Publishing, Merchandising, and Character Licensing: Advances, Royalties, Approvals, and the Long Tail

Document type: Article Practice area: Intellectual Property — Entertainment and Media Jurisdiction: United States Last reviewed: 5 September 2026

The grant is the deal

A publishing or merchandising agreement is, in substance, a licence or assignment of rights under 17 U.S.C. § 106 — the exclusive rights to reproduce, prepare derivative works, distribute, perform, and display.

Everything else is commercial detail. The royalty rate matters, but a licensor who grants broad rights at a good rate has usually done worse than one who grants narrow rights at a lower one — because the rights not granted can be licensed again, and the rights granted cannot.

The recurring failure is technology-neutral drafting, and two cases define it.

The electronic rights problem

Random House, Inc. v. Rosetta Books LLC, 150 F. Supp. 2d 613 (S.D.N.Y. 2001) addressed contracts from the 1960s granting the exclusive right to "print, publish and sell the work in book form." Rosetta Books obtained electronic rights from the authors and published e-books. Random House sued, arguing "book form" included electronic editions.

The court held it did not. Reading the grant against the contract as a whole — which separately addressed subsidiary rights and contained a non-competition clause suggesting the parties contemplated a physical product — the court concluded that "book form" meant a physical book. The authors retained electronic rights.

New York Times Co. v. Tasini, 533 U.S. 483 (2001) reached a related conclusion from the other direction. Freelance authors had licensed articles to periodicals. The publishers included the articles in electronic databases, relying on the collective works provision permitting a publisher to reproduce a contribution "as part of that particular collective work, any revision of that collective work, or any later collective work in the same series."

The Supreme Court held that the databases were not a permitted revision, because they presented the articles individually, retrievable in isolation, rather than as part of the periodical. The freelancers' rights were infringed.

The other direction

Grants can be read broadly too, and the outcome turns on the language.

Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998) considered a 1939 licence of a musical composition for use "in motion picture." Disney used the work in a videocassette release fifty years later.

The Second Circuit held that the question is one of contract interpretation, and that a licence granting rights in a medium may extend to later technologies within that medium where the language is broad enough. The court rejected a rule that new uses always belong to the licensor, and directed attention to what the parties actually wrote.

Bourne v. Walt Disney Co., 68 F.3d 621 (2d Cir. 1995) reached a similar analysis on synchronization and videocassette rights under an older agreement.

The synthesis: there is no default rule allocating new media. The grant's language decides, read in the context of the whole agreement, and drafting matters more than doctrine.

Drafting the grant

For a licensor:

Grant specific rights in specific media, and reserve everything else expressly: "All rights not expressly granted are reserved to Author."
Do not grant "all rights in all media now known or hereafter devised" unless the price reflects it.
Where broad media language is unavoidable, limit it by territory, by term, by language, and by format.
Reserve subsidiary rights you can exploit separately: dramatic, audio, translation, serial, merchandising, and electronic.
Include a reversion for rights not exploited within a period.

For a licensee:

Grant language should be broad enough to cover the actual business, including formats that will emerge during the term.
Where the licensor insists on specificity, secure a most-favoured right of first negotiation on new formats.
Address the whole distribution chain: sublicensing, subdistribution, and print-on-demand.

Advances, royalties, and the reserve

The advance

A prepayment of royalties, recouped against earnings. It is not a fee, and the distinction matters commercially: an author whose book earns less than the advance keeps it (in a non-returnable structure) but earns nothing further.

Points to negotiate:

Non-returnable, subject only to failure to deliver or to a breach — the standard, and worth confirming
The payment schedule: on signature, on delivery and acceptance, on publication, and sometimes on paperback publication
Acceptance standards. "Satisfactory to the Publisher in form and content" is a discretionary standard that permits rejection; "professionally competent and fit for publication" is objective and is what an author should seek
A cure period before rejection, with editorial guidance
Cross-collateralization: whether the advance on one work may be recouped against another. Authors should resist, because it converts separate deals into one.

