Textbook contracts: How to determine a good royalty rate offer

Tips of the Trade ImageQ: “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?

Tips of the Trade ImageQ: “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.

This can be an actively negotiated item on both sides. The negotiations reflect a number of factors, including: how successful and established is the book?; how valuable will it be for the publisher to continue listing the original author as ‘author’?; what would be fair and attractive royalties to attract an excellent new author or authors to take over the book? (the publisher will typically be reluctant to expand the total royalty pot); will the initial author play any continuing role as a consultant or in marketing?”

A: Kevin Patton, TAA Member:

“When researching a succession agreement between myself and a coauthor, Richard’s formula of ’50 percent, 25 percent and out’ was by far the most common type of formula that I ran across.

I think the continued use of your name does pose some potential risks, which I’d never really fully considered before seeing it on the listserv here. Not only that, but will you have any input into the selection of a succeeding coauthor? A wrong move there could be disastrous, I would imagine.”

A: Michael Lennie, Lennie Literary & Authors Attorneys:

“Kevin, You are right, 50/25 percent is the most common, but I would encourage all authors in third or beyond edition to bargain for a 60/30/15 percent with the 15 percent ”evergreen’ (i.e., to apply to third and subsequent editions not participated in by the author.

I take slight issue with my friend and colleague Dr. Hull’s suggestion of the phantom author problem. That issue is present when ‘name authors’ allow themselves to be represented as the author of a book without contributing original content. This is not the same as an author who has developed a book over 2-3-4-5 editions and then retires – ethically or commercially.”

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?

Tips of the Trade ImageQ: “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?

Tips of the Trade ImageQ: “Can I renegotiate my book contract when going into subsequent editions?”

A: Steve Gillen, Attorney:

“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.”

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

“You can put in the revision clause in the original contract that the contract is negotiable in the next edition. This is very difficult to do, but could be done.

You should also include a phase out clause whereby the author would receive 50 or 60 percent of the royalty if he or she did not participate in the next edition, 25 or 30 percent of the royalty if he or she did not participate in the next edition thereafter, and 10 or 15 percent if he or she did not participate in all subsequent editions thereafter.”

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

Tips of the Trade ImageQ: “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…]