Business Musings: Long-Term Thinking: Rights Reversions (Contracts/Dealbreakers)

As I’ve been looking over my book Dealbreakers from 2013, it’s surprising to me how much I’ve had to change. Things have gotten worse, rather than better.

However, I found a couple of topics I could reprint with few changes. I’ve decided to put those up over the two weeks of America’s Fourth of July holiday, for my convenience (in part) and because I know the readership will be down, so I figured better to do a few things a lot of regular readers have seen, instead of something new.

Which isn’t to say these topics from last week (Contract Termination) and this one aren’t important. They are very important. I’m just hoping those of you who’ve already purchased the book from years ago or read the blog have some grounding in this.

A few things are different, and I’m threading them through this blog. Some of you wrote to me about your on-going negotiations to get your rights reversions—thank you!—and I’ll do my best to reflect the changes you’re seeing.

Before you get too deep into this post, two warnings. First, I’m not a lawyer, so everything I say here is informational only. Second, if you don’t understand copyright, then do this. Head to my blog post called “Know Your Rights” and read that. Then order yourself a copy of The Copyright Handbook, because if you don’t understand copyright, you don’t understand the most important aspect of your publishing business.  Got that?

Okay, here goes:

When a writer signs a contract with a publisher to have a book published, that contract includes which rights the publisher is licensing and at what cost/percentage of that cost. All of this is based on the copyright, which can be sliced down to minute fractions, and each fraction licensed.

For example, a writer might license worldwide rights to publish the book as a hardcover novel in the English language. The other rights, from e-book to audio to mass market paperback, would not be included in that particular contract.

Some contracts are short, some are ten and twenty pages long. Each contract will delineate what the rights licensed are, what the publisher will pay the writer for the use of those rights, and when the contract expires. All contracts need an end date to be legal, and so you’d think that book contract would have a set time period. It’s pretty convenient: both parties know the contract expires on a specific date. The contract can be renegotiated around the time of expiration or renewed on a yearly basis, until one party decides to cancel the contract, or, or, or…

Before we go any further, I want to make something very, very, very clear. Often, writers in the comments section of this blog ask a question about contracts that assumes that all book contracts are the same. Some writers might understand that contracts differ, but those writers then believe that all bestsellers have the same contract, and all midlist writers have a different one.

Here’s the truth of it, folks. You—one writer—can have twelve book contracts with the same company, and each contract might have different terms from other contracts. In other words, you might have spent your entire publishing career with one publishing house. You might write the same type of book year after year, and you still might have twelve different contracts, with twelve different terms, including twelve different reversion clauses.

I know that’s hard to wrap your minds around, but it’s an important thought, because if you believe that all contracts are the same, you’ll end up signing something that’s bad for you. After all, Famous Writer (who publishes with the same publisher) signed that contract, right?

No, not right. Famous Writer One is different from Famous Writer Two. One is a great negotiator who hires an IP attorney. Two is a terrible negotiator with an even worse agent. The great negotiator with the IP attorney might have a better contract. But he might not. Because the terrible negotiator might be too famous to piss off, and the publisher automatically offered terrible negotiator better terms than great negotiator.

You don’t know, and can’t know, and probably never will know.

So you must make decisions based on your own career.

Now, back to reversion clauses. They are not created equal. But there are some commonalities in book contracts that I can talk about in general.

Over the decades, book contracts evolved to avoid the time-limit. Instead, the ticking clock would start once the book was officially “out of print.” Generally speaking, “out of print” was usually defined in a contract (if defined at all) as “unavailable for sale.” Once the author realized that the book was unavailable, she would notify the publisher that she wanted all rights reverted. Once the writer notified the publisher, the publisher either had to do revert the rights, or would have a set amount of time (generally six months) to reissue the book.

Of course, there were a dozen permutations of that. I’ve seen some contracts that would not allow a rights reversion for seven years after the date of the contract even if the book went out of print in the very first year. The publisher in that case had no obligation to reissue the book and could sit on the rights for six years. At the end of the seventh year, the publisher would still have the option of putting the book back into print if the publisher did so within a six-month window after the writer informed the publisher that she wanted the rights back.

Why would a publisher have this clause? Imagine this: in the six years that the publisher ignored this out-of-print book, the writer went from relative unknown to a bestseller. Even if she became a bestseller under another name, the publisher would want the right to reissue that old book. That’s why you often saw things like Famous Writer writing as Not-So-Famous Writer on book covers, particularly in the 1980s and 1990s. Those writers had signed bad contracts early, and were paying for it years later.

