Something unrelated to technology and publishing if:book is discovering during TOC 2012: engaging with exciting developments in reading, writing, and technology via webcast at three in the morning is much more difficult than we anticipated. The irony that we would discover that while working on a project called The 24-Hour Book is not lost on us. But that will be totally different, right?
Just as well we have Meg Vann in the correct timezone who can send us almost live notes from events in New York.
Dana Newman (Dana Newman)
Join Dana Newman as she discusses the changing world of digital rights and publishing agreements. Authors, agents, and publishers alike will appreciate this workshops which promises to offer a clearer understanding of the issues, with a variety of topics to be addressed. Read more.
Notes from Meg:
Dana Newman is and Attorney and a literary agent from LA.
This session covers publishing agreements and the changes coming about as a result of digital rights and digital distribution of books.
1972: Harper & Row published Julie and the Wolves. The book is currently at the centre of a digital lawsuit with Open Roads. Harper is claiming new Open Roads ebooks are in violation of author’s original contract in 1972.
It is becoming imperative to find the best equitable solution of digital rights, and who is the best exploiter of those rights in each channel.
Publishing agreement = Copyright License. Aims to balance the benefits of the spread of information with the rights of the original creator. Duration = term of contract or until it’s ‘out of print’. Rights revert to author.
Who controls electronic rights if contract was signed before ebooks existed? Random House vs Rosetta. Random filed to stop Rosetta from epublishing their authors’ books, claiming that books = ebooks. Random denied an injunction (therefore unlikely to win) because ebooks not mentioned anywhere. Same attorneys from that case are now on both sides of Julie and the Wolves.
License vs sale: Licence royalties usually split higher to artist than sale royalites. Eminem sued his record label for the higher royalty rate, arguing that iTunes downloads are a license not a sale – class actions now being filed – a big pending issue in book publishing. eBooks are being licensed by readers so should revenue shared 50/50 instead of as a primary grant of rights (with a lower split to author).
For publishers looking at releasing ebook versions: check initial contract for a grant of rights, subsidiary rights, and whether ebooks were considered. If not, try to negotiate an amendment. But authors have so many options on the table now – such negotiations can be difficult.
The Cosmic Clause: Drafting contracts to encompass everything in the entire universe – language to encompass the unknown – ways used, platforms, channels. One example: ‘Print, electronic, online, audio, audio-visual, and any form to publish, display, distribute, or provide access to.’
In 1938, rights to all Superman comics were sold for $130. That was reversed – in USA, grantors can terminate a Grant of Rights after a certain period of time. Grants of 1978 are coming up in 2013. Authors may be able to recapture those rights but it’s a very technical legal process and needs a specialised lawyer.
Granting digital rights for an ebook. Digital verbatim conversion is different to a derivative work: additional material, enhanced, interactive, mobile, web-based, app. Does not overlap with performance rights TV, film, audio. Make it clearly defined and delineated, with marketing, licensing, and distribution plans spelled out. Put a time period on it (e.g. 2 years). If not distributed, then rights revert to authors.
Royalties. Primary concern: how to earn on distribution of digital works. Evolution of price of ebooks and growth of Amazon. Publishers mostly settled on the Agency Model. Publisher sets the price and grants the rights to the retailer, who distributes in exchange for commission for 30%. So if ebook price fluctuating wildly then parties still have some measure of control, knowing the cost, the percentage. Royalties: 25% net receipts = 25% of the 70% from the retailer.
- Random House uses a sliding scale: existing authors backlist from 25 to 40% based on sales. Ebooks sell for less and becoming a larger portion of overall sales so total revenue is declining. Not so long ago, ebooks were released after hardcover, trade paperback, etc, but now they're co-released with print at a lower price.
- Open Road offer 50/50 share after costs (converting and distribution). Digital only: mostly 40+%. Mostly do not include advances – for ebook rights advances not paid or only a token amount paid.
Digital royalty rate strategies:
- Negotiate rate at the time of exercising the rights
- Agree to match a favourable rate (being paid to other authors). The common rate was originally negotiated at 25% so publishers are trying to hold to that because if it goes up, this will trigger many ‘favourable rate’ contract amendments.
- Escalators – after costs recouped, royalty rate bumps up
- Ebook royalty floor: ties to highest print rate
- Right of first refusal, reversion for unexploited digital rights
Faster accounting for ebooks? There’s a view that ebooks should speed up the payment of royalites because it’s faster to get the data – quarterly/monthly, and no returns. Good sources of data:
- Wall Street working with BookScan - good data on ebooks
- NYT Books shares vendor data and publishing data
‘Out of print’ clause – ebooks never go out of print. Old definitions don’t work. Redefine ‘out of print’ and tie it to a minimum sales/marketing effort eg ‘not available in any format through any of the major online retailers – through 1 or 2 accounting periods.’
