“Industry Standard” Provisions

Q. What is meant by “industry standard” provisions in publishing agreements?

B. One of the greatest annoyances for publishing attorneys and literary agents is encountering authors, or their representatives, unfamiliar with standard terms of publishing agreements. The most exasperating occur when the author is being advised by a “contracts attorney” who may know a lot about contract law but knows nothing about the publishing industry.  Or a real estate lawyer doing a favor for his sister-in-law.  I write from experience.

Just because an industry standard provision is present in a contract, however, doesn’t mean it can’t, or shouldn’t, be modified.  Far from it.  Industry standard terms are negotiable – to a degree.  But in order to negotiate properly, it is important to know the base from which you are starting.  Literary agents and publishing attorneys know these standard terms, and also know how likely a publisher will agree to vary those terms.  Let’s cover some of the more common “standards”:

  1.  Rights.   The standard book publishing agreement “Grant of Rights” clause commonly takes all print rights in a “territory” (e.g., North America; British Commonwealth; worldwide) plus certain specified subsidiary rights – foreign, translation, book club, electronic, film & television, audio, dramatic, periodical, and merchandising.  Publishers typically are most willing to negotiate over foreign & translation, film, television, and dramatic.  But asking an established publisher, for example, to limit your assignment of rights to just hardcover, or paperback, or digital, is unrealistic.
  2. Advance on royalties.   Industry standard is to receive half upon signing the contract, and half upon acceptance.  Don’t ask for your whole advance when you sign the agreement unless you’re a highly successful, established author.
  3. Accounting and payment of royalties.  Industry standard accounting periods are  semi-annual, based on sales through June 30th and December 31, although each publisher has their own system of accounting for those sales.  Reserves for returns from bookstores are at least 15%, often more than 25%.  There is no industry standard for audit clauses, unfortunately – you must ask for one – but most publishers will agree to reasonable clauses.
  4. Publication dates.  Industry standard for print is between 12 and 24 months from acceptance of the manuscript – typically 18 months.   Don’t ask for six months, or some specific, definite date — you won’t get it.
  5. Indemnity and warranty clauses.  These provisions are in every standard publishing agreement.  Don’t ask that they be deleted – it won’t happen.  There are, however, certain modifications to the terms that most publishers will accept.
  6. Royalties.  Despite inroads made by the multiplicity of publishing and marketing channels, there still are industry standards for traditional print hardcover and mass market paperbacks: 10-15% for hardcover and large format paperback, 6-8% for mass market paperback.  Historically that percentage was based on the book’s cover or list price; unfortunately, many publishers now consider “net receipts” (actual revenue received from sales after discounts and other deductions) to be standard.  Royalty percentages for digital and electronic vary widely.
  7. Out of print clauses.  It is standard to have an out of print clause in a publishing agreement. However, because of the rise of digital, I no longer can say there exists standard language.  I have seen wide variance in what used to be a provision that gave an author a specified time after the book went out of print to demand a reversion of rights.  Unfortunately, the definition of “out of print” in a digital age has led to many versions within a general framework.
  8. Option clauses.  These clauses traditionally gave publishers the right to either buy or make an offer for the author’s next book or books.  They used to be standard, and some publishers will argue they still are.  I disagree.  Most of the big New York publishers will delete option clauses in agented contracts, or turn them into “rights of first negotiation” rather than true option clauses.

In summary, an author’s understanding of what is “standard” and what is not in publishing agreements should be the first step in approaching a negotiation and/or understanding the agreement presented to you by a publisher or your agent.  There are many books and online resources which explain these terms.  Take advantage of these resources.

© 2017 Daniel Steven