The royalty base

The single most consequential commercial term, and it is not the percentage.

Base	Effect
List price (retail)	Higher effective royalty; simpler; the author's preference
Net receipts (amounts actually received)	Lower; depends entirely on the deductions permitted

Where the royalty is on net receipts, the deductions define the deal, and they should be enumerated exhaustively rather than left to "customary deductions." Watch for: distribution fees to affiliates; returns; freight; discounts; marketing contributions; platform fees; and — the recurring problem — deductions taken by an affiliated distributor, which move money within the licensee's group and out of the royalty base.

Rate escalators by volume, and different rates by format, channel, and territory.

High-discount and special sales at reduced rates — a category that can swallow the deal if defined broadly. Cap it, or define the discount threshold precisely.

The reserve against returns

Books are sold on a returnable basis, so a publisher withholds a reserve against future returns before paying royalties.

The provisions that matter:

A cap on the reserve, as a percentage of royalties otherwise payable
A liquidation schedule: the reserve is released over a stated number of accounting periods
Disclosure of the reserve taken, in the royalty statement
A prohibition on reserving indefinitely, which without a cap and a schedule is what happens

An unlimited, undisclosed reserve is a licence to defer payment indefinitely, and it is the provision authors' counsel most often fails to address.

Accounting and audit

Statements semi-annually or quarterly, showing units by format and channel, price, deductions itemized, reserve taken and released, and the running recoupment position.

Audit rights are what make the reporting meaningful:

On reasonable notice, at the author's cost, once per year
By an accountant of the author's choosing, not one from an approved list
Access to the underlying records, including sublicensee statements
A period to object after each statement, and — importantly — the objection period should not be so short that it forecloses an audit
Cost shifting where the audit reveals an underpayment above a threshold, commonly 5% — this provision is what makes audits happen, and licensees resist it

Character licensing

Where the licensed property is a character, an additional question arises: is the character itself protectable, separately from the works in which it appears?

DC Comics v. Towle, 802 F.3d 1012 (9th Cir. 2015) is the leading modern statement. The defendant built and sold replicas of a fictional vehicle from comic books, television, and film. The Ninth Circuit held the vehicle was a protectable character, applying a three-part test: the character must have physical as well as conceptual qualities; it must be sufficiently delineated to be recognizable as the same character whenever it appears, displaying consistent, identifiable traits; and it must be especially distinctive and contain some unique elements of expression.

Gaiman v. McFarlane, 360 F.3d 644 (7th Cir. 2004) addressed both character protectability and joint authorship in a comics context, holding that a writer who contributed a character's name, personality, and dialogue could be a joint author of the character even where another party drew it, and that comic book characters are protectable where sufficiently delineated.

The practical consequences:

A well-delineated character is licensable across media independently of any particular work
Stock characters and character types are not protectable, and a licence of a thinly drawn character grants little
Consistency of depiction matters, both to protectability and to the licensor's ability to enforce
Joint authorship risk where a character emerged from a collaboration — the Gaiman problem — and it should be resolved by agreement rather than left to litigation

Trademark runs alongside. Character names and visual representations frequently function as trademarks, and a merchandising programme should be built on both copyright and trademark, with registrations in the relevant classes and jurisdictions.

But note the limit. Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) held that the Lanham Act's false designation of origin provision does not reach uncredited copying of a communicative work whose copyright has expired — "origin" refers to the producer of the tangible goods, not to the author of the underlying content. Trademark is not a substitute for copyright, and a licensor whose copyright has expired cannot use trademark to police copying of the content itself.

Merchandising: approvals and quality control

In a merchandising licence, the licensor grants the right to apply its property to products it does not make. Its entire protection is the approval process and the quality control obligation, and these are the provisions that decide whether the programme builds or destroys the property.

Why quality control is not optional

For a trademark licence, failure to exercise control over the quality of the licensed goods can result in abandonment of the mark — naked licensing. A licensor that grants merchandising rights and never looks at the products risks losing the mark it licensed.

