Model Trade Book Contract

The grant of rights section sets out all the rights under copyright law that the author is giving the publisher as well as the limits on the publisher's ability to exercise those rights. The basic rights you will see in almost every contract today are the exclusive rights (meaning the author cannot grant the same rights to anyone else or exercise them independently) to publish the book in the U.S. in English in both print book and ebook form.

Under U.S. law, copyright is a bundle of rights, including the rights to reproduce, distribute to the public, perform publicly, display publicly, and create derivative works (other works based on your work). By default, the publisher will ask for a right to reproduce and distribute, whether or not these exact terms are used. The grant of rights should be limited to the specific formats in which the publisher may distribute the work, and should ideally list specific countries and languages. Virtually all publishing agreements will include a right to sublicense the rights granted to the publisher. That means that the publisher can "sell" any of the rights it has licensed from the author to another entity. For instance, translation and foreign rights are often sublicensed, as are book club and other subsidiary rights (see Section 6).

The grant clause in the Model Contract gives the publisher the rights to (1) reproduce and distribute the book through all technologies in the defined formats and in the defined territory and languages, (2) make additional copies as necessary to create different formats and exercise the rights granted, (3) translate the book, if applicable, and (4) sublicense any of these rights to third parties. The territory, languages, and formats that the publisher will acquire are usually subject to negotiation, although some of the top international publishing companies will insist on worldwide rights.

A U.S. publishing agreement typically gives the publisher the exclusive right to distribute the book in the U.S. and Canada. Many publishers, especially larger ones, will also often seek rights in the U.K. and its territories or in all English-speaking countries; or they will seek English-language rights worldwide (meaning they can distribute the English-language version in non-English speaking countries). Large, international publishers usually ask for exclusive rights in specifically listed territories and non-exclusive rights in the rest of the world, referred to as "open markets." These "open markets" are territories in which the publisher can exploit  rights without affecting your ability to grant non-exclusive rights to another publisher. Authors should not grant English-language rights in non-English-speaking countries on an exclusive basis as doing so deprives them of the opportunity to license rights to other English-language publishers in those countries, and may even affect export sales to those markets. Some large, international publishers insist on getting worldwide rights--i.e., the right to publish the work in all languages throughout the world. If your contract contains such a grant of rights clause, you should try to restrict it to the U.S. and its territorities and Canada. If the publisher insists on a more expansive grant of rights clause, try to specifically identify the countries where you are willing to allow it to exploit the work (see Schedule A in Appendices for an example).

Before granting worldwide or broad English-language rights, review the royalties the publisher offers for sales in foreign countries (see Section 6). Remember, income received from a U.S. publisher for foreign rights will be applied against your advance unless otherwise agreed. The author's share in a typical foreign rights deal is 75% of net proceeds, unless the rights are exploited in the U.K. in which case the author's share can be as high as 80% of net proceeds. Be aware that the share of net proceeds is calculated after deducting any foreign agent commissions, taxes, and transaction fees. For example, if the publisher uses a foreign agent to sell foreign rights, the publisher will typically subtract the foreign agent's commission from  income from that license before calculating the author's share. Try to retain a right of approval, or at least a right of consultation, over any foreign affiliate sublicenses. If the publisher has foreign affiliates, be sure to seek assurances that it will deal "at arm's length" in its efforts to sell the rights and will put forth good faith efforts to attain standard royalty rates. Some publishing contracts may already contain language that obligates the publisher to deal "at arm's length" (i.e., as it would deal with any other sublicensee unaffiliated with it) with its affiliates.

The Authors Guild believes that publishers should revert any foreign rights to the author that remain unsold two (or three) years from the U.S. publication date (see Section 10). While most publishers' standard agreements do not provide for this, it is only fair to return rights that the publisher does not intend to or does not succeed in exploiting after a certain reasonable period (for e.g. two years). When the publisher fails to sell or stops trying to sell foreign rights without reverting them back to you, you and your agent lose the opportunity to exploit them on your own. We urge publishers to adopt these provisions—and authors to request such rights-reversion rights, especially if they are unsure about their publisher's long-term commitment to selling the subsidiary rights.

If you have an agent, be sure to discuss the territory clause with them. Your agent can help you extract a higher advance for a broader territory grant or, alternatively, they might be able to get higher individual advances for the foreign rights by selling them directly.

The term of the grant is the amount of time that the publisher gets to keep the rights to the book. The standard license term for traditional trade publishing deals is "the whole term of copyright" (i.e., the author's life plus 70 years). Often the effective term is much shorter—or could be if the author (or the author's heir) takes the correct steps to assert reversion rights provided for in the contract (when the book goes out of print) or termination rights (automatic for all grants 35–40 years after the grant or publication).