In the past, when a novel went out of print, it was pretty obvious. No one could find a new copy of the book in a bookstore. The burden was still on the writer to ask for a reversion. Back in the 1980s, publishers often required a letter from a bookstore along with the author’s reversion request. To prove that the book was out of print, the bookstore letter had to say that the store tried to order copies of the book and failed to get them.

Note that even though it was the publisher’s responsibility to print and distribute the book, the author had to prove that the book was no longer in print. Needlessly adversarial? Not really. The problem was that then, as now, the publisher seemed to be the only one in the equation who understood that the control of the rights was the important thing. Writers, for the most part, just wanted to get published.

In fact, back then, only weird or pushy writers would ask for rights reversions. In the 1970s and earlier, rights reversions were important because other publishing houses would buy backlist, but by 1990, that concept was disappearing. So writers just didn’t ask. Or they’d instruct their agent to get the reversions, and the agents either wouldn’t do it at all or wouldn’t follow up.

And getting reversions, even then, required a lot of follow-up.

By the late 1990s, printing technology changed, and print-on-demand books became easier to do. Publishers started using print-on-demand suppliers to do second, third, and fourth printings of backlist titles. Those printings might have been as small as 100 copies. By the mid-2000s, such practices were common.

As usual, writers and their agents were behind the curve on this thing, and only recently started adding the phrase along the lines of “the availability of a print-on-demand edition of the book does not count toward the in-print definition in this contract.”

The only reason I can’t get my rights back on my last remaining title with Simon and Schuster is because my very old contract with them does not have that line, and S&S counts the POD availability as “in-print.”

(Note: I first wrote that sentence in 2011, and I still in 2016 can’t get the book out of S&S’s clammy greedy hands. Lawyers R Us, and soon.)

If contract terms can be bent or stretched to the publishing house’s favor, the publishing house will do so.

The print-on-demand technology changed the in-print calculation. At that point, the bookstore letter became irrelevant. If the bookstore waited long enough, it could get an edition of the book.

So agents and authors tried to define the end of a contract by sales velocity. If a book sold fewer than 500 copies in a six-month period (for example), then that book would be considered out of print, and would, for the sake of the contract, be eligible for reversion.

The problem here? The only way the writer knows what the book’s sales are is through the royalty report generated by the publisher. And, as I have discussed in various blog posts, those reports are rarely accurate.  Plus, if the book sold fewer than 500 copies in a six-month period, the writer would have to wait until the reporting time after that period ended. Which gives the publisher even more time to hang onto the rights.

For example, the six-month period from January 1 to June 30 royalty reports arrive from many traditional publishers at the end of October. That gives the publisher an extra four months to goose sales, if goosing is needed.

At that point, the end of October, the writer can then request a reversion, and will probably have to wait for six more months for a reply. If there’s any chance the book will sell well, the publisher has plenty of time to remedy any out-of-print or sales issues. Too much time, in fact.

Why do I say that? Wouldn’t a writer want a book to stay in print?

Not always. Sometimes the reason a writer wants a rights reversion has nothing to do with book sales and everything to do with mismanagement in the publishing company. In 2012, when I posted the blog “A Tale of Two Royalty Statements,” saying one royalty statement from one company was accurate and a royalty statement from another company was an unmitigated mess, many writers wrote me privately asking who the good company was.

I didn’t tell them. My problem was this: the company with the accurate royalty report had also provided me with my worst-ever editor experience (in a career filled with bad editing experiences) and I wanted the hell out of that company because of the editor. The company with the god-awful royalty reports had an excellent editor and editorial support staff. Companies the size of most traditional publishers are not all good or all bad. They’re a mixed bag, and that bag might be different for different writers.

So, back to our overall reversion topic. At the dawn of this new century, it became very hard to get rights reversions. It became even harder in the past several years as the e-book revolution hit traditional publishing.

If an old publishing contract contained e-book rights, and that e-book was available, did that constitute in-print? Traditional publishers said yes; writers and their advocates said no. The courts will eventually decide a lot of these cases.

