Electronic Rights Publishing Agreements: Permissions & Out-Of-Print Clauses

Introduction

Electronic publication has significantly broadened the scope of publishing and licensing opportunities for publishers. Therefore, it is important that the author-publisher agreement permits the publisher to take advantage of these opportunities to increase the revenue stream from the original print-based publication for both the author and publisher. Two important clauses that should be reviewed as a result of the increased importance of electronic rights are the "permissions" clause and the "out-of-print" clause that may also be referred to as the "discontinuance of publication" clause.

Permissions Clause

The permissions clause is frequently overlooked as being one of the more mundane boilerplate clauses in the publishing agreement. Traditionally, permission to use third party material by the author has been restricted to only the book that he/she is currently writing for future publication. The permissions issues that were most commonly discussed by author and publisher usually concerned who would pay for the right to use third party material and the timely delivery of permission releases to the publisher so that the publisher could ascertain that the author had obtained the right to include the third party material in his/her book.

Today, the scope of use for permissions should be broadened to ensure that the publisher has the ability to take advantage of additional commercial opportunities other than just use the third party content in the publication of a book. The publisher's broadened use of third party material should, if feasible, be accomplished when the author initially obtains permission to use the third party material. Although it is certainly possible for the publisher to obtain permission each and every time the publisher plans to use the author's work in other than book format, such as electronic use, this may not be the most cost effective or efficient manner to acquire permission.

The alternative permissions model is one whereby the publishing agreement requires that the author initially obtain permissions to use third party material for "all the rights" that the author has granted to the publisher in the grant of rights clause. By using this permissions model the publisher has the capability to use or license the author's work for other than just book publication without being concerned with whether additional permission must be obtained before using the third party content.

Another concern that that is frequently not addressed at all in the publishing agreement or permissions clause involves those instances when the author should obtain interview and photograph releases. Once again, specific contract language could be added to the permissions clause that requires the Author not only to obtain the releases for use of the material in the book but also ensures that the publisher can use the interviews and photographs for all the rights granted by the author to the publisher.

Recommendation:

The permissions clause should be reviewed and revised if necessary to include permission to use third party material for the all rights granted to the publisher and this clause should also encompass interview and photograph releases.

Out-of-Print Clause

The out-of-print clause has traditionally concerned itself only with an author's book that is no longer available in the book format. The purpose of this clause is threefold in that it set forth the (1) particular conditions under which an author's work would be considered out-of-print, (2) duties of the publisher to reprint the book, and (3) author's rights in the event the author's work goes out-of-print and the publisher fails to reprint the book.

Although the specifics of this clause will vary among publishers this clause has normally worked as follows. Once the book is no longer being published and distributed by the publisher or if a licensed book edition is not then currently available or forthcoming, then the publisher upon the author's request must reprint the book within a specified period of time or in failing to do so the clause permits the rights in the author's work to be returned (revert) to the author.

This clause may still be satisfactory for some publishers but it may not meet the needs of those publishers who are currently taking advantage of or planning to use or license the use of the author's work in the new publishing technologies such as publishing an author's work electronically or by print-on-demand. It would be prudent for all publishers to review the out-of-print clause and evaluate whether their existing clause takes into consideration these new technologies in determining when an author's work shall be considered out-of-print and more importantly whether you want the out-of-print clause to provide for these new technology considerations.

The important question for the publisher is the following: "Should an author's work be considered out-of-print when it is only available as an "electronic book" or as a "print-on-demand book"? The significance of this decision, especially as it relates to backlist titles, could have an important impact on the company's publishing model and financial viability. Although this may appear to be an easy decision for the publisher, there are a number of issues that should be analyzed before making that decision.

The publisher's and author's goals are compatible and are principally twofold: (1) the availability of the author's work to the purchasing public and (2) the revenue from the sale and licensing of author's work. These goals could be achieved in a variety of ways by revising the traditional out-of-print clause and addressing those issues that will ensure that the author's work continues to remain available for purchase and advertised and promoted through both currently existing and new distribution methods.

It is my opinion that an author's work should not be declared out-of-print based solely on the condition that it is no longer available in a print format. Instead, the out-of-print clause should recognize that an author's work will be considered "in print" for as long as the publisher and author agree to certain conditions that provide for (1) the continuing availability of the author's work which will include it being published through print-on-demand technology or as an electronic book, (2) the book publisher's commitment to promoting the author's title in its regular trade catalog and on its web site, if such web site exists, and (3) guaranteeing the author a minimum annual royalty. It is my contention that all parties, including the reading public, will benefit from this revised out-of-print clause. For the publisher, this proposal could require minimal or even no warehoused inventory and the savings of financial resources could be better utilized in promoting the author's work and ensuring that the author received an minimum annual royalty. The reading public and author would be satisfied in that the author's work would remain available for purchase for a longer period of time than may be realistic under the existing publishing model.

Recommendation:

The publisher should review its current out-of-print clause and consider revising it to better meet the needs of a new publishing model that may result in the following benefits (1) increased revenue for publisher and author, (2) a better use of financial resources for the publisher, (3) a longer time period in which the author's work would remain available to consumers, and (4) a guaranteed minimum annual royalty for the author

Conclusion

Electronic rights have created a new revenue stream for publishers and authors. However, the business and legal dynamics resulting from electronic rights have created a new publishing model that must be incorporated in the publisher's standard publishing agreement to ensure a successful transition to this new model. This transition will only occur if the publishing agreement is reviewed and revised accordingly.