At TAA’s 2019 Textbook & Academic Authoring Conference, industry insider Sean Wakely and royalty auditor Juli Saitz addressed some common questions authors have about what prerogatives publishers have in respect to publication decisions, calculating royalty payments, marketing, and rights, with hypothetical examples from their point of view.

Here are the questions and answers from that session, divided into five parts:

Financial

Q: Can the publisher reduce my royalties going forward because of rising costs?

A: Probably not without your agreement.
 
Q: Can the publisher stop publishing my book if I don’t agree to reduced royalties because of “rising costs”?

A: Yes. Publishers generally retain the right to cease the publication of a book for any reason.

Q: Is there a limit to the amount a publisher can deduct from my royalties for permissions or other costs?

A: Probably not. There is no limit on such deductions unless the author negotiates a cap and/or cost sharing at the time the publishing agreement is signed.

Q: Can the publisher charge me for making changes during the proofreading process?

A: Yes. In order to discourage authors from rewriting after the book has been edited and typeset, penalties for extensive rewriting at the page proof stage are outlined in most agreements. The key is to finalize the manuscript in the copyediting process and confine changes after typesetting to corrections. Other schedule delays, introduction of errors, and cost overruns will result.

Q: Can the publisher deduct costs of defending an infringement lawsuit from my royalties?

A: Generally, yes. Most publishing agreements include this provision, and publishers are unlikely to concede it.

Promotion/Marketing

Q: Can the publisher make all decisions regarding title, order of authors’ names, cover, interior design, supplemental materials, price, marketing program, etc.?

A: Generally, yes – unless you specifically negotiated approval over such elements. It’s likely a publisher will agree to “consultation” at some point. Consultation means the publisher agrees to seek your input, but it still makes the final decisions.

Q: Can the publisher charge my royalties for photo research, photo permissions, researching illustrations, permissions to use illustrations, text permissions research, text permissions, and supplements?

A: Maybe. Textbook publishing agreements generally provide for the publisher to pay such costs up front and then deduct those costs from authors’ royalties.  This is a contract term that is typically negotiated between the author and publisher at the time the publishing agreement is signed.

Q: Can the publisher require me to keep the agreement confidential?

A: Yes. This is a standard provision in most textbook publishing agreements.

Q: Can the publisher include content from the work in generic learning supplements for the specific discipline without paying royalties?

A: Maybe. This is a new area that most publishing agreements do not fully anticipate or address.  A very close read of the publishing agreement is crucial for answering this question.  Key questions include:  Are such supplements being sold?  Is the author being paid a permission fee instead of a royalty for the use of the content?

Q: Can the publisher remove the author from a project without his/her consent?

A: Sometimes. Textbook publishing agreements generally anticipate an author’s potential non-performance or death. Such circumstances allow the publisher to retain talent to revise or complete the work and charge the author or author’s estate. Even so, in most cases the author or the estate remains a party to the publishing agreement for some period or even indefinitely. Some publishing agreements allow the publisher to terminate the agreement with a non-performing coauthor when there are multiple authors involved.

Royalties

Q: Can a publisher pay a different royalty rate for digital sales?

A: Maybe. Some publishers’ agreements specify different royalty rates for digital sales and some do not.  Read a proposed contract carefully regarding this point.

Q: Can a publisher pay royalty rates that are half of the regular rate on certain sales?

A: Generally, yes. Most textbook publishing agreements provide for some reduced royalty rates on certain “channel sales” based on increased costs of exploiting those channels, deep discounts, or long-standing custom. Channel sales include sales outside of the U.S., sales to secondary to schools, remainder sales, sales to the U.S. military, etc.

Q: Can the publisher classify a sale to its benefit? Ex. Publisher sells 30,000 units, but is coded as a “special” sale and paid at a lower rate than a “regular” sale.

A: This is acceptable under most publishing agreements. The publisher is usually given wide latitude to determine the nature of a sale and what royalty rate applies. The expectation is these determinations will be applied consistently.

Q: Can the publisher cross-collect between multiple titles if I publish more than one book for outstanding advances or returned units?

A: Most publishing agreements are based on a general royalty account model. This allows the publisher to pool costs and deduct them from any author’s title under contract or any edition of the same title. This can be a point of negotiation when a contract is signed. While a publisher may agree to confine all cost deductions to the associated title, it is unlikely to limit its right to deduct old edition returns from the new edition’s royalty payments.