Term of License: a reasonable period (3,5,7 years, whatever makes sense) and then the rights would revert back. Or until author has earned out.
Permission to use digital content.
- Check if the author have the right to use the materials in the electronic version? Especially in multimedia projects with many underlying elements like pics animation video music – layers of rights.
- Cover a broad range of formats.
- Co-authors and ghost writers: use a work for hire agreement that explicitly includes digital – technical requirement in terms of language.
Options. Often advances not paid for ebooks, so less incentive for author to sign an option contract. Does it cover all digital rights, all print rights? Define specifically. Provide a period of time to negotiate it.
In Julia and the Wolves, Random House argued development of an ebook is a ‘competing work’ but the court did not agree. ‘All rights not granted are retained by the author’. Although enhanced ebooks are seen as derivative work – directly competitive.
Business models evolving rapidly: no one standard, no right or wrong answer.
- Agency model most used 17.25% (25% of 70%)
- Digital publishers/distributors (e.g. Harlequin, Open Road 50/40% to author)
- Self-pub through aggregator (eg BookBaby, Smashwords, Kindle Direct 85%, iBook author). No professional editorial expertise, marketing, promotion.
- Crowdsourcing (Unbound, Kickstarter)
- Subscription model – not downloading, don’t own a copy, looking at books as a service (like NetFlix) not available through major retailers. Apple mags 30% commission. Kindle lending library for prime members – one book a month an you can only read it on Kindle. 24Symbols in Spain – offers cloudbased access to books – more in line with Spotify (free, ad supported)
- Freemium model: Spotify. Ad based. Issue of fee to author 50%, but how to apportion it? O’Reilly and Angry Robot using serial/subscription model.
- Story bundle: Like Radiohead. 5 books, pay what you want, consumer chooses royalty, good for widely known authors
- Unglue.it: modelled after public broadcasting, rightsholder sets price, anyone can access it.
- Fractured/aggregated content – Amazon singles, Bookriff online platform where consumers and publishers can create a new work - you riff off original, your content, new content – it’s a mixed tape of books. How do your parcel the rights of a mash? Currently Agency model: charge 30%, and people who create mixed tapes (curators) get commission of 5%. Amazon singles (chapter/chunk).
- Reimagine the copyright agreement as a service agreement. Service contract: manage authors’ development and distribution of digital books (Cargo), or manage all your rights etc for a flat fee (not relating to a particular work). Co-publishing 360 deals – 50/50 split, contract extended if publisher performing well and contract is profitable (usually works if artist is a brand, speaking and performances etc).
No clear paths, shorter term licenses. Embrace fact that majority of revenue is going to be based on digital models so need to determine fair and flexible models for crafting deals.
Q: Publisher negotiating ebook distribution of an author’s backlists. Who do you go to, to find out?
A: Publishing contract for each book – check is it still in effect, still in print, rights reverted? Author can provide notice, then a period of time (6 months usually) if no publisher action, then rights revert to author.
Q: What if author had no copies of publishing contracts?
A: Request a copy from publishers or agents. Don’t proceed on the basis of assuming you have the rights – verify first.
Q: Overdrive and the release of books to Overdrive for use of books in libraries?
A: A library has the right to use. More tracking of chain of title, track who will access the digital copy. Eformats are more tricky to account for when shared by multiple users.
Q: Global rights?
A: Trend for publishers to get world rights/more territories due to ease of distribution. But look at whether the publisher you can grant those broad rights to, are they the best to exploit them, do they have contacts, knowledge to distribute. Be aware of different laws regionally eg some countries recognize world rights of author/creator rights over content. Tax implications.
Q: What is the relationship with publishers and agents having to share royalties for ebooks?
A: There are a lot of arguments from agents seeking higher royalties for their authors. Agents are also starting to act as publishers – after having shopped a project around, some agencies set up a service arrangement where they help the author to self-publish by using existing contacts with editors, marketers, designers etc – but is that a conflict of interests? Publishers paying low royalty rates being discussed among agents – industry wide royalty rates have increased, so agents argue that it’s triggered the ‘more favourable’ clause - publishers to renegotiate, increase royalties.
Q: Creative Commons gives rights holder more control – perfect for blogs etc. Any uptake in the industry among publishers of a more open approach to releasing content?
A: Publishers usually allow a certain percentage of a work to be used for free eg Kindle first look (free chunk), Scribd
Publishers try to buy as much rights as they can for as low cost as they can. Buy low, sell high!
Image by By Horia Varlan (CC BY 2.0)