SECTION 1: Fundamentals
In this section we will look at what foreign rights are, why they are licensed and what the process for licensing foreign rights is.
What are Foreign Rights?
Foreign rights is the term given to the licensing of content to overseas publishers. Once in receipt of a licence overseas publishers are able to produce their own edition of the content for distribution in their market or territory.
Often the term foreign rights is used interchangeably with ‘translation rights’ (where the foreign publisher’s edition is a translation of the original content into the language read in the licensee’s market) however strictly speaking foreign rights might encompass a broader range of rights, such as English language reprint rights, or other rights licensed outside of the home market.
The rights team of a publishing business is likely to have responsibility for a spectrum of ‘subsidiary rights’ which might include permissions, collective licensing, film and television rights, audio, merchandising and others. Licenses for translation or reprint rights in a particular territory are usually exclusive to the licensee. Foreign Rights are most often sold but may also be licensed on a gratis basis.
Why licence foreign rights?
The most obvious answer is to gain some extra revenue, but there lots of other reasons why it can be beneficial to licence your rights overseas.
The sale of translation or other rights can be lucrative if handled efficiently. Depending on the content being licensed and the market to which it is being licensed, the value of each deal could range from a few hundred pounds to tens of thousands, or even more. Most publishers account income from subsidiary rights licencing as bottom line profit. This can make rights income particularly lucrative.
Rights income is also shared with authors in proportions agreed in the head contract, so it is of financial benefit to authors too. For authors who did not receive a substantial (or any) advance on publication, income from rights sales can provide a welcome boost to their royalty account. Where authors are in receipt of a large advance, the author’s share of licensing receipts will usually (not always!) be set against it, allowing the publisher to reduce their exposure.
Besides the financial benefit accruing to the author, the sale of foreign rights is an opportunity for an author to become known in other markets. Foreign publishers will do a certain amount of promotion of their edition, and this could involve bringing the author to their market or building social media campaigns around an author. Even without author-centric promotion, the mere availability of a work in a new market can enhance an author’s reach and reputation.
An author of professional business books runs a marketing business and is looking to expand in Russia. One of the author’s books is licensed to a Russian publisher for translation. The Russian publisher promotes the book in conjunction with a well-known Russian consultancy firm. The Consultancy firm builds a relationship with the author which leads to them engaging the author on a new project. As the author builds his company’s reputation in Russia, the Russian publisher acquires the rest of the author’s books which go on to sell very well.
Publishers have many different brands, ranging from their corporate brand to their authors’ and may additionally have imprint or series brands too. Licensing is an opportunity to get a publishers’ brand(s) into new markets, increasing awareness of your offering and engaging new audiences. This can have a positive impact not only on the next works that carry those brands, which are licensed in the territory but also on your original works which you may be selling alongside translated editions.
It is not unusual for the publication of a translated edition to create a sales spike in the original language version. A great example of using foreign licensing to extend the reach of your brand is Wiley’s for dummies® series. Their website lists 18 languages in which the series is available, and all with the distinctive bright yellow look and feel of the original edition.
Licensing rights can help you dip a toe in the water of potential export markets. With virtually no outlay you can get some of your content out in the market and see how it performs. You can start to get a sense of how that market operates, the kinds of content that works well, promotion and pricing strategies and what the distribution channels are. If you are thinking about entering new markets, you might find that licensing is a good way to help you get more of a handle on the opportunities and risks.
Enabling Access to Content
Whilst publishing is first and foremost a business, for most of us, it is very much more than that. Published content takes people on journeys, it opens up new worlds, it educates, informs, celebrates and entertains.
In the English speaking world we have access to a huge array of published content, but in other parts of the world, local language content isn’t necessarily as readily available, or as diverse. For languages where the number of people speaking them globally is relatively low, the potential author pool for publishers catering to those markets is necessarily limited, and therefore acquiring translation rights from overseas publishers can help them to build the range of local language content for their market – increasing access to a broader range of material than would otherwise be possible.
Increasing local language content can also help the language itself to thrive. Indeed, in some countries governments make grants available to support local publishers in producing local language publications in order to encourage its use.
It isn’t just translation rights that can help ensure our content is accessible to a broad range of global readers. In markets where purchasing the original publisher’s English language edition of the book is cost prohibitive, publishers sometimes agree low cost reprint licences, allowing local publishers to produce a fixed number of copies, with distribution strictly limited to a specific territory.
The original publisher has no overheads in this scenario and can set a fee that enables the foreign publisher to print and distribute the content at a market appropriate price.