Writers and agents again tried to close the barn door after the horses got out by trying to define e-book velocity as out of print. If, for example, the e-book sold fewer than 100 copies in a six-month period, then the book would be considered out of print. But that barn door remained wide open, since most writers and agents did not exclude free e-books from the sales figures. So if a publisher wanted to hang onto rights, he could offer the book for free for a few days, the “sales” would go up, and the book would not revert.

As the writers and agents have changed the contracts again, the publishers are now discounting e-books to 99 cents or less and counting those sales toward the on-sale total. (Such discounting is often not counted the same way as full-price books in the print book part of the contract.)

Slowly, traditional publishers have realized that backlist titles are worth a lot of money. As I wrote recently, traditional publishers are slowly figuring out that they are no longer in the manufacturing business, they’re in the rights business.

So they’re buying—and holding—rights. Years ago, when I got angry at a publisher for their misbehavior, I offered to buy back the rights to one of my books. It caught that publisher flat-footed. No writer had ever done that, and the publisher had no idea how to estimate the books’ value to the company.

Now, I’m hearing from more and more writers that their publishers insist on the writers paying to get rights reverted. While this is in part good news—the publishers are willing to let go of the books—it’s also bad news. Writers are being asked to pony up as much two-thirds of the book’s initial advance (on books that were already published) to get the rights reverted.

The publishers claim that this is how much the books will be worth to them in the next ten years, which leads me to wonder if that’s just some accountant’s valuation on a spreadsheet, done to estimate the value of an existing asset. (Oh, never mind. I’ll examine this more thoroughly later.)

What you need to know is this: Traditional publishers are doing everything they can to make these old publishing contracts (and even the new ones) into contracts that exist in perpetuity while seeming to follow contract law. It’s a dicey proposition which will take a lot of legal wrangling to settle.

Which is why I’ve started recommending to writers that if they want to have a traditional publishing contract for their book, that contract has to have a limited term. The contract can exist for ten years from the date of the contract (or seven from the date of publication, which may not be unreasonably delayed), and can be renewed at the same or more favorable terms. I explained this more last week.

So, if you don’t have a limited-term contract, how can you get your rights reverted?

Writers sometimes ask me why they even need to bother the publisher to get the rights back. After all, if the sales go below 200 copies or whatever that agreement is in the contract, don’t the rights automatically revert to you? And I always shake my head in wonderment that the question even came up. Because… um…your relationship is defined by a contract, and contracts require communication.

Besides, most publishers, as I mentioned above, reserve the right to “cure,” meaning they can try to repair the damage to the book’s sales and put the book back into print.

So it might look like your rights have reverted, but you don’t have full legal title to those rights until you have a release letter from your publisher.

A note here: I’m dealing with book contracts, but many short story contracts also have rights reversion issues. Each contract is different. If you’re going to reprint a short story that you’ve previously published, then you need to make certain that the rights you’re about to exercise belong to you.

If you didn’t understand that paragraph, you really need The Copyright Handbook. As I mentioned earlier, you’re not selling a book when you sign a contract. You’re licensing part of the copyright.

Okay. So…you want to reprint one of your backlist titles or put up an e-book of an out-of-print novel or sell the Japanese rights to your first novel.

Time to haul out the contract and read it. See what the terms are, what you signed, and what you still own. If the contract is old enough, you might not have licensed e-rights at all. They might not have existed. Make sure you didn’t sign an addendum to the contract in the last few years granting e-rights, either.

If you believe you own the rights you’re about to exercise free and clear, if you’re positive that there are no existing licenses on those rights, then proceed.

But if you’re in doubt, then you need to do some research. You might even need to hire an intellectual properties attorney to help you figure out what you own and what you don’t.

Let’s assume, though, that the book is out of print by whatever standard is set in the contract. Then you have to go through the hoops that the contract establishes for rights reversion.

Generally, those hoops are pretty simple. You must write a letter asking for the rights to revert to you.

The letter should be formal. It should cite the contract, its date, the clause that pertains to reversion, and the proof you have that the book meets the definition of out of print. Then you should ask for a letter reverting the rights to you.

Send this letter to the legal department at your publisher by snail mail with a delivery confirmation attached. Also send it to the legal department by e-mail.

You probably won’t get a response from the legal department. Usually, they’ll just put the reversion letter into a pile and deal with it at a biannual meeting on rights reversions.

I would avoid both your agent and your editor in this process. They both have a vested interest in keeping that book under contract. In fact, contacting your editor before writing the letter might get that back-in-print process under way before your letter even hits the desk at legal.

