“Exploring Contract Negotiations between Oxford University Press and a New Author: Balancing Advance and Royalty Rates in Academic Publishing” Plusses and Minuses of Advance and Royalty Rate Contracts for Oxford University Press and its New Author The two acquisitions

Oxford University Press, an academic publishing company in England that publishes textbooks and academic monographs, is in contract negotiations with a new author (a professor at a U.S. university) to write the 1st edition of a new textbook in biochemistry. Two of Oxford’s acquisitions editors are debating over how to structure the contract terms. One editor wants to offer the author an “advance”1 of X euros plus a royalty rate of 15% of net revenue.2 The second editor wants to offer the author no advance but a larger royalty rate of 20% of net revenue. Discussion questions: What are the plusses and minuses of both contracts, considering the author’s incentives? If Oxford chooses the first contract, how should it choose the value of X? Assuming that X is correctly chosen, which of the 2 contracts do you think is preferable for Oxford, and why? 300 words