All trade publishing contracts should have an out-of-print clause that allows authors to reclaim their book rights and terminate the contract early if the publisher is no longer making more than negligible sales of the book. Out-of-print clauses are discussed in Section 10.

The Copyright Act provides a separate termination right to all creators, including authors, that allows them to recapture their rights under any grant of rights after 35-40 years from the date they sign a contract or the date of publication. This termination right is never mentioned in publishing contracts, and many authors are not aware they have such a right. It is an unwaivable right (meaning a contractual provision saying the author agrees not to exercise the right is void and unenforceable). This right also supersedes any other out-of-print or reversion clause in your contract. If after 35-40 years, your book is still selling, you or your heir might be able to negotiate a new advance with your publisher. Otherwise, you or your heirs can exercise your termination right under Copyright Act to get your rights back and sell them to another publisher or self-publish the book.

Note, however, that if you enter into an agreement with a publisher to write on a "work made for hire" basis, you will not have a termination right under the Copyright Act. The law deems the publisher to be the author, not you, even though you wrote the manuscript. If you are a true employee of the publisher, everything you write for the publisher as part of your employment will be a work made for hire. Outside of that, few books are eligible to be work made for hire. A piece of writing (or other work) has to fit into one of the following categories to be a work made for hire: (1) a contribution to a collective work (such as text books and treatises with multiple authors), (2) part of a motion picture or other audio-visual work, (3) a translation, (4) a supplementary work (screenplays are virtually always treated as work made for hire), (5) part of a compilation (such as an anthology), (6) instructional text, (7) a test, (8) answer material for a test, and (9) an atlas. In addition, your agreement must specify that the work is being written as a work made for hire; otherwise you remain the author even if the work falls into one of the above categories.

Information about these termination rights is provided on the Authors Guild's website. You do not have to think about termination when you enter into a publishing agreement—unless you use a loan-out company such as an LLC for your writing business. If you do, you should not have the loan-out company sign the grant. Arguably, a grant made by a loan-out company instead of an individual creator is not terminable. This issue has not yet been decided by the courts, but to be on the safe side, you should sign all publishing agreements as an individual to preserve your termination rights. If you use a loan-out for tax purposes, you can assign the agreement or the income to the loan-out after you execute it.

The Authors Guild assists members in exercising termination rights. Do not try to do this on your own; the terms about when and how to provide notice are far from crystal clear but must be strictly complied with.

The format clause includes all the ways and media in which the publisher may publish the book.

Print.

Virtually all publishing contracts today will grant the publisher the right to publish the book in physical book or "print" form (hardcover and/or paperback). The publisher might specify the right to publish in alternative print forms such as large print.

Electronic.

Almost all publishers today will demand electronic rights as ebooks have become an important part of the book market. As a general rule, the publisher should not be given the right to include audio-visual enhancements in the ebook version; such enhancements could impact your ability to exploit video, multimedia, and audio rights elsewhere. The exception, of course, is where the book is intended to be an "enhanced ebook" or where having an "enhanced ebook" edition is important to the success of the book. In such cases, ensure you are getting adequately paid for it.

Audio.

Increasingly, publishers are demanding the right to create and sell audiobooks. Most big publishers nowadays have in-house studios for creating audiobooks, and they insist on getting audio rights. While The Authors Guild recommends that authors try to retain audio rights and sell them separately for an additional advance, this may be non-negotiable for many publishers. If your publisher insists on getting audio rights, then make sure to factor their value in any advance you negotiate. Before granting audio rights, determine whether the publisher intends to immediately exploit audiobook rights. If no exploitation is specifically planned, and the publisher is unwilling to allow you to retain the audiobook rights, then try to negotiate a term of years (ideally one or two after initial publication of the work) during which the publisher must exercise audio rights either itself or through a licensee; and if it fails to do so, the rights should revert to you, the author. Audio books are becoming a much bigger part of the overall book market and authors do not want to lose out on it. There are several excellent audiobook companies that will buy audio rights directly from the author and provide a separate advance.

If your publisher requests the right to create abridged versions in audiobook format, you should have the right to approve the abridgement. It is also important that you be given the opportunity to narrate the audiobook and be paid a separate fee for doing so, or to at least approve the narrator.

The reservation of rights clause confirms that any right not specifically enumerated in the contract belongs to the author alone. Most publishing contracts have such a clause, but be sure to check. It is important that this language be included to prevent any confusion down the road, such as when new technologies or formats are created.