A Contract Primer: Subsidiary Rights
[Originally published in the magazine Romance Writers Report, January 2011.]
You’ve done it! You’ve interested a publisher in your novel. You’ve received your first publishing contract. Yep – there’s the language – the publisher agrees to print and distribute your book, maybe electronically, maybe in hardcover, maybe in trade paper or mass market paper.
But there are several more pages to that frightening legal document, pages that list endless “subsidiary rights”. Pages that make you remember vague online postings about “rights grabs”.
What does a reasonable publisher ask for, in subsidiary rights? Where does it make sense to push back? How can you make your publishing contract work best for you, yielding the most money and the greatest likelihood of building your career?
Subsidiary rights: They’re a minefield and a treasure trove, all wrapped up in fancy legal language. And you, the author, can polish what you find in that treacherous territory, challenging contract terms that are unfair, making the best legally binding agreement for you.
One brief disclaimer: This article does not constitute specific legal advice for your situation. It does not create an attorney-client relationship or any other expectation of confidentiality, nor is it an offer of representation.
Subsidiary to What?
Simply put, subsidiary rights permit your publisher to license other businesses to publish different editions or adaptations of your work. Authors receive contract-defined percentages of all money earned by the exploitation of subsidiary rights. For example, a typical contract dictates that the publisher holds the subsidiary right to distribute a novel to book clubs. In exchange for making the book club arrangement, the publisher collects 50% of the money paid by the book club, and the author gets 50% of the money.
Subsidiary rights fall into two different groups: “primary” and “secondary”. In general, publishers reserve all primary subsidiary rights to themselves. Secondary rights are less certain – the publisher might reserve them, the author might keep them, or they might be split between the publisher and the author.
Primary rights are not absolutely carved in stone; however, most agents and publishers agree that primary rights include:
- Book club: While book clubs have faded in popularity with the advent of online booksellers who can convey specialized material to far-flung readers, several of these specialty publishers continue to exist. Typically, primary publishers submit manuscripts or advance readers copies to book clubs, hoping to entice a purchase. Book clubs then pay a lump sum for the right to reprint the material, often in a different size, with different cover art. While book club rights usually do not pay substantial money, they provide a substantial amount of prestige and publicity.
- Reprints: Reprints come in a variety of sizes and shapes. They might include deluxe editions, large-print editions, illustrated editions, and other special-format versions of a book. (Traditionally, paperbacks were treated as reprints of hardcover books; however, the majority of romance publishers purchase paperback and hardcover rights at the same time, removing paperback from the category of subsidiary right “reprints”.)
- Second periodical: This publication in a magazine occurs after publication in book format. Second periodical rights might include serialization, digest form, abridgement, condensation, or excerpts being published in one or more issues of a periodical.
Secondary rights typically include:
- First periodical: This publication in a magazine occurs before publication in book format. In rare cases, a novel has been serialized completely before it is sold to a publisher to appear as a book. In those circumstances, first periodical rights are excluded from the agreement entirely.
- Dramatization: Books can be adapted for performance in a variety of ways, including as a stage play, a musical, a feature motion picture, a made-for-TV motion picture, a television series, or a radio broadcast. Each of these rights can be negotiated on a separate basis.
- Foreign translations: Some foreign translations can also be restricted by territory (e.g., Portuguese rights for Portugal, separate from rights for Brazil).
- Commercial exploitation: This catch-all category includes a variety of uses, such as toys, video games, and the creation of amusement parks.
Most contracts do not explicitly divide subsidiary rights into primary and secondary categories. Rather, experienced negotiators know that primary rights can almost never be negotiated, while there is – at least in theory – room for negotiating secondary rights. Alas, that bargaining space is increasingly limited; many publishers now refuse to give back any subsidiary right (yes, even the one to create an amusement park.)
Divide and Conquer
The savvy author attempts to negotiate each of these subsidiary right individually, making separate decisions based on market size, market penetration of the publisher, and potential value of the right. For example, an author might conclude that it is in her best interest to leave dramatization rights with a publisher that is co-owned by a major media corporation (where, presumably, the publisher has strong contacts with the movie-making arm of the company), even while she demands separate treatment for the creation of a line of action figurines (where, presumably, the media corporation has no special expertise.)
Foreign translation rights require specific attention from an author (assuming that they are negotiable at all; some large publishers absolutely refuse to separate any foreign rights from the domestic rights they purchase.) Authors must weigh the likelihood that their work can sell in foreign markets. Most authors will conclude that they would rather be paid multiple times for the same work (e.g., once for United States rights, again for United Kingdom rights, and yet again for Australia/New Zealand rights, rather than one single payment for “English-language” rights). Occasionally, though, publishers have such strong international partners that authors choose to sell all of their rights at once, trusting the publisher to develop the project internationally. Only familiarity with the marketplace and knowledge of individual publishers’ track records will aid authors in making this evaluation.
To Thine Own Self Be True
Subsidiary rights form a complicated network of potential income for authors. Nevertheless, many people skim over them when evaluating publishing agreements, simply accepting the long laundry list of rights granted, without challenging that “rights grab” or negotiating additional payment. By negotiating each specific right, authors can add substantially to their bottom line.
Laundry List of Subsidiary Rights
The following partial list of subsidiary rights is culled from a handful of contracts from various publishers:
- Amusement park or theme park
- Audio use
- Book club
- Direct-to-Consumer sales
- Dramatic stage play
- First Serialization
- Graphic adaptation
- Interactive and multimedia electronic and/or digital use
- Internet and online use
- Large print
- Motion picture (feature film)
- Motion picture (pay per view)
- Motion picture (video on demand)
- Radio broadcast rights
- Second Serialization
- Strip cartoon
- Television (free)
- Television (pay)
- Television (pay per view)
- Television (syndication)
- Television (video on demand)
- Video games