Written by Alyce Evans and Jennifer Tutty, Principal

It’s the moment that aspiring authors dream of. You’ve (finally) sent out your manuscript. Sleepless nights, early mornings and countless cups of coffee have gotten you to this point. Then, it all becomes real.

The publisher responds and you’re face to face with a book publishing contract.

So what do you do in the moments after the moment you’ve been waiting for? For all the talented writers, we’re here to break down the legal lingo and complex clauses of your book publishing contract.

What is a Book Publishing Contract?

Let’s go back to basics. A book publishing contract is an agreement between an author (that’s you) and a publisher, establishing each party’s rights and obligations. Under this agreement, the author provides the publisher with the rights to publish their book. The publisher provides the service of publishing the book and pays compensation to the author.

Before You Begin

Before you crack open the contract, there are a few key points to remember:

1. Make sure that all agreements are in writing

You’ve just spent a significant amount of time putting your story onto the page. Make sure the publisher does the same with your contract.

2. Understand what you are signing

Read your contract carefully. Then, read it again. If there is something that you don’t understand, do some research. Speak to other authors about what is regular or irregular in a book publishing contract. Consult with your agent (if you have one) or a lawyer. Read this guide! 

3. You can negotiate!

Although it may seem daunting at times, remember that you’ve put in the hard work and the publisher has chosen your manuscript. They want to publish your book, so don’t be afraid to negotiate. There are many professionals out there who can assist you. If you don’t want to negotiate alone, consider engaging a literary agent or an intellectual property lawyer.

What Authors Need to Know When Reading a Publishing Contract

Now, let’s move on to some of the clauses and terms you can expect to see in your book publishing contract.

1. Understanding Copyright

Australia’s Copyright Act 1968 (Cth) (Copyright Act) protects copyright in literary works.

If you don’t categorise your novel as ‘literary fiction’, don’t despair. The legal interpretation of literary is a little different. It includes books, letters, academic papers, e-books, diaries, reports and even computer programs. Therefore, your book is a literary work under the Copyright Act.

If you’ve put pen to paper or typed words into a computer, your book is likely to be protected by copyright. As the author of the work, you are the first copyright owner. 

This means that you have the exclusive right to reproduce your work in material form, publish it, perform it in public, communicate it to the public and make an adaptation of it. Additionally, if you do make an adaptation, you have all of these rights in regards to that adaptation.

2. Assigning vs. Licensing of Copyright

Tip: Do not assign your copyright to the publisher if it can be licensed instead.

Generally, authors will grant their publisher with a licence to use the copyright work (i.e. their book). However, sometimes, you will be asked to assign ownership of the copyright in your book to the publisher. When reading your contract and determining what is best for you, it is crucial to understand the difference between these two terms.

Assignment of copyright

Some contracts will require the author to assign the copyright in their novel. Any such clause must be in writing and signed to be effective. Once signed, it will significantly vary the author’s rights.

By assigning copyright, the author transfers their ownership in the copyright (and the associated rights) to the publisher. Unless the contract states otherwise, an assignment is generally permanent.

Licensing of copyright

If an author grants a licence in their work to the publisher, they give the publisher a right to publish the book. They may also grant a licence to do other things (depending on what’s in the contract). Crucially however, the author is still the copyright owner of their work.  

Additionally, licences can be exclusive or non-exclusive. When it comes to book publishing contracts, the licence granted will typically be exclusive.

In practical terms, when you sign a publishing contract that has an ‘exclusive license’, you are granting the rights set out in that contract exclusively to the publisher.

This means that you cannot then grant the same rights to another publisher. It also means you cannot exercise those rights yourself.

For this reason, it is important to understand exactly what rights you are granting to the publisher before you sign! More on this below.

3. Rights Granted

The rights being granted to the publisher in relation to your book (regardless of whether the book is being assigned or licensed to the publisher) will be outlined in the publishing contract. These may be as broad or as narrow as the law and the contract allows.

Some potential rights granted include the right to publish your book, distribute it in print and as an e-book and sublicense it to publishers overseas.

Publishing contracts also commonly include ‘subsidiary rights’ (see point 9 below for more information on these).

4. Exploitation Period (the ‘Term’)

Book publishing contracts will generally refer to a ‘duration’ or ‘term’ during which the publisher can exercise its rights in the book. If you’re granting a licence, this is how long the licence will last.

An exploitation period / licence term could be as short as 5 years or as long as the ‘life of copyright’ in the book. A common ‘meeting in the middle’ sets the term at 15 – 20 years from the date of first publication.

As a starting point, publishing contracts often set the term of the licence as the life of copyright in the work. But what does this mean? In Australia, copyright in a literary work (a book), generally lasts for the life of the author (i.e. your whole life) plus 70 years after their death.

Consider whether this is something you want to negotiate with your publisher.

5. Territory of Use

A territory of use clause determines who (out of you and your publisher) holds what rights and where. For novelists in Australia, the contract is likely to define the territory of use as either:

– Australia;

– Australia and other countries; or

– Worldwide.

There are advantages and disadvantages to each of these options. Ultimately, the best choice for you depends on your publisher, your goals as an author and your own connections.

If the territory of use is ‘worldwide’, take a look at your publisher’s international presence. Do they often publish works internationally and are these successful? If so, it may be beneficial to grant them worldwide rights so that you gain access to their international connections and resources.

Alternatively, is your publisher popular nationally but still looking to break into the international market? Do you have your own overseas connections you can utilise? If so, you may want to consider limiting the territory of use (to just Australia, or Australia and a few other countries). Doing so grants the publisher the right to deal with the work in Australia or other select countries. However, it also allows the author to enter contracts with other international publishers.

