Key Terms In Your Publishing Contract – What you need to know
Receiving an offer from a publisher is an exciting moment. Nothing quite compares to the thrill of knowing that one day your work may be seen in print.
However, before you sign your contract and begin a long-term relationship with your publisher, you should review and consider the following key features of your contract.
1. Authorisation to enter into a contract
A question we are often asked by new and emerging authors is whether a manuscript needs to be ‘registered’ or recorded as copyright before entering into contract negotiations or even self-publishing. The good news is that there is no system of registration for copyright in Australia. An author’s work is automatically protectable from the moment it is written or recorded.
However, it can be more complicated where multiple authors have contributed to a work, or in cases where manuscripts are published posthumously by beneficiaries of a literary estate.
If your manuscript has been developed in the course of collaboration with others, or you have been tasked with representing another person in their publication journey, it is important to have the written support and consent of all contributors before negotiating a contract. This is so your decisions are not challenged and you find yourself in a dispute.
2. What rights do you granted to your publisher?
There are different ways in which an author’s copyright can be dealt with under a publishing contract. The two main pathways are:
a licence (common), where the author retains their copyright but grants to the publisher the exclusive (or in some circumstances non-exclusive) right to publish, communicate and sell the work, in different editions, formats and territories; or
an assignment (uncommon), where the author transfers complete ownership of copyright subsisting in the work to the Publisher and the author is no long the owner of the copyright transferred.
If your contract includes an assignment, you need to ensure you have an understanding of all consequences before signing on the dotted line. A complete transfer of copyright ownership may limit your ability to exploit your work on your own terms, or have your rights returned to you after the book is out of print.
3. Term of Contact
When reviewing your contract, you should take note of the term or length of time of the licence. Is it set for a fixed duration, or until copyright in the work expires?
It would be a good idea to ask your publisher in what circumstances you can expect your rights to be returned to you. It is not uncommon for a publisher to retain the right to produce and sell the work until the edition is deemed to be out of print. When reviewing your publishing contract, consider the definition of ‘out of print’ and familiarise yourself with what this means. Does it refer to an electronic edition becoming unavailable, or a print run falling below a specific number of volumes per year? If the duration of the contract term is unclear, make sure it is resolved before signing away your rights.
4. Advances and Royalties
Most publishing contracts include details of an advance as well as royalties, typically calculated as a percentage of gross or net receipts.
Your advance is an upfront payment from your publisher for granting rights in your manuscript. An advance can be paid on signing or paid out in instalments at different phases of the copyediting process.
A general guide several publishers use for an advance is half the estimated royalties on the first print run. However, this is not a hard and fast rule. A lot will depend upon the expectation the editor has for the performance of the work, and how the book will be sold.
If your contract requires you to pay your publisher, be cautious and please seek advice.
5. Tax
In Australia, authors will ordinarily be asked to provide their publisher with an Australian Business Number (ABN). If you have not set yourself up with an ABN, your publisher may need to withhold a portion of your advance and royalties and remit this to the Australian Tax Office (ATO).
If you are a first-time author, consider consulting with your accountant to consider where your royalties ought to be directed, in a remuneration structure that works best for you.
6. Subsidiary Rights and Reserved Rights
The rights you grant to a publisher can be divided out and distributed in a number of ways, including by territory, language or format. These interests are managed through different licences. Subsidiary rights are all the rights other than the primary print publication rights. A sub-rights clause should include a schedule of those rights your Publisher can sub-licence to third parties, the royalties payable and where your consent and sign off is required.
Examples of subsidiary rights include:
Film and tv adaptation rights;
Dramatisation;
Audio publishing rights;
Translation rights; and
Extracts and quotations.
Commercial publishers tend to acquire broad and long-lasting rights including audio, translation and English language reprint rights.
You may however choose to reserve certain rights. By carving these out from the primary contract, you secure the opportunity to control sub-rights licensing independently, or request that a literary agent manage these on your behalf. Imagine if you had a best seller on your hands and the film and tv rights were already bundled. Without reserving these rights, you risk missing the opportunity to maximise your revenue stream.
7. Warranties and indemnities
You should expect the contract to contain a clause wherein you represent and warrant several things to the publisher including that:
you are the sole owner of copyright subsisting in the Work;
the Work does not infringe the copyright of another person; and
the Work has not been published before in the relevant territory.
If your work is non-fiction (including a biography), there may be additional warranties, including that it does not contain material that is defamatory or infringes the right of privacy of others, or is otherwise so inaccurate that it would mislead or cause confusion. If the Work is instructional (such as a recipe book) you may be asked to warrant that the manuscript does not contain directions that, if followed, would cause harm to the reader. If you’re not confident that you can give these warranties, you should seek a risk assessment of your work.
You should also look out for a basic reciprocal indemnity clause. An author is expected to indemnify their publisher for any loss incurred resulting from a breach of the contract. However, it is not unreasonable for a publisher to indemnify you against the publisher’s use of your Work. This could include any work performed by an in-house marketing department, or a designer preparing the cover art of the book or for the publisher to not harm your reputation.
8. Permissions clearances
If your work includes any material from a third party, that is, not created by you, additional requirements will likely apply. A publisher will expect that any third-party copyright material in your work (including quotations, photographs or illustrations) has been obtained under licence. This may be expressed in the form of a warranty clause, however there may also be another section of the contract dedicated to permissions and clearances.
It is important that you identity the scope of any licence you are expected to obtain for third party material. Does your publisher expect to secure global rights or rights in one territory only? Are you expected to pay licensing fees, or is reimbursement managed by the publisher? Typically, a publisher will expect you to obtain all necessary rights to enable the work to be published in all editions, including by subsidiary rights licensees. This can be a logistical challenge depending on the scope of third party materials used.
If you are an author needing assistance to understand your obligations under a publishing contract, Harwood Andrews can help.
If you are in the business of publishing, we can develop a suite of licensing resources that can assist you and your authors to understand the responsibilities under contract, and review your existing publishing templates for compliance.
Our services at Harwood Andrews include:
publishing contracts;
contracts for freelance designers and editors;
contracts for commissioned works;
contracts for literary agents;
copyright licensing, permissions agreements and consents; and
advice relating to copyright and other IP infringement.
Harwood Andrews is dedicated to assisting creative and inventive individuals and businesses in protecting, commercialising, maintaining and enforcing their intellectual property rights.
Our team can work with publishers, agents and authors alike to manage the licensing of literary or other creative works, together the sale or transfer of copyright subsisting in these assets.
By the IP Team at Harwood Andrews - IP@ha.legal
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