Brenda Tobin, Solicitor
As a lawyer practicing exclusively in creators’ rights since 2000, I have drafted many publishing agreements on behalf of both publishers and authors. I am writing this note as a general guidance based on my experiences in these negotiations which often involved drafting of carefully worded clauses and further refinement as the two sides come closer to a deal. Your relationship with your publisher is unique and what is achievable in contract negotiations can depend on how much the publisher wants to publish your book and how commercial the publication is.
This note is a general guidance note only and is not intended to be comprehensive or a substitute for legal advice. Each negotiation turns on its specific set of facts, so you should not rely on this note in place of seeking professional advice.
As a writer, you have probably been anticipating the moment when a publishing agreement is sent to you by your publisher or agent. It is an exciting time and a great achievement to have got to this stage but, without sounding too much like a lawyer, I would advise caution before cracking open the champagne just yet!
Having put so much work into your book, you now need to apply that rigour again to understanding and negotiating the details of the deal. Up to now you may only have been advised of the bare bones of the deal as the detail usually only emerges in the publishing agreement. Do not be too distracted by the advance, as you may find that the draconian nature of the rights clauses mean that the book could lie on a publisher’s backroom shelf unpublished for years or you might not realise that you are responsible for picking up the tab in a libel dispute.
I will try and unpick some of the challenges that any author faces when negotiating with a publisher. As all contracts and relationships are different, I suggest that you get your lawyer to fully explain to you the terms of the agreement and to negotiate the best possible deal for you.
The fundamental conflict inherent in these negotiations comes from the fact that the publisher and the author have diametrically opposing positions regarding the agreement.
The publisher wants:
- to have control of the production and publication of the book
- to be the exclusive agent for any agreed subsidiary rights such as film rights, and
- that the writer carries the risk for ‘any breach or non-performance’ by the writer of any of their obligations under the agreement (more on that later)
The writer on the other hand wants:
- the publisher to make reasonable efforts to market and publicise the book
- is concerned about the amount of the royalties, and
- that they retain any rights that they intend to exploit themselves.
Now, I’m going to run through some suggestions on how to deal with the agreement itself:
The first thing I would advise you to do is negotiate. Publishing agreements are not normally “take it or leave it” agreements and if the publisher isn’t allowing you to negotiate the terms of the agreement or is giving you an unreasonably short turnaround time, then you should be concerned. A publishing agreement must work for both parties and be mutually beneficial financially to you and the publisher.
You or your agent may have agreed an advance with your publisher, and while the size of the advance is significant to you, it is potentially less significant than the obligations that you may be taking on elsewhere in the agreement. Ask the publisher for a draft agreement and read it carefully. Tell the publisher that you will be responding with comments and revisions once you’ve had an opportunity to consult with your lawyer. If you don’t have a lawyer, your representative organisation may be able to help you find one.
The first clause that you need to pay close attention to is the Grant of Rights clause. This is where the ownership rights in your work, known as copyright or rights, which up to now you have owned outright, are handed over in whole or in part to the publisher. The publishing agreement is principally intended to give the publisher the right to print, publish and sell your book, but it also does a lot more.
If you were to assign copyright or grant an exclusive unlimited licence in the book to the publisher, you will be essentially relying on that publisher to generate all the revenue that you will earn from that book. You want to avoid a situation where a book is tied up permanently with a publisher who doesn’t have much interest in or incentive to publish it.
There should be no need to assign copyright to a publisher. Consider what specific territories and languages you want the publisher to have and be sure the grant of rights is limited to those territories and languages.
Make sure you understand and agree to all the specific formats granted to the publisher, including all electronic, digital and audio book rights, and insist on a clause reserving to you all rights that you don’t specifically grant to the publisher.
The publishing agreement may also contain a grant of subsidiary rights such as the right to make films, TV shows, stage plays, spin offs from your book. The royalty rates for these will be normally agreed at this stage, but it’s also ok to let a publisher know that you’re not opposed to giving them these rights at a later stage.
Make sure your contract requires your authorisation to grant licenses for excerpts, anthologies, and new editions. This will ensure that you keep some control over the exploitation of your work.
3. Edit and Credit
Be clear as to who has creative control over the look of the published edition and the final version of the text. A publisher may look for the right to edit your work and you must look very closely at the wording here to make sure that the publisher can only edit your work for punctuation and layout, but not make substantive edits. However, the publisher will want the right to edit the work to avoid any legal risks. You need to look closely at the wording here to ensure that any changes made are reasonable and within parameters set out by custom and practice. Ideally you would like approval of any substantial changes that editors or copyeditors make to your work.
You have the right to a credit for your work and you should ensure that the wording and placement of the credit is satisfactory to you.
4. Publication and Promotion
On delivery of the manuscript, the publisher may want the right to reject it. You should try and secure the right to submit a revised text within a certain time frame, that they may then agree to publish.
Whether or not you have received a royalty for this work in advance of publication, any delay on publication that is substantial will not normally benefit you. You should ensure that the agreement contains a deadline for publication and a clause allowing you to terminate the agreement and keep your advance if the publisher fails to bring out the book on time. To avoid allowing your publisher to maintain control of your book forever, you should ensure that the agreement contains wording that permits your book to be declared out-of-print. The rights that were transferred to the publisher under this agreement should then revert to you if the publisher pays you less than a certain amount of royalties each year. You should be entitled to retain all advances and royalties paid to date.
