Contracts, rights, and royalties
A book contract is the document that decides what an author earns, for how long, and under what conditions the book can ever come back. The Authors Guild has campaigned on several of its standard clauses and has published its objections, which makes this one of the few corners of publishing where an author can read a specific critique of the terms they are being offered. We are editors and not attorneys, and every answer here reports what named sources say rather than advising on a contract.
What am I signing away?
A grant of rights, a set of warranties, and usually a term. The grant says which rights the publisher may exploit and in which territories and languages. The warranties are promises about the manuscript itself.
The Authors Guild sets out what those warranties typically say. The author promises that the book does not infringe anyone else's copyright, does not invade another's privacy, and is not libelous. Some contracts add that it contains no matter otherwise contrary to law.1 The indemnity attached to them requires the author to cover costs and liability whether or not a claim is valid, and whether or not the author knew.1
The Guild asks publishers to limit warranties to the author's actual knowledge and to cap liability against the author's earnings from the project.1 Whether a particular contract does either is a question for the person reading it.
What rights should I keep?
The ones the publisher will not actually use. A right granted and left idle earns nothing and cannot be sold elsewhere. That is the argument behind the Authors Guild's proposal that subsidiary rights unused within eighteen to twenty-four months of publication should revert to the author.2
The rights most often worth examining separately are translation, audio, film and television, and serial. Whether a publisher can exploit them depends on its own arrangements rather than on the size of the house.
The question to put to a publisher is concrete rather than adversarial. Asking what they have done with audio rights on comparable titles produces an answer an author can weigh. An inability to answer is itself informative, and it costs nothing to ask before signing.
What is a reasonable advance, and what if there is none?
No published figure exists, and advances vary by category, house, and author record to a degree that makes averages meaningless. Anyone quoting a normal advance is describing their own experience.
What an advance actually is matters more than its size. It is an advance against royalties, recouped from the author's earnings before any further payment, and it is normally paid in installments tied to signature, delivery, and publication.
A contract with no advance is not automatically a bad contract, and it removes one protection. An advance is the only money an author is certain to receive, because royalties depend on sales that may not happen. A house with nothing at stake also has less of its own money to recover.
How do royalties work, and when am I paid?
A royalty is a percentage, calculated either on the retail price or on the publisher's net receipts. The difference between those two bases is larger than most differences in percentage, because net receipts are what the publisher gets after the retailer's discount.
Electronic royalties have their own history. Writing in July 2015, the Authors Guild described the standard ebook royalty as 25 percent of the publisher's net receipts, and argued that a fifty-fifty split of net proceeds is the fair rate.3 The same piece records that from the late 1990s to 2004 rates varied widely, with many publishers paying 50 percent of net receipts, before the industry settled on the lower figure.3
Payment timing is set by the contract and is usually semiannual, with a reserve against returns held back. Where an agent collects, the Association of American Literary Agents requires members to pay clients within ten business days after clearance and no later than twenty-one days unless otherwise agreed.4
What is an option clause, and should I accept one?
An option clause commits the author's next book, or next book in a category, to the same publisher on some stated basis. Publishers want them because a successful first book makes the second more valuable.
The variables are what triggers the option, what the publisher must do, and how long the author waits. An option on the next work of any kind is broader than an option on the next novel in the same series. An option requiring the publisher to respond within thirty days of delivery is different from one with no deadline.
Whether to accept is a negotiation rather than a principle, and it is exactly the kind of clause an agent or a lawyer earns their percentage on. An author reading a contract alone should at minimum know which of those three variables their clause leaves open.
Should an author keep audio rights?
Informed people take both positions on this. Keeping the rights lets an author license audio separately, and audio production is now within reach of an independent author in a way it was not a decade ago. It also leaves the work of finding a licensee with the author.
Granting them to the publisher means somebody with existing relationships is responsible for exploiting them, which matters if the author has no intention of doing it themselves. A right held and never used is worth nothing.
The Authors Guild's position points at a middle path rather than at either extreme, since it asks for unused subsidiary rights to revert after eighteen to twenty-four months.2 A grant with a use-it-or-return-it clause gives the publisher its chance and gives the author the right back if nothing happens.
Do I need a lawyer or an agent to read this?
One or the other, and the two do different jobs. An agent knows what terms are currently obtainable from that publisher, which is market knowledge rather than legal knowledge. A lawyer knows what the words commit the author to.
An agent is paid by commission on the deal, which aligns their interest with the size of it and gives them a stake in the relationship continuing. The Association of American Literary Agents requires a full, clear, and honest accounting of services, fees, charges, and commissions before work begins.4
Reading it alone is the option that goes wrong quietly. The clauses that cause trouble later are rarely the ones that look alarming on a first reading, which is precisely why a second reader helps.
What happens if the publisher does nothing with the book?
Nothing happens, unless the contract has provided for it. That is the situation the Authors Guild's campaign on contract terms addresses: a contract lasting the life of copyright, which is the author's life plus seventy years, effectively ties the book to the publisher forever.2
The mechanism that used to release a neglected book was the out-of-print clause. The Guild argues that print on demand and permanent ebook availability have made it inoperative, because a publisher can keep a book technically available while selling almost none.2
The Guild's proposed replacement is a revenue test rather than an availability test, with rights reverting if the book fails to earn a stated minimum each year.2 Whether a given contract contains anything similar is the thing to check before signing, and the answer is usually in a clause nobody reads twice.
Can I get the rights back?
Sometimes, by one of three routes. A reversion clause returns the rights if the contract has a workable one, negotiation may return them if it does not, and statutory termination returns them after a long wait.
The reversion clause is the first place to look, and its wording is what decides whether it functions. A clause tied to a book being available in any edition behaves differently from one tied to annual earnings, which is the Guild's argument for the second kind.2
United States copyright law also provides a termination right that becomes available decades after a grant, and the Authors Guild refers to a thirty-five-year termination window in arguing that contracts should expire well before it.2 That is a matter for a lawyer rather than for an editor, and the deadlines attached to it are strict. Every document a client sends us is treated in confidence, contracts included.
References
- The Authors Guild, Stop Forcing Authors to Take Unlimited Financial Risks, December 18, 2015. https://authorsguild.org/news/stop-forcing-authors-to-take-unlimited-financial-risks/ ↩
- The Authors Guild, A Publishing Contract Should Not Be Forever, July 28, 2015. https://authorsguild.org/news/a-publishing-contract-should-not-be-forever/ ↩
- The Authors Guild, Half of Net Proceeds Is the Fair Royalty Rate for E-Books, July 9, 2015. https://authorsguild.org/news/half-of-net-proceeds-is-the-fair-royalty-rate-for-e-books/ ↩
- Association of American Literary Agents, Canon of Ethics, revised April 29, 2022. https://aalitagents.org/canon-of-ethics/ ↩