Merchandising Rights – Do you have control?

People who love books also love book-related merchandise. Tie-in products, also known as swag, have long-term promotional benefits, whether you are giving product away or selling it. If the book is popular, so will the related merchandise (like what’s in my nephew’s room, somewhere underneath all the clothes – a gazillion comic book action figures). The potential for such a lucrative income stream, especially in the wake of Harry Potter, has made merchandising rights a valuable subsidiary right in book publishing deals.

If you are unfamiliar with the term, merchandising rights in the publishing world are part of the cluster of subsidiary rights from the underlying copyright in the book. In particular, merchandising refers to the right to license, manufacture, and distribute merchandise based on characters, names, or events in a book.

While merchandising rights belong to the copyright owner, i.e. you the author, many publishing deals license those rights to the publisher exclusively in exchange for a royalty on the merchandise sold. Once an exclusive license is in place, you can no longer license the merchandising rights to another party. You no longer have control over any merchandise that is based on your book.

In a publishing contract, merchandising rights can be found in various places, all with similar language whereby the author grants the publisher commercial and merchandising rights throughout some territory, usually the world. Sometimes merchandising rights are found in the primary rights clause of the contract, sometimes in the subsidiary rights clause, sometimes in a catch-all phrase that is a general grant of all subsidiary or all derivative rights. Typically though, the merchandising rights will be found in a separate paragraph, with verbiage like:

  • Merchandising Rights
    • Author grants to publisher…an exclusive right throughout the world to manufacture, sell and distribute, products, services, merchandise and other commodities including but not limited to photographs, illustrations, drawings, posters, toys, games, apparel, foods…which may refer to or embody the book including but not limited to plot, title, scenes, settings, attire….

You get the picture. The grant language above gives the publisher a broad exclusive right. Meaning you, the author, no longer have control of creating book swag. If you want to make your own book swag, the publisher’s approval is required.

While a publisher may push for exclusive merchandising rights, there are reasons why you should retain control.

  1. If the book is a success, selling book related swag is a great source of revenue for an author. Why should that windfall go to the publisher? You should be the one to capitalize on your creative endeavors.
  2. If you want to make your own promotional tie-in product, you will not need your publisher’s approval if the publisher does not have an exclusive license to the merchandising rights. This way, you can make swag yourself or license it others on a non-exclusive basis.
  3. Without control of your merchandising rights, you are at the mercy of the publisher as to what merchandise, if any, is created.

So what do you do if the publisher serves up an exclusive license to the merchandising rights in the publishing agreement?

You can delete/strike out the language and insert language like: all merchandising and commercial rights are reserved by the author. Or, you can grant the publisher a non-exclusive merchandising license, and if possible, one that is limited to particular products. This will give you the ability to make your own swag without having to ask the publisher’s approval.

If you cannot keep the merchandising rights, and you must give the publisher an exclusive merchandising right (or maybe you want to give the publisher an exclusive because they are good a making book swag), make sure you have the right of approval. This will allow you to review and approve any merchandise derived from your book. The right approval also applies to a non-exclusive license too.

One last point about merchandising rights — compensation. Pay close attention to the royalty payment clause as it pertains to merchandise. Usually, the merchandising license comes with a royalty split. There is a wide variation in spilt compensations, but typical income splits are 50-50 on income from goods sold. But you have to exam carefully what income means – net receipts, gross income, net income, gross revenue. It will make a difference in how much you make. And what writer does not appreciate income. Never should the publisher keep 100% (and certainly not more than 50%) of the merchandise profits.

Merchandise rights are your intellectual property. You should profit from your creativity so take control. Now go forth and merchandise.

Photo Credit: edwicks_toybox | Visualhunt | CC BY-NC

Legal Disclaimer: This information is provided for educational purposes only. Consult a qualified lawyer in your jurisdiction for all legal opinions for your specific situation.

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