The Business Side of Writing: Rights of First Refusal

My topic this month is something that any business person should be familiar with, only a lot of writers aren’t business people. Many of them have never negotiated a contract and are unaware that once they sell a book, they and their writing become a business. Most publishers, from the  big six to the small presses, want the right of first refusal on your next book.

The concept itself isn’t that advanced. Once they have one of your books lined up for publication, a publisher will want to be the first to see your next book, and they don’t want anyone else to have a chance to buy it before they do. Many writers see this as a benefit, knowing that the editor and publishing team they already work with will consider taking on the next project. So why an entire blog post about this contract provision? Because I believe it is taken to an extreme and abused in the LDS market. A lot of small LDS presses want right of first refusal on everything you write after you publish with them. Sometimes it says as much in the contract. Everything you ever write has to go to them first. Even if it’s all wrong for them, and even if you didn’t enjoy your publishing experience with them. There’s also a power imbalance here that can stop your writing career cold. It’s extreme, but it does happen. Specifically:

There is often no provision stipulating how long they have to consider your next book. Anyone who’s submitted a book around knows that a publisher can take a year or more to consider a book and decide whether or not to publish it. Even if you know the book you’ve written is all wrong for your publisher, under this provision they get to sit on the project for as long as they like. Sometimes this can get downright malicious. A colleague of mine, working with a non-LDS small press, saw her next book go into submission purgatory indefinitely. She and her editor had a disagreement and he retaliated by holding her career hostage. While a turn like this requires someone with a bad motive, the problem with this contract provision is that it doesn’t safeguard against a person with a bad motive. Power goes to people’s heads, so stories like this aren’t unheard of.

Does this mean you refuse to have a right of first refusal in your contract? Not necessarily. They are the norm. The important thing is that the right have a clearly defined scope. Here are some clauses that you’ll want to consider including.

A time limit on how long they have to consider the book. Rather obvious, no? I don’t think I need to spend a lot of time on this, but the publisher does need to be under some time pressure to decide whether to fish or cut bait. They should never have the power of holding up your career. I don’t know what a standard time limit is. The one I’ve seen bandied about is three months. A time limit doesn’t just prevent the worst outcome, it works to the benefit of the author. It means that the next time you submit, there’s at least one publisher who’ll get back to you in a relatively short amount of time, thus cutting down one of the years you might spend waiting to sell that next book.

A limit on the types of books they’d have the right of first refusal on. Even with a shorter time limit, a submission to your old publisher of your new book could still be a waste of time. What if you wrote them a how-to book and your next work is urban fantasy? Why bother giving them three months to stall your submissions process? Any right of first refusal should be limited in its scope to the type and genre of book you’ve already published with the house.

Only one right of first refusal at a time. Any clause in your contract that makes a blanket statement that the publisher gets right of first refusal every single time you write a new book is overreaching. They are trying to control your career decades in the future, and this is unnecessary. Rather, each agreement should contain the right of first refusal for the next work, and the parties should negotiate whether this provision stays in or out. One publisher, I’ve just been informed, wants right of first refusal for at least twenty-one years. Okay, so this trips the lawyer geek in me. Why is twenty-one years significant?

It’s the time period in the Rule Against Perpetuities. I’ll save you the lecture, but in summary, the Rule Against Perpetuities ensures that no legal entity or agreement can endure indefinitely. It’s to prevent us today from being bound by agreements that made sense in the middle ages, and to prevent us from imposing our dated desires on people centuries from now. If the publisher is aware of the Rule Against Perpetuities, I would argue that they’re aware they want too much power. The R.A.P. shouldn’t come into play in publishing except for in one instance: copyright law. This is why copyrights expire 70 years after the author’s death (with the exception of Peter Pan – but that’s another story.) That a publisher should want to control your submissions for as long as legally possible is overreaching, in my opinion. Finally:

Once you are successful, you want that right of first refusal gone. Why? Because of what’s called an auction. Now, people know what auctions are in general. In publishing specifically, they occur when the same book is offered to multiple houses and they bid for it. Auctions are a powerful tool in an author and agent’s arsenal to push the amount offered for an advance higher than would be possible any other way. Furthermore, they are a recognition of the relative power of the parties. An auction is that turning point when the author is able to start calling the shots. As the creator of the content for sale, a successful author should reach this tipping point sometime in their career. An eternal right of first refusal is a specific attempt to prevent an author from reaching this tipping point, and it’s imposed on the author when they are new to the game and relatively powerless. An unacceptable abuse of power, in my opinion.