So the approval provisions serve two purposes: commercial protection of the brand, and preservation of the trademark itself.

The approval architecture

Stages. Approval at each stage, not only at the end:

Concept — the product category and the design direction
Design and artwork — the specific application of the property
Pre-production sample — the physical prototype
Production sample — from the actual production run
Packaging, hangtags, and labelling
Advertising and promotional materials
Any use on the licensee's website or social channels

Mechanics that make it workable:

A submission process with a defined form and channel
A response period — commonly ten to fifteen business days
Deemed approval or deemed disapproval if the licensor does not respond. Licensees want deemed approval; licensors want deemed disapproval. The compromise is deemed disapproval with an escalation right and a shorter second period.
Reasonableness. Approval "in the Licensor's sole discretion" is common for premium properties and is a real risk for a licensee that has tooled a product.
No material change after approval without resubmission
Retention of approved samples by both parties, as the reference standard

Quality control

Specifications and standards for materials, construction, and safety
Compliance with applicable product safety, labelling, and content regulation in every territory
Testing by an accredited laboratory, with certificates provided
Inspection rights at manufacturing facilities, including those of subcontractors
Approved manufacturers, with a right to require the licensee to cease using one
Ethical sourcing and labour standards, increasingly non-negotiable for consumer brands
Recall procedures, with the licensor's right to require a recall and the allocation of its cost

Territory, channel, and exclusivity

Territory, defined precisely, with the internet addressed expressly — an online store sells everywhere, and a territorial licence that does not address online sales is unenforceable in practice
Channels: mass, specialty, direct-to-consumer, online marketplaces, and the licensee's own site
Exclusivity, if granted, defined by product category, channel, and territory — and subject to minimum performance
Carve-outs for the licensor's own direct sales and for promotional use

Minimum guarantees and performance

The minimum guarantee is a floor on royalties, payable whether or not sales occur. It is the licensor's protection against a licensee that takes an exclusive and does nothing.

Payable in instalments across the term
Recoupable against earned royalties, but not refundable
Sized to a realistic sales projection, not to a hope

Minimum sales performance, separately: defined sales or royalty thresholds per period, with the consequence of failure being loss of exclusivity, reduction of territory or categories, or termination. Without a performance obligation, an exclusive licence can freeze a category for the term.

Term, termination, and sell-off

Initial term of two to three years is typical, with renewal on performance
Termination for cause, with cure periods differing by breach — no cure for unapproved product or for a safety failure
Termination for insolvency, subject to the constraints bankruptcy law places on ipso facto clauses
Sell-off period: commonly ninety to one hundred eighty days after expiry, permitting the licensee to sell existing inventory, subject to an inventory statement, continued royalty payment, and no manufacturing after termination
Disposal of remaining inventory, tooling, moulds, and artwork after the sell-off — the licensor should have the right to purchase inventory at cost and to require destruction of the rest, with certification

The statutory termination right

An author or their heirs may terminate a grant of copyright decades later, notwithstanding any contract to the contrary.

Under 17 U.S.C. § 203, for grants executed by the author on or after 1 January 1978, termination may be effected during a five-year window beginning thirty-five years from the date of execution of the grant (or, for a grant covering publication, thirty-five years from publication or forty years from execution, whichever is earlier). Notice must be served not less than two nor more than ten years before the effective date, and must be recorded.

The features that matter:

It applies notwithstanding any agreement to the contrary. A contract purporting to waive it is ineffective. This is unusual in American contract law and it surprises licensees.
It does not apply to works made for hire, which is why the work-made-for-hire characterization is fought over so vigorously.
Derivative works prepared under the grant before termination may continue to be exploited under the terms of the grant — but no new derivative works may be prepared after termination.
The formalities are strict, and defective notices have defeated terminations.
A parallel provision governs pre-1978 grants, with different timing.

Practical consequences.

