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Millions of Dollars of Sub-Rights Money Now Available

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by Judith Appelbaum, Editor, IBPA Independent

Judith Appelbaum

A new BISAC form with the potential to help publishers collect millions of dollars in “mystery money”-i.e., payments from buyers of subsidiary rights that come with inadequate documentation-is about to go out to the leading large publishers and thousands of smaller houses.

Developed by the Book Industry Systems Advisory Committee (BISAC), the Subsidiary Rights Payment Advice Form has won praise from industry leaders. Warner CEO Laurence Kirshbaum, for example, is “wholeheartedly behind” it.”The success rate in finding the source of this mystery money is very high” with some of these procedures in place, he reports.

And Penguin CEO Peter Mayer “heartily endorses” the form. “Efforts are already under way here to amend our foreign rights agreements,” Mayer notes.

Reports from industry groups led BISAC’s Royalty Statement Subcommittee to prepare the payment advice form and an accompanying checklist as a solution to the problem of “mystery money” that comes to publishers or agents from subsidiary rights buyers (foreign, reprint, book club, multimedia, etc.) who do not provide adequate documentation.

Because documentation is missing and/or confusing, the people who receive these payments have no clear indication of what each payment is for and therefore can’t determine either whether they are getting the money that is due or how to credit appropriate amounts to authors’ royalty accounts.

The subcommittee, which includes representatives from large houses, a major book club, and literary agencies, concluded that the problem of “mystery money” can be substantially solved through easily implemented procedures, including using the new form.

Deliberately low-tech, the new BISAC form has the power to boost publisher’s revenues from domestic as well as foreign sub-rights sales in three ways:

  1. “With this simple, one-page form, publishers can collect millions of dollars a year in sub-rights money that they don’t get now because they’re
    not aware that it’s due,” says Fran Toolan, chair of BISAC’s Royalty Statement Subcommittee.
  2. The form will also give large publishers-as well as agents, packagers, and authors-access to millions of dollars that would otherwise be imprisoned in holding accounts, Richard Curtis, President of the Association of Authors Representatives, points out. Given the current quality of rights information, royalty departments often can’t figure out how to allocate sub-rights money, which means publishers reap interest on these accounts but can’t legally disburse the principal.
  3. Wasted staff time will shrink dramatically. Sub-rights, royalty, and accounting people spend countless hours trying to decipher what they have received and to get information from rights buyers. “Once everyone starts using this little form, we’ll all be much more productive,” says David Golkin, head of Penguins USA’s royalty department.

Because the BISAC Sub-Rights Payment Advice Form takes practically no time to fill out, it’s easy to use and to integrate with any existing accounting systems, explains Sandra K. Paul, BISAC’s managing agent. Copies of the form and advice about its use are available from the BISAC office (160 Fifth Avenue, New York, NY 10010; phone 212/929-1393; fax 212/989-7542; e-mail 4164812@mcilmail-.com). On request, BISAC will provide the form on any publisher’s letterhead and in specified foreign languages.

It is expected that the BISAC form will eventually replace current complex forms used by major subsidiary rights buyers such as book clubs. The current forms can be so complicated that even well-meaning accounting departments cannot process them correctly.

The form is also going out to agents, to book packagers, and to authors’ groups nationwide, who will be monitoring its use and reporting in due course. Thus stockholders as well as writers, agents, packagers, and lawyers will be aware of which houses are handling sub-rights carefully and correctly and which are still failing to properly collect and allocate revenues.

Publishers and other sub-rights sellers need to take just four steps to solve the problem of this type of “mystery money”:

  1. Insert a clause in sub-rights contracts requiring buyers to provide the bare minimum of necessary information with all payments. (BISAC can provide a sample clause.)
  2. Assign a Unique Identifying Number to each work for which sub-rights are sold. (Depending on how the house organizes its records, this Unique Identifying Number could be the ISBN, which HarperCollins uses, or the acquisition contract number, which Penguin might prefer, or any other number that serves to identify each work clearly and completely.)
  3. Specify the exact information that is to accompany payments, preferably by using the one-page BISAC Subsidiary Rights Payment Advice Form.
  4. Use the checklist provided with the form to handle any undocumented payments that continue to arrive.

“We anticipate,” Sandra Paul of BISAC says, “that this strategy-as embodied in the payment form and the accompanying checklist-will increase efficiency, eliminate frustrations, and boost revenues.”

BISAC’s parent organization, the Book Industry Study Group, Inc., is a New York City not-for-profit research organization supported by publishers, booksellers, librarians, wholesalers, book manufacturers, and suppliers. The Group’s research studies include the annual Book Industry Trends and the upcoming 1995 Consumer Research Study on Book Purchasing.

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