So, okay, let’s assume now that you’re a writer with a contract with a right of first refusal in it that you want taken out. What are the usual arguments that you’re going to hear from the publisher? There are a few that crop up all the time.

It’s actually a benefit to you as an author. This is spouted in the LDS market all the time, and it’s complete garbage. How can I prove it? If it’s really of benefit to only the author, then no publisher should have any problem ditching it without argument. I’ve yet to see a publisher do this. Clearly it doesn’t benefit only the author. It might be of some benefit to the author to know that one publisher will review their next book, but a publisher isn’t out to be charitable here. I have little patience for bogus spin, and this one’s way too common. Don’t fall for it.

It’s standard in the industry. This is the “everyone else is doing it” argument. It always cracks me up when people ascribe this to teenagers. Everyone uses this argument – and we all know the answer: that alone doesn’t make it a good one. Same goes for right of first refusal clauses. Explore why they’re so common and decide for yourself if they’re for you.

You don’t get a contract if you don’t accept this. Ultimately, this is the one you can’t refute unless you have another offer, and that’s the way the power balance is when you start out. The only way to refute it is to go with someone else, or go indie, which may or may not be the right decision for you. Now that indie is an option, it’s always worth having it in your back pocket, ready to pull out if traditional publishers try to hold you over a barrel.

As with any business agreement, the deal you get is about the balance of power. Go in with your eyes open. Many authors have launched successful careers with a bad first contract starting out, but don’t get locked into a provision that will never allow you to grow. Plan for contingencies, and your own success is a contingency. I can’t give concrete advice on how strongly to weigh it, that’s up to you, but don’t ever disregard it. Accept a right of first refusal only if it benefits you in some way.

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34 Responses to The Business Side of Writing: Rights of First Refusal

  1. Ryan Rapier says:

    In my recent contract, the clause called for last right of refusal rather than first. Since I wasn’t bursting with offers, I took it. But in my mind, I saw this as preferable to first right of refusal because I would have the option of seeking out other offers which my current publisher when then have an opportunity to match. Am I correct in this assumption or is last right of refusal as detrimental as first right?

    • Wm says:

      My best guess is that it’s not a good thing. But there’s not way to know without knowing the exact language of the clause — did you have an attorney review the contract? What exactly do they have to match?

      The reason why it could be a bad thing is: what if, for example, a national publisher wants the book and the small publisher wants to and is able to meet the advance (let’s say it was a smallish advance $5-15k and not a huge one that the small publisher would not be able to meet). Wouldn’t you rather have the distribution support and marketing power of the national publisher over the small publisher? Actually, the answer to that isn’t a slam dunk — it very much depends. But let’s say that you’d prefer the national publisher. The small publisher now has control over whether or not you can enter into that business relationship. Not having Right to First Refusal (and you’re absolutely sure that they don’t have that, right?) technically means you can shop your other works around. But have RtoLR means that the publisher still has some (how much exactly depends, again, on the exact terms) control over the results of that process.

      Or another scenario: what happens if you simply would like to switch small publishers because a different one has an editor you would work better with and/or a better marketing and sales team?

      Now, of course, the small publisher is going to say that they need the clause in order to protect their investment in the author etc. etc. Definitely. But note that that’s all centered around what they need.

      None of this is to say that you made the wrong decision. It so very much depends on your goals and expectations, the precise wording of the contract, and the people on the other side of the equation.

      • Jonathan Langford says:

        It also occurs to me that a “right of last refusal” means that the publisher always goes into the situation knowing what he/she has to offer you in order to keep you. There’s no “but what if I get a better offer?” uncertainty. On the other hand, at least you have a chance to get a better offer *first.*

    • Wm says:

      One thing to look at Ryan is whether the clause applies to everything you write or only to LDS-themed books. Also: fiction vs. non-fiction. Also: novel length vs. other lengths.

