Derivative Works in Publishing Contracts, Part Deux!

Last week we took a look at the meaning of "derivative works" and who owns the copyright on them.

This week we'll return to John Q. Penman's contract with Fictitious Publishing Entity and see what it has to say about derivative rights:

Derivative Works. The copyrights in the Work and all derivative works created by Author belong to Author exclusively and in perpetuity. The copyrights in derivative works based on the Work which this Agreement authorizes Publisher to create, including without limitation performance copyright in sound recordings and audiobook versions of the Work will, at the Publisher's option, be owned by the Publisher, it being understood that such registration does not affect the ownership of the copyright in the Work or derivative works based upon the Work and created by Author.

Let's take a closer look.

"Copyrights in the Work and all derivative works created by Author belong to Author exclusively and in perpetuity." 

This is good language. It means John owns both the work and all derivative works that John creates.

"The copyrights in derivative works based on the Work which this Agreement authorizes Publisher to create, including without limitation performance copyright in sound recordings and audiobook versions of the Work will, at the Publisher's option, be owned by the Publisher,"

At first glance, this looks very bad, because it gives the Publisher a copyright interest. If possible, John should get this part of the language removed.

That said, note that this language doesn't grant the Publisher any independent right to create derivative works - the Publisher's copyright interest is only in derivative works ... which this Agreement authorizes Publisher to create - meaning that if the contract doesn't state that the Publisher has a right to create derivative works, this grant of copyright gives the publisher...nothing.

The key, if the Publisher refuses to remove this language, is to read the contract carefully to see what, if any, rights the Publisher has to create derivative works. If the Publisher doesn't have any rights to create derivative works, then this language doesn't actually cause a problem.

The final verdict? Remove that clause if you can, but if the Publisher insists on keeping it, read the rest of the contract very carefully to see what actual risk the language creates. If none, this might not be the deal breaker it initially appears.

Posted by Susan Spann

Susan Spann is a California publishing attorney and the author of Claws of the Cat (Minotaur Books, July 16, 2013), the first novel in the Shinobi Mystery series featuring ninja detective Hiro Hattori.

Don't Let Copyright Become Copy-wrong

Today we continue our journey through John Q. Penman's fictitious author contract with a look at the Copyright Clause, also known as the Statement of Intellectual Property Rights.

Let's see what John's contract has to say:

Copyright. Copyright in and to the Work belongs to the Author solely and exclusively. Publisher will register the copyright in the Work with the United States Copyright Office, in Author's sole name, within three (3) months after initial publication of the Work, and Author hereby authorizes Publisher to make such registration on Author's behalf. Publisher will print a copyright notice, in the form authorized under U.S. law, in all copies of the Work printed and/or distributed by Publisher pursuant to this Agreement.

Finally, a simple one!

This paragraph has three operative provisions, none of which present an issue for John:

1. John (the Author) - and John alone - owns the copyright to the Work. It's nice to have a straightforward statement of copyright ownership, to ensure that everyone knows who owns the work.

2. The Publisher will register John's copyright with the U.S. Copyright office within 3 months after initial publication of the Work. This means the Publisher will handle the copyright filing and pay the filing fee (it's minimal, but it's nice to have someone else take care of this formality).

Registration with the copyright office is not required to establish or create a copyright in creative works, but registration is required in order to recover certain statutory damages for copyright infringement. (In English: You don't have to register your work to own a copyright in it. However, you get a lot more money, and the right to recover attorney fees, and some other benefits, if you do formally register your copyright.)

3. The Publisher will print a copyright notice in all copies of the Work printed and/or distributed under the contract. This means the books will contain a notice similar to: "Copyright (c) 2013, John Q. Penman."

This is a fairly standard copyright paragraph. As an author, you should look for a paragraph containing all three of these features in any publishing contract you're asked to sign. Some smaller publishers may expect the author to register the copyright - and although most traditional publishers handle the copyright registration, that alone isn't necessarily a reason to lose the deal.

That said, any contract that attempts to transfer copyright ownership to the publisher (in part or in whole) is inappropriate and not something an author should sign.

Do you have questions about copyright or copyright ownership? Feel free to ask in the questions!

Posted by Susan Spann  
 
Susan Spann is a California publishing attorney and the author of Claws of the Cat (Minotaur Books, July 16, 2013), the first novel in the Shinobi Mystery series featuring ninja detective Hiro Hattori. 

Royal(ty) Pains, Part 2: Show Us the Money

Happy Valentine's Day, everyone! I hope your day is filled with love.

And since nothing says "love" like Legalese (I hope you know I'm kidding) ... let's dive back into the royalty language in John Q. Penman's deal....

