subsidiary rights

What are subsidiary rights?

My first job in publishing was in a subsidiary rights department. I’m ashamed to admit that I accepted the job without having much idea what subsidiary rights were. Many writers may feel just as vague about this part of publishing, so here’s a quick breakdown.

When an author signs a contract with a publishing house, they generally grant the publisher ‘volume rights’ within certain territories (see the next Inside Publishing column on the English Language Publishing World). This gives the publisher the right to publish the book in certain formats. The royalties relating to hardback, paperback and sometimes trade paperback (a larger paperback format) editions will be spelt out (see Advances and Royalties).

There will be clauses in the contract covering all the other rights. These are the ‘subsidiary’ rights granted to publishers and can also be referred to as sub-leases.

If the publisher has world rights in all languages, then there will be a provision in the contract to cover translation rights, but each country would not normally be specified. This will provide for a split between the author and the foreign publisher of the advance and royalties set against each translated edition. It is now usual for the agent to retain these rights and sell them on the author’s behalf, often through a sub-agent in the country concerned.

German rights could be worth a lot if a book has been sold for a big advance in the US or the UK, as Germany has a flourishing book trade and is usually regarded as the biggest translation market. However, translation rights for a first novel in, say, Lithuanian, may be hard to sell.

In the days before ‘vertical’ publishing the hardback publisher would sell the paperback rights which could be worth a lot of money. Paperback rights are still sometimes sold, but generally the book will be published 'vertically', which means by the hardback publisher's paperback house. The author will then get the entire paperback royalty, without having to split it with the hardback publisher. The downside of is that there is often no specific further advance set against the paperback edition.

Publishers often get world English language rights in their contracts. If the publisher is American, that means they can sell British Commonwealth rights, sometimes separating out Australian rights to sell to an Australian publisher. A British publisher would be able to sell American and Australian rights, although it is more likely that they would want to distribute their own edition in Australia, often through a subsidiary company.

An Australian publisher would probably try to sell British Commonwealth rights, excluding Australia and New Zealand, to a British publisher and US and Canadian rights to an American publisher. You see why you might need an agent or someone to check your publishing contract!

Book club rights used to be worth much more than they are now, particularly in the US. Competition between the two big book club groups drove up the bidding for the club rights in many books. If the book club manufactures the book, then there is an advance and royalties to be split between the publisher and the author. But if the publisher manufactures the book club’s edition, then the author generally gets 10% of the price received by the publisher. Club rights do not earn much money for the author, on the whole.

Serial rights are divided into first serial, which is pre-publication, and second serial, which follows publication. In the UK there has been a tendency for serial rights to be retained by the agent. But publishers seem to be re-asserting control because careful placement of a major pre-publication serial can have a huge impact on the book’s sales. When more than one newspaper is interested, the bids can go quite high. At the moment though they are rather low and publishers no longer have big expectations for serial money.

In the US there is much less interest in serial rights, perhaps because of a less powerful national press.

Finally, there are other rights which are worth remembering. Audiobook rights may be worth something.

When I first wrote this article in 2002, I said that 'electronic rights and e-book rights are either the thing of the future or never going to amount to anything, depending on your point of view and which area of publishing you are in'. How much that has changed! E-book rights have become a battleground and agents are very keen to see them exploited by the publisher, and to get a decent royalty for them - and their idea of a 'decent' royalty may be 25% or 40%, or even 50%.

Large print rights can be a nice little earner, but the right to produce a Braille edition is generally granted free of charge. Permission to quote from your book for a small fee would also be granted by the publisher.

The author’s share of the revenue from all these rights is usually set against the advance, which means that it will help to ‘earn it out’. The first serial rights may be an exception to this. The author will only get a share of the subsidiary right income once the advance has earned out. Usually the only exception to this is first serial ,and (for British publishers) the American rights, which the agent and author may have agreed should be paid straight through and not set against the advance.

In some cases the subsidiary rights income earned by your book may be enormously important, so it makes sense to understand the effect of the split you are agreeing to and what the result is likely to be in terms of the income you get from your book.

Chris Holifield

Two of Michael Legat's books provide information on subsidiary rights, Writing for a Living and Understanding Contracts, but the subject is not well understood outside publishing circles. If you have to deal with a the subsidiary rights in a book contract, our Contract Vetting service may be able to help.

Other articles in the Inside Publishing series: