Subsidiary RightsMarketing: Internet

L 9

Ing. Jiří Šnajdar 2014

Subsidiary Rights

The sale of subsidiary rights is essential to the success of your company.

The net profitability of most publishing companies comes very close to that percentage of sale of subsidiary rights.

A subsidiary rights sale is any rights sale that is “subsidiary” or secondary to the actual right to publish the book.

That is, it is any sale of the right to publish the book that you, as publisher, grant to someone else for a licensing fee.

If you view subsidiary rights as just that, something that is incremental or “subsidiary” to your regular publishing program, then you will put it into the proper framework.

This area can be extremely lucrative, but the streams of income are relatively unpredictable. The more usual pattern of selling sub-rights results in a modest stream of revenue that builds over time.

What constitutes subsidiary rights?

• Book club sales• Serial rights sales• Foreign rights sales• Mass-market rights sales• Audio book sales• E-content sales• Movie sales• Stamp sheet sales• Condensation sales• And much more

If you think sub-rights is only for the large publishers, think again!

Many independent publishers are highly successful in selling subrights.

Book Clubs

Book clubs are direct response vendors who sell a variety of publishers’ books to the members serviced by the individual club.

The service provided by the club is at least twofold: to provide an editorial selection for members, and to make it easy for buyers to purchase books they either might not find elsewhere, or which may be purchased at a reduced cost from the club.

One common dilemma for publishers revolves around the question of whether selling a book to a book club will cannibalize the publisher´s sale of the same book in other markets.

If one looks at the results obtained from publishers who do large-scale direct-response marketing on their retail programs, the fear of cannibalization can be alleviated.

What almost all publishers agree on is that selling books to the clubs is an excellent way to increase your book’s exposure and sales and that selling to clubs has no negative impact whatsoever on sales through other channels.

Once you’ve decided to sell your books to the clubs, how do you go about it?

There are basically four key elements to selling to book clubs successfully:

1. Target your book to the right clubs.2. Get your material in early.3. Establish rapport with the buyer.4. Price your material correctly.

Let’s review each of these factors in turn.

Sending a cookbook to the Military Book Club is a total waste of your time and money.

Use common sense and rigorously target every book on your list to the appropriate clubs that may be of interest.

No matter how frequently you sell clubs, every time you think about submitting a new title, always go through the list of clubs in Literary Market Place to remind yourself of what clubs are around and what clubs might be interested in your title.

No matter how often you sell clubs, there are always some you’ll forget about or overlook. It’s a step that’s simple to take—and can reap rewards.

Get Your Material in Early

With clubs, there are between 13 and 17 cycles per year for most of them. A cycle is the period between mailings of club catalogs or offerings of books to members. That means clubs constantly need new titles for use as Main Selections, that is, the primary book offered during a cycle, or as Alternates, other newly offered titles that members may purchase from month to month.

In most clubs, the main selection is automatically sent as a “negative-option” title.

Positive-option books, on the other hand, are returned in very small percentages because the people buying them actually request them.

What is important to you, as a publisher, is to understand the rhythm of the clubs’ mailings; what clubs usually buy; and therefore what they’ll need.

Thus, to sell successfully to clubs, you must get your books to the clubs very early, so those books can fit into the clubs’ schedules.

Different clubs have different needs and schedules. One nice attribute (among others) of clubs is that they are anxious to see material as early in the publishing process as possible.

Establish Rapport with the Buyer.

Once you’ve sent in your material, wait a few weeks before checking up on it.

Buyers have too many books to review and too many buying options.

Don’t make an enemy of them or a pest of yourself. Do, however, get to know the buyers.

One of the big mistakes some independent publishers make is that they don’t take the time or make the opportunity to see book club buyers or to talk to them on a regular basis. Again, this is a highly personal business.

Price Your Material Correctly

Few publishers get rich on book-club sales.

The reason is that, book clubs have very high costs of creation and mailing. Thus, they must purchase books from the publisher at very deep discounts, or print their own editions, to make the margins they need to operate successfully.

How deep are the discounts needed?

Depending upon the quantity purchased, around 60 to 80%. Why then sell to book clubs?

Because

1.You can make incremental money on the sale.

2. You can save money on your own print run by adding the club’s copies to that run. The money you save per copy by running a greater quantity of copies never directly shows up on your income statement as a by-product of club sales but is a primary reason for selling to clubs.

3. Selling to the club helps you turn inventory faster.

Because

4. Turning inventory faster helps your cash flow because you can turn inventory into cash quicker and earn an amount greater than keeping the money tied up in inventory, and most likely greater than that you can earn by simply keeping your money in the bank.

5. You get free advertising from the club’s catalog, website, and print advertisments.

Because

6. You get the prestige of being able to state on your book’s cover or jacket, and in all of your press material, that the book is a selection of a club.

