What’s going on?
The recent white paper, Rights Management in Publishing: How effective management of rights can improve publishers’ profitability’, published by Publishers Licensing Services, revealed that only just over half of publishers surveyed budget for rights income. Presumably for the remaining 50%, rights income was either too difficult to budget for or just not worth budgeting for?
In the same survey almost two thirds of respondents said that they generated less than 5% of their gross income from rights in their last financial year and less than half reported that rights income always, often or occasionally had a significant impact on the profitability of their business. As a rights professional, I found these statistics shocking. That last statistic really felt like a sucker punch. Rights income is almost always (depending on the accountancy practice of the publisher) treated as bottom line profit and, therefore, can often have a huge impact on profitability, even where it looks less significant in revenue terms.
Publishing heavy-weight, Richard Charkin, made this point particularly eloquently a few years back:
“It’s a truth almost universally acknowledged that the net profit of a general book publisher is invariably smaller or equal to the net rights income received.”
– Let’s Hear It for Book Rights Sales People Worldwide, Publishing Perspectives, April 24 2020
So, why have more than half of survey respondents not seen the returns you might expect on their rights business?
Other statistics from the PLS survey may point to some answers. Almost two thirds of respondents said that they do not have rights representation on their boards and as many as half either never or only occasionally have input into decisions about book and project acquisitions. If the expertise and experience of rights teams is being routinely ignored by their businesses, why would those same publishers see a positive return on their rights numbers?
When asked: ‘what restricts your rights management and licensing?’, 40% of survey respondents felt their effectiveness was restricted by insufficient resourcing and investment and 29% cited insufficient internal knowledge and training. Other factors noted included:
- inability to find information (18%)
- a lack or inaccessibility of contract information (15%)
- poor communication (16.5%)
- lack of systems integration (19%).
In light of this picture, it is little wonder that the rights returns are not as significant as they could be for some publishers.
Overcoming the ‘restrictions’ on your rights management and licensing
Most of these ‘barriers’ are easy for publishers to overcome.
Sorting out internal contractual and related information is a critical component of a modern publishing business. A publishing business can’t function effectively without a good understanding of the legal basis on which it is able to enter into agreements with its partners (not doing so carries a high level of legal and other risks), so it is frustrating that the importance of this aspect of publishing is still being overlooked.
There are a range of good training courses for rights professionals in addition to supporting resources, such as those provided by the Rights&Licensing hub.
A lack of investment in resources – both human and technological – might suggest that there is a perception, certainly amongst many of the businesses represented in this survey, that rights is simply not worth it?
Revealing the benefits of a thriving rights department
The survey size in this whitepaper was relatively small, less than 100 respondents, and we don’t know the exact proportions of the genres and publisher types represented, perhaps a larger or broader sample would have revealed different results? Nonetheless, it does suggest that there is much work to be done within the industry to ensure that publishing businesses are seeing the very real benefits that a thriving rights business can bring.
Comments from survey respondents revealed some of the tangible economic benefits of having a thriving rights team in place:
- “Some high value rights contracts have brought in more revenue than sales of the original book”
- “We publish multiple projects where without rights income the project would not be financially viable.”
- “Income from book sales may level off after a few years, but rights income can and often does have a longer life.”
Any rights professional will be able to give you very similar examples. There is hard financial evidence of the value of investing in your rights teams too. The Book Industry Study Group report: Positioned for Growth: The return on investment in rights and royalty management solutions, by Bill Rosenblatt and Steve Sieck, shows some impressive numbers for those investing in rights technology to support their staff. Here are just a few examples they cite:
- A midsize trade publisher was able to increase licensing revenue by $2.1 million over a period of 5 years.
- A large professional publisher increased its licensing revenue by about $600,000 through analysis of data about prior licensing deals, enabling it to improve pricing and increase license renewals.
- A small literary agency has increased revenues by 10–15% by increasing foreign rights deals per year with the same staff.
We know from our own experience with clients implementing RightsZone that technological investment can have a transformational effect on productivity and enable human resources to be re-deployed more effectively, in turn creating increased revenues. The Positioned for Growth report features a Case Study from one of our clients in which they find:
“RightsZone tracks the licensing process from licensee interest to license revenue in a single record. For the two team members who process the division’s approximately 200 new license sales per month, the new system saves 5–10 minutes for each transaction. It has also cut the time needed to enter metadata by half an hour for each contract. Researching information on existing licenses is performed by the staff approximately 2–3 times every hour — and what had taken 10 minutes each time now takes seconds.”
– Positioned for Growth: The return on investment in rights and royalty management systems by Bill Rosenblatt and Steve Sieck
Why invest in your rights team?
When people do invest in rights teams, the evidence suggests that it very much IS worth it.
The value of rights goes way beyond just delivering cash to the bottom line.
Extending the reach of products beyond their original intended language or format through licensing can have a huge impact on authors, publishers and consumers of content world-wide – whether that’s catapulting an author into the public consciousness through a film rights deal; helping a business book author to establish a new client base overseas on the back of a translation rights deal; providing low-cost educational resources for children living in poverty through a reprint deal; or many, many other examples.
Rights teams are more than just a profit centre.
So, if we have the evidence of the valuable contribution rights teams can make to a thriving publishing business, why is it that in some businesses rights professionals still not being given a seat at the table when it comes to strategy and acquisitions?
Why is it that there inadequate resourcing and training?
Why is it that the contractual information that rights teams (and the wider business) rely on still in such a mess, and often still mainly analogue?
Why is there no investment in the systems and technology that would help rights teams achieve their potential?
Perhaps the crux of the issue can be summed up by this statement in BISG’s Positioned for Growth report:
“For too many companies, rights management is still an insufficiently understood and inefficiently executed function”
And if rights is insufficiently understood, then as rights professionals it is incumbent upon us to do something about it.
Rights professionals – raising our own profile
Rights professionals have been great at just getting on with their jobs, quietly working away, no-one really knowing what exactly they do.
But…if we really want the investment in resources, training and systems that we know will super-charge what we are capable of we need to start communicating effectively about why rights matters.
The PLS whitepaper and the BISG report are key assets in our armoury, providing evidence of the impact of investment and under investment in our rights businesses, but we need more.
We need to pull evidence from within our own organisations too, including:
- evidence of inefficient processes
- failures of inter-departmental communication
- lack of supporting systems
- the difference having a rights voice in acquisition decisions can make
- the impact rights deals have on authors.
We need to build strong business cases and build good relationships with senior management teams so that they trust us to deliver a return on their investment.
If we can raise the profile of rights both within our own organisations as well as in the industry more broadly, we WILL get the investment we need for rights professionals to thrive and many more of our publishing businesses will see the impressive impact that a rights team can have on the bottom line and beyond.
Watch out publishing, the rights teams are coming!