Q: Can the publisher pay pro rata or proportional share for the use of the work in combination with other works or when included in a database (e.g. value allocation)?

A: Yes. Industry practice for proportional shares and royalty payments based on customer works has long precedent and is generally accepted. Database models are newer, however, and industry practice is still evolving.

Control

Q: Can the publisher hire a local auditor at their own cost?  Should I agree?

A: Yes, but the author must usually agree to the publisher’s selection of an auditor. It is generally better for an author to select his/her own auditor.

Q: Can the publisher prevent me from assigning my own contract to someone else or from arranging someone else to prepare the work?

A: Yes. The publishing contract is for personal services provided by the author. For that reason, textbook publishing agreements are not assignable. Some authors subcontract with other to help write a manuscript. A publisher will usually agree if notified in advance and the terms of the subcontract arrangement are acceptable to it.

Q: Can the publisher rewrite the manuscript without my consent?

A: Not usually. Textbook publishing agreements usually allow the publisher only to make corrections for grammar, spelling, and punctuation. Review a proposed contract carefully to ensure it does not allow the publisher to make material changes to the form or meaning of the work.

Q: Can the publisher solely determine the timeline in which a new edition of the work is to be published?

A: Yes. Such publishing decisions are generally retained by the publisher and are unlikely to be conceded during the contract negotiation process.

Q: Can the publisher prevent me from publishing another work on the same subject or contributing/assisting on a competing work?

A: Yes. Most textbook publishing agreements contain a “non-compete” clause.

Rights

Q: Can the publisher create derivative versions of my work without my consent?

A: Yes. The right to make derivatives is generally transferred to the publisher in the grant of rights made by the author as part of the publishing agreement.

Q: Can the publisher refuse an audit or refuse to cooperate with an audit?

A: Maybe. Some publishing agreements do not provide for an audit. If there is no reference to an audit, the author should check applicable state laws to confirm the right to request an audit and for how many previous years.

Q: Can the publisher sell or license the rights to other parties to create derivative versions of my entire work without my consent? (including “affiliate” companies owned by the same company)

A: Yes. Most standard textbook publishing agreements contain this provision and a publisher in unlikely to concede this point.

Q: Can the publisher refuse to return publication rights if it does not plan to publish another edition, or keep the work “in print” on a technicality to avoid an out-of-print rights return?

A: Basically, the answer is “no”, but an author sometimes has to prompt a publisher to act if the publisher no longer plans to update or revise the book. Publishers can profitably make books available for much longer than in past years. Inventory can be printed on demand profitably at very low quantities and online delivery can obviate the need for print fulfillment.

Q: What is the difference between copyright and publication rights?

A: Copyright is an indication of who controls the publication rights to the work. Textbook publishing agreements require the author to convey both the copyright and publication rights to the publisher. Some authors negotiate to retain copyright, but the publisher must always receive the publication rights to function. It can complicate legal the defense of infringement if copyright and publication rights are not held by the same party.

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Juli Saitz, CPA, is a Senior Managing Director at Ankura Consulting Group. She leads the contract and royalty compliance practice at Ankura and has extensive experience serving clients including several textbook authors as well as multi-national corporation licensors. Her work in this area includes developing and implementing royalty compliance programs and performing audits of licensees around the world. Juli has helped authors and corporate clients recover millions of dollars in asserting their audit rights related to licensed copyrights, trademarks and patents. She is focused on the shift in the publishing industry to electronic content delivery methods and adaptive learning platforms. In addition, Juli has served as a damages expert in matters involving royalty disputes in the publishing industry.

Sean Wakely is Vice President of Product and Editorial at FlatWorld. Sean possesses extensive higher education publishing experience gained by working at Cengage Learning, Thomson Learning, Pearson Education, and Houghton Mifflin’s college division. He’s held positions as a sales representative, college acquisitions editor, professional books editor, editorial manager, and, just prior to founding Academic Author Advisers, was a senior executive for Cengage Learning’s global product planning team and National Geographic Learning group. He is also coauthor of Writing and Developing Your College Textbook: A Comprehensive Guide.