Right of First Refusal Clauses in Book Contracts

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Tim O'Reilly
Jan. 02, 2004 11:37 AM
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One of my editors just wrote to our internal editors list an impassioned email about Right of First Refusal Clauses -- and since I agree with him that right of first refusal clauses are pernicious, I thought I'd publish his comment, and challenge publishers who use them to justify the practice, if they can:

I'm increasingly running into authors who have really strong non-compete clauses, right of first refusal on subsequent books, and other stuff like that in their contracts.

[Names of some offending publishers omitted.]

I'm tempted to suggest that we add similar clauses to our contracts, but frankly, they're repugnant to me. And that would only make the situation worse, not better.

What we really need to do is broadcast the word far and wide that a first time author should never sign a contract that limits what he can do in the future--particularly with respect to his publisher. That's just standard good advice for first time authors. And it's advice I've given authors ever since I started working here.

And then another of our editors chimed in:

I've run into the same thing [right of first refusal on all subsequent projects]. In one case, the author was released for a particular book. While he's since been promised release from all further books, they're not really moving on fulfilling that promise. So he's in limbo.

I can sometimes see non-compete clauses if they are restricted to a very specific title or subject. We don't have them at O'Reilly, and it does burn me somewhat when we see an author go and write a very similar book for another publisher (it's happened to us once or twice). But we generally find that common sense keeps authors from doing that. If a book is doing well, an author should put his or her energy into updating it and promoting it, trying to build on the success, rather than dividing the audience. If you compete with yourself, you can often drive both books below the level of ongoing retail viability. On the other hand, if a book flops, and the author wants to try again with another publisher, he or she should be free to do so. So on balance, we don't think even non-compete clauses make a lot of sense -- at least not unless the publisher has made a major investment in the author or series. (For example, it might be a legitimate component of a major multi-book deal with unusually high advances and royalties, or appropriate in a case in which the publisher developed an unusual book concept and just asked the author to execute on it.)

But right of next refusal for a first time author? And coming from publishers who have limited marketplace success? That's really bad business. And it does seem that many of the publishers offering these kinds of contracts are in fact the second tier publishers, the very publishers whose lack of success with a title is likely to drive an author to want to try again with someone else who has better distribution, sales and marketing. (They also are common in contracts from one of the top publishers in the industry.)

Advice to authors: If you're offered a contract with a right of first refusal clause, strike it out. You'll very rarely find it a deal breaker for the publisher, and if you do, let it be so. It should be a deal breaker for you. If you're offered a contract with a non-compete clause, think hard about whether or not it's fair, and unless there is a compelling reason for the publisher to bind you to such a promise, strike it out too.

Advice to publishers: if you want to keep your authors, treat them well, and sell lots of copies of their books. Locking them up by contract is not the way to go.

I'd love to hear from publishers who feel strongly that these clauses are justified, and why.

(I posted a version of this message to the Computer Book Publishing List, and author John Levine replied with an interesting hack: "Computer book proposals are a dime a dozen, so fish a few of your old ones out of the pile, send them to the publisher, they say no, and you're off the hook. Or they say yes in which case you either negotiate a contract you're happy with (I've never seen an option clause that required that you accept their offer) or you don't, and you're still off the hook." I haven't looked at enough of these clauses to know if this would work -- send in a proposal that is completely unpublishable, and then be released from the obligation -- but it's an interesting idea for authors, if their publishers are so unreasonable as to try to hold them to publishing any future books, despite an unsatisfactory first experience.)

Tim O'Reilly is the founder and CEO of O'Reilly Media, Inc., thought by many to be the best computer book publisher in the world, and an activist for open standards. O'Reilly Media also publishes online through the O'Reilly Network and hosts conferences on technology topics, including the O'Reilly Open Source Convention, the O'Reilly Emerging Technology Conference, and the Web 2.0 Conference. Tim's blog, the O'Reilly Radar "watches the alpha geeks" to determine emerging technology trends, and serves as a platform for advocacy about issues of importance to the technical community. For everything Tim, see tim.oreilly.com.

If you're an author, have you ever been bitten by a non-compete or right of first refusal clause?
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Showing messages 1 through 5 of 5.

• On non-compete clauses
  2007-06-03 04:33:53  SomersetBob [Reply | View]
  
  
  Hi Tim,
  
  I came here via Matt Wagner's comment posted at Chris Webb's ckwebb.com site on the non-compete clause (Matt provided a link to this post of yours). What an interesting thread it is. As an aspiring writer I found it all very useful.
  
  I went on quite a trip, following the links from Chris's respondents to their various web sites, and wrote it up on my blog as 'The Real Value Of Web 2.0' ( http://www.bobkingsley.co.uk/blog/?p=85 ). I hope you'll find the time to pop in and have a read. I'll certainly be coming back here for a dig around - you have what looks like a veritable mine of useful information!
  
  Best wishes,
  
  Somerset Bob

• gotta disagree
  2004-01-03 08:51:51  anonymous2 [Reply | View]
  
  
  sorry, tim. as an author, i find RoFR to be acceptable to me. but then again i'm with a publisher i'm very proud to be with (not O'Reilly Press, for what it's worth).
  
  a publisher is investing in their talent pool, and they have to protect their investment. it's as simple as that. i respect that.
• gotta disagree
  2004-01-03 11:41:37  Tim O'Reilly [Reply | View]
  
  
  If a publisher is indeed "investing" -- that is, helping you to develop as an author, or making your name in the first place -- a contractual tie may be appropriate, as I said in my original posting. But let me ask you this: suppose that your book doesn't sell as well as you expect (I see it is just out in November), or that your editor leaves, or that you have a great idea that's appropriate for some other publisher's list--will you still feel that way? After all, if your publisher succeeds for you, why do they need a contractual tie? Isn't the contract designed to protect them precisely in the case where you are unhappy? Isn't mutual success sufficient?
  
  I'm a publisher -- I am in exactly the same position as Artech House. I might develop an author, only to have him or her solicited by other publishers. It happens, and I hate it. But I think that tying an author down -- especially a new author who doesn't yet realize the big differences between publishers -- is often taking unfair advantage.
  
  As John Levine says, it's probably easy enough to get out of a RoFR, unless it says for all future projects. So maybe this is a tempest in a teapot.
  
  Anyway, best of luck with your book. Like you, I have a lot of respect for your publisher. I've heard good things about their books.
• gotta disagree
  2004-01-03 08:52:43  jnazario [Reply | View]
  
  
  oops, i forgot to log in. it's me, jose nazario, who wrote that last comment.
  
  i hope all is well.

• It might be fair if....
  2004-01-02 17:10:19  anonymous2 [Reply | View]
  
  
  Right of first refusal should be accompanied with, obligation to publish at a minimum rate. Tie the publisher as much as the author.
  
  I know this would never fly, but I think the quid pro quo is reasonable. Author must offer the book for first refusal, Publisher must publish at agreed floor rate in constrained time period.
  
  This would approximate the apprenticeship system where artist and audience are bound together. If a publisher knows they don't want to publish any book the author writes, they should be real clear as to the limits of what they will consider for first refusal, and free the author to write on other subject matter.
  
  bv

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Showing messages 1 through 5 of 5.

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