In terms of publicity then, you need to know what you’re agreeing to in terms of promotion of the book. You are also trying to pin the publisher down here in terms of what they are going to do to promote the book, because in essence that is the purpose of the publisher. They have a publicity machine and promotional tools that will help you to maximise the revenue for the book. If your publishing agreement is silent or insubstantial on what your publisher is going to do to promote your book, that should be a cause of concern for you.
Marketing of your book is essential for your book to reach as wide an audience as possible. If the publishing agreement does not contain affirmative obligations in respect of marketing your work, it will be very difficult for you to force the publisher to do this after the agreement has been signed. This needs to work with the publisher’s obligation to publish. If the publisher doesn’t have a positive obligation to publish or specific marketing requirements and, if they have not paid you a significant advance, (which is always an incentive for the publisher to actively promote the work) the prospect of your book languishing on a virtual shelf is a real possibility.
5. Royalties and Advance
You will need to be aware that any advance paid to you at this stage is an advance on royalties and therefore will be set off against any future royalty income that the book earns.
An agreement should set out a scale of royalties depending on how many books are sold, this is often referred to as a step-up rate for royalties. For example, the agreement may set a royalty rate for the first 50,000 books sold which should increase for between 50,000 and 100,000 books sold and increase again for any books sold over 100,000. The increased royalty reflects the fact that the publisher is getting a better return on their investment because their costs will have been absorbed by then.
In addition, you should receive a higher level of royalty for ebooks to reflect the lower production costs incurred by the publisher in publishing an ebook. Make sure your royalties meet industry standards, be clear about whether they are a percentage of the gross or net receipts received by the publisher. Net receipts have certain deductions such as expenses taken off the top and you need to be very careful around the wording of the definition or net or gross receipts. You should also try to negotiate wording that prevents the royalty from being dramatically reduced by special deals that can allow the publisher to offer substantial discounts at your expense.
There is a lot of focus on advances in book publishing agreements. It is important that you understand that an advance is an advance payment of royalties and that if, for example, you receive an advance to write a book, this will normally be paid in instalments, the first payment being made on signature of the agreement, the second on delivery of your manuscript and the third on publication. Once the book starts to sell, you will receive no royalty payments until the advance has been repaid in full to the publisher. You will need to negotiate a wording that prevents the publisher from reclaiming any portion of your advance if your royalties don’t earn it out.
You should also try to avoid any other risk of having to pay back your advance if the publisher rejects your manuscript. If possible, insist that if you deliver the book and the publisher rejects it, you can bring it to other publishers and that any amounts you have received to date, as part of your advance, do not have to be repaid until and unless you are paid such amounts from any subsequent publisher.
6. Writer’s warranties and indemnities
Another area of concern for writers in publishing agreements are the warranty and indemnity clauses that publishers normally want writers to sign up to. What they essentially do is make the writer responsible for any legal problems that might arise after publication of the book including rights that weren’t cleared or any content that is considered defamatory or in breach of privacy rights.
For example, if you quote from somebody else in your book and you didn’t get permission, or you use a photograph that wasn’t cleared, you could be exposed to the cost of the licence fee to clear the work and legal cost under this clause. On the contents side, if you defame an individual, you may be required to take full financial responsibility for the risk involved in any litigation that may arise. As you can see this is quite an onerous obligation and you should certainly try to limit the scope of this clause, in particular if your book is of a nature that might be contentious.
You may need to seek the advice of a lawyer to guide you through the various ways of limiting this clause as it is important that you fully understand the risk that you may be taking on and with guidance negotiate a level of risk that you are prepared to accept.
If it cannot be limited to your satisfaction and depending on the subject matter of the book, you will have to consider whether the potential exposure to financial risk is justifiable.
You should receive royalty statements from your publisher periodically. It is very important that you inspect these to make sure that they are in line with what has been agreed in terms of the royalty and in your definition of net receipts. Your publisher should not be deducting such items as utilities or rent as these are general office expenses and not relevant to your royalty payment. It is important therefore that you fully understand what deductions you have agreed to.
You also need to ensure that there is a robust audit clause in place. This will give you the right to have the publisher’s accounts inspected periodically. If a discrepancy is found in your favour, in other words, if the royalty payments made have been less than they should have been, you should be entitled to a refund plus interest. It would also be advisable to have a clause in the agreement which gives you the right to charge the publisher for the cost of the audit if the discrepancy in your favour is over a certain amount, normally 5 or 10%.
Any royalties owed at the time of termination should be paid up to the date of termination.
Try and ensure also that any over-payment on one book, where the advance was not earned out by royalties, cannot be deducted from income on a subsequent book.
8. Other bits and pieces
Make sure your contract does not prevent you from creating “competing works” on topics similar to the ones in your book.
Be careful around signing option clauses. While it might seem like some kind of indication of a future income stream, if there is no additional payment for the option, it might not be in your best interest to be tied in to this publisher for your next book at this stage.
Try too to ensure that the contract is governed by Irish law and determined by the Irish Court.
I hope this has helped clarify some of the tricky principles and problems inherent in publishing agreements and just to remind you again that this note should not be used as a substitute for getting legal advice. Negotiations can be difficult, but it is better to put the work in at the outset and protect the hard work that went into writing your book as well as your peace of mind.
© Brenda Tobin 2018