    • Jonathan Langford says:

      Okay, one other thought: How long does your publisher have to consider and made a counter-offer? Because it occurs to me that this could be a pretty horrible way of sabotaging an author’s next sale, if a publisher wanted to do it.

      Even without negative intent on the part of the original publisher, I could see this causing issues for the new publisher because it introduces elements of uncertainty into the process. That would particularly be the case if there’s no immediacy to when the first publisher has to respond.

      Finally, I wonder about how far this extends into the future. Is it a one-time thing? Is it for the next thing you submit for publication, or does it kick in *only* when you get an offer from another publisher? For example: assuming you decide to self-publish your next few books, then get a title that you think could be a blockbuster with a traditional publisher several years down the line, will this contrast provision be still there lying in wait?

    • Emily Tippetts says:

      Hi Ryan, It depends on if the right of last refusal requires them to match or outbid the offer on the table. If it does, then your analysis is correct. If it instead gives them dibs after all the bidding has been done, and they do not need to match other bids, then it’s just as detrimental as the right of first refusal.

      That’s definitely a different clause than I’ve seen before, though. Any chance we can see the actual language? You don’t need to disclose the publisher.

      • Ryan Rapier says:

        No problem. It is as follows:

        The Author hereby grants to the Publisher a right of last refusal to publish all subsequent installments in the series of The Work, all subsequent works pertaining to the same subject matter of the Work, and the Author’s first work published after the Work. This right of last refusal grants the Publisher the right to match any other publisher’s offer to publish any Future Manuscript. For any Future Manuscript for which the Author has no offer from any other publisher, the Publisher will have a right to publish the Future Manuscript under the same terms set forth in this Agreement, unless the Parties mutually agree to different terms. To exercise its right of last refusal for a particular Future Manuscript, the Publisher shall provide written notice of the Publisher’s intent to exercise its right of last refusal to the Author within 14 business days of receiving actual notice of any other publisher’s offer to publish the Future Manuscript, or actual notice of the Author’s intent to self-publish the Future Manuscript. Notwithstanding this right of last refusal, if the Publisher has at any time previously rejected the Future Manuscript initially, the Author is not required to inform the Publisher of another offer by another publisher for publication of that same exact manuscript that the Publisher rejected. To be clear, if the Author submits to another publisher a manuscript that is different from the manuscript previously rejected by the Publisher, then the Publisher’s right of last refusal is invoked as to the different manuscript.

        • Wm says:

          Depending on what direction you want to go with your writing that “same subject matter” could be an issue.

        • Emily Tippetts says:

          That’s a pretty good one you’ve got, Ryan, as it stipulates they have to match the other house’s offer and give them a 2 week time limit. Wm is right that “same subject matter” is your stickiest issue. “Subsequent installments” is another slightly gray area, as it may or may not cover prequels. But I’ve seen some pretty big contracts with wording about this precise in them.

        • Ryan Rapier says:

          Thank you . It makes me feel better to have someone else validate what I thought when I signed this. I know the “same subject matter” thing probably locks me into this publisher for any other LDS fiction that I do, but I can live with that as I’m not sure I intend to write another LDS fiction novel. And if I do, my experience has been such that I would be comfortable with this publisher if all things remained the same. Thanks again for your thoughts.

        • Wm says:

          I may be reading this wrong, but I’d be tempted for that “first work published after the Work” to write something that I wanted to write but also knew would have no chance with a national publisher and then self-publish it. That then takes care of the “and the Author’s first work published after the Work”. (I am not a lawyer and haven’t seen the rest of the contract, etc. etc. caveat, but self-publish is actually mentioned in the rest of the clause so it seems like it would apply to the “first work published after the Work”.

        • Wm says:

          But also: I’m glad your experience with your publisher has been good.

        • Emily Tippetts says:

          Yeah, the clause specifically mentions self publishing, so you wouldn’t get around it this way. Better to “get around” it by not signing in the first place if you aren’t interested in a longer term partnership with the publisher – bear in mind they don’t make money from your first book either. Unless you stick with them for a few books, you’re a loss to them.