For licensees and their assignees: a long-term grant is not permanent. Model the termination window, and consider whether a renegotiated grant post-termination is likely and on what terms. Where the property is central to a business, this belongs in the diligence.

For authors and estates: calendar the window. The notice periods are long and the deadlines are absolute, and the right is lost if the window closes. This is the most valuable asset many literary estates hold, and it is routinely missed.

For everyone: the derivative works exception means a licensee that has built a franchise may continue exploiting what it made, but cannot make more. That asymmetry drives the renegotiation, which is what usually happens.

Who owns the work in the first place

Before a grant can be negotiated, someone must own what is being granted, and the ownership question is less settled than most parties assume.

Work made for hire. A work prepared by an employee within the scope of employment is a work made for hire, and the employer is the author — not merely the owner. For commissioned works, the category is narrow: the work must fall within one of the enumerated categories (a contribution to a collective work, part of a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional text, a test, answer material for a test, or an atlas) and there must be a written agreement, signed by both parties, expressly stating that the work is a work made for hire.

Illustrations, cover art, and design work commissioned from a freelancer frequently do not fit any category, which means the work-made-for-hire recitation is ineffective and the freelancer owns the copyright unless there is an assignment.

The drafting response — and it is standard for a reason:

The Work is a work made for hire for [Company]. To the extent it is not, [Contributor] hereby assigns to [Company] all right, title, and interest in and to the Work and all intellectual property rights therein.

Note the consequence of the characterization. A work made for hire is not subject to the statutory termination right, while an assigned work is. This is why the characterization is fought over: it determines whether the grant is permanent.

Joint authorship. Where a work results from collaboration, the contributors may be joint authors, each of whom may license non-exclusively and each of whom must account to the others for profits. Effects Associates, Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990) addresses the related point that a copyright transfer requires a writing, while a non-exclusive licence may be implied from conduct — a filmmaker who commissioned and paid for effects footage obtained an implied non-exclusive licence to use it, though not ownership.

Cohen v. Paramount Pictures Corp., 845 F.2d 851 (9th Cir. 1988) illustrates the scope question from the other side, holding that a 1969 synchronization licence permitting exhibition "by means of television" did not extend to videocassette distribution — again, the grant's language decided.

The diligence question for any licensee. Before taking a grant, confirm: who created each element; whether each was an employee acting within the scope of employment or a contractor; whether written agreements exist; whether any recitation of work made for hire is effective for that category of work; and whether there is a present assignment as a fallback. A licensee that takes a grant from a party that does not own the work has taken nothing.

A worked example: the Ashgrove property

The property. Marguerite Ashgrove writes a series of illustrated children's books featuring a character, Pelham the Pangolin. The books sell modestly; the character is distinctive and well drawn.

The publishing agreement

As offered by the publisher: an advance of $45,000 for three books; a royalty of 8% of net receipts; a grant of "all rights in all media now known or hereafter devised, throughout the world, in all languages, for the full term of copyright"; and merchandising rights included.

What Ashgrove's counsel changes:

The grant. Narrowed to: English-language print, e-book, and audiobook rights in the United States, Canada, and the United Kingdom, for the term of copyright subject to reversion. Translation, dramatic, and — critically — merchandising rights are reserved. All rights not expressly granted are reserved to the Author.

Why merchandising is the point. The character, not the books, is the asset. Granting merchandising rights to a book publisher that has no merchandising capability would freeze the most valuable right for decades.

The royalty base. Moved to list price for print — 10% escalating to 12.5% after 20,000 copies — with net receipts retained only for e-book and audio, where the deductions are enumerated exhaustively.

The reserve. Capped at 20% of royalties otherwise payable, liquidated over two accounting periods, disclosed in the statement.

Acceptance. Changed from "satisfactory in the Publisher's sole judgment" to "professionally competent and fit for publication," with a thirty-day editorial notice and a sixty-day cure period.