Building mutually beneficial relationships
The flip side of licensing is acquiring or buying rights. The relationships built up when licensing rights can often result in being content being pitched the other way. Acquiring translation rights from other languages can give English language publishers the opportunity to freshen up their lists, access exciting new authors and bring new ideas and perspectives from cultures across the globe.
Translated fiction has become much more popular with English speaking audiences in recent years. Stieg Larsson’s The Girl With the Dragon Tattoo started a boom in Scandinavian crime fiction, which exploded the myth that translated fiction does not work for English language audiences. Consequently, English language publishers are now much more active in acquiring translation rights.
How does it work?
One of the nice things about licensing foreign rights, is that it’s a partnership, and all the benefits that accrue to you and your author, will also accrue to the foreign publisher that you have licenced. Working together with your foreign rights partner, you can create significant wins for everyone.
The chart below gives you an overview of how the basic process of licensing foreign rights works.
This process varies slightly for co-editions, where the original publisher produces the foreign publisher’s edition on their behalf, leading to an agreement for sales of stock in addition to the licence for rights. In co-editions multiple language editions can be produced simultaneously, with each foreign publisher supplying the text of the translation in addition to cover and copyright page changes, and the originating publisher co-ordinating the printing and shipping arrangements.
SECTION 2: Stages of a Rights Deal
The process of licensing foreign rights is reasonably complex. In this section we have broken it down into a step by step process. We will look at each step in turn and highlight the practical considerations involved for each.
Well before you can consider licensing rights, you need to ensure that you have something to licence. Under copyright law it is the creator who is the first owner of a copyright work, but they can assign their copyright or license elements of it to others. In publishing, content is usually acquired from authors via an agreement often referred to as the Head Contract.
Sometimes the agreement will assign copyright entirely to the publisher (often the case for agreements for journal articles and reference content) but more commonly a specific set of publication rights are licensed exclusively to the publisher. The agreement will specify the rights being licensed, and the period of time they are being licensed for. It will cover what languages and formats the work can be published in as well as where the content may be sold (the Territory). A publishing agreement will also cover the subsidiary rights that are being granted. Where granted, the publisher has the (exclusive) right to sub-license the subsidiary rights listed in the agreement to third parties.
Only where translation and/or reprint rights are listed in the subsidiary rights being granted, can you start to consider licensing foreign rights.
Do remember that the author contract may be only one of several agreements that need to be checked before you proceed. There may be additional agreements for contributors, illustrators, cover designs, ancillary material, and content included under permissions agreements. You should also check whether you have already sold rights in the language/territory combination you are about to sell. For example, if you have sold World Spanish language rights in a title to a publisher in Spain, you cannot then licence Spanish rights to a publisher in Mexico. As we will look at in section 3, good record keeping is essential to ensure that you don’t trip up when licensing rights.
It is worth ensuring that those who are responsible for acquiring rights are giving some thought to subsidiary rights opportunities when they negotiate acquisition agreements. When you come to do a deal for foreign rights and you don’t have the right to licence some elements of the publication, you will have to either try and obtain them (time consuming and likely to push up costs), ask your licensee to obtain them (unlikely to be something they will have time or budget for either) or remove those elements (impacts on licence fee you can achieve, risks diminishing the product to the extent that the licensee is no longer interested).
Always check the agreements covering the content you are hoping to sell, before you start trying to get people interested in it. As well as letting you know whether you have the right to licence the content, the agreements will detail what percentage of the payment that you receive from licensing will need to be paid on to the author or other contributors. This will help you when you come to negotiate the financial arrangements.
TIP: Bear in mind that it is common for literary agents to withhold certain subsidiary rights, especially translation rights, and to take responsibility for selling these themselves.
Curating Your Content
In order to ensure you are maximising your foreign rights sales opportunities, it is worth spending some time marketing the content and rights that are available. It is tempting to think that your whole list is going to appeal to foreign rights buyers, but in reality, there is probably a relatively small proportion that will tick all of a buyer’s boxes. The titles that are the most suitable for foreign rights may be buried deep in the inner pages of your catalogue and only identified if a buyer gets that far in. In order to ensure that your best titles get the most attention, it is worth identifying and highlighting them.
Whilst the sorts of things that might be of interest to foreign rights buyers is likely to vary from country to country and from publisher to publisher, the checklist below gives you a quick and easy guide as to whether your content is generally likely to be of interest to someone buying translation rights. Use the checklist to help you identify the titles that will have the greatest appeal to the buyers you are hoping to attract.
