Reading a publishing contract: the grant of rights is the whole document

The grant of rights is the whole document

The normal shape of a trade publishing deal is a licence: the author keeps copyright, and grants the publisher an exclusive right to publish the work in named formats, in a named territory, for a stated term. Everything the publisher can do flows from that sentence, and everything it cannot do is whatever the sentence left out.

What should not appear is an assignment. A clause transferring copyright, or calling the work a work made for hire, moves ownership permanently; after it the author needs permission to reuse their own book. Some publishing genuinely works that way — work-for-hire series fiction, ghostwritten and reference titles — and the price should reflect it. For a book under the author's own name it is the wrong instrument. Exclusive versus non-exclusive licences covers what the words in a grant clause do, and who owns the work covers when an IP assignment is the right document instead.

The advance, and what earning out actually means

An advance is a payment against royalties the book has not earned yet. It is normally split into instalments — on signature, on delivery of the manuscript, on acceptance, sometimes on publication — which means the headline figure is not the cheque.

Royalties then accrue against it. Until they exceed the advance the author receives nothing further, and the statements show a negative balance shrinking. A book has "earned out" when the balance turns positive. Most do not, and that is not a default: once published, the advance is normally non-refundable. Earning out matters for the next deal, not the last one.

The royalty base moves more money than the royalty rate

Two contracts can both say ten per cent and pay very different amounts, because they are ten per cent of different things. List price is the cover price. Net receipts is what the publisher collects — and publishers sell to the trade at discounts commonly in the 40 to 55 per cent range.

Neither base is a trick, and net receipts is standard at many reputable presses. The failure is comparing offers on the percentage alone. Two further clauses do quiet damage: the deep discount royalty, which drops the rate on sales above a stated discount threshold, and the definition of net receipts itself, which decides whether shipping, taxes and distributor fees come out first. Ask where the deep discount threshold sits, and have the permitted deductions listed exhaustively rather than described.

Ebook royalties are almost always a percentage of net receipts, commonly around a quarter. Print rates often escalate after stated sales thresholds — where they do, check the thresholds are reachable for a book of this kind rather than notional.

Delivery and acceptance: where a signed deal can still unwind

Most contracts condition the delivery instalment on a manuscript "satisfactory to the publisher in form and content", judged in the publisher's sole discretion. Read literally, that turns a publishing agreement into an unpaid option: the house can decline the finished book for a change in the market, a departed editor, or no stated reason.

It compounds with the repayment term. Standard drafting requires the advance to be repaid in full before the book can be published elsewhere, so the manuscript is frozen until someone finds the money. The Authors Guild's position, and the fairer drafting, is threefold: acceptance measured against the agreed proposal rather than taste, written editorial notes plus a real chance to revise, and repayment out of first proceeds rather than up front.

Subsidiary rights: which to grant, which to keep

Subsidiary rights are everything that is not the publisher's own edition: translation, book club, serial, film and television, merchandising, audio. Where granted, income is split, and the split varies enormously by right.

Audio deserves extra attention because the contracts have not caught up with the money. If audio is granted, tie it to performance: the publisher produces an audiobook within a stated period, or the right reverts. A granted right that is never exercised is worth nothing to the author and costs the publisher nothing to hold.

The option clause on your next book

Nearly every trade contract has one. A benign version gives the publisher a first look at the next book and a limited window to negotiate. A punitive version ties the author up for years.

• The right to negotiate, not to publish. The option should give the house an exclusive window to agree terms, not an entitlement to the book.
• Never "on the same terms". Exercising on the first contract's terms removes all negotiation over a book whose subject, length and prospects are not yet known.
• No last refusal. A right to match a competing offer after passing makes the book close to unsaleable elsewhere; nobody bids against a topping right.
• On a proposal, not a finished manuscript. An option that opens only on delivery of the completed next book can freeze a career for years.
• On a clock. Stated days to decide, a further period to agree terms, and silence counting as a pass.

Why "out of print" stopped meaning anything

The traditional reversion clause returned the rights once the book was no longer available through normal retail channels. Print-on-demand and ebooks ended that. A title listed on a retailer's site and printed one copy at a time is available forever, so on the old wording it never goes out of print and the rights never come back.

The answer major publishers have accepted is a financial trigger inside the definition. The Authors Guild recommends a royalty threshold rather than a sales threshold, because units sold at deep discount generate copies but very little money for the author; figures around $150 to $300 across two consecutive royalty periods are the sort in use. The principle outlasts any figure: the test should be whether the book is still earning, not whether it is still listed.

Two details are worth fixing while the clause is open. Reversion should cover every right granted, not only the print edition, or the publisher keeps audio and translation on a book it has stopped selling. And it should say what happens to sublicences already granted: they continue and are accounted for, or they terminate on notice. Where a publisher simply stops responding, the obligation is contractual and a breach of contract notice is the first formal step.

The backstop the contract cannot remove

For grants made on or after 1 January 1978, US copyright law lets an author — or, after their death, a defined group of heirs — terminate the transfer whatever the contract says. Termination takes effect during a five-year window beginning 35 years after execution, or, where the grant covers publication, 35 years after publication or 40 after execution, whichever ends earlier. Notice must be served between two and ten years beforehand. It does not apply to works made for hire, which is one more reason not to sign a clause calling your book one.

It is a genuine safety net and a poor plan. The window opens decades away, the formalities are unforgiving, and by then the book has earned whatever it was going to earn. The clause that decides how this contract really ends is the reversion clause, and it is negotiable now, in the same conversation as the advance — where it costs a paragraph rather than thirty-five years.