Audit. Annual, accountant of the Author's choosing, access to sublicensee statements, cost shifting at a 5% variance.

Reversion. If the work is out of print — defined by reference to actual sales below a stated threshold over two consecutive periods, not by the publisher's declaration — rights revert on notice.

The merchandising programme, three years later

Pelham becomes popular. Ashgrove, holding merchandising rights, licenses a toy manufacturer.

The structure:

Grant: plush toys, figurines, and soft goods; North America; three-year initial term; exclusive within the categories
Minimum guarantee: $250,000, payable in six instalments, recoupable but not refundable
Royalty: 9% of net sales, with deductions limited to actual returns, trade discounts, and freight — and expressly excluding any distribution fee to an affiliate of the licensee
Minimum performance: $1.2 million in net sales in year two and $1.8 million in year three; failure converts exclusivity to non-exclusivity
Approvals: concept, artwork, pre-production sample, production sample, packaging, and advertising, each within ten business days, deemed disapproved if no response, with escalation to a named executive and a five-day second period
Quality: specified materials; safety testing to the applicable standards by an accredited laboratory with certificates; inspection rights at manufacturing sites including subcontractors; approved manufacturer list; ethical sourcing standards; recall procedure with cost allocation
Territory and channel: North America, all channels including online — with the online provision addressing sales to purchasers outside the territory, requiring geo-restriction and prohibiting sales to known re-exporters
Sell-off: 120 days, inventory statement within ten days of termination, royalties payable, no manufacturing after termination, licensor's option to purchase remaining inventory at cost

The dispute, year two

The licensee launches a Pelham plush toy in a different colourway from the approved sample, and sells it through a channel the licence does not cover — a discount retailer.

Ashgrove's position: unapproved product and out-of-channel sales, both material breaches.

The licensee's position: the colourway change was minor, and the discount channel is within "all channels."

How the agreement resolves it. The "no material change after approval without resubmission" provision covers the colourway. And the channel definition enumerated the permitted channels rather than saying "all channels," so the discount retailer is outside it.

The outcome: the licensee ceases the colourway, pays a negotiated amount for the out-of-channel sales, and the licence continues. The dispute took six weeks because the agreement said what would happen.

And thirty-five years later

Ashgrove's estate serves notice under section 203 to terminate the publishing grant. The publisher may continue to exploit the editions it prepared under the grant, but may not prepare new derivative works. The estate relicenses print rights to a new publisher on materially better terms.

The estate's counsel calendared the window when the estate was established. Most do not, and the right is lost.

Subsidiary rights and the split

Where a publisher holds subsidiary rights, the licensor's share and the mechanics of exploitation matter as much as the primary royalty.

The categories, and typical author shares:

Right	Typical author share of publisher's receipts
First serial (pre-publication excerpt)	90%
Second serial (post-publication excerpt)	50%
Translation and foreign language	75%
British Commonwealth	80%
Book club	50%
Paperback reprint (where separately licensed)	50%
Audio	50–75%, or a direct royalty
Dramatic, film, and television	90%, where granted at all
Merchandising	Usually reserved to the author
Anthology and permissions	50%

The negotiating points beyond the percentages:

Reserve what you can exploit yourself. An author with an agent who can sell translation rights should reserve them; one without may do better letting the publisher sell them at a 75% share.
Consultation or approval on subsidiary licences, at least for material ones — dramatic and merchandising rights should require approval, not merely consultation.
A time limit: rights not licensed within a stated period revert.
Accounting for subsidiary income at the same intervals as the primary royalty, with the sublicensee's statement provided.
No cross-collateralization of subsidiary income against unearned advances on other works.
Direct payment, where a sublicensee will pay the author's share directly — cleaner and avoids the credit risk of the publisher.

Dramatic and audiovisual rights deserve separate treatment. They are frequently the most valuable right in the package, they are exploited through a different industry with its own conventions, and a publisher is rarely the right party to hold them. Reserve them where possible, and where a publisher insists, secure approval rights and a high share.