6. Delivery Clauses

A delivery clause sets out the date when you must ‘deliver’ the final copy of your manuscript to the publisher.

Take careful note of this date, as well as any other requirements for delivery. These may include things such as required fonts, line spacing, file type and who to send your manuscript to.

Not delivering your work on time (or failing to comply with delivery requirements) can have serious consequences for an author. Your contract is likely to state what happens if you don’t comply with this. Often, non-compliance will allow the publisher to terminate the contract and you may need to pay back any advances.

7. Royalties

Royalties are payments made by a publisher to an author, in exchange for the right to publish their book. Each time someone buys your book, you make money through royalties. Typically, royalties are expressed as a percentage of either:

– The recommended retail price (RRP) of your book (excluding GST); or

– The net receipts (which is generally calculated from the trade price of your book).

What is the difference between RRP and net receipts?

The RRP is what customers will pay for your book in bookstores. The standard royalty rate for print books in 2021 was 10% of the RRP of each book sold.

The net receipts, is generally calculated from the trade price (a discounted price) that booksellers and distributors will pay the publisher to purchase the book. This price will generally be a lower price than the book’s final RRP.

For this reason, 10% of net receipts is not the same as 10% of the RRP.

This is an important distinction to understand when reading your publishing contract. Neither is better or worse than the other, they are simply different calculation methods. You may also see both in your contract, as e-book royalty rates are often set out as a percentage of net receipts.

Understanding the difference between RRP and net receipts can help you decide whether you are comfortable with the royalty rate offered.

8. Advances

An advance is a sum of money that the publisher pays the author upfront or when certain events occur. Such events often include signing the contract, delivery of a complete manuscript and the first publication of the book.

Typically, the author will not receive any royalties until the publisher has recouped the advance amount through book sales. So, if you are paid a $10,000.00 advance, you won’t start earning royalties until the publisher has made this back through selling your book.

When considering an advance, find out the initial print run planned for your book (i.e. how many copies will be printed) and the RRP. This will help you to understand when you can expect to receive royalties and whether the advance is appropriate.

9. Subsidiary Rights

Subsidiary rights are all additional ‘special’ rights granted to the publisher other than the usual ones like publishing the book as a hard copy book or e-book. These can include audio book rights, film and television rights, or the right to create merchandise in connection with the book.

Determining how you will allocate subsidiary rights is a strategic and commercial decision.

Tip: Try to retain as many subsidiary rights as possible (within reason!). You can always negotiate and grant these additional rights to the publisher at a later date.

10. Creative Control and Approvals

When considering your contract, think about how much creative control you want to have over what the publishers can do with your manuscript. This includes the title, cover design and marketing strategy for the book, as well as subsidiary rights and uses such as merchandising, adaptations and film rights.

Do you want to be consulted and included in a collaborative process? Are you happy for your opinions and preferences to simply be taken into consideration? Or, do you want your approval to be required at each step?

Different people will hold different values and opinions about what is important to them. If the title and cover design of your book is non-negotiable for you, then make sure to read your contract carefully to determine what your rights are.

Remember, publishers engage professionals to work on these matters and you all have a common goal – to publish your book. Where possible, maintain balance between this goal and the value you place on retaining creative control. To enable the agreement to move forwards, be clear with your publisher about what you want and what you are willing to compromise on.

11. Publishing Options over Subsequent Works

Planning to write more books and build your literary empire? Time to take a look at this clause.

A clause in your publishing contract referring to ‘publishing options over subsequent works’ will be triggered when you write your next book. This clause typically gives your publisher the ‘first option’ to publish your next book. Depending on the contract terms, this may be limited to your next book in the same series or genre. Alternatively, it may be broad and include whatever you write next.

While the idea of writing more books may be an exciting one, consider the binding nature of this clause. Generally, it doesn’t mean that the publisher has to publish your next book. It means that you are legally bound to offer it to them before anyone else.

This means that you cannot sell the rights to subsequent books to a different publisher, unless your current publisher has given permission for this or been given the first option.

Be careful with this clause.

If the publisher has the ‘first option’, you are also unable to publish the work yourself. This will restrict you from self-publishing your next work, sharing it with friends or family or entering it into competitions, until after your publisher has made a decision on it.

12. Moral Rights

In addition to copyright, all authors have moral rights relating to their work. These cannot be assigned to anyone else. However, they may be varied by a contract.

An author’s moral rights include the right to be attributed as the author of their book. This also extends to the right to not have the work falsely attributed to someone else. Additionally, authors have the right to take action if their work is treated in a derogatory way.

Tip: Carefully read any moral rights clauses to make sure you are properly attributed as the author and that you retain the right to integrity. 

In Conclusion

When the initial excitement of receiving a publishing contract simmers, remember: take your time to read it carefully, understand what it means and be prepared to negotiate. We look forward to seeing your novel in bookstores.

Written by Alyce Evans and Jennifer Tutty, Principal

First published 17 March 2022. Updated 27 April 2024

Further Information

If you have any legal questions relating to publishing (such as assistance with a publishing contact, a pre-publication legal review of your work, or defamation law or copyright advice), please contact us through our online form or via email at hello@studiolegal.com.au.

Looking for more? Check out our blogs:

– When Fact Inspires Fiction: How to Avoid Defamation Claims as a Writer.

– 9 Common Mistakes People Make About Copyright.

– Moral Rights 101: A Guide for Creatives.

Photo courtesy of Darius Bashar via Unsplash.

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.