Publishing Agreements

So, you’ve done the difficult bit and persuaded a publisher to make an offer to publish your book. But how do you know if you’re getting a fair deal? And what should you be looking out for on the contract? I would always advise an author or illustrator to engage an agent. An agent will ensure that the contract gives you the best possible chance of maximising your income from a book. Alternatively, the Society of Authors (see The Society of Authors) and the Writers’ Guild of Great Britain (see The Writers’ Guild of Great Britain) will both check publishing agreements for their members. In addition, there are lawyers who specialise in publishing contracts and for those who prefer to go it alone, there are some useful books on the subject listed at the end of this article.

What follows is a whistle-stop tour around the key points of a publishing contract, especially for those writing for children. To begin, the offer from the publisher should come in writing clearly setting out exactly what rights the publisher wants to license and what they are willing to pay for those rights. A contract is a business agreement for the supply of goods or performance of work at a specified price. Normally, that payment comes as an advance against royalties. Occasionally, a flat fee payment is appropriate, but a royalty allows the author to share in the income from a book throughout its life and is therefore generally preferable. Perhaps the most important point of all is that you make sure you fully understand which rights are being licensed under the contract and aren’t seduced merely into worrying about the advance and royalty (tempting though they may be!)

Publishers’ agreements often have useful headings for each clause and I’ve used some of those headings here for ease of reference.

Licence

The very first thing to be clear about is what is being licensed to the publisher. For a new book one expects to grant to the publisher, for the legal term of copyright, the exclusive right to publish and sell the work in certain forms. The standard grant is of ‘volume form’, which means all book forms (hardback, paperback, other formats). However, the offer or contract may also state other forms, for example serial (newspaper and magazine rights) or audio rights. Some publishers’ contracts include all-encompassing wording such as ‘all media forms currently in existence and hereinafter invented’. This in effect hands control to the publisher of a wide range of rights, including electronic, dramatic (film, television, radio), merchandising and so on. In such a case, it’s likely that the author’s share of income from such rights will be less than it would be were the author to reserve those rights and have them handled separately.

Territory

Territory states where the publisher has the right to sell or sub-license the book. For picture books of all kinds, fiction and non-fiction, UK publishers generally require world rights as the UK market alone is not large enough to sustain the costs of four-colour printing. US publishers are lucky enough to have a sufficiently large home market to mean they are not reliant on foreign sales and therefore will not always require world rights.

For fiction (i.e. novels) a judgement needs to be made about which territories should be granted to the publisher. English language rights are made up of two large mutually exclusive territories: the UK and Traditional British Commonwealth (including or excluding Canada) on the one hand and the USA, its dependencies and the Philippines on the other. The rest of the world is considered an open market. One could grant Traditional British Commonwealth rights in the English Language to a publisher, thereby reserving American and translation rights to be sold separately. Or one could grant World English Language rights, so the publisher can sell on US rights while translation rights are held in reserve to be sold separately. Or again, one could grant world rights to the originating publisher.

When thinking of granting a wide range of territories to a publisher, it is worth checking out how proactive and successful their foreign rights department is. It may be possible to speak to the foreign rights manager and find out for yourself if they have a good track record. An agent will have an informed view on a publisher’s expertise in this area and furthermore, they will probably either be experienced themselves in selling foreign and US rights, or will work with associate agencies in all the different language territories. Publishers will take 15–30% share on US and foreign sales and, if you have an agent too, their commission will also be deducted before you receive your percentage. Agents will generally charge 15–20% on US and foreign sales.

Advances

We’ve all read the newspaper headlines about huge advances, but the fact is most children’s book advances currently fall within the range of £1,000–£25,000. For books that will be published in the trade (i.e. by a mainstream publishing house and where the book will appear in bookshops) most offers are framed as an advance against royalties. Advances may be paid in one go, on signature, but don’t be surprised if the publisher proposes paying half on signature and half on publication, or in thirds (signature, delivery and publication), or even in quarters (signature, delivery, hardback publication, paperback publication), though the latter is more common when the advance offered is substantial.

Royalties

As a very basic rule of thumb, hardbacks attract a 10% base royalty and paperbacks 7.5%. Bear in mind that on picture books these figures will be shared between author and illustrator. Sometimes, children’s black and white illustrated fiction titles also bear a small royalty for the illustrator, which will come out of the total royalty. Most novelty books, including board books, work on a smaller royalty, for example 5% or even less because of the high production costs and relatively low retail price.

Ideally, the royalty will escalate to a higher level when a certain number of sales have been achieved and this can prove to be very important if a book becomes a long-running success.

For a trade book the royalties should ideally be based on the recommended retail price for home sales. Export sales and sales to book clubs or book fairs are usually calculated on the publisher’s price received (or net receipts). The contract should set out each type of sale and list the appropriate royalty rate. Nowadays particular attention needs to be paid to ‘high discount’ clauses in contracts. However good the main home sales royalty is, a disadvantageous high discount clause can mean that disappointingly few of the sales attract the full royalty and consequently revenues will be much reduced. This is especially important now because retailers are pushing publishers hard on discounts. An agent will be used to negotiating carefully on precisely this kind of area to secure the best possible terms.

Co-edition royalties

As previously mentioned, picture books in the UK are very dependent upon publishers selling American and foreign language co-editions. Therefore, it is important to note on the contract what the author’s share of any such co-edition deals will be. These generally fall under two categories in the contract:

• If the UK publisher prints for the foreign publisher, the books are usually sold for a fixed price per copy as ‘royalty inclusive’ and the author’s and artist’s share will be expressed as a percentage of the publisher’s price received. These deals help to get the book published by bringing the unit cost down and they begin the process of earning out the advance.