7. Your authors will be happier.

Pricing for Book Clubs

A publisher can make money on book-club sales in two ways:

• on the unit cost• on the royalty

If a club is interested in your book, the buyer will call or e-mail and ask for a quote on buying the copies they need, whether 200 or 2,000 or more.

There are two ways clubs work with publishers: they either buy copies from your inventory or stock, or they will print their own edition. If a club buys copies from your stock, it will pay you both a unit cost and a royalty.

When you estimate your book for the club you must do so using their parameters, this is subsidiary income.

You must establish a different costing method for it and provide the club with the discounted price that works for their market.

Once you have the all-inclusive club price, which covers both unit cost and royalty, you back out the royalty to see what the actual unit cost is and to see how it compares to your own unit cost.

Different clubs use different royalty rates, so again you should ask the buyer what the royalty rate is for that particular club.

Rates range from 2.5% on dividend or bonus books up to a more usual 8 to 10% on hardcover books.

With this calculation completed, you can compare the club’s unit cost offer for your book with your unit cost of paper, printing, and binding.

In sum, use the clubs to help your profitability, but don’t view them unrealistically.

Over time, working with the clubs can generate substantial income and incremental profits.

Get to know the club buyers as well as you can.

If you prove your commitment to them, work with them consistently and properly, then they will welcome your call and visit.

And that will be beneficial to everyone—especially your company.

Serial Rights

Another subsidiary right that is relatively easy for smaller publishers to sell is serial rights.

Serial rights refers to the sale of parts or all of your book to a magazine, newspaper, journal, website, or other media, which will then publish that excerpt of your book in the magazine or other media.

Like book clubs, magazines, journals, and most other media work on long lead times.

Newspapers and websites are the exception.

Basically there are two kinds of serial rights:

• First serial, which gives the purchaser the right to publish the material prior to its book publication

• Second serial, which grants the purchaser the right to publish after publication

First serial rights give the media publisher a “scoop” over others because it will have first access to your material, so the publisher can usually demand a larger fee for that use.

Second serial rights are always nonexclusive and the payments to the publisher by the media for such rights range from zero to substantial sums.

Serial rights can be nice incremental income.

Foreign Rights

As a publishers are always looking for new books to publish, so too are foreign publishers.

And sales of your books to these publishers can be an excellent source of subsidiary rights income. The key is to find those publishers who are publishing in categories similar to yours.

Once found, it’s an easy process to find an editor in that foreign house with whom you can correspond and who can express interest, or not, in your books.

Foreign Rights

The easiest way to begin the process of selling foreign rights is to make a commitment (remember that word) to this source of sub-rights income.

The easiest way to begin the process of selling foreign rights is to make a commitment (remember that word) to this source of sub-rights income.

Foreign Rights

It is always good trying to get a royalty-inclusive sale. The reason for this is simple: you then don’t have to worry about how many books the foreign publisher sells. You will already have your money in hand.

How much can you expect to make on foreign rights?

It depends, obviously, on the kind of book you have. The range is vast.

Remember too that your marketing expenses for selling foreign rights are typically deducted before royalty splits are made to your author.

Costs for exhibit space, personnel, and travel should be fairly apportioned against those titles sold and deducted from any revenues received.

Whatever you earn, though, is extra, incremental money to that which you had before.

Remember, sub-rights income grows as your reach expands.

Foreign Rights Agents

Many publishers, both large and small, rely on agents and foreign co-agents to handle their foreign rights sales.

The reason is simple: foreign rights sales can be complicated by a variety of issues including the difficulty of keeping abreast of local market trends; the difficulty of keeping up with the constant editorial and personnel changes that occur within individual publishing companies; the difficulty of conducting business in a foreign language; not to mention the difficulty of dealing with foreign currency-exchange issues.

Foreign Rights Agents

How much do agents charge for their services? Most work on a commission basis and charge 10 to 15% of the sale price as their fee.

Direct Response

Marketing: Internet 101

Because of the difficulty of obtaining good trade distribution or in an effort to expand markets or target those markets more precisely, many small to midsize publishers turn to direct response marketing.

• Internet/online sales

• Direct mail

• Telemarketing

• Catalog sales

• TV ads and infomercials

• Radio

• And more

The essence of direct response marketing is the sale of a product directly from the source of the product to the end user, eliminating the need for middlemen along the sales path.

The essence of direct response marketing is the never-ending pursuit to develop new creative efforts that can become your control piece and generate greater response.

The point is, by looking at how others market their competitive products, you’ll get a feel for what’s usual.

Like every other aspect of publishing, you can be successful in direct response, but it’s not easy. You must budget constantly and accurately. You can’t omit small things that you think aren’t important. Every single item is important. Do your homework carefully and then jump in.

But don’t jump in over your head.

Start slowly and test. Then test again.