Improving Your Book Contract

Negotiation Tips for Nine Typical Clauses

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1. Grant of Rights

What the clause does:

The Grant of Rights clause transfers ownership rights in, and therefore control over, certain parts of the work from the author to the publisher. Although it’s necessary and appropriate to grant some exclusive rights – e.g., the right to print, publish and sell print-book editions –don’t assign or transfer your copyright and use discretion when granting rights in languages other than English and territories other than the United States, its territories and Canada. Also, limit the publication formats granted to those which your publisher is capable of exploiting adequately.

Negotiation tips:

Never transfer or assign your copyright or “all rights” in the work to your publisher.

Limit the languages, territories, and formats in which your publisher is granted rights.

2. Subsidiary Rights

What the clause does:

Subsidiary rights are uses that your publisher may make of your manuscript other than issuing its own hardcover or paperback print book editions. Print-related subsidiary rights include book club and paperback reprint editions, publication of selections, condensations or abridgments in anthologies and textbooks, and first and second serial rights (i.e., publication in newspapers or magazines either before or after publication of the hardcover book). Non-print-related subsidiary rights include motion picture, television, stage, audio, animation, merchandising, and electronic rights.Subsidiary rights may be directly exploited by your publisher or licensed to third parties. Your publisher will share licensing fees with you in proportion to the ratios set forth in your contract. You should receive at least 50% of the licensing proceeds.

Negotiation tips:

Consider reserving rights outside the traditional grant of primary print book publishing rights, especially if you have an agent.Beware of any overly inclusive language, such as “in any format now known or hereafter developed,” used to describe the scope of the subsidiary rights granted.

Make sure you are fairly compensated for any subsidiary rights granted. Reputable publishers will pay you at least 50% of the proceeds earned from licensing certain categories of rights, much higher for others.

3. Delivery and Acceptance

What the clause does:

Most contracts stipulate that the publisher is only obligated to accept, pay for, and publish a manuscript that is “satisfactory to the publisher in form and content.” It may be difficult to negotiate a more favorable, objective provision, but you should try. Otherwise, the decision as to whether your manuscript is satisfactory, and therefore publishable, will be left to the subjective discretion of your publisher.

Negotiation tips:

If you cannot do better, indicate that an acceptable manuscript is one which your publisher deems editorially satisfactory.Obligate your publisher to assist you in editing a second corrected draft before ultimately rejecting your manuscript.

Negotiate a non-refundable advance or insert a clause which would allow you to repay the advance on a rejected book from re-sale proceeds paid by a second publisher.

4. Publication

What the clause does:

Including a publication deadline in your contract will obligate your publisher to actually publish your book in a timely fashion. Be sure that the amount of time between your delivery of the manuscript and the publication of the book isn’t longer than industry standard.

Negotiation tips:

Make sure you’re entitled to terminate the contract, regain all rights granted, and keep the advance if your publisher fails to publish on or before the deadline.Carefully limit the conditions under which your publisher is allowed to delay publication.

5. Copyright

What the clause does:

Current copyright law doesn’t require authors to formally register their copyright in order to secure copyright protection. Copyright automatically arises in written works created in or after 1978. However, registration with the Copyright Office is a pre-requisite to infringement lawsuits and important benefits accrue when a work is registered within three months of initial publication.

Negotiation tips:

Require your publisher to register your copyright within three months of initial publication of your book.As previously discussed in Grant of Rights, don’t allow your publisher to register copyright in its own name.

6. Advance

What the clause does:

An advance against royalties is money that your publisher will pay you prior to publication and subsequently deduct from your share of royalty earnings. Most publishers will pay, but might not initially offer, an advance based on a formula which projects the first year’s income.

Negotiation tips:

Bargain for as large an advance as possible. A larger advance gives your publisher greater incentive to publicize and promote your work.Research past advances paid by your publisher in industry publications such as Publishers Weekly.

7. Royalties

What the clause does:

You should earn royalties for sales of your book that are in line with industry standards. For example, many authors are paid 10% of the retail price of the book on the first 5,000 copies sold, 12.5% of the retail price on the next 5,000 copies sold, and 15% of the retail price on all copies sold thereafter.

Negotiation tips:

Base your royalties on the suggested retail list price of the book, not on net sales income earned by your publisher. Net-based royalties are lower than list-based royalties of the same percentage, and they allow your publisher room to offer special deals or write off bad debt without paying you money on the books sold.Limit your publisher’s ability to sell copies of your book at “deep discounts” – quantity discount sales of more than 50% – or as remainders.

Limit your publisher’s ability to reduce the percentage of royalties paid for export, book club, mail order, and other special sales.

8. Accounting and Payments

What the clause does:

Your accounting clause should establish the frequency with which you should expect to receive statements accounting for your royalty earnings and subsidiary rights licensing proceeds. If you are owed money in any given accounting period, the statement should be accompanied by a check.

Negotiation tips:

Insist on at least a bi-annual accounting.Limit your publisher’s ability to withhold a reserve against returns of your book from earnings that are otherwise owed to you.

Include an audit clause in your contract which gives you or your representative the right to examine the sales records kept by the publisher in connection with your work.

9. Out of Print

What the clause does:

Your publisher should only have the exclusive rights to your work while it is actively marketing and selling your book, i.e., while your book is “in print.” An out-of-print clause will allow you to terminate the contract and regain all rights granted to your publisher after the book stops earning money.It is crucial to actually define the print status of your book in the contract. Stipulate that your work is in print only when copies are available for sale in the United States in an English language hardcover or paperback edition issued by the publisher and listed in its catalog. Otherwise, your book should be considered out-of-print and all rights should revert to you.

Negotiation tips:

Don’t allow the existence of electronic and print-on-demand editions to render your book in print. Alternatively, establish a floor above which a certain amount of royalties must be earned or copies must be sold during each accounting period for your book to be considered in print. Once sales or earnings fall below this floor, your book should be deemed out-of-print and rights should revert to you.Stipulate that as soon as your book is out-of-print all rights will automatically revert to you regardless of whether your book has earned out the advance.