What's in this heart-to-heart?

 

So you’ve received an offer for your book from a publisher. Congratulations!  It’s a very exciting time. But it can also be somewhat intimidating, too. How do you know if you’re getting the right advance level? How do you know if the royalties are standard (or better than standard)? And what in the world are subrights? Well, if you have an agent, they can answer these questions for you, of course. But if you don’t, you likely are turning to resources online or asking friends.

There are a number of resources online that talk about advances and royalties, and Sooz and I are also talking about these things, too. But not as many posts breakdown subrights. So I will do my best to do so here in a digestible way.

One of the basic fundamentals you should understand is what your manuscript represents. Your manuscript that you worked very hard on for a very long time is YOUR intellectual property. And as the creator of that manuscript, you are the copyright owner.

Your intellectual property can be exploited by you in many ways. You can take that manuscript and create a video game from it. You can take that manuscript and make it a movie. Or an audiobook. Or a webseries. You can sell it to be translated into different languages. You can take quotes from within that manuscript and put those quotes on t-shirts and sell the merchandise. And there are other ways, too! But the two most common ways to exploit a book manuscript first is by licensing the publication rights to a publisher, or by self-publishing the book yourself.

If you self-publish your book in the English language, then chances are, the only rights you’ve exploited are English language digital publication rights. It’s possible you are also printing paperback copies of the book at your own cost. And if that’s the case, the rights you’ve exploited are English language, digital publication rights and paperback publication rights. But that’s usually it.

If you license your publication rights to a publisher, however…they ask for a LOT more than just English language digital and paperback publication rights. In fact, the very base rights that a publisher will insist on having are typically:

I could spend an entire post on almost any one of these rights, so I won’t get into the nitty gritty about each of them. But what I want you to know is that you don’t need a book publisher to exploit these rights. These are different rights that can be exploited by YOU as the copyright holder. And while publishers are very good at publishing books, they are not known for making movies or building theme parks or even creating merchandise. So I urge you to consider very carefully whether or not you want to license them any of these additional rights.

I’ll tell you right now, the rights I won’t even consider as part of a discussion with a book publisher when they are making an offer for an author’s book are:
Merchandising & Commercial rights

If a publisher wants these rights, they can make a separate offer for them, just like any other licensee. And when they make that offer, they should have a history of doing that thing well, and a plan to present that shows how they will execute those rights for your property.

The rights that I very rarely consider granting, but sometimes do (depending on the project and the publisher and the offer level) are:

And in the instance we do consider granting those rights to the publisher, we negotiate royalties and “subrights splits” very clearly up front.
What are “subrights splits” you ask? Well, see—publishers actually handle publishing books. So the ebook, the hardcover, the paperback…those are all things that publishers produce themselves (they hire printers and manufacturers, but it’s all happening under their umbrella). But publishers don’t always do translation themselves, or create graphic novels themselves, or produce audiobooks themselves…in fact, there is a lot they don’t actually produce in-house. And in those instances, they will license the rights out to another company/party. And because you’ve granted them these rights, they have the right to grant them to others.

When they license these rights out-of-house (meaning, to a third party), they receive compensation. And they must split that compensation with you, the author.

I’m going to breakdown what are fair requests for these splits – Author / Publisher:

Note that I said that these are fair requests—meaning, that you can sometimes get better splits, and sometimes get worse splits, but if you ask for (or are presented with) these terms, then in my experience they are fair and should often be granted to you.

These “splits” are calculated from the net revenues your publisher receives. Please note that I said net revenue—that means it’s the monies after certain expenses are deducted (representation commissions, carry fees, bank fees, etc).

So if you granted your motion picture rights to a publisher (though I don’t recommend it!), and the publisher goes out and makes a deal with Universal Studios to option your movie rights for $100,000. This is how the breakdown of what you’re paid would work according to the fair subrights splits I recommend above:
 

$100,000 - $10,000 (film agent commission) = $90,000
$90,000 - $9,000 (publisher 10% cut) = $81,000
Author makes $81,000 on that $100,000 deal.

More commonly you see something like this: you’ve granted your publisher translation rights. They sell the book in Germany for $20,000. This is what you receive:

$20,000 - $2,000 (German agent commission) = $18,000
$18,000 - $100 (bank fees) = $17,900
$17,900 - $5,370 (publisher 30% cut) = $12,530

Author makes $12,530 on that $20,000 deal.
 

You might be thinking “Okay! I’m cool with that! It’s still $12,530 more than I had yesterday!” But there is another thing you need to take into consideration: you don’t just get paid that money. All of that money goes toward paying back your advance on your book deal. So until your advance has earned out, 100% of that money goes to the publisher.

Before I wrap up this briefing on subrights, I do have a note about audio rights:

One of the rights that more and more publishers are fighting very hard to keep these days is Audio rights. This is a growth market in the industry, and publishers see the potential for strong revenue streams for it. Revenue streams that you get a small percentage of and which also earn against your advance. If a publisher is insisting on keeping these rights (which many of them do), you should ask what their plan is for the audiobook version up front, during the initial deal negotiation. If they don’t have a plan, you should follow up and ask “if there is no plan, then why should I grant you these rights?”

I can’t promise that they’ll have a good answer for you. And even if their answer is not a good one, you still might take the offer for various reasons, and that is OK. #nojudgement However, asking these questions up front will give you a very clear idea of how they are prioritizing your book in-house. And that’s always good to know when going into business with someone.

And that concludes my subrights thoughts for the day. I hope this was helpful, all!