Royalty step-down clause: Factors and formulas

Q: “I am trying to establish a royalty step-down clause for a very successful text. I proposed the three-edition step-down of 75 percent of contractual royalty to 50 percent to 25 percent, assuming this means, for example, when I do not participate at all, I would receive 75 percent of, say, 15 percent, then 50 percent of 15 percent then 25 percent of 15 percent. Is that correct?

My publisher astounded me by saying this means 75 percent of the full royalty, contractual rate, then 50 percent of the new, reduced, rate, and 25 percent of the latter vastly reduced rate!! Doesn’t this depart from common industry practice? It is my understanding from TAA discussions and other sources that the standard step-down is 50 percent of contractual rate, then 25 percent of the same contractual rate, followed by nothing. What’s up??”

A: Zick Rubin The Law Office of Zick Rubin, Publishing / Copyright / Trademark:

“This is a very important item. Here is a formula that is sometimes proposed by authors and that is sometimes acceptable to publishers for a successful textbook: 75 percent of the royalties (i.e., the contractual rate) in the first edition in which the author does not take part, 50 percent of the royalties for the second such edition, and 25 percent of the royalties for the third and subsequent such editions. [Read more…]

Textbook contracts: How to determine a good royalty rate offer

Q: “I’m in discussions with six publishers right now for my first book. One of them has just made a preliminary offer, including a 12 percent royalty on the first 2,000 sold and 15 percent thereafter. They also offered me a $3,000 advance against royalty to prepare a camera-ready copy over the summer. The editor has informally projected something like 2,000 books/year sold at about $90-100 per, saying it costs them $60-70 per. Here are some of my questions: 1) How common is it to have a lower percentage on the first chunk of books?; 2) Even if it sold only 1,000 at $80, 12 percent of that equals $9,600. Shouldn’t they be willing to part with more than $3,000 of it up front?; 3) How much am I saving them with a camera-ready copy? Doesn’t that cut out a lot of work for them and shouldn’t that translate into a much better deal than this? Sounds like a cookie-cutter offer.”

A: Don Collins, former managing editor at a publishing company:

“First, it is very common to offer a lower rate on the first texts published. The publisher is in business for profit and at every point the publisher wants an advantage although in your case it seems slight. Second, up front money is an expense. If the book does not sell then the publisher is out this money. But you get to keep the advance. And lastly, you may think of giving camera ready copy as saving the publisher money. It probably is. But the way publishers play the game is to take only authors who are willing to do this.

Only after your work has proven successful and you have established a reputation will you have much of a chance of negotiating better terms.” [Read more…]

Textbook succession planning: What is a reasonable royalty rate for the original author?

Q: “What is a reasonable royalty rate for an author whose name will remain on a (successful) textbook, but who wants to stop doing the revisions? What sort of language in the revisions clause can protect your heirs?”

A: Zick Rubin, The Law Office of Zick Rubin, Publishing/Copyright/Trademark:

“This is a very important item. Here is a formula that is sometimes proposed by authors and that is sometimes acceptable to publishers for a successful textbook: 75 percent of the royalties (i.e., the contractual rate) in the first edition in which the author does not take part, 50 percent of the royalties for the second such edition, and 25 percent of the royalties for the third and subsequent such editions. [Read more…]

How to divide royalties when one author retires

Q: “I’m interested in information about the division of royalties, the typical percentages for members of the author team, and the percentage for the author who is retiring from the author team. Can anyone offer advice?”

A: Paul Rosenzweig, CPA:

“As far as I have ever perceived, there are no “rules” about how co-authors or a team, divide royalties. The co-authors negotiate their own shares among themselves. I recently saw a group that had different percentages for the main text vs salable ancillaries, with varying rates among the ancillaries, presumably based on the co-author’s contributions.”

As for the share allocated to a retiring author, that’s usually designated in that author’s (earlier) contract with the publisher. Typically, the retiring author retains a declining percentage as the editions continue.” [Read more…]

What is a fair royalty arrangement when taking on textbook co-authors?

Q: “I would like to phase out of my textbooks and take on co-authors to keep them going. What is a fair royalty arrangement?”

A: Michael Lennie, Attorney, Lennie Literary & Author’s Attorney:

“I usually deal with this issue in the revised editions clause by negotiating a 60/30/15 percent provision. Under this provision the retiring author receives 60/30/15 percent of the full royalty for the first/second/third and thereafter edition in which he does not participate. Higher percentages are available depending on the number of prior editions and the reputation of the retiring author.”

Can you renegotiate your textbook contract when going into subsequent editions?

Q: “Can I renegotiate my book contract when going into subsequent editions?”

A: Steve Gillen, Attorney, Wood, Herron, Evans LLC:

“If you are the original and sole author and they really need you to prepare the next edition, and they acknowledge that, your leverage is to say no to writing the next edition if they don’t improve the offer. However, you need to be prepared to walk away, and they need to believe you will.

You get what amounts to a right of first refusal on subsequent editions. If the publisher realizes that it needs your special talents and reputation for the revision, your threat to decline the opportunity to revise may buy you some improvements in your contract. But if you say no, they can find a replacement for you and charge the cost of your replacement against your royalties, which would step down in subsequent editions.” [Read more…]

Definition of ‘camera-ready copy’ & how it could affect your contract negotiations

Q: “The contract that has been offered on a book based on my dissertation specifies ‘camera-ready copy.’ What does this mean?”

A: Michael Lennie, Authoring Attorney and Literary Agent, Lennie Literary and Authors’ Attorneys:

“The best answer is that you should ask your publisher what it means, since it might have a different meaning to your publisher than it does to other publishers. This information may be on your publisher’s website or in print form available from your publisher. Generally, camera-ready copy is the final layout of a page (or in your [Read more…]