ISSUES TO CONSIDER WHEN LICENSING SUBSIDIARY RIGHTS
Under most U.S. book publishing agreements, the publisher acquires not only the English language book publication rights, but also acquires certain so-called subsidiary rights. Subsidiary rights typically include the right to publish foreign language editions of the book, the right to reprint portions of the book in magazines, anthologies, textbooks and other publications, the right to package and sell the book in the form of an audiobook or book on tape, the right to produce plays, motion pictures and television shows based on the book, and the right to use the book and themes, illustrations or characters from the book for various types of merchandise.
In most cases, the publisher will not exercise any of the subsidiary rights itself, but will instead seek to license those rights to others. The following is a short checklist of some of the issues for a publisher to consider when licensing subsidiary rights:
Determine Your Goals
You should determine your goals before entering into a licensing relationship, and try to structure the relationship in such a way that those goals will be met. For example:
- Do you want to use the licensing arrangement to gain increased publicity, and, hopefully, increased sales for the book, or are you simply looking for additional sources of income from other uses of the book?
- Do you want to establish an on-going relationship with the licensee, or do you view the licensing agreement as a one-time-only transaction?
- If the license is for merchandise, do you want to sell books to the licensee to be packaged with the licensee's licensed merchandise, or, conversely, do you want to purchase licensed merchandise from the licensee to package with copies of the book?
Know the Licensee
The success of any licensing transaction will depend largely on the ability and quality of the licensee. Before committing to a licensee, you should ask the following questions:
- Does the licensee have experience with the rights that you are seeking to license?
- Will the licensee be able to reach the typical channels of distribution, and will it engage in sufficient advertising and promotional efforts?
- Can the licensee meet your quality standards, not only in terms of the licensed products, but also in terms of its advertising and general business practices?
- Is the licensee creditworthy, or is there some risk that your royalties will be used to cover the licensee's other expenses, or end up with a bankruptcy trustee?
Be Sure You Own The Rights To Be Licensed
You can only license rights if the owner of those rights has expressly authorized you to do so. You can only license rights if the owner of those rights has expressly authorized you to do so. Failure to obtain all of the necessary rights before entering into a licensing transaction may subject you to lawsuits from both the licensee and the owner of the rights which you are attempting to license. Therefore, before signing any license agreement, you must determine the following:
- Does your publishing agreement with the author and/or illustrator expressly grant you the right to license the subsidiary rights in question?
- If the book contains material for which you had to obtain permissions or licenses from others, such as photographs, illustrations, music lyrics, or excerpts from other books, do you have the right to license that material for reuse by the licensee?
Licensing subsidiary rights can be a very profitable part of a publisher's business, provided the publisher takes the right steps along the way.