Friday, November 13, 2009

When The No-Compete Clause Comes Into Play

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!