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Episode 37: Rights, Control, and Making Publishing History

November 10, 2012

The contract didn’t arrive from White Cloud until the end of July. We’d made the agreement in March. Why had it taken 4 months to deliver a standard boiler-plate contract? We couldn’t quite understand it. Then again, there wasn’t much we did understand about the Bookmuda Triangle. In truth, earlier in the month we had gently pushed for the end-July delivery. To their credit, they agreed and delivered right on time.

The contract was just as Steve said it would be: We would fund $11,000 in non-recurring expenses for printing the first run for which we would receive an increase to 50% royalties. It all seemed in order—except for the rights to the book.

What I didn’t understand at the time was that as part of printing the book, the publisher retains all the rights to the book. In most cases, the secondary rights (foreign language printing, movies, etc.) are the lifeblood of publishing–the place where a publisher really makes their money. Small publishers can also make a big payday if a larger, mainstream publishing house comes to buy the rights to a very successful small press book. Either way, the publisher is the entity who makes the profit because in owning the rights, they basically own your book.

Having the publisher own the rights might be okay if you’re an author using a book to enable your work as a speaker. The contract spells out specifically how you can use the material in the book within your business. Excerpts, handouts, powerpoints—you are permitted to use the content of your book without paying the publisher for the right to use the material. We, however, were launching an online dating website. Even though the book was written to stand on its own as a serious treatise on dating and relationships, the concepts from the book were at the core of the MM dating site. I had no idea how we would want to use the book in the future—and I didn’t want to be hamstrung by a contract limiting access to my own material. As I stated in an earlier episode, one of my mottos is ‘simple is profitable’. I didn’t see a simple way to rewrite (or amend) the contract so I could use the material any way I saw fit while still meeting the requirements of the publisher to retain control over the rights. This was turning into another huge problem created by the divide between Gutenberg and the Silicon Valley.

We needed an out-of-the-box solution. How was I going to retain the rights I needed to be successful and, at the same time, make Steve and Stephen at White Cloud successful?

The answer was to create a partnership between WC and MM—to bring them in as partners to our team. I looked at the Publishing King and said, “Listen, I need to control the book rights in order to increase our chances for success and you want to be in a position to amplify your profit when the book really takes off. Let’s create a win-win. Write a contract in which I retain all the rights in the book and, in return, I’ll give you shares in MM.”

In the 600 year history of publishing, it had probably never been done before … but it made sense. Trading rights for equity in MM provided multiple revenue streams for the publisher and lined them up for the large upside that would come when we completely disrupted the $1B online dating market.

I suggested that they keep their 50% share of the royalties (which they would have lost if they would have sold the rights to Random House), we change the percentages of the secondary rights to be more in my favor, and for those concessions, they’d receive a generous portion in company equity. It was perfect! The arrangement would give them two solid revenue streams while giving me the ability to make those streams as profitable as they could be.

The question was would they go for it? Would they dare let go of that which has kept them alive for 600 years and move into a new paradigm? Or would FUD (fear, uncertainty, and doubt) keep them locked in their 20th century steps?

They needed some time to think about it.

Episode 38: Publishing’s Lunatic Paradigm: Let The Author Do IT

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