A note on options. A film or television option is a short-term exclusive right to acquire, for a fee, with a purchase price payable on exercise. The terms that matter are the option period and extensions, the fee and whether it is applicable against the purchase price, the scope of the rights on exercise, the reserved rights, credit, and — for a book property — whether the option covers sequels and whether the author retains publication rights in any novelization.

Warranties, indemnities, and the risks an author actually bears

The warranty and indemnity provisions in a publishing agreement are frequently the harshest terms in it, and authors sign them without reading.

The standard warranties. That the work is original; that the author owns it and has the right to grant; that it has not been previously published; that it does not infringe any copyright or other right; that it is not defamatory; that it does not invade privacy or publicity rights; that any factual statements are true; that any recipe, formula, or instruction will not cause harm; and that permissions for third-party material have been obtained.

The indemnity. Typically requiring the author to indemnify the publisher against any claim arising from a breach, including the publisher's legal costs — and frequently triggered by a claim rather than by an adjudicated breach.

Why this matters practically. An author with no assets indemnifying a publisher against defamation claims has given a promise that cannot be performed, and the publisher knows it. The provision's real function is to permit the publisher to withhold royalties against a claim, which it can do for years.

What to negotiate:

Knowledge qualifiers on the warranties that admit them — infringement and truth of factual statements, particularly
Indemnity triggered by a final adjudication or by a settlement the author approved, not by a bare claim
A cap on the indemnity, at the amounts received under the agreement
The right to participate in the defence and to approve counsel and any settlement
Coverage under the publisher's insurance, naming the author as an additional insured. This is standard for many publishers and authors frequently do not ask
A limit on withholding: royalties may be withheld only in a reasonable amount related to the claim, only after notice, and only for a defined period
A carve-out for material the publisher supplied or required, and for editorial changes the publisher made
Survival limited to the applicable limitations period rather than indefinitely

For a licensee's counsel, the mirror-image point: an indemnity from a party with no assets is not risk transfer. If the content risk is real, insure it — media perils coverage exists — and treat the author indemnity as an allocation of responsibility rather than as protection.

And on the licensor's side of a merchandising deal, the indemnities run the other way: the licensee indemnifies for product liability, for its manufacturing and distribution, and for its own advertising, and the licensor indemnifies only for the property's clearance. That allocation is correct and should be resisted only at the margins.

Auditing a licensee

Royalty statements understate. Not always deliberately, but systematically, and the audit is how a licensor finds out.

What audits typically find, in rough order of frequency:

Unreported sales channels — sales through a marketplace, a subsidiary, or a direct-to-consumer site not included in the reporting
Deductions not permitted by the agreement, particularly distribution fees to affiliates and marketing contributions
Wrong royalty rate applied to a category or a channel, usually the lower of two rates
Sales at the "special" or "high discount" rate that do not meet the definition
Free goods and samples exceeding the permitted allowance
Returns credited that were never returned, or credited twice
Reserve taken without disclosure, or held beyond the liquidation schedule
Sublicensee income not reported or reported net of unagreed deductions
Sales in territories outside the licence, or through unapproved channels
Currency conversion at unfavourable or undocumented rates
Late payment without the contractual interest

Running the audit:

Give notice in the form the agreement requires, and diarize the objection deadline for each prior statement
Request the underlying records listed in the agreement, and be specific: sales registers by SKU, channel, and territory; the deduction ledger; sublicensee statements; the returns register; and the reserve computation
Reconcile the statements to the general ledger, which is where unreported channels appear
Test the deductions against the enumerated list
Sample transactions across channels and periods
Present the findings in a schedule the licensee can follow, quantified item by item
Negotiate. Most audits settle at a fraction of the claim, and the settlement usually includes prospective changes to the reporting

The provision that makes audits happen is cost shifting: where the audit reveals an underpayment above a threshold, commonly 5%, the licensee pays the audit cost. Without it, an audit costing $60,000 to recover $40,000 does not get run, and licensees know it.

