Grant of rights, explained

What rights are typically granted in a publishing contract? #

In a standard publishing contract, authors grant the publisher the right to publish their work in various formats, including print, digital, and audio. The contract may also specify rights for different territories (e.g., North America, Europe, or worldwide) and languages. For example, a contract might grant the publisher exclusive rights to publish the book in English in North America, while reserving other rights for the author.

Understanding the scope of rights granted is essential. For instance, a broad grant of rights might include:

• Print rights (hardcover, trade paperback, mass-market)
• Digital rights (e-books, online serialization)
• Audio rights (audiobooks)
• Translation rights (foreign language editions)
• Derivative rights (film, TV, merchandise)

How do royalties work, and what are the typical rates? #

Royalties are the payments authors receive based on book sales. The royalty rate varies depending on the format and the publisher’s accounting practices. For instance, e-book royalties are typically calculated as a percentage of the publisher’s net receipts, often around 25%. In contrast, print book royalties are usually based on the list price, with rates varying from 10-15% for hardcover to ~7.5% for trade paperback.

Here are some typical royalty rates based on the verified figures:

• Hardcover: 10% of the list price for the first 5,000 copies, 12.5% for the next 5,000, and 15% thereafter.
• Trade paperback: Approximately 7.5% of the list price.
• Mass-market: 8% of the list price up to ~150,000 copies, then 10%.
• E-book: 25% of the publisher’s net receipts (the de-facto standard, though the Authors Guild argues 50% is fair).
• Audio: Commonly around 25% of net receipts.

It’s important to note that royalties on net receipts are generally lower than those on list prices because net receipts are calculated after the retailer’s discount, which can be as high as 55%.

What is the difference between an advance and royalties? #

An advance is a payment made to the author before the book is published, essentially an advance against future royalties. Advances can vary widely depending on the author’s track record, the book’s potential, and the publisher’s expectations. According to Publishers Marketplace deal bands, advances can range from “nice deals” under $49,000 to “major” deals over $500,000. However, most books do not earn out their advance, meaning the royalties generated do not surpass the advance amount. This is a normal occurrence and does not necessarily indicate poor sales.

For example, if an author receives a $10,000 advance for a book with a 10% royalty on hardcover sales, they would need to sell $100,000 worth of hardcover books (based on the list price) to earn out the advance. Given that the average hardcover book sells for around $25, the author would need to sell 4,000 copies to earn out the advance.

How can authors evaluate whether a grant of rights is reasonable? #

Evaluating the reasonableness of a grant of rights involves understanding the scope of rights being granted and the potential impact on the author’s earnings and control over their work. Here are some factors to consider:

• Scope of rights: Is the grant of rights too broad or too narrow? For instance, granting worldwide rights in all languages might be excessive if the publisher does not have the capability to exploit those rights effectively.
• Royalty rates: Are the royalty rates competitive? Comparing the offered rates with industry standards can help determine if the deal is fair.
• Net vs. list: Understanding whether royalties are based on net or list receipts is key. A lower percentage on list can be more favorable than a higher percentage on net, depending on the publisher’s discount structure.
• Territories and languages: Are the specified territories and languages appropriate for the book’s potential market?
• Subsidiary rights: Are there opportunities to retain or share subsidiary rights (e.g., film, TV, merchandising) that could provide additional revenue streams?

What are some common pitfalls to avoid in grant of rights clauses? #

Authors should be wary of several common pitfalls when negotiating the grant of rights:

• Overly broad grants: Granting rights in perpetuity or without clear limitations can leave authors with little control over their work.
• Unfavorable royalty structures: Royalty rates based on net receipts with high retailer discounts can significantly reduce earnings.
• Limited audit rights: Without the right to audit the publisher’s records, authors may struggle to verify royalty payments.
• Non-compete clauses: These can restrict authors from publishing other works, potentially limiting their career growth.
• Unclear reversion clauses: Without clear terms for rights reversion, authors may find it difficult to regain control of their work if the publisher stops publishing it.

Frequently asked questions #

What is the difference between net and list royalties?

Net royalties are based on the publisher’s receipts after the retailer’s discount, while list royalties are based on the cover price of the book. For example, if a book sells for $25 with a 50% retailer discount, the net receipt would be $12.50. A 10% royalty on list would yield $2.50, while a 10% royalty on net would yield $1.25.

How are e-book royalties typically calculated?

E-book royalties are usually calculated as a percentage of the publisher’s net receipts, often around 25%. This is because e-books are typically sold at a discount to the retailer, and the publisher’s net receipts reflect this discount.

What is an advance, and how does it affect royalties?

An advance is a payment made to the author before the book is published, which is deducted from future royalties. If the book earns more in royalties than the advance amount, the author receives additional payments. If not, the author does not owe the publisher the difference.

Can authors negotiate the grant of rights?

Yes, authors can negotiate the grant of rights. This includes the scope of rights, royalty rates, advance amounts, and other terms. Having a literary agent can be helpful in navigating these negotiations and advocating for the author’s interests.