CHECKLIST: Should this title make the cut?
- Is it short? Translators charge per number of words, long books are expensive to translate, and can often be prohibitively expensive. (exceptions include certain kinds of textbook or reference works)
- Does the author have an international reputation? Particularly in the markets that you are hoping to target. An author who is well known in a market or has connections there, can make a huge difference to sales
- Is the content unique compared to what is available in the local market? Buyers are looking for content that they cannot source from within their own market. The content (or its author) therefore has to be something really unique or special.
- Is the text written with a global readership in mind? Books that are full of colloquialisms or that contain social and cultural references that are unlikely to be understood by readers of a translated edition are unlikely to work.
- Has it (or the author’s previous works) sold well in your market? If a book has sold well or early orders suggest it is going to sell well in your market, it helps the buyer to feel like they are taking less of a risk in acquiring the rights.
- Other Hooks? Have you signed a film deal? Does the content pertain to something particularly newsworthy?
- Does publication coincide with an anniversary? Is it published in conjunction with a prestigious organisation? There could be a variety of ‘hooks’ that might be of relevance to your prospective buyers.
There are always exceptions and just one of these factors may trump the others (for example Harry Potter, which has been translated into 80 languages, fails almost every part of the checklist, except having been a best-seller in its original market!) but this will give you a general sense of what is most likely to succeed.
Identifying potential markets and purchasers
Once you have decided what to promote you need to consider where to promote it. Research overseas publishing markets by looking at the market reports in this Toolkit or by visiting publisher association websites (there is a list of publishers associations around the world on the IPA website).
Get a feel for the markets, what genres appear on best-seller lists, what kinds of publisher operate in each market. Consider the market in a broader context; population, literacy levels, employment, political situation, leisure interests – where are the markets where your content might feel at home?
Identify publishers in each market that look like they would be a good fit with your content and find out who is responsible for acquiring rights. You could do this by attending book fairs and looking around the international publishing booths, as well as scouring catalogues and websites.
Promoting your rights
When you have some potential contacts, you can start sharing information with them about the content you think may be of interest. Typically, publishers will start promoting titles ahead of publication, significantly ahead if they are trying to secure co-edition deals. There are several ways of doing this. Emails, newsletters, catalogue mailings, social media, websites etc.
Many publishers will compile Rights Guides, a seasonal catalogue of curated titles that they want to promote to potential purchasers. These can be anything from a collection of Advanced Notice sheets to a professionally produced rights brochure. Titles are selected for inclusion based on their suitability for foreign rights sales and when they are due to be published. It is perfectly possible to also include recent frontlist and important backlist titles in a rights guide too. Rights guides are usually produced to coincide with the spring and autumn book fairs.
Book fairs give rights sellers a fantastic opportunity to meet with a large number of potential licensees in a very short amount of time. Booking appointments early is essential.
The London and Frankfurt book fairs are regularly attended by a large number of international publishers, and for children’s publishing, the Bologna book fair in Spring should not be missed. Beijing and Shanghai (children’s) are growing in importance and several others are regularly attended by UK publishers each year. The New York Rights fair has recently been established and is the first fair to exclusively focus on rights. For a full list, please see the links in section 4.
TIP: As you start to develop relationships in each market, you may find it useful to arrange sales trips where you can visit several publishers, but spend a longer period with each, really getting to know the kinds of content they are looking for and the market within which they operate.
When a foreign publisher expresses interest in a title, they will usually ask to see some sample content for review. Depending on proximity to publication they may ask for a sample chapter, proofs, or finished copies. These are usually sent in digital format although some publishers prefer to send hard copies. You need to decide before you send anything out whether you are going to do so on an exclusive or non-exclusive basis.
Types of Submission
Exclusive (AKA An Option)
What does it mean?
Only 1 publisher at a time reviews for that territory/language combination
How does it work?
A publisher gathers together all expressions of interests and places them in a queue (queue order determined by publisher not necessarily in order of who expressed interest first).
The publisher with the 1st option considers the content and has the chance to make an offer for it, ahead of anyone else.
If they decline the opportunity to make an offer within a specified time, the publisher with the 2nd option has the chance to review and offer.
This process repeats until all publishers in the queue have had the opportunity to review.
When is it used?
Where the reviewing publisher needs to engage expert readers or otherwise invest in the review period (e.g. medical textbooks).
