This year I submitted a new novel to the publisher who published my first novel and this week they sent me a contract. It looks the same as the first contract, and sounds the same as the first contract, but upon comparing the two, there are a few differences. One new point regarding compensation has me perplexed and I would like to know your feelings on it.
Here is the new paragraph listed under "Compensation for Primary Rights":
(1) If we sell, assign, enter into a distribution arrangement, or otherwise transfer one or more of the Primary Rights to another publisher, you will receive the Author’s Percentage of the amount we receive in connection with sales associated with each such Right, e.g., you will receive the Author’s Percentage of 25 percent of amounts we receive for a license/transfer of audio rights listed in Paragraph(X)
(2) With respect to proceeds which are not readily identifiable as payment for any specific Right, or which are consolidated to pay for more than one Right without designation as to their application, e.g., an advance payment for all Primary Rights where different Author Percentages apply, we will make an equitable allocation of such payment for each Right being acquired relying upon the percentage of total prior sales associated with each Right. To the extent utilized, agents’ or expert counsel fees would be deducted before the allocation of any such proceeds to either you or us.
Generally a publishing contract precludes a publisher from selling or assigning the license you've granted them for print and electronic publication unless they've sold the entire company.
Here's what that language looks like:
Publisher shall not assign this agreement without Author’s consent, except that no consent shall be required if such assignment is made in connection with the transfer of all or a substantial part of our business.
What they're asking you to agree to here is a pig in a poke. You won't know, or have any control of the royalty rate you're paid if this publisher gets a distributor or does some other kind of deal with their assets.
What you're going to suggest instead is that they pay you a royalty based on the net. That means if they start paying a distributor (which it sounds like they aren't now) the rate they pay you is the same and thus auditable. What will change is the amount they receive. That too is auditable.
Resist signing this clause as it is.
If they license the audio rights to your book, that is a subright, not a "primary" right, and you should receive at LEAST 50% of the proceeds. A good agent gets you more, or retains the audio for direct sale.
The "we'll pay you a pro-rata share" of what we receive should be struck as well. I'm not sure what they're planning to do here but unless you know what this covers, you don't license them the right.
This is why you really need a publishing lawyer.