Information on Territorial Rights Sales

Rights can be a valuable source of income for exporting publishers. They’re also a great way to reach new audiences around the world. Here is some information and advice on territorial rights sales from our market guide Exporting Academic and Scholarly Books: A Guide for Canadian English-Language Publishers.

For the purposes of this discussion, a territorial rights transaction is one in which an originating Canadian publisher makes a deal with an English-language publisher in another territory, allowing them to publish the book in question under its imprint in a specified (usually exclusive) geographical area. This kind of transaction is frequently referred to as a “co-publication,” and the Canadian publisher who controls the rights is usually referred to in legal terms as “the proprietor” of the work.

Although “selling rights” is a commonly used term in the publishing industry, it is almost always a misnomer. Most modern contracts grant the publisher a license to publish the work, but do not transfer ownership of the underlying intellectual property.

Most book contracts allow the publisher to sub-license a range of rights to another party, although authors working with agents often retain many of those rights in order to license the work separately for different uses and territories. Agents usually work with trade authors and are rarely involved with textbooks, which are commonly commissioned by the publisher. It is rare for an agent to be involved with scholarly books, as they are highly specialized titles with little potential to earn significant enough royalties to support an agent’s commission. Publishers of scholarly books usually obtain control of the disposition of all subsidiary rights, although the financial benefit of any transaction is largely to the author.

Licensing English-language rights to sell a title in other parts of the world is one of the most efficient and effective means of increasing the international exposure of a work. Certainly, a foreign publisher entering into a rights agreement has greater incentive than a distributor to sell the work successfully, because of the opportunity to recover the initial investment. With art books and other titles that have high production costs, the greatest incentive to sell rights is the ability to share the risk. Co-publishing agreements allow for increased volume of production, lowering the unit cost of inventory, and increasing the gross margin on the copies sold. In such a case, there is a sale and a license. The sale concerns the physical stock, which becomes the property of the purchasing publisher. Meanwhile, the license concerns the right to sell the work in the territory or market specified in the agreement.

Until a few years ago, the standard method of conducting rights transactions for scholarly books was to license rights and sell stock in tandem. This is still the case with expensive illustrated works, where production costs are high and publishers seek to reduce risk by sharing a print run. But as scholarly markets have contracted, the advantages of selling, printing, and shipping units of simple printed texts have diminished. Purchasers are often unwilling to buy in significant enough quantities to move the needle for the originating publisher, and rising shipping costs have made such transactions involving the shipping of finished stock even less financially viable.

The equation has changed since the arrival of short-run digital printing. A rights transaction need no longer be focused on the sale of stock and instead can be more of a pure licensing deal. Publishers (whether buyers or sellers of rights) are trimming initial print runs and printing more frequently in small quantities as needed. It is very simple to provide files to a licensing English-language publisher with minor adjustments to copyright page, logo, etc. In order to ensure that the publisher acquiring rights is invested in the success of the title, an advance against royalties is usually accompanied by an “offset fee”—a non-recoverable payment in return for the use of the file.

A counter-argument to this strategy is that Internet marketing and social media will make international audiences directly accessible to the originating publisher, and that e-books and digital printing at the point of purchase will make the concept of licensing exclusive territories to other publishers a relic. This may ultimately prove to be correct but, as in so many things, the publishing industry has yet to see this digital promise come to fruition, and for the time being, selling rights is still a valuable source of income.

Moreover, the goal of scholarly books and university presses is the dissemination of scholarship, and therefore the scholarly publisher bears a significant dual responsibility. The publisher is equally responsible for both the assessment of scholarly work and the career development of authors who rely on publication for promotion, tenure, and career advancement. The approbation that comes from having a scholarly book published under more than one imprint is gold to an author, and worth consideration in itself as motivation to complete a rights deal for a scholarly book.

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10/05/2016 | Export, Marketing, Rights