Merchandising rights are a frequently misunderstood (and often overlooked) part of publishing agreements. They are the right to market, sell, and license physical and tangible articles related to your copyright ownership, such as t-shirts, posters, action figures, games, etc. – even your book’s cover art. They are part of the cluster of “derivative” rights inherent in your copyright. It is unlikely that a detective in a mystery series would generate much in the way of merchandising unless it is a huge best seller – but you never can tell when something in your book will create a “spin off” market.
Unfortunately, there often is a wide variation in the way publishers treat merchandising rights in their agreements. Sometimes they are addressed in the initial “rights” clause of the contract (e.g., “Author grants Publisher commercial and merchandising rights throughout the world”); sometimes in the subsidiary or ancillary rights clauses; sometimes in a separate paragraph or section; and sometimes no mention is made at all. In the latter event, you must check the other sections of the agreement to be sure that merchandising rights are not subsumed under a general grant of “all subsidiary” or “all derivative” rights. That is why it is important to obtain language in your publishing agreements that “All rights not granted by Author to Publisher herein are reserved to Author.”
So – should you fight to retain merchandising rights for your novel? As noted above, it is the rare book that will generate any substantial income from such rights. If you believe you are the next J.K. Rowling, you definitely should keep the rights. If you are represented by an agent, he or she will employ a subagent to market them; otherwise you’ll have to retain such an agent yourself. If, on the other hand, you think your book has little potential in this area, giving the merchandising rights to your publisher is an easy concession.
Even if you give up these rights, however, there are other issues that must be addressed – such as the income splits between you and the publisher, and the definition of “income.” (Some publishers will not agree to any split – which in my view is patently unfair.) Assuming there is a split, there again is a wide variation in compensation formulas – although 50-50 is most often seen. Definitions of income also vary – “net receipts,” “gross income,” “net income,” “gross revenue,” etc. These must be examined carefully.
Finally, you must consider whether you wish to have any veto right in the sale of merchandising rights. Usually if the publisher keeps the rights, it gets to negotiate and determine the deals, and you have to agree to them, even if you believe they are being sold too cheaply, or to licensees (and products) you find objectionable.
Still – if you actually get to use your merchandising rights, it’s a nice problem to have.