children's book advances and royalties - how to split with author

amandajoyhogan

@NessIllustration Thanks so much for your reply!
Yes, our approach was very untraditional and I'm surprised we found a publisher! The original plan was to self publish, but the author found a small imprint that was excited about the project.

Can I also pick your brain about copyright? I just asked Jeremy this question above, but basically we are retaining subsidiary rights because the author wants to pitch merchandise to some brands. She feels she automatically owns rights to my art in a 50/50 split because we were collaborators on this project. From what I understand, she'd only own rights to my art if this project was work for hire or if she purchased rights from me.

However, she will be the one doing to work of pitching the merchandise and of course that effort has value. I just want to understand this industry better and try to avoid being taken advantage of.

Thanks again for the insight! I really appreciate it.

NessIllustration

@amandajoyhogan She owns the right to the text only, you own the right to all the illustrations including the character designs, unless and until you license or sell those copyrights to her.

It's usual for the illustrator to license (rent out) the rights just for books, and usually for a limited amount of time (like 5 years). If she wishes to create more products than just books, she needs to either buy the copyrights outright or license additional rights for specific merch products. A license could be a flat fee, or it can be a royalty. 5-10% is standard.

Jeremy Ross

Hi @amandajoyhogan, the copyright ownership and use needs to be in your contract with the small publisher.

Make sure you read the full contract and consult with an attorney if you’re not sure.

Sounds like this is a great opportunity to get published; however, it also sounds like this book might develop tension with yourself and your friend author. Complicated…

Good luck!

amandajoyhogan

@NessIllustration @Jeremy-Ross

Our contract with the publisher indicates that we are retaining sub rights for merchandise, tv, etc. So the author and I are having a second contract created for additional uses of the work. I will make sure I keep ownership of my copyright in that contract, but the author wants me to sign for 50/50 split on any merchandise created. Do you see any downsides to signing that agreement? Would it be more common to have a contract for each merch product licensed rather than one all encompassing contract?

Thanks again for the help! I didn't know this process would be so complicated and this forum has been really helpful.

NessIllustration

@amandajoyhogan A licensing agreement is usually 5-10% royalty for the artist. It seems low, but that's because it's calculated from the revenue, not profit, and the manufacturer has to account for all production and marketing costs before splitting what's left.

50% sounds like a better deal, and it might be, but I'm pretty sure she mean 50% of the PROFIT, not how royalties are typically calculated. In that case, your cut is only as good as the profit margin. Make sure to ask for those details and calculate what your cut will be for each unit sold, and it will give you a better idea if this is a good deal or not.

Jeremy Ross

Hi @amandajoyhogan, I think the question you should be asking yourself is:

“How likely is it that my characters will be merchandised?”

I can certainly appreciate your due diligence in advance, but is the level of effort worth writing and executing a separate contract for merchandising rights?

You may very have an award-winning book in your hands, in which kids would love to have a plush toy to accompany the book.

When I go to BarnesabdNobles, I see the top books (bestsellers) and classics have a toy you can also buy, which is pretty cool.

https://www.barnesandnoble.com/b/literary-plush-books/_/N-2r19

amandajoyhogan

@NessIllustration that makes sense. I can't calculate the cut yet, because there's no actual merchandise planned. It seems like I should hold onto all my rights for now until she can propose a specific product that she wants to make and we can negotiate from there.

amandajoyhogan

Hi @Jeremy-Ross

So you're saying possibly better to hold onto my rights until we see how the book performs, correct? I feel like I'd be more clear on what I'd want to license out at that point.

I love the idea of a plush toy. That's been on my mind for sure - dreaming big, but it would be so fun to see this character as a doll someday.

NessIllustration

@amandajoyhogan It does seem incredibly premature to even be discussing that with the author at this point. Keep your rights and after the book is out, if it does well and merchandise is actually a real possibility, then you can license additional rights.

I don't have to tell you that most self-published book rarely make it past 50 sales, much less ever gets merch. This feels as premature as debating what color the baby nursery should be for your future child while on a first date...

Jeremy Ross

Good plan @amandajoyhogan