  2. Wm says:

    Excellent analysis, Emily.

    One of the reasons that small publishers are able to get away with this is that new authors tend to think in terms of only that first hit of validation (I want to be published!) rather than thinking in terms of a career. Keep in mind that:

    a) it may seem like this is your only shot, but that’s only true if you make it true. That is, some authors break through on their first completed work, but don’t bank on that — you need to have as many irons in the fire as you can forge.
    b) don’t be rigid in your vision of how you want your debut to unfold — this holds just as true for those who are dead-set on being author-publishers as for those who are dead-set on being published by a traditional publishing company; being flexible means that you’re less likely to accept a bad deal or self-publish a work that’s not ready, etc.

  3. Jonathan Langford says:

    Hi Emily,

    Thanks for the report on this.

    Something I’ve always wondered: Does the standard “right of first refusal” involve some kind of obligation on the part of the writer to accept the publisher’s offer (e.g., if it matches the terms of the previous contract)? Or would that be a different thing?

    • Emily Tippetts says:

      Yes, a right of first refusal usually means you need to take their offer if they give it. Literally, they must refuse before you have the right to go elsewhere. Now I say “usually” because contracts are in a constant state of evolution, and I’m not current on every variation of this clause. I’m sure authors with a some bargaining power have negotiated contracts in which the publisher gets to see the manuscript first and make an offer than can be accepted or rejected. I do not know if this variation would also be considered a form of ROFR clause or if it goes by another name.

  4. Amy Metz says:

    Emily, you are spot on. Thanks to a right of first refusal in my contract with a small press, my career is now on hold. My relationship with the publisher is strained at best–we only speak through our lawyers–yet he will not waive the clause. I can’t even self-publish. The momentum of my first book will be lost by the time I’m able to continue the series. Power play is the nicest term for it. Thanks for posting this. I hope more authors will ask for changes to that clause before they sign a contract.

  5. Wm says:

    The problem with clauses (of any type) that don’t have limits is that if there’s room for interpretation and the publisher interprets it in the way most unfavorable to the author then it becomes a much longer and costlier process to litigate.

    • Emily Tippetts says:

      Yes and no. Ambiguous wording is read to the detriment of the drafter of the contract, so the law does have mechanisms to speed this sort of thing along.

      • Tricia says:

        How would you interpret a clause such as this: “The Author hereby grants the Publisher the Right of First Refusal of subsequent works, independent of the above titled Work.”

        • Emily Tippetts says:

          That translates to “We get right of first refusal on everything you write and have no time limit on how long we can take consider the book.” Though the time limit might be in another clause elsewhere.

  6. C says:

    At least in some entertainment industry contracts, like book and screenplay options, these terms are often broken out into right of first negotiation and right of last refusal, with lots of details about decision timeframes, genres, budgets, further sequels or related works, other elements, etc., so you have to look closely at the scenarios from both ends of the pitch/sell process. I think a lot of those considerations arise here, and Emily’s hitting on the salient points pretty well.

    • Emily Tippetts says:

      Yes, any contract where there’s some serious money involved – which can include some book contracts, the language is a lot more nuanced and specific. So there are a lot of variations on the clause that can work quite well for the author. They are only available if you have some real bargaining power.

  7. utterly, utterly helpful. Thank you. Right now I’ve got, first right of refusal for next book in a series the publisher has already published, and first right of refusal in same genre, and first right of refusal (or perhaps last right, like Ryan–we have the same publisher) on next book.

  8. So (sneaky sneaky, sorry) you need to have a manuscript you can offer as your “next” that you know they will refuse.

    OK i’m being silly. Sorry.

    (but it’s an idea)

    • Th. says:

      .

      I think this is where the old expression “keep a porn proposal in your backpocket” comes from. Of course, in this case it would need to be an actual manuscript….

    • Emily Tippetts says:

      Lol, you wouldn’t be the first person to attempt something like that, Sarah. The problem? I know quite a few manuscripts designed to fail that end up getting published, and then you’ve got it in your bibliography…

      Sorry for the delayed reply. I was at MileHiCon – Eric James Stone can corroborate ;-)

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