Your first publishing contract: what to read first

What are the most important clauses to read first? #

When reviewing your first publishing contract, start with the following clauses in order of their potential impact on your finances and career:

• Royalties (reference/royalties/): Understand how royalties are calculated and whether they are based on the list price or net receipts. This can significantly affect your earnings, as royalties on net receipts are typically lower.
• Advance: The advance is the upfront payment you receive for your book. While it is not directly tied to royalties, it is key to understand the amount and payment schedule. Advances are often divided into installments, and knowing when you will receive these payments is important for financial planning.
• Rights Granted: This clause outlines the rights you are granting to the publisher, such as print, digital, and subsidiary rights. Be cautious about granting exclusive rights without understanding the implications, as this can limit your ability to exploit other revenue streams.
• Subrights and Subsidiary Rights: These include audio, foreign, and film rights. Negotiate for a higher share of these rights, as they can be lucrative. For example, audio rights can be particularly valuable given the growing audiobook market.
• Reversion of Rights: This clause specifies the conditions under which your rights revert back to you. It is important to ensure that there is a clear and reasonable process for rights reversion, especially if the publisher is not actively exploiting your work.

How do royalties work, and what should I look for? #

Royalties are the payments you receive based on the sales of your book. They can be calculated in several ways:

• List Price vs. Net Receipts: Royalties based on the list price are calculated as a percentage of the book’s cover price. In contrast, royalties based on net receipts are calculated after the retailer’s discount, which can significantly reduce your earnings. For example, if a book sells for $20 with a 50% retailer discount, the net receipt is $10. A 10% royalty on list price would earn you $2, while a 10% royalty on net receipts would earn you $1.
• E-book Royalties: E-book royalties are typically calculated as a percentage of the publisher’s net receipts, often around 25%. However, the Authors Guild argues that 50% is a fairer rate, given the lower costs associated with e-book production and distribution.
• Audiobook Royalties: Audiobook royalties are usually a percentage of net receipts, often around 25%. Given the higher production costs, these royalties are generally lower than e-book royalties.

What is an advance, and how does it affect my earnings? #

An advance is an upfront payment made to you by the publisher. It is essentially an advance against future royalties, meaning you will not receive additional royalty payments until the advance has been earned out. Here are some key points to consider:

• Advance Amounts: Advances can vary widely, from a few thousand dollars to millions. According to Publishers Marketplace, a “nice deal” is up to $49,000, while a “major” deal is $500,000 or more. However, most deals are not publicly disclosed, and there are no reliable public per-genre advance averages.
• Earning Out: Most books do not earn out their advance, which is normal. This means that the royalties generated from book sales do not exceed the advance amount. However, this does not necessarily indicate the book’s success, as the advance amount is often based on the publisher’s expectations of the book’s performance.
• Payment Schedule: Advances are typically paid in installments, such as on signing, delivery and acceptance of the manuscript, and publication. Understanding the payment schedule is important for financial planning.

What rights should I be aware of, and how do they affect my income? #

The rights you grant to the publisher can significantly impact your income and control over your work. Here are some key rights to consider:

• Print and Digital Rights: These are the primary rights granted to the publisher. Make sure the contract specifies whether royalties are based on list price or net receipts, as this can affect your earnings.
• Subsidiary Rights: These include audio, foreign, and film rights. Negotiate for a higher share of these rights, as they can be lucrative. For example, audio rights can be particularly valuable given the growing audiobook market.
• Exclusive vs. Non-exclusive Rights: Granting exclusive rights to the publisher can limit your ability to exploit other revenue streams. Consider negotiating for non-exclusive rights where possible.
• Reversion of Rights: This clause specifies the conditions under which your rights revert back to you. It is important to ensure that there is a clear and reasonable process for rights reversion, especially if the publisher is not actively exploiting your work.

Frequently asked questions #

What is the standard royalty rate for e-books?

The standard royalty rate for e-books is typically around 25% of the publisher’s net receipts. However, the Authors Guild argues that 50% is a fairer rate, given the lower costs associated with e-book production and distribution.

How are audiobook royalties calculated?

Audiobook royalties are usually a percentage of net receipts, often around 25%. Given the higher production costs, these royalties are generally lower than e-book royalties.

What is the typical advance for a first-time author?

Advances for first-time authors can vary widely, but according to Publishers Marketplace, a “nice deal” is up to $49,000. However, most deals are not publicly disclosed, and there are no reliable public per-genre advance averages.

What rights should I retain when signing a publishing contract?

Retain as much control as possible over subsidiary rights like audio and foreign translations. Negotiate for a higher share of these rights, as they can be lucrative. Additionally, consider negotiating for non-exclusive rights where possible to maximize your potential income.