Generally, “merchandising rights” refers to the right to create, market, and sell merchandise (read: physical items). In a publishing deal, “merchandising rights” refers to the right to create and sell “merchandise” based on a book or created world.
“Merchandising rights” is a broad term, which covers everything from greeting cards to T-shirts and action figures. Many authors don’t realize that publishing contracts often contain a license of merchandising rights (to the publisher). Contracts which license merchandising rights to the publisher should also contain a royalty split for the author. However, there’s no legal obligation (& often, no need) for an author to license merchandising rights to the publisher at all.
The grant of merchandising rights usually “lives” in the paragraph which contains a listing of subsidiary rights. You usually won’t see merchandise listed in the initial grant of rights – so be sure to check the entire contract for the word “merchandising” or “merchandise.”
Although some publishers want to license merchandising rights, merchandise is often a windfall for both the author and the publisher. Merchandising rights become most important when a series or book becomes a bestseller (or a film or TV series). However, book-themed merchandise can sell from day 1 – so it’s important to consider the issue carefully before signing those rights away.
Let’s look at some issues authors should consider before licensing merchandising rights to a publisher or other third party:
1. Is the grant of rights exclusive? True exclusivity prevents the author from making his or her own merchandise, as well as licensing to others. Except in unusual circumstances, the author should generally retain the right to create & sell his or her own merchandise.
2. Is the publisher or third party capable of exploiting the licensed merchandising rights? Don’t license merchandising rights — or anything else — to a publisher or other party who can’t use and exploit them effectively. Few (if any) publishers have merchandising departments – and few have sales departments capable of licensing those rights effectively. Unlike foreign rights, merchandising rights most often sell when third parties approach the rights owner, seeking permission to make a product. If you’ve licensed the rights to a publisher, you lose the chance to make that deal yourself. Some authors don’t mind licensing merchandising rights, but no author should license them without serious thought.
3. Does the publisher (or other third party) have a plan to exploit the licensed merchandising rights? You wouldn’t sell your manuscript to a publisher unless the publisher actually intended to publish the work, right? Then why license merchandising rights to any third party which can’t explain its plan for exploiting and profiting from them?
Many authors feel intimidated when publishers — or anyone — pushes back on the issue of merchandising rights. Don’t.
Merchandising rights may have little value at the time the contract commences, but over time they may grow to significant levels. Consider JURASSIC PARK and GAME OF THRONES. How much more valuable are the merchandising rights now than they were at the time of the novels’ initial release?
Your novel may never reach GAME OF THRONES levels. Then again, they might. Be smart about your merchandising rights now and avoid regrets later.
Is it worth abandoning a publishing deal to retain your merchandising rights? Maybe not (though only you can make that call). Like any other rights, merchandising rights are a valuable component of the author’s work, & must be treated as such. When considering whether to license merchandising rights, it’s OK to ask how the other party intends to use & exploit them. It’s also important to make sure your financial remuneration (read: royalties and payments) are fair and stated in the contract.
Never let your excitement over a publishing deal (or your fear of losing one) push you into making a foolish business decision. Once you’ve signed the rights away, you may never be able to get them back – so take the time to make a solid business decision.
No one can tell you whether or not to license your merchandising rights. It’s a call you must make based on the facts & circumstances of the deal. However: it’s always wrong to license your merchandising rights (or any other rights) without serious consideration. If you can’t evaluate the offer yourself, consult an agent or a publishing attorney for assistance.
Remember: if you’re an author, writing is your art but publishing is your business. Treat it as one.