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How to Read a Book Contract – Minimum Wage for Authors

12 May 2011

Passive Guy has received a lot of questions about his “Minimum Wage for Authors” reversion of rights clause.

The purpose of a traditional reversion of rights clause in a publishing contract is to return all rights to a book to the author when sales of the book have tailed off or, for whatever reason, the publisher is no longer interested in publishing the book.

Often, reversion of rights is connected to an ambiguous Out of Print clause. Under some contracts, a book goes out of print when the publisher declares it to be out of print. Under others, a book goes out of print when the number of printed copies in the publisher’s inventory drops below a specified number. Under one OOP clause PG heard about recently, if the publisher had fewer than 100 printed copies of the book and the author was willing to purchase those copies, the book would go out of print.

A reversion of rights clause without a definite trigger is nothing but an invitation for an author to go begging to his publisher from time to time.

Again, to protect the relationship of the author with the publisher, following isn’t the exact reversion of rights language in any contract I helped with, but it will give you some ideas about how such a provision might be constructed. All capitalized words or terms are Defined Terms described elsewhere in the Publishing Agreement.

The major components of the provision are:

  • It can’t be exercised until royalties earned equal or exceed 150% of the advance. So the demonstration provisions didn’t become too complex, I didn’t include termination provisions for situations where royalties earned were less than 150% because the equities between author and publisher differ if the advance isn’t earned out.
  • If any semi-annual royalty report provides for payment of less than $3,000, the author can give notice of intent to cause rights to revert
  • The publisher can pay the difference between actual royalties and $3,000 and continue the contract. This gives the publisher a second shot at promoting sales of the book.
  • If the publisher doesn’t cure the shortfall or a subsequent royalty report provides for less than $3,000 in royalties, the author can terminate the contract and publisher can’t stop this from happening

Here’s the language

Reversion of Rights

A. If, after the Royalties earned by Author under this Agreement total 150% or more of the Author Advance paid by Publisher hereunder, the Royalties for the Work are less than $3,000 on a semi-annual Statement of Royalties, and Author owes Publisher no other unpaid sums under this Agreement, Author may give Publisher written notice that Author desires to exercise the Reversion of Rights to the Work under this Paragraph.

B. After receiving such written notification, if Publisher desires to continue to exercise its rights to the Work under all the terms and conditions of this Agreement and Publisher is not in material default under any provision of this Agreement, Publisher may, within 30 days of receipt of such notice from Author, pay to Author the difference between the actual Royalties paid with respect to the Work on the preceding Statement of Royalties and the sum of $3,000. If Publisher makes said payment in a timely manner, this Agreement shall continue until later terminated under this Paragraph or another Paragraph of this Agreement.

1. By way of illustration and not limitation, if Publisher pays Author the sum of $2,000 with a Statement of Royalties and Author gives notice as provided above, Publisher may cause this Agreement to continue by paying Author the additional sum of $1,000 within 30 days of said notice.

C. If

A. Publisher fails to make the payment described in sub-paragraph B. above or

B. Publisher has made one such payment and, thereafter Royalties for the Work are less than $3,000 on any subsequent semi-annual Statement of Royalties and Author has given a second written notification of intention to exercise Reversion of Rights as provided in sub-paragraph A. above,

all rights to the Work shall revert to Author on the Effective Date set forth hereafter, and Publisher shall have no further rights to the Work, subject only to the provisions of sub-paragraph F. hereof.

D. The Effective Date upon which all rights to the Work revert to Author shall be 30 days following receipt of the last notice from Author as provided in sub-paragraphs A. and/or C. above.

E. On and after the Effective Date, Author may exercise all of the rights of the owner of the copyright to the Work free and clear of any claim whatsoever by Publisher.

F. For a period of one year following the Effective Date, Publisher shall have the right to liquidate any remaining inventory of hard copy books in its possession on the Effective Date, subject to its obligation to pay Royalties to Author therefor and all other obligations of Publisher under this Agreement. In the event that Publisher has any remaining hard copy books in its possession on the first anniversary of the Effective Date, Publisher shall cause such books to be destroyed at Publisher’s expense.

G. Any other provision of this Agreement notwithstanding, after receipt of any notice from Author under sub-paragraphs A. and/or C. above, Publisher shall not enter into any agreement with any third party assigning, transferring, selling or licensing any rights to the Work in whole or in part without the express written consent of Author to the specific transaction and any such purported assignment, transfer, sale and/or license without the express written consent of Author shall be void ab initio.

Unlike some attorneys, Passive Guy doesn’t believe he is perfect or incapable of making mistakes. If anybody sees a problem with this language or has suggestions for improvements, please make a comment or send me a message via the Contact page.

The Obligatory Disclaimer: Passive Guy is an attorney, but he doesn’t practice law any more. Passive Guy is most definitely not your attorney and is not giving nor will he ever give you legal advice. For legal advice, go hire an attorney who is practicing law. The contract language in this post is for discussion purposes only. It may not be appropriate your contract. It may entirely screw up your contract and ruin your life. It may cause bolts of lightning to strike you dead or make you lose all your hair. Talk to your lawyer before you use this language or any variation of it in any sort of contract.

Contracts, PG's Thoughts (such as they are)