Why enter into a sub-license agreement with a foreign publisher?

This week, I asked our Senior Advisor and Founder of the Agency, Mr. Claude Choquette an important question. When and to what extent is it beneficial for publishers to enter into a sub-license agreement with a foreign publisher of the same language? Here is his advice….

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There has always been big players in New York, London, Paris, Madrid or Barcelona who have tried to obtain world rights for the original titles in their language. They distribute and sell their books in their own markets, either directly or via wholesalers to whom they give a discount of around 55%. Most of these publishing houses distribute their books in external markets via affiliated local wholesalers.

In general, independent publishers have distribution agreements with local wholesale importers to whom they offer even greater discounts to cover transport costs. However, it nearly always works out better for these independent publishers to enter into sub-license agreements with local publishers in foreign territories. As such, they don’t have to invest in foreign stock and pay transport costs.

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If they enter into a sub-license agreement, they usually retain half of the royalties earned on sales abroad and the whole of the amounts payable for the signature of the sub-licence, a per page offset fee and/or a contribution to the plant cost ( the cost of the book’s development). These amounts paid do not involve any risk or investment and constitute a straight bottom-line profit for the original publisher.

On the other hand, local distributors don’t appreciate it when publishers decide to withdraw their best-selling titles in order to enter into a sub-license agreement with a local publisher. To prevent this from happening they often require exclusivity on the publisher’s catalogue. For independent publishers, export sales are rarely profitable, but desired by authors who still want their books to be available overseas.

 

(Translated from French by Claire Nicole)