• US and foreign language sales also fall under the heading of subsidiary rights. In this case, the UK publisher may or may not print the books, but the US or foreign publisher will have agreed to pay an advance and royalty for the right to sell the book in their territory (a ‘royalty exclusive’ deal). The author’s and artist’s share in this instance shouldn’t be less than 50% and it could be much more. If a book is particularly sought after by foreign or US publishers, such a royalty exclusive deal could mean that the original UK advance is earned out immediately.

Subsidiary rights

Other subsidiary rights include reprint rights (large print, book club, paperback reprint, etc), serial rights (the right to publish in newspapers and magazines), anthology and quotation rights, educational rights, audio rights and so on. There will usually be a percentage listed against each right and that is the author’s share of any deal. Generally the author receives at least 50% on these deals and more in the case of serial, US and translation rights. The rights listed in the sub-rights clause should be checked against the opening grant of rights clause to see that they conform.

Delivery and publication

There should be clauses in the contract that state the agreed delivery date of the book and give some indication of what is expected, for example ‘a work for children to be written and illustrated by the said author to a length of not more than 25,000 words plus approximately 50 black and white line illustrations’. There should also be an undertaking by the publisher to publish the work within a stated time period, for example ‘within 12 months from delivery of the complete typescript and artwork’. There might also be an indication of what the published price will be.

Copyright and moral rights

As you are licensing your work, you should retain copyright and there should be a clause that obliges the publisher to include a copyright line in every edition of the work published or sub-licensed by them. The author’s moral rights are also often asserted within the contract.

Production

Though the publishers will generally insist on having the final decision regarding details of production, publication and advertising, they should agree to consult meaningfully with the author over the blurb, catalogue copy, jacket and cover design. There should also be an undertaking to supply the author with proofs for checking and enough time for the author to check those proofs.

Accounts

Publishers usually account to authors twice a year for royalties earned. Even if the advance has not earned out, the publishers should still send a royalty statement. Royalty statements are notoriously enigmatic and vary from publisher to publisher. Mistakes on royalty statements are more common than one might like to think and an agent will be used to checking royalty statements carefully and taking up any anomalies with the publisher.

 In addition to the twice-yearly accounting, once the initial advance has been earned out, an agent will be able to ensure that any substantial income from sub-rights deals (e.g. in excess of £100) will be paid immediately.

Electronic or ebook rights

The electronic or ebook market is growing quickly, with a proliferation of devices and formats for accessing ebooks on the market. Publishers are rushing books into ebook format and establishing protocols with online retailers. Ebook development currently encompasses several different forms: straightforward verbatim text; ‘enhanced’ ebook, i.e. with added material such as author interviews; ‘apps’ for smart phones; and some children’s novels are even available in a ‘game’ format for reading on one of the popular handheld devices. Authors should take care to retain the right of approval over every aspect of these enhanced electronic editions.

At the time of writing, standard ebook royalties are hovering around 25% of the publisher’s price received, but this is often subject to review after a fixed period to enable both sides to take account of changing practice. As this part of the market is fluid and expanding, it’s wise to keep your options open if you can.

Reversion

It’s important to ensure that the author can get back the rights to their book if the publisher either fails to stick to the terms of the contract or lets the book go out of print. Historically, if the publisher left a book out of print for 6–9 months after receiving a written request to reprint it, rights would revert. However, ebook and print-on-demand formats mean that standard ‘stock level’ reversion clauses no longer provide adequate protection and new triggers for reversion need to be agreed. This might be a rate of sale or revenue threshold. It is well worth reclaiming rights to out-of-print books as it may well be possible to re-license them later on.

Assignment

A small but important clause that may need to be added states that the publishers shall not assign the rights granted to them without the author’s express written consent. This gives the author at least a degree of control over the book’s destiny if the publishing company runs into trouble or is sold.

Educational publishers’ contracts

Many children’s authors begin as writers for educational publishers and quite a number continue to work in this field alongside producing books for the trade market. Educational publishers usually commission tightly briefed work. Advances are generally modest and the royalties are based on the publishers’ price received. However, substantial sums can eventually be earned. Educational publishers usually expect to be granted a very wide range of rights and while it makes sense to grant audio or electronic rights where the publisher has the capacity to produce or license such formats for their market, it may be possible and desirable to reserve, for example, dramatic and merchandising rights. However, discretion is needed here. If, for example, the publisher is commissioning writers to create stories about a given set of characters created by the publisher, then the publisher will rightly expect to control such rights.

That really is a scratching of the surface of publishing agreements. Do take advice if you don’t feel confident that the contract presented to you is fair. It seems a very obvious thing to say but always read a publishing agreement carefully before signing it and if anything in it isn’t clear, ask for an explanation. Remember, too, that it’s a negotiation and that despite publishers’ talk of ‘standard terms’ and ‘standard agreements’, it is always possible to make amendments to contracts.

Caroline Walsh is a literary agent and a director of David Higham Associates Ltd (www.davidhigham.co.uk). She specialises in the children’s book market.

Useful reading 

Clark, Charles (ed.), Publishing Agreements: A Book of Precedents, Tottel Publishing, 7th edn, 2007

Flint, Michael F., A User’s Guide to Copyright, Tottel Publishing, 6th edn, 2006

Jones, Hugh and Benson, Christopher, Publishing Law, Routledge, 3rd edn, 2006