Where a publisher has acquired rights in an author’s previous works or other titles in the same series, and for when there may be a contractual arrangement that they receive a ‘first option’
- Can be used strategically to build strong relationships with important customers
- You only have to deal with one offer at a time
- Can take a long time to move through the queue and get a deal
- Reviewers further down the queue may lose interest or go elsewhere
Don’t agree who can have the first option until you know exactly who all the interested parties are.
What does it mean?
Multiple publishers review simultaneously for that territory/language combination
How does it work?
Review material is sent out to everyone who is interested with a deadline for offers.
Each publisher reviews the material and advises whether they want to make an offer or not.
If multiple offers are received you can chose who to contract with the strength of their offer or hold an auction (see ‘Negotiation’ below).
When there is a very hot property, potential licensees may be given a very short window in which to review material.
When is it used?
When a publisher has no reason to work on an exclusive basis.
- Saves Time
- Creates opportunity for multiple bids or an auction, which can push value of deal up
- Reviewing publishers can feel aggrieved when they lose out to a competing bid
Make sure you communicate really well with everyone reviewing the book, especially if you have received an offer from another party and when you decide to accept an offer from someone else.
Regardless of the submission process the review period can range from 1-3 months depending on the nature of the title concerned. For big trade prospects, the review period may be much shorter. In reality, for anything but the hottest properties, you are likely to need to chase up responses and expect to extend review periods, sometimes several times, before a response is forthcoming.
If a publisher is interested in acquiring foreign rights, they will either make an offer or ask you for terms based on the planned print-run or circulation and the selling price of their edition. An offer of terms will set out the rights being granted (language, formats, territory), the duration of the agreement and the financial arrangements on the table.
The financial arrangement is likely to take one of two forms, a flat fee or an advance and royalty. In the case of a flat fee, the offer will be for a certain amount of money in return for a fixed print-run or circulation. In the case of advance and royalty, the offer is for an amount payable in advance of publication to be set against future royalty earnings, which will be calculated at a % of the purchasing publisher’s list price (or sometimes, especially in the case of digital publications, net receipts). An advance may take the form of a single payment or could be split into several instalments (this is more common when the advance will represent a significant outlay for the publisher concerned).
Royalty rates are often set with a lower percentage initially, escalating 2 or 3 times if sales reach certain levels. For example: x% to the first 3000 copies sold, rising to y% from 3001 to 10,000 copies sold, and z% on all copies sold thereafter. The level of fee or advance and royalty rates offered will vary from territory to territory and will depend on local market conditions as well as the value of the content itself. In the case of co-editions, potential partners will be expected to specify a number of copies, this number can then be factored into your print run in order to produce costs and give them a quote.
Co-edition deals can be agreed on a royalty inclusive basis (the royalty is included in the unit cost being paid) or royalty exclusive (there is an additional royalty payable on top of the unit cost). Shipping arrangements will also form part of the quote – whether the licensee will pay (and be responsible for shipping) from the printer (ex Works) or whether costs of getting the stock to the licensee’s nominated shipper are included (FOB – Free On Board), or other variants.
How can I tell if it’s a good offer?
Advance and Royalty
Ideally you would be looking to achieve at least 50% of the amount that would be due on the first print run as an advance, although it is sometime possible to achieve 100% or more. Imagine that you have received the following offer:
Expected print run: 3000 copies Expected selling price: 12 Euros Advance: 1500 Euros
Royalties: 6% net receipts.
The maximum revenue the publisher could achieve if they sold their entire run would be: 3000 x 12 Euros = 36,000 Euro.
At a 6% royalty, this would equate to potential payment to you of: 36,000 Euro x 6% = 2160 Euro. 50% of that would be 1080 Euros.
1500 Euros therefore looks like a reasonable offer (albeit one that could be improved), assuming the royalty rate is what you would expect from the market. Some negotiation on the level of advance may be possible. There are no escalators on the royalty, which might also be a point of negotiation.
You would expect to set a flat fee at a value equivalent to 100% of the royalties due on the first printing, if you had agreed a royalty deal using a rate that you might reasonably expect from that market. In the above scenario you would therefore be looking for a fee of around 2160 Euros.
Don’t forget that it’s not all about the financial arrangements on the table. You need to ensure that your content is going to find the right home. Your evaluation of an offer will depend on your particular priorities, but here are a few other factors you may want to bear in mind when selecting the publisher you want to move forward with:
- Existing relationship
- Speed of publication
- Formats that will be created
- Design/Production values
- Marketing and PR plans
- Distribution capabilities
- Payment and Royalty Accounting track record
Negotiation is an expected part of buying and selling rights, and there are different ‘bargaining chips’ that can be used. For example, you may be able to obtain a greater level of advance by allowing the purchasing publisher to split it over several instalments (e.g. on signature of agreement, on receipt of proofs, on publication).