You may remember John's (fictitious, and highly simplified) royalty paragraph from last week:

Royalties. Throughout the Term of this Agreement, and as long thereafter as necessary for Publisher to report all sales of the Work made prior to termination hereof, Publisher will pay Author the following royalties ("Royalties") on Publisher's sales of the Work:
        a. Hardcover. On Publisher's sales of hardcover editions of the Work, if any, except as specified elsewhere in this Agreement, ten percent (10%) of the list price on all copies sold.
        b. Paperback. On Publisher's sales of paperback editions of the Work, if any, except as specified elsewhere in this Agreement, eight percent (8%) of the Publisher's list price on all copies sold.
        d. ebooks. On Publisher's sales of ebook editions of the Work (including without limitation all electronic, digital, and downloadable versions of the Work), if any, except as specified elsewhere in this Agreement, ten percent (10%) of the Publisher's list price of all copies sold.
        e. Audio Editions. On Publisher's Audio Editions of the Work sold in physical media form (e.g., on CD), if any, except as specified elsewhere in this Agreement,ten percent (10%) of the amount received by the Publisher on sales of the Work. With respect to exploitation of Publisher's Audio Editions by means of transmission, uploading, downloading, broadcast or similar means or methods other than sales in physical media form, if any (and except as otherwise specified in this Agreement) twenty percent (20%) of the amount received by the Publisher. 

In last week's post, we talked about the difference between gross royalties and net royalties, and how glad John is that his contract contains a gross royalty provision.

With that settled, let's look at the second point of concern: percentages.

Royalty percentages vary based on the publisher, form and format, territory, type of rights, and sometimes even the number of copies sold. 

Generally speaking: hardback and "trade paperback" pay higher than mass market paperback, and ebooks pay highest of all. Subsidiary and foreign rights pay at varying percentages, and IF you let your publisher keep subsidiary rights like film and television (Note: don't do this if you can avoid it) the author's share should be far higher than the percentages applicable to sales of books (and ebooks).

Current industry tolerances for traditional publishing deals run somewhere in the 10-15% range on hardback, slightly lower on trade paperback, 6-9% on mass-market paperback ... and 25% (or, rarely, more) on ebooks. (The numbers are higher in independent publishing - more on this in a minute.)

Do you see the problem in John's royalty language? Look again.

His publisher offered only ten percent on ebooks.

John should counter the publisher's offer by asking for at least 25% of ebook revenues.  He should also ask for language stating that if the publisher's average (or "standard") ebook royalty percentage rises above 25%, John's royalties will also increase to an amount equivalent to that higher standard percentage. (The automatic increase isn't a deal-breaker, but a publisher who won't come up to at least 25% on ebooks probably isn't one John wants to sign a deal with.)

John might also want to request escalation clauses, which increase John's royalty percentage at various sales thresholds. For example:

Hardcover. On Publisher's sales of hardcover editions of the Work, if any, except as specified elsewhere in this Agreement, ten percent (10%) of the list price on the first five thousand (5,000) copies sold, twelve percent (12%) of the list price on the next ten thousand (10,000) copies sold, and fourteen percent (14%) on all copies sold after the first fifteen thousand copies.


Not all publishers will agree to escalation (and not all escalations will be this high), but it's not a bad thing to ask for if the publisher is open to discussion.

The Indie Publishing Question: A better deal?

Some authors point to traditional royalty percentages and ask, "Can't I make more money self-publishing?"

The answer is ... Yes, and no, and maybe.

Yes, if you look only at gross royalty percentages. Self-publishing generally grants the author a higher percentage of revenues than publishing via the traditional path.

No, because self-published authors incur additional costs along the way - costs like editing, cover art, trademark registration, and the share of the marketing (even if small) which would otherwise be covered by a traditional publisher.

Also: independent authors without a platform often have a more difficult time selling books (at least initially), and a higher royalty percentage may not even out if the author's book sells fewer copies than it would with a traditional publisher's name and distribution behind it.

However, an independently published book which sells an equal number of copies at an equivalent price point will usually earn the author more money than a traditionally-published author receives.

Ultimately, the choice between traditional and independent publication has more to do with author preferences than with money. Both are viable options, and both can result in success - or failure - depending upon the author, the book, and the buzz surrounding the title. 


Note also that independent authors sign contracts too - with publishing houses, printers, and with Amazon or other publishing venues. Those contracts (sometimes disguised as "Terms of Service" - but make no mistake, it's a contract) have similar clauses to those in traditional publishing deals, so authors of all stripes have very good reason to read and understand the legalese.

What are your thoughts on royalty percentages? Do you have questions about royalties, percentage-based or otherwise? I'd love to hear your thoughts in the comments.



Posted by Susan Spann 

Susan Spann is a California publishing attorney and the author of Claws of the Cat (St. Martin's / Minotaur, July 2013), the first novel in the Shinobi Mystery series featuring ninja detective Hiro Hattori.