Okay, we're going to clarify some things from the comments because I made some assumptions that clearly left people confused. (I can only imagine what lurkers are thinking!)
Now, I personally share Holly Kennedy's opinion that is is *almost* always better to have your agent sell your foreign rights rather than your publisher, if they have the capability to do so. However, I do say *almost* because there are definitely exceptions. Here's where the math comes in. Also, you will see Jamie's point about double dipping in terms of royalty percentages.
Okay, let's say you get an offer from your publisher for 10,000 dollars. (Nice round number). They want North American rights. (For the sake of this entry we are going to say that the unimaginable happens and they agree to pay out your advance in one lump sum. If that doesn't sound strange to you, go here and read how advances are generally doled out.)
Here's how the numbers work: $10,000 - (15% or $1,500)= $8,500 to the author.
Now your agent sells $10,000 worth of foreign rights. She and her co-agent split 20% of the advance which means: $10,000 - (20% or $2,000)= $8,000 to the author.
Foreign Rights plus NA rights combined= $16,500. Savvy?
Good, because now we're going to complicate things.:)
Next Scenario: The publisher wants World Rights and is willing to pay $20,000 for them. Again, we are in dreamworld, so they pay out the $20,000 in one lump sum and your agent takes his/her cut.
$20,000 - (15% or $3,000)= $17,000 to the author.
Now wait a minute. It looks like the author who sold World Rights is actually coming out ahead. Why don't I just advocate selling World Rights? Well, we need to get a little further into the process. Thinking caps on. (Hehe, my third grade teacher used to say that all the time.)
Let's compare apples to apples and say that the publisher was also able to sell $10,000 worth of Foreign Rights.
Thats $10,000 - (20% or $2,000 for the publisher)= $8,000 that the publisher sends to your agent. Now the agent will take his/her fifteen percent commission (and this is where Jamie's comment about double-dipping comes in.)
$8,000 - (15% or $1,200)= $6,800 for the author as opposed to the $8,000 the author who only sold NA rights received for their foreign rights. So in the end, it would actually take the second author $1,200 worth of royalties more to make the same amount of money despite the fact that they got $500 more in the beginning.
However, this is a scenario where all things are even. Do you remember in the last post where I said there should be a reason to sell World Rights? Well, there definitely are some.
Let's have some more scenarios, and we're going to up the ante since higher numbers are often involved when agents and authors are negotiating for World Rights.
A publisher offers $50,000 per book for NA Rights for three books. $150,000 - (15% or $22,500)= $122,500 for the author.
The agent is able to sell an additional $150,000 worth of foreign rights. $150,000 - (20% or $30,000)= $120,000 to the author.
That makes $242,500 to the author. Nice, huh?
However, let's say the Publisher really wants World Rights, and they are willing to pay for it. They offer $175,000 per book for three books. Weird number you say? Watch and see.
$175,000 X 3 books= $525,000
You see what just happened? We just got into the "major deal" range. By doing so, the publisher has just made a huge amount of buzz. You can consider them to have paid for advertising. There are many overseas companies who will make a bid to buy foreign rights sight unseen if they know the books have sold for over half a million dollars. Because of this, the publisher in our scenario was able to sell not $150,000 worth of foreign rights, but because they have an excellent FR department and the additional buzz, they are able to sell $300,000 worth of foreign rights.
Now let's crunch the numbers.
$525,000 - (15% or $78,750)=$446,250 to the author
With Foreign rights we will see the double dipping principle upon payout:
$300,000 - (20% or $60,000)= $240,000 - (15% or $36,000)= $204,000
(Don't add the $204,000 to the $446,250, it doesn't work that way. The $446,250 is all the author gets up front, we'll use the Foreign Rights number later.)
Let's say that in North America, each author sells 100,000 copies of each book (300,000 total) and earns about $2.50 per book. (Yes we could get into hardcover vs. paperback and escalation clauses, etc, but I'm not an accountant.:))
Author A, who sold NA rights has earned $750,000 plus the advance from her foreign rights which her agent sold which equaled $120,000.
Author A has earned a total of $870,000 on three books.
Author B, who sold World Rights, earned the same $750,000 that Author A earned on North American sales, but her royalties from foreign rights equaled $204,000 despite the fact that her publisher and her agent both took a chunk.
Author B has earned a total of $954,000 on three books.
Now I think we would all agree that both authors did ridiculously well, but technically, the author who sold World Rights made more money. Why? Because the publisher saw the value of the World Rights and was willing to pay for them.
When all things are equal, as in the scenario at the top, I say go for only NA or WE rights every time. Keep those foreign rights and have your agent sell them. But when the publisher has a good reason for obtaining those rights, it can pay off and pay off big.
The bottom line? You've got to have an agent you can trust to advise you on decisions like these. They will crunch these kinds of numbers, they know if the publisher had the ability to sell FR better than they do, they know what those foreign rights mean for you. I sold World English Rights to HarperCollins because Jodi advised me to do so. But if she had told me that she thought selling WR was in my best interest, I'd have done so in a heartbeat.
Take the time and effort to get an agent you can trust.
And when you do, trust her.
*I promise, promise, promise to cover the rest of the sub-rights next time, but really, no one wants to move on to film and audio rights after reading through that veritable calculus class.;)*