Alternatively, you may be able to accept a lower advance for fewer rights, e.g. restricting a Spanish publisher to distribution in Europe only, enabling you to seek a separate deal with a Latin American publisher. The amount of advance, starting rate and escalation points of royalties are regularly negotiated.
In some cases, you may consider holding an auction. You need to tell all the offering publishers that you intend to conduct an auction and outline the form that it will take so that it is fair to everyone. You should set a deadline for bids and advise the publishers of any other supporting information you require, for example marketing and promotional plans.
You can conduct multiple rounds of bidding until you are satisfied you have achieved the best deal or alternatively just set one ‘best and final’ offers deadline. There may be more to consider than who will pay the highest advance, for example; the experience of the publisher, whether you have been pleased with previous projects on which you have collaborated, their promotional plans and also your author’s preference.
When negotiating offers and conducting auctions, do remember that in most cases you will be trying to build a long-term relationship with a foreign publisher. Build trust and understanding by being reasonable in your negotiations and sympathetic to the licensee’s market conditions and the additional costs they will have to factor in including, translation, pre-press, production, marketing, sales and distribution. It is in both your interests that they are able to do well with the book and making them commit more budget to the advance and less to their marketing efforts will likely result in fewer sales and impact later royalty earnings as well as potential deals in future.
Once you have concluded your negotiations and accepted an offer, you will need to draw up a contract to formally record the rights being transferred and the terms and conditions under which you are doing so.
Most publishers will have their own boilerplates for the kinds of rights deals that they enter into most frequently. If you don’t have an existing boilerplate, Clark’s Publishing Agreements (see Useful Publications in the Resources section) contains a useful Precedent. The accompanying notes give detailed explanations of the purposes of each clause and alternative wording for certain situations. You can download the Precedent as a word document to tweak as you see fit. In some cases the offering publisher, or the agent (if there is one) will provide an agreement. The following checklist gives you an indication of the sorts of clauses you would expect to see in any agreement for the sale of foreign rights.
Clauses you may expect to find in a foreign rights agreement
n.b. a co-edition agreement will look quite different with pre-press schedules, shipping and reprint arrangements and clauses relating specifically to the purchase, sale and warehousing of stock. There are precedents for co-edition agreements in Clark’s Publishing Agreements.
Having drawn up your agreement you will need to send it to the Licensee for signature. Be prepared for the licensee to come back to you with queries over specific clauses, there may be a further period of negotiation over specific contractual terms.
Given that sending contracts by snail mail is slow and by courier, can start getting expensive, the ideal method is to send them via a digital service such as Docu-Sign, where the licensee is happy to work this way. The contracts also need to be signed by a signatory of the legal entity that owns the content being licensed. Take care to ensure that it is specifically the legal entity that is named as a party to the contract rather than an imprint or trading name.
Where an agent is being used and has obligations under the agreement, it is prudent to include them as a party and signatory to the contract as well. When printed contracts are exchanged, it is usual to provide enough copies for each party to the agreement, so that once they have all been signed and counter-signed, an original copy can be retained by each party.
The contract may contain various payment elements depending on what has been negotiated. Invoices are not always required, since the licensee may be happy to pay any amounts due on the strength of the instructions in the agreement. Very often invoices are issued, either because the licensee requires it, or to aid accounting on the licensor’s side. For any advances or fees that are due on publication, invoicing can take place immediately the contracts are fully signed.
Future due payments need to be noted so that invoices can be raised, or payment chased at the appropriate time. It is easy to forget at the point of sending proofs or receiving a licensee’s finished edition that further payments may be due, so you need to put in place a robust method for dealing with split payments if they form part of your agreement.
Where you have agreed a royalties element, you will need to ensure that statements of account are being received at the appropriate times from each of your licensees. Incoming statements should be reviewed to check that the appropriate level of royalty has been applied to any sales and the correct amount deducted from any advance that has been paid.
When an advance is earned i.e. the royalties due on sales exceeds the amount paid in advance, additional payments will be due from the licensee. In some cases, these are paid automatically without an invoice being raised, but in others a licensee will await an invoice before making payment. Identifying payments from foreign licensee’s can be tricky, especially if you have lots of agreements and payments from other overseas companies going into the same bank account.
