Last week’s Wednesday post discussed royalty and sales statements from publishers to authors.
This week we’re continuing (and finishing) that discussion. In addition to the major issues covered in last week’s post, an author’s publishing contract may contain some secondary provisions regarding sales and royalty reporting. These include termination rights, detailed descriptions of statement contents, and timing on the release of retained royalties.
This week, we’re looking at termination and rights reversion in the event of publisher non-payment.
In addition to termination rights when the work goes out of print, authors may want to seek termination rights (and rights reversion!) if the publisher fails to pay royalties when due. Like all termination clauses, these can be tricky to read, and it’s important the author know what to look for in the language.
1. Termination Timing. The contract should specify how long the author must wait before terminating for non-payment of royalties due. Sometimes the contract will also state how much the publisher must owe the author before termination becomes an option (for example, allowing termination only if the publisher fails to pay $250.00 or more in royalties owed). A contract which gives the author ambiguous termination rights also gives the publisher ambiguous rights to keep the contract in force. As always, clarity is key.
2. Rights Reversion. Contract termination is meaningless if the author doesn’t also receive a return of all rights to the work. Any place the contract provides for termination, it should also specifically state that rights automatically revert to the author upon termination (preferably with no further action or documentation required on the publisher’s part).
3. Mandatory Notice. When the contract gives the author specific termination rights for failure to pay royalties due, it’s fair for the publisher to require “notice and an opportunity to cure.” This means the author must send the publisher notice (usually in writing) detailing the nature of the publisher’s breach (non-payment) and the publisher then has a stated period of time to correct the problem before the author can terminate the contract. Read the notice provisions carefully and ensure you understand exactly how to comply if the need arises. If you can’t understand the procedure, or find it difficult to comply with, you need to revise the provision before you sign.
4. “Grace Period” aka “opportunity to cure.” After receiving notice of a default (read: non-payment), publishers often expect a grace period to cure the problem. This is normal and reasonable. Just make certain the time is clearly stated in the contract and that you are willing to agree to whatever length of time the publisher requests.
5. Don’t panic. Not all contracts have specific clauses permitting author termination for nonpayment of royalties. This doesn’t mean you have no rights. Any time a party to a contract fails to perform as the contract requires, the other party has rights and remedies. If the publisher doesn’t pay your royalties, you still have rights to that money and the ability to demand it. Your rights often include termination rights, if the breach (nonpayment) is substantial and ongoing.
As always, if you have questions about this or any other publishing law issues, please post them in the comments or ask me on Twitter, @SusanSpann, using the #PubLaw hashtag.