And the provision licensors most often lack is a right to audit sublicensees, or at least to receive their statements. A licensee that sublicenses and reports only its own net receipts has made the largest part of the revenue invisible.

Quick reference

The grant is the deal. Rosetta Books and Tasini show grants read narrowly; Boosey & Hawkes and Bourne show them read broadly. There is no default rule allocating new media — the language decides. Licensors: grant specific rights in specific media and reserve the rest expressly. Licensees: secure enough breadth to run the business, or a right of first negotiation on new formats.

Confirm ownership before the grant. Work made for hire is narrow for commissioned works, and a recitation that does not fit a statutory category is ineffective. Always include a present assignment as a fallback — and note that a work made for hire is not subject to statutory termination while an assignment is.

The royalty base matters more than the rate. On net receipts, enumerate the permitted deductions exhaustively, and exclude affiliate distribution fees.

Cap and schedule the reserve against returns, and require it to be disclosed. An uncapped, undisclosed reserve defers payment indefinitely.

Make the audit right real: an accountant of the licensor's choosing, access to sublicensee statements, and cost shifting at a 5% variance — the provision that makes audits happen.

Characters are protectable where they have physical and conceptual qualities, are sufficiently delineated to be recognizable, and are especially distinctive. Build merchandising on copyright and trademark — but note Dastar: trademark does not substitute for expired copyright.

In merchandising, approvals and quality control are the whole protection — and quality control is not optional, because failure to exercise it can result in abandonment of the mark. Approve at every stage, with a response period and a deemed outcome, and no material change after approval without resubmission.

Minimum guarantees and minimum performance are different things, and an exclusive licence without a performance obligation freezes a category for the term.

Negotiate the warranty and indemnity package. Knowledge qualifiers, a final-adjudication trigger, a cap, participation in the defence, coverage under the publisher's insurance, and a limit on withholding.

And calendar the statutory termination window. Thirty-five years from execution, a five-year window, notice two to ten years in advance, notwithstanding any agreement to the contrary — the most valuable asset many literary estates hold, and the one most often lost to a missed deadline.

Digital distribution and the platform layer

Publishing and merchandising now run substantially through platforms, and the platform's terms interact with the licence in ways the licence rarely addresses.

E-book and audiobook platforms. The publisher sells through a retailer whose terms set the price mechanism, the discount, the reporting, and the payment timing. The royalty base question — list price or net receipts — becomes a question about what the platform actually pays, and an agency model in which the retailer takes a commission produces a different number from a wholesale model in which it buys at a discount and resells. Address both in the definition.

Subscription and lending models. A platform paying per page read, or allocating a pool among titles, produces revenue that does not map onto a per-unit royalty at all. The agreement should say how it is treated, and a licence drafted only for per-unit sales will be argued about.

Print on demand. Changes the out-of-print analysis fundamentally. A reversion clause keyed to "out of print" is meaningless where a title is perpetually available on demand, which is why modern reversion clauses are keyed to actual sales below a stated threshold over consecutive periods.

Online marketplaces for merchandise. A territorial licence is unenforceable in practice unless the agreement addresses online sales: geo-restriction obligations, prohibitions on sales to known re-exporters, and responsibility for third-party sellers listing the licensee's product outside the territory.

Direct-to-consumer channels. Frequently the highest-margin channel and frequently outside the enumerated channel list, because the list was drafted for retail. Address it expressly, and address the royalty base for it, since there is no wholesale price.

User-generated content and social platforms. A merchandising licensee's social marketing uses the property, and the approval provisions should cover it — as should the ownership of any content created. And the licensor should consider its own policy on fan use, which is a commercial question about community as much as a legal one about enforcement.

Platform takedowns. Where a licensee's product is copied, the practical remedy is a platform notice-and-takedown rather than litigation. Address who may issue notices — a licensee issuing takedowns in the licensor's name creates exposure — and require coordination.