Where there is an unearned balance (the amount due in royalties has not exceeded the advance amount paid) regular statements should still be submitted so that you can track sales and stock held by the licensee and ensure compliance with your agreement.
TIP: When you receive royalties income from one country but are resident in another you may be liable to pay tax in both countries. To prevent this, the UK has double taxation treaties with over 100 other countries. If your organisation is classed as resident in the UK and there is a double taxation treaty in place with the country concerned you can apply to HMRC for a Certificate of Residence. The CoR is then supplied to the licensee for their tax authorities, and allows them to deduct tax at a reduced rate or not apply tax at all. More information about applying for a certificate of residence can be found on the HMRC website, it also has details of the specific tax treaties agreed with each country and the applicable rates of withholding tax.
As with any other payment process it is rare that you will receive all the payments you are expecting within the payment period you have specified. This can be for a number of reasons such as invoices not having been received, issues with tax forms (see tip above), invoices stuck in approvals processes or payment has been made but not allocated correctly within your accounts.
It is very rare that a licensee who has taken the trouble to negotiate a contract with you, does not intend to pay for the rights they have licensed (which would invalidate their agreement). However, it is an accepted part of the job that you will need to carry out a certain amount of chasing and have to track down payments from time to time. Once payment has been received and identified as foreign rights income, it needs to be allocated correctly within your accounts.
The most important element of this is ensuring that the author share of any advances and fees (where an author share is due) is assigned to the correct author royalty account. The share due to the author will be calculated in accordance with the % set out in the author’s agreement for the specific right being sold.
It is therefore important to ensure that whoever is managing this part of the process knows for each incoming payment which kind of right it relates to so that they can apply the correct percentage when calculating the author share. There may of course be more than one author, and the author share will be further split in the contractually agreed percentages between them. There may also be additional parties such as illustrators and editors who are due a share of subsidiary rights receipts.
Some consideration should be given to allocation of the publisher share of subsidiary rights income. Depending on your financial accounting practices you might allocate it at a project, imprint or divisional level. You may choose to account for subsidiary rights as one budget line, or to split it out into different kinds of subsidiary right e.g. translation, collective licensing, audio etc.
Prior to publication of the licensee’s edition, there may be additional material to supply to the licensee, e.g. final proofs, working copies or high-resolution production files. There may be queries arising from the translation process, cover designs to approve, sample translated text or proofs to review.
In the case of co-editions, there will be the co-ordination of production schedules and the collation of all the licensees’ changes ahead of production, not to mention shipping arrangements for the dispatch of the licensees’ copies. The Licensee may be delayed in publishing their edition. It is worth keeping an eye on expected publication dates and chasing licensees if they haven’t published when expected – particularly if you have advance instalments due at that stage. An addendum can be drawn up to extend the publication period, if required.
When the licensee’s edition is published you will usually receive sample copies. These should be checked carefully, especially covers and imprint pages where you may have specified in the contract particular arrangements for branding, author’s name and acknowledgments.
If you are happy with the finished edition, you can send on copies to the author(s) and other relevant contributors. It can be very exciting for authors to receive a copy of their work translated into other languages (provided you have checked the edition thoroughly prior to sending and ensured their name is spelt correctly!).
If you have the space to retain an archive copy of each translation, it can be handy, alternatively you could ask the licensee to provide a PDF version.
TIP: When you receive a copy of the licensee’s edition, make a note of their ISBN. It may prove useful at a later date, when a mysterious royalty payment turns up with only the licensee’s ISBN as a reference, allowing you to allocate the payment correctly.
Managing the life of the Agreement
It is important to manage the agreement for its full term. The licensee may request changes to the agreement if new opportunities arise, they may want to publish in a new format, change pricing, or acquire some additional subsidiary rights. These can be managed, if acceptable to you as Licensor, by way of an addenda to the main agreement, outlining the agreed changes together with any fees, royalties or additional advance payments (often termed a ‘refresher advance’).
You will want to monitor accounting for the duration of the agreement, whether that be in terms of a royalty statement or an annual statement of sales and stock, so that you have an idea of how the licensee’s edition is performing. This will give you valuable insight into your products, your licensee and their market and will help inform future decision making.
If things go wrong and the licensee is in serious breach of your agreement (very rare), then provided you have made provision in your agreement for termination, you can serve notice to cancel in accordance with those terms. In many cases receipt of such a notice will be enough to bring the licensee into compliance, but if not, the agreement will terminate, and all rights licensed should revert back to you.
