PUBLISHERS: A TUNE-UP FOR YOUR HOUSE PUBLISHING AGREEMENT
Publishing tends to be a relatively slow-changing industry, but there are still some new developments which publishers may want to recognize in their standard house agreements.
New Methods of Distribution
Books have always been distributed by sales of individual units, in the form of print copies or digital copies. However, there is an increasing interest in distributing books by a subscription model, much like Netflix for films. Under the Copyright Act, “publication” is defined as “the distribution of copies by sale or other transfer of ownership, or by rental, lease or lending,” and thus a grant of the right to “publish” a work should include the right to make that work available through a Netflix-type lending system. However, in order to make it clear that this right is included in the rights granted to a publisher, the agreement should specifically state that the publisher has the right to make the work available in all of the formats covered by the agreement. The agreement should also specify that making a work available under the imprint of the publisher through any lending system is a royalty-generating event, and not a license of subsidiary rights to the third party operating the lending system.
Also, the royalty section of the agreement should include a specific provision for the payment of a royalty on any distribution by means of lending. At first glance, this appears to be somewhat complex, as at this point there is no standard model for charging consumers to gain access to a work through a lending service. Alternatives include a per copy fee to access a particular work or a periodic subscription fee which would grant the user access to all of the works included in the lending service. The latter model could also allocate the subscription fee for a period: (1) to all works included in the lending system for that period; (2) to all works accessed by the subscriber for that period; or (3) based on a random sampling of works accessed by subscribers during that period (in effect, the BMI and ASCAP model for determining music royalties for radio performances). However, regardless of which model is used, the agreement can simply provide for a royalty to the author based on the amount received by the publisher.
Activities of Authors
In recent years, there have been several instances of authors providing less than accurate biographies, and as a result many publishing agreements now include warranties as to the accuracy and completeness of the biographical information submitted by the author. However, there can also be other concerns with regard to the actions of authors. For example, an author may engage in activity, whether related or unrelated to the author’s professional position, which lowers the author’s standing in the community and which thus can be expected to have a negative impact on sales of the work. If this happens, a publisher may want the right to terminate the publishing agreement and recover the advance (if the act in question happens prior to publication) or to remove the author’s name from the work (if the act occurs after the work has been published).
Also, in some cases an author may mention or even promote a product or service in his or her book. This can create an embarrassing situation for the publisher and can lower the author’s credibility if it is later discovered that the author had some connection to that product or service. Accordingly, particularly for professional, technical or other similar nonfiction works, a publisher may want to require the author to disclose any relationship which the author has with the manufacturer or distributor of any product or service cited by the author in the work.
Out of Print/Reversion of Rights
In the days of print publication and large print runs, it was usually easy to determine when to place a work out of print. As long as copies remained in the warehouse, the publisher would continue to offer those copies for sale, thus keeping the work in print. As the stock of inventory dwindled, if it was apparent that the book had essentially run its course, the publisher would not reprint, as reprinting usually had to be done in quantities of at least 1,000 copies or more. Once the existing inventory was exhausted or nearly exhausted, the publisher would declare the work out of print and the rights would revert to the author.
Changes in technology and distribution formats have altered this picture. Today it is possible to print limited numbers of copies using print-on-demand technology, and once a digital file has been created an e book will always remain in inventory and available for sale. In light of these changes, many authors are demanding that publishing agreements provide for termination and reversion of rights to the author if sales of the work fall below a specified level for two consecutive accounting periods.
This is a reasonable request, and one that most publishers are willing to agree to, but publishers should consider the following:
- The sales floor should be set at a level that matches the work. For example, if the work is not expected to sell more than 500 copies per accounting period even when first released, then the floor for termination should be lower than would be the case for a work that is expected to be a best-seller.
- Most publishers will want to specify that the floor applies to combined sales in all formats, and is not limited to print sales only.
- Termination should be optional and not automatic. An author may determine that, even if sales fall below the floor, the chances of placing the work with another publisher or realizing success by self-publishing are slim to none, and in that case the author would most likely prefer to leave the work with the publisher.
- In many cases, publishers add significant content to a work before publication. This can include cover art, introductions, conclusions, illustrations and other materials. Unless there is a transfer from the publisher to the author, the copyright in these materials will remain with the publisher, and the publisher may not want the author to be able to reuse these materials if the author terminates the agreement and takes the work to another publisher or self-publishes. If this is the case, this should be stated in the agreement, as it will make the author aware of this prior to exercising a right of termination, and it may result in the author deciding to leave the work with the publisher.
As a general rule, publishers welcome and encourage an author’s efforts in promoting a work. However, in an age of constant and instantaneous social media, an author may post or tweet something that interferes with the publisher’s publicity plans. For example, there may be cases where the publisher does not want to release (or, in the case of a licensed work, is not authorized to release) any information about a work until a certain date, or wants to limit initial promotional efforts to certain target markets. If this is a concern, the agreement should include a provision restricting any announcements, press releases or publicity for the work by the author, including by social media or the author’s blog or website, or requiring that the publisher approve any such announcements, releases or other publicity in advance.
The publishing world is not static, and publishers should periodically evaluate their house agreements to ensure that those agreements continue to meet their current and anticipated future business model.