Sub Subsidiary Rights

By David Alan Rech of Scribe Inc.


By definition, subsidiary rights are a mystery. We have no sure way to predict revenue generated through the various streams that account for the backlist life of a publication, so any revenue that is generated from subsidiary rights is often excluded from a book’s profit and loss accounting and is rarely a consideration when producing a book.

Though I would argue that the accounting methodology employed in this consideration is outdated and that the reasons behind it (along with all the tax implications) are no longer valid, the real danger in detaching “subsidiary” rights from the frontlist consideration of a book lies in the damaging effects it has on the book itself.

The damage done by siloing out subsidiary rights is dramatic. The act of segregating them from the editorial and production process detaches the full life of a publication from those who are producing it. Publishers who are only concerned with getting a book to the first run print tend to be shortsighted in the manner in which they produce books. They care little for creating a well-constructed book, having an archive of the production files, or using the best source files in the development of other products.

This destroys the individual publication and the publisher directly. Increasingly, the backlist life of a publication means more than just gaining rights to a foreign market; it involves deploying a publication in another format. Thus subsidiary rights are generated by more than mere reprints. Be they companies seeking the ability to translate a book for a foreign market or aggregators wishing to distribute publications in a specific platform, those seeking subsidiary rights regularly deploy books in forms that differ from the original print.

Obviously, those who obtain subsidiary rights are sensitive to development costs. Like any business, they seek a good return on their investment. The higher the cost to bring a product to market, the less it is worth to them. Despite the fact that the best practices to efficiently edit and produce frontlist titles improve the quality of archival files, publishers rarely have optimal files. Thus opportunities to gain subsidiary rights are frequently lost, and any corresponding revenue goes unrealized.

Remarkably, the biggest complaint from those who obtain or negotiate subsidiary rights is that publishers do not supply files from which they can work. The causes for this are manifold. Publishers often rely on outside representatives to handle their rights, and while this gets contracts signed, the publishers often have no mechanism for fulfilling the needs of the licensee. In many cases, there is no repository for publisher files; those tasked with producing books—the editorial and production staff—frequently don’t have an archive of their publications. They “rely” on their vendors to have files, or they merely keep foul or PDF versions of their publications. There is a complete disconnect between those producing books and those who bring them to market.

In light of this article, this may seem problematic. But to those who produce books, this problem simply does not exist. Those tasked with producing a book have “no need” to preserve or maintain files. Their only concern is producing the frontlist print product (usually through a vendor) and making sure that a PDF is available for the printer and e-book developer—they are detached from the life of the book and must answer only to the frontlist profit and loss accounting in which publishers engage.

The result of these practices is that contracts go unfulfilled or the cost to deliver a book to a “secondary” market is excessive. This causes diminished revenues on solid-selling books and results in no revenue for books of lesser esteem. Equally important, it limits the options for “alternative” revenues for publishers to pursue. In a world in which publishers are struggling to get books sold, this creates a downward fiscal cycle that causes diminishment of the editorial and production process. Publishers continuously narrow the focus of sales to ever-shrinking frontlist strategies because they cannot see alternative opportunities to sell and market their books. Frankly, almost every publisher that I know complains about Amazon but cannot see a way out of their dilemma. I suggest that part of the problem is that we are so focused on looking at the (dead) trees that we fail to see a forest of opportunity that is available to us.

Another major issue is that editors and production people are fixated on the print (and sometimes the e-book) production without consideration for a variety of matters. Faced with continuous cost-cutting measures, editorial and production staff narrow their focus to fulfilling the immediate requirement—producing print, ePub, and Kindle files. They do not have the opportunity to develop best practices. In the current method of accounting, there is no budget for staff to develop their publications in more artistic, functional ways. Without the view of how publications are utilized along the full complement of readers, they miss opportunities to improve the frontlist life of a publication.

The editorial and production process is done in ignorance of how publications are deployed in other environments—how they are read in their entirety. This results in a failure to think more holistically about publications, see how actions relate to each other, or deploy more creative strategies to edit and produce books. When you connect standard book publishing with backlist opportunities, it dramatically affects the way a book is edited, designed, and indexed. Fusing the multiple uses of a book allows publishers to be inventive about their publishing program and how they structure relationships with licensees and helps them generate a larger audience (and thus larger revenue) for their books. It also opens up new opportunities for publishers to sell their books outside of the diminishing “traditional” market or the publisher-killing Amazon market.

Subsidiary rights, by definition, are not a primary concern. But to divorce them from the frontlist editorial and production process is a damaging and perhaps enterprise-threatening activity. If we are to survive as publishers, we must develop creative ways to produce, edit, and sell our books. This is not a secondary concern—nor should the life of our publications be.