As the licence reaches the end of its term, you can think about contacting the licensee to see if they would like to renew their agreement, or if things haven’t gone as well as you would have liked, to point out that their agreement is coming to an end and that rights are due to revert to you. Some licences are renewed repeatedly over many years with the licensee acquiring future editions and additional works by the same author or in the same series.
If by your choice or theirs the agreement comes to an end, it marks an opportunity to try and re- licence those rights to an alternative publisher.
SECTION 3: Managing the Rights Selling Process
As we have seen in Section 2 there are a lot of stages to the process of selling foreign rights. When you start to ramp up the number of submissions, negotiations, contracts and renewals that you are working on at any one time, managing your rights business efficiently and effectively is critical to your success.
Systems and Processes
For each of the steps identified in Section 2 you should develop a process that works for your organisation. From ensuring that you are clear what rights have been acquired, managing the submission process through to dealing with renewals and reversions. The more efficient you can make that process at every stage, the greater the volume you will be able to cope with – more deals = more revenue.
The table below is not comprehensive but gives you an idea of the sorts of tasks that are involved on a daily basis when selling foreign rights.
Example Foreign Rights Processes
It should be clear from this table that licensing foreign rights is admin heavy. There is lots of information to record and check, dates to be on top of, and plenty of back and forth between you and your licensee or potential licensee. It is no co-incidence that of the 25 tasks listed, 5 of them involve chasing things that other people are responsible for actioning!
Some kind of system to support your rights-selling process will help you manage these tasks and processes efficiently. If you do not have a big list of titles and the number of potential deals is relatively small, it is perfectly possible to manage foreign rights sales with spreadsheets in combination with a calendar. As your operation expands you will find greater efficiencies, and fewer missed opportunities if you adopt more robust, rights system.
Some publishers develop their own in-house databases to support their licensing requirements, others find that their publishing system has a module for managing rights licensing (although be aware that sometimes these only cover a very narrow part of the process). There are also a number of stand-alone options which are purpose-built for the task of selling rights. The most modern of these are cloud-based and incorporate tools for simplifying your workflow as well as acting as a repository for your data.
Adoption of the right system can revolutionise the way that you manage your foreign rights business and can be more effective than recruiting additional headcount (for a fraction of the price) so it is well worth looking into if you are planning on doing a lot of licensing. A list of systems can be found in Section 4.
In addition to good systems, you also need the right people to manage your licensing business. The skills required to work in rights are many and varied, I would argue that the best foreign rights people are:
- Commercially aware
- People people
- Great negotiators
- Interested in detail
- Process Oriented
- Well organised
You may find you have someone internally who is able to take on rights selling as part of an existing role. Anyone can learn to sell rights and there are several excellent training courses available, including online training and mentoring packages (see Section 4).
If you don’t have the resources to manage foreign rights in-house there are other options.
Options for managing foreign rights externally
You can use combinations of the above, working direct in markets you know well, and using agent or freelance support in others. There are advantages and disadvantages with each method. With freelance support, there is investment with no guarantee of return, with Agents, you might find it hard to get them to take you on if you have a relatively small list, as it just won’t be worth their while.
If you work with sub-agents in multiple territories, you can cover more ground, but your list may be lost amongst all the others they are working on. With any of the options it pays to manage the relationship carefully, supporting their work by providing timely information and answers to queries and expecting in return regular updates as to performance of key titles and market intelligence that can help you (both) build strategically. Lists of freelancers and agents are provided in Section 4.
More recently, automated licensing options have started to emerge whereby you can list your titles and potential licensees can purchase rights and receive a contract in accordance with your predefined licensing terms (see Software vendors in Section 4).
As you build your foreign rights business you will be able to analyse where your strengths and weaknesses are. What content is selling in which markets? Where are the most lucrative areas? Where do you have gaps in terms of subject matter, territories and customers? Your analysis will help you identify opportunities and allow you to plan a strategy that takes advantage of them and grows your business further.
Think about what is reasonable to achieve with the resources available to you currently and what it would take to scale up. Whether you decide to work directly or with external support, setting goals and objectives that enable you to measure progress and which you can revisit and update as you do further analysis will help you keep on track.
Selling rights is not usually something that happens quickly. Even when you are using external agents or freelancers it can take time for word to get out about your content, relationships to develop and you need a certain amount of luck to have the right book for the right customer at the right time. Patience is therefore a necessity, and whilst foreign rights licensing can be a lucrative endeavour, it will not necessarily bring returns instantly.
