Model Trade Book Contract

6.

Subsidiary Rights.

Publisher shall have exclusive authority to license on Author's behalf the rights in Work set forth below. On editions of the Work licensed to a third party who assumes the role and functions of a publisher in creating, producing, marketing, and disseminating its own branded editions or excerpts of the Work (i.e., not a distributor, selling agent, or retailer of Publisher's editions or excerpts), Publisher shall pay or credit to Author's account, at the time of the next regular accounting following receipt, Author's share of the net proceeds of such licenses as set forth below. Publisher shall not grant licenses for any of the following subsidiary rights: [list the rights for which permission will be required] without Author's consent, which shall not be unreasonably withheld. Publisher shall give Author at least 15 business days written notice of the terms of any proposed license (or five business days in the case of an auction for such rights). If Author does not respond to the notice within this period, Author shall be deemed to have consented to the license on the terms stated in the notice. Upon Author's written request, Publisher will provide Author with copies of executed licenses in which Author's share of the proceeds is $500 or greater.

 

 Subsidiary Rights  

Publisher’s Share

 

Author’s Share

 First Serial (use of serializations or excerpts, in newspapers, magazines, or other periodicals before publication of the Work)

 

10%

 

90%

 Second Serial (use of serializations or excerpts, in newspapers, magazines, or other periodicals after publication of the Work, and condensations, digests, and anthologies)

 

50%

 

50%

 Book Club

 

50%

 

50%

 Permissions

 

50%

 

50%

 Trade or Mass Market Paperback

 

50%

 

50%

 Other Book Publication (including, but not limited to, hardcover; large-type editions; mail order, premium, and other special editions; and schoolbook and book fair editions licenses)

 

50%

 

50%

 Foreign Rights (which may include any of the rights granted elsewhere in this Agreement, including First Serial and Audio Recording rights, even when such rights are not granted to Publisher in the Territory)

 

20%

 

75%

 Translation (which may include any of the rights granted elsewhere in this Agreement, including First Serial and Audio Recording rights, even when such rights are not granted to Publisher in the English language)

 

20-25%

 

75%– 80%

 Verbatim Text Ebook Edition  

50%

 

50%

 Audio Recording 

 

50%

 

50%

 

 

Commentary

Subsidiary rights are rights that authors grant to their publishers to license to third parties. These rights can be divided into print- and non-print-related rights. The print-related rights might include some or all of these rights: first serial, second serial, book club, permissions, trade or mass market paperback, other book publication, British Commonwealth, and translation. Non-print rights include verbatim text ebook edition, enhanced ebook edition, and audio recording. Some contracts may also include performance rights, such as television and film and related rights, and commercial/merchandising rights. Authors should retain these rights by striking-out or deleting the language granting those rights.

 

In general, most authors can expect their publishers to adequately exploit domestic print-related rights. On the other hand, many small and medium-sized publishers don't have the resources or intent to exploit both foreign print rights and non-print subsidiary rights. If an author is publishing with a small or medium-sized publisher and has an agent, the Authors Guild strongly recommends that the author try to retain both foreign and non-print-related subsidiary rights. Agents who specialize in placing performance and merchandising rights are often willing to work with unagented authors, and so reserving these rights is necessary even if you do not have a literary agent.

 

Royalty Splits

Most publishers pay a minimum of 50% of their net receipts from the licensing of domestic print-related rights. Regarding foreign and non-print rights, however, publishers tend to pay much higher license fee shares, keeping the equivalent of a commission. The splits listed in the Model Contract are fairly standard. Splits should be in the ranges noted in the Subsidiary Rights splits chart. Do not grant rights not listed in the chart unless you have a specific reason for doing so. Absent very special circumstances, you should never grant the motion picture (TV or film) or merchandising rights to the publisher—rarely is the publisher in the best position to exploit them.

    1. Copies for the Reading Disabled.

      Publisher shall have the right to license transcription or publication rights in the Work in braille or other non-book formats, without charge to licensee, specifically and only for use by the visually impaired.

    Commentary

    Section 121 of the Copyright Act permits certain organizations, including non-profit organizations and libraries, to make copies of works accessible to the handicapped without committing copyright infringement. Many publishers license such copies for free and will stipulate in the contract that they have the right to license transcription or publication for handicapped readers with no royalty going to the author.

    1. Publisher's Right to Exploit Subsidiary Rights.

      If Publisher itself exercises any of the rights specified in this Section 6 in lieu of licensing them, the royalty rates, unless specified in Section 5, shall be subject to agreement between the parties. For the avoidance of doubt, the parties hereby specifically acknowledge and agree that any license of rights set forth in this Section 6 to an affiliate (including foreign affiliates) of Publisher shall be negotiated at arm's length and on traditional terms similar to those of Publisher's comparable agreements for similar licenses between Publisher and unaffiliated companies.

    Commentary

    Some publishers will add provisions allowing them to exploit subsidiary rights themselves or with their affiliates. Since it might be difficult to agree upon a royalty rate at the outset, it is best to stipulate that the publisher must engage in good faith negotiations with you at the time it wishes to exploit a specific subsidiary right. To this effect, try to stipulate that good faith negotiations must be completed within a certain and short period of time after your publisher notifies you that it wants to exploit a particular right (e.g., 30 days). While it may be tough to negotiate, try to stipulate that if your good faith negotiations are not completed during the specified time period, your publisher would be prohibited from exploiting the desired right and should, ideally, be obligated to revert the right at issue back to the author.

    1. First Serial Rights.

      If Author has retained First Serial rights in the Work, Author will not license such rights anywhere in the world without consulting Publisher with respect to the timing and excerpt of the Work so that Publisher may coordinate publication of the First Serial and Publisher's edition of the Work.

    Commentary

    If your agent is able to place first serial rights, reserving these rights is appropriate. If you have no agent, you will only want to reserve these rights if you are confident you can place them on your own. Otherwise, you should grant first serial rights to the publisher, provided you retain a right of approval over the placement of your work. If the publisher places first serial rights, its share is customarily no more than 10%. Even when you are represented by an agent, some publishers will insist on handling first serial rights and seek a share of license fees from their exploitation.

    1. Sales to Foreign Markets.

      All copies sold by the Publisher for distribution in markets outside of the United States should be marked or stamped with a legend to the effect: "This book is for export sale only."

    Commentary

    This is a new provision that we have added to address the problem of books sold for foreign markets at cheaper prices and being imported back into the U.S. It requires publishers to stamp copies of books that the publisher knows are intended for export. The Authors Guild strongly recommends that publishers adopt this practice to curtail the number of books that publishers sell at lower prices to wholesalers for export but end up being sold in the U.S. by Amazon resellers, competing with the higher-priced domestic edition.