Pub Rants

Agenting 101: When The No-Compete Clause Comes Into Play

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STATUS: TGIF! Have a great weekend. I plan to.

What’s playing on the iPod right now? CAN’T GET YOU OUT OF MY HEAD by Kylie Minogue

Currently, Publishers consider non-multimedia electronic rights as part of the “standard” package of the grant of rights when buying a work from an author.

For years, I often held electronic rights (back when publishers weren’t paying attention to it) but now, publishers will walk away from deals unless eRights are granted. Very few authors, especially the new or the debut, are willing to walk away from an offer over a right that makes up such a small percentage of current overall sales—at least in today’s world. Who knows about 10 years from now.

But here’s another interesting tidbit. Let’s say you are successful in keeping electronic as a reserved right. Publishers are getting stricter in the language they are using in the no-compete clause of the contract and that language may make it impossible for you to exercise that reserved right.

I’ve talked about the no-compete clause here in my Agenting 101 series.

But just to jog your memory, here is a sample of language from a no-compete clause in a publishing contract (and since I lifted it from my previous entry, this language is easily several years old).

“During the term of this Agreement, the Author shall not, without written permission of the Publisher, publish or permit to be published any material based upon or incorporating material from the Work or which would compete with its sale or impair the rights granted hereunder.”

So what am I trying to say here? I’m telling you that even if you are able to reserve your electronic rights so as to as to set up your own deal with Kindle or Scribd (or whoever), your publisher could make an argument that sales of your reserved electronic right is materially damaging the sales of their licensed rights.

Ah, I see the light bulbs going off as you get what I’m saying here.

We’ve particularly seen this over the last two years when reserving comic book/graphic novels rights only to fight on the no-compete clause to make it even a possibility for the author to exercise those rights.

Unless you are embroiled in publishing contracts on a daily basis, very few authors make the connection of how these two very different clauses (grant of rights and the no-compete clause) clearly impact each other. Once again, I hope I’ve shed just a little light on it.

And on that lovely note, have a great weekend!

22 Responses

  1. Kelly Bryson said:

    Could you get the publisher to sign a no-compete clause and then sue them if the sales of your ebook are low? Why are they the ones that get it both ways? Oh, wait…Does it go back to the old standard- I need the publisher, they don’t really need me? LOL. Thanks for the info.

  2. Lisa Dez said:

    I can’t even tell you how helpful your series of contract posts have been in enlightening the uninformed. My agent is getting a lot of interest in my mss, so I’m taking copious notes and hoping I’ll have the chance to put my newfound knowledge to work soon.


  3. Amalia T. said:

    Really?! Comic Book rights?! But wouldn’t that just whet the appetite for the book itself? I’m really not sure the kind of people picking up the comic book are going to be the people who AREN’T buying the book, too…

    Man, this is one more reason why having an agent is a good idea, I think!

  4. Jeevan Padiyar said:

    Publishers go into this process trying to protect the investment they are going to make in your work, to produce, print and market it. It wouldn’t make much sense from their perspective, if they spent tons of effort getting an authors book into store (both physical and virtual) only to have those sales damaged by side deals the author makes him/herself.

    It really comes down to protecting the bottom line.

  5. Kelly McClymer said:

    Thanks for this lightbulb. It makes me feel better about having let my publisher have e-rights. I can see that it is a competition in a way that movie or audio rights are not. Someone who sees a movie may run out and buy the book, thus enhancing sales rather than competing with them. But with an e-book, there may be direct competition.

    Never thought of it that way, but it sure makes sense.

  6. Bron said:

    Could authors/agents put in clauses saying that publishers need to exploit these erights to the best of their ability? Otherwise, as Kelly pointed out, they could let them languish knowing you can do nothing about it under the no-compete clause. But I do understand why a publisher would want a clause like this.

  7. mlsfleming said:

    Nobody thought about video sales when Peggy Lee was recording Lady and the Tramp (including her lawyer, I guess.) The rest is not pretty history.

  8. mlsfleming said:

    PS. I have to ask: if writers have their own blog or blog on their own website, won’t that be construed as interfering with book sales? For instance, I’ve read advice that we could put in bits left out of the book. . .

  9. Mechelle Fogelsong said:

    Who usually gets rights to the audio version of a book?

    I recently bought the audio books for two of the Harry Potter series (for my nine-year-old). I was out a whoppin’ one hundred bucks! Who gets that gob of revenue? The publisher? J.K. Rowling? The actor who reads the novel?

    Just wondering. When you say electronic rights, is the audio book in that category too?

  10. Adrian Lopez said:

    Should the book industry someday make the transition to digital-only distribution, publishers as we know them will almost certainly become irrelevant. You can see this in the software industry, where developers of downloadable goods typically become their own online publishers.

    Given the lack of printing costs in eBook publishing, authors will soon find they don’t really need anybody else to publish their eBooks. After all, who needs an abusive middleman trying to claim rights it doesn’t deserve when you can sell your stuff yourself?

  11. Donna Hole said:

    I’ve been thinking of looking into the e-publishing thing, but now I’m not so sure. Patience is a hard commodity to secure for me these days.


  12. Cam Snow said:

    Sounds like it is time for contracts to get even more complicated and confusing. However, I see the publishing companies’ point of view – why should they popularize your book in print and get your name out (at a great expense), and then let you keep potentially lucrative rights that will cut them out of the high profit marging medium?
    However, that is a subtle clause, and you pointing it out definitely clears up a question I had.

  13. Jenny said:

    Couldn’t there be some kind of time limit imposed for *certain* non-compete rights? You’d have to spell it out in each contract–something like for the hardcover period you won’t sell the ebook/comic/accessory rights to anyone else, but once in paperback it’s fair game?

  14. Joseph L. Selby said:

    I don’t so much want to withhold electronic rights to pursue my own distribution methods. I just want a reasonable percentage for electronic royalties. If I have to take less of an advance to get it, so be it. I want my contracts now to represent the baseline I will work for now and in the future. I don’t want to wrestle with the publisher later when electronic rights become a major revenue source and I’m trying to hop on the bandwagon. I want to be able to point to previous contracts and say that this was a precedent of our established relationship and they knew it from my very first book. It may cost me money on the front end and it may not net me money on the back end, but it’s how I want to do business.

  15. Joseph L. Selby said:

    This whole “ebooks spell the end of publishers” is just silly. Authors can publish their own content electronically now. E-only printing won’t increase their exposure any more. Publishers will continue to do what they do right now, serve as a distribution and promotion venue for authors who would otherwise be unknown to 99.999% of the world.

  16. Adrian Lopez said:

    Publishers serve four major functions: editing, printing, marketing and sales. eBooks aren’t printed, leaving editing, marketing and sales as the only services a publisher offers to eBook authors.

    There isn’t any reason why those functions have to be served by publishers as we know them, and it’s not too difficult to imagine an environment where freelance editors take care of the editing, PR experts take care of the marketing, and agents take care of securing these experts and of selling the final product to those stores that for some reason choose to carry a select virtual inventory (despite virtually unlimited capacity).

    If you think that’s silly, it’s only because you refuse to see the potential.

  17. LilySea said:

    I’ve just received a small press offer for publication but I don’t have an agent (YET). This has been really helpful as I ponder whether or not to accept the contract–at the very least what changes to ask for before I decide.

    Thank you!