If you get no response in a month, go through this process again. And then do so a month later. By then, someone will respond. They’ll be pretty irritated and they’ll probably tell you that they will get to you when they get to you.

Remind them that they have six months from the date of your original letter to put the book back into print, or they lose the right to publish the book. (If, indeed, that clause is in your contract. If it isn’t, simply state that they must respond to this legal request in a timely manner.)

What you want to do is get them to release your rights. You want to be that annoying person they grant the release to because they don’t want to deal with you anymore.

You must remain polite but firm. And if you can’t do this comfortably, after the first letter, hire an attorney to do these letters for you. Believe me, that will pay off in the end.

If the publisher says no, but doesn’t put the book back into print, then repeat this process six months later. If the contract calls for them to put the book into print six months after the notification, and they haven’t, they’re in breach of the contract. Notify them of that—or better yet, have an attorney do it.

I know most of you are afraid to hire attorneys, but attorneys aren’t very expensive, especially for something that won’t take a lot of their time. These days, agents really aren’t fighting to get rights reverted and have never been good advocates on this issue. They’re the wrong people to ask for help.

Most publishers are hanging onto publishing rights these days because it’s easy. The publishers believe the rights will be worth money down the road. Writers generally don’t push to get books reverted, so publishers have had free reign over this process for decades.

If you want your rights reverted, then you need to be proactive about getting them back. You have to show the publisher that this is important to you, and you will continue to push until you get your way.

Because publishers have so many writers and so much backlist, they won’t push back against a squeaky writer unless they believe that writer’s book (reissued) will make a lot of money. In most cases, the publisher won’t even do enough research to learn that the book would make money.

If you push consistently and politely, you will succeed more times than you’ll fail. But it’ll take a concerted effort on your part.

What if the publisher wants you to pay them money for the license? They’ll say that they’ll revert the rights if you pay them ten or twenty or fifty or one-hundred thousand.

Take a moment to gather yourself before responding. And realize that the response is good news. They’re willing to revert. Now, all you have to do is settle on a price.

As you calculate what the reversion of the book is worth to you, revisit the contract. Figure out what rights you licensed to the publishing company. If it’s only First North American book rights, it might not be worthwhile to you to get that license back.

Chances are, though, it’s World English and audio and serial rights and t-shirt rights and a whole slew of other rights. Remember, each slice of copyright is worth money in and of itself. You’re not just asking so that you can republish in the States (or Europe or whatever this contract licensed). You’re asking for an entire group of rights.

I figure any rights reversion is a good one, even if you don’t make money right away.

Just be prepared to negotiate. If they say it’ll cost $100,000 to revert the rights, counter with “you reverted for free in the past.” If they hold firm, then counter with $10,000. Chances are, they’ll come back with another, lower figure.

You’re negotiating. And if you don’t know how to do that, read my posts on negotiation or pick up my short book How To Negotiate Anything. If you’re not comfortable negotiating—which is a whole different thing than not knowing how—hire an attorney to negotiate for you. But still look up the proper way to negotiate, so you don’t freak out as the process goes along.

You can do this. Worst case scenario is the one I find myself in: the publisher won’t revert the rights. Even that can be fought with enough money, time, and legal fees. Just pick your moment.

And remember: Don’t reprint your book if you’re in doubt about whether or not you own the rights. The key to success in rights reversion is this: read your contract, follow the law, be polite, be consistent, and don’t give up.

Good luck.

Thanks, everyone, for your continued support of this blog. It means a lot to me. And I learn from all of you. I appreciate the private letters I get, as well as the comments below. It helps me—and other writers as well.

If you have experiences to share, please do. It’s probably best not to mention the name of the companies you’re dealing with, but the experiences will be valuable all the same.

Contracts posts are difficult for me. Not because of the principles involved—I get all of that. But because things are even worse than they were when I first started blogging on this topic back in 2011. I get discouraged sometimes.

But seeing what you’re all doing and hearing about the changes on the writers’ side of things help. And, crassly, so does the occasional donation.

Which is why I put a donate button on the blog, but never do on the fiction posts.

So…if this post has been valuable to you, please leave a tip on the way out.

Thanks!

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“Business Musings: Long-Term Thinking: Rights Reversion,” copyright © 2016 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2016 by Canstock Photo/PixBox.