SECTION 4: Useful Resources
This section contains a glossary and other information you might find useful for licensing foreign rights.
An amount of money paid in advance of the licensee accounting any royalties which may be due on sales of their edition. An advance is set against future royalty earnings which means that no royalties will be payable until they have exceeded the value of any advance which has been paid. An advance may be split over several instalments.
A formal document signed by all the parties to vary the terms of a contractual agreement that the parties have entered into.
A person or organisation who acts to broker a deal between two parties. They are usually paid commission on deals that they have brokered.
Trade fairs focused on authors, publishing, book-selling and allied services. They are held all around the world, often attracting international exhibitors and attendees.
Certificate of Residence
A form obtained from HMRC that confirms you are a (tax paying) resident of the UK and enables you to take advantage of any treaty benefits available under double taxation arrangements which are in place with other countries. If accepted by a licensee’s tax authority the Certificate of Residence (CoR) will enable them to either remove tax deducted from payment to you or apply it a reduced rate.
Rights deals in which the Licensor produces physical copies of the Licensee’s edition alongside their own. A co-edition deal covers both a licence for rights and arrangements for producing the licensee’s edition and purchase of stock.
An amount paid to an Agent or other service provider in respect of the services they have provided. Usually expressed as a percentage.
A Contract or Agreement is a legally binding document setting out the rights to be licensed and the terms and conditions that apply. It is signed by all the parties that need to be bound by the terms and conditions contained within it.
Term used to describe the situation where sufficient royalties have been accounted to cover the Advance paid. When an advance has been earned, a licensee will need to pay the licensor for royalties earned on subsequent sales of their edition.
An agreement for rights that are granted exclusively to one licensee. In the event that an exclusive licence is given, then the same rights (or any part thereof) may not be licensed to another party during the term of the agreement.
An amount of money paid for the rights being licensed which is not linked to future royalty earnings.
Subsidiary rights that have been or are available to be licensed to overseas entities.
The medium in which content may be published, may be defined broadly (print, digital) or more specifically (paperback, ebook, website).
An agreement made with an author or main contributor.
The recipient of the rights being granted in the licensing agreement. Also known as the publisher, or foreign publisher.
The entity who is granting rights in the licensing agreement. Also known as the proprietor or originating publisher.
The act of entering into a licence or agreement for the sale or transfer of rights.
The advertised price of a published work, prior to any discounts having been applied. Also known as the selling price or cover price.
The amount the licensee actually receives in respect of sales of their edition, after discounts have been applied.
A submission that is dealt with on an exclusive basis. Those requesting options are usually placed in a queue with the submitting publisher determining the order.
The entities that enter into a contractual agreement
Items of content produced by 3rd parties for which permission is required in order to include them in a work.
A catalogue or brochure that shows the content for which the originating publisher wishes to sell rights to. Often contains details of rights that have already been sold/are available. The selection may be different to the publisher’s main catalogue as different content may be available and the information is tailored to meet the requirements of purchasing publishers.
The percentage that the licensee will pay the licensor on sales of their edition. A royalty is usually based either on the licensee’s list price or their net receipts.
The point at which a royalty percentage will increase and the amount that the royalty will increase to. An escalator is usually applied after sales of a certain number of copies. This enables the licensee to pay a lower amount at the beginning of the agreement (when they have incurred the most costs), but for the licensor to have a greater share if sales go well, and the licensee has recouped their initial investment.
The act of sending material such as a synopsis and outline, proofs or finished copies, to interested parties to review. Material to be reviewed is sent either on a non-exclusive (many entities simultaneously) or an exclusive basis (one entity at a time). An exclusive submission is also known as an option.
A set of rights that are granted in the head contract which are additional to the main right of publication.
A country or group of countries in which the rights being licensed may be exercised.
The period for which the licence is valid. Also known as duration of licence.
A subsidiary right that allows the holder to translate works into other languages. An agreement for translation rights will specify the specific language(s) the content may be translated into.
The amount of money that is currently outstanding (showing as a negative figure), when you deduct the amount paid in advance from the royalties that have been accounted. Where there is an unearned balance, the licensee will not be required to make further payment until the royalties accounted exceed the amount that has been paid as an advance.
Tax applied by overseas tax authorities on royalties (or fees) remitted by licensees to licensors. Tax can be reduced or removed all together if the relevant forms are supplied to the licensee.