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TrueSlant.com blogger Roger Theriault has picked up a story from the MobileRead forums that Random House will go against the recent rush by its Big Six buddies to the "agency" e-book retail model recently introduced by Apple.
Apple's approach is for publishers to retain control over the list price, rather than allowing the list price to be pegged by the e-tailer, as is currently employed by Amazon. It also allows publishers flexibility in timing release of e-books - delaying them rather than releasing them simultaneously with publication of hardcover editions.
Random's decision is based on two approaches to e-book publishing that are at odds with the philosophy of at least three of its fellow publishers. A RH spokesperson voiced the opinion that publishers “have no real experience at setting retail prices.” That explains why Random held back from embracing Apple's iPad tablet. The other reason is timing of e-book releases. “Our current policy is we release e-books at the same time as physical books,” she said. "I haven’t been convinced that it’s good for the author or consumer to delay the release."
Separation of E-Book Rights: Publishers' Worst Nightmare
Publishers are fighting the last war, but they'd better turn their heads forward if they don't want to lose the next one.
The notice served by Random House to authors and agents, vowing to protect its backlist from predatory e-book developers, focused so much attention on previously published books that just about everybody took their eyes off an infinitely larger issue and an infinitely larger prize: the future.
When we look back at the fireworks triggered by Random House's action we will see it as a noisy squabble over a relatively small number of contracts with ambiguous definitions of the word "book". Very old books have entered the public domain beyond the reach of proprietary publishers. Very new ones, on the other hand, dating from around 1990, carry explicit language defining e-rights that no buccaneer would dream of challenging. That leaves a body of post-World War II titles predating the e-book revolution, and in a great many cases their contracts have just enough references to things like "information storage and retrieval rights" and "no competing editions" to intimidate most would be poachers. There may not be that many books worth fighting over, and certainly not that many worth suing over.
But there is one body of books that publishers will have to fight for if they are to avoid calamity: the ones that have not yet been published. Events of the last few weeks have introduced a concept so terrifying to book publishers that they have refused to think about it: the separation of e-books from the suite of rights that they have taken as God-given for centuries. Who can blame them for living in denial? Deprive publishers of e-rights and they become mere printers, game set match.
We don't have to look at ancient history to see how another right that publishers took for granted was pried out of their clutches, and that's audio. For decades "audio" was a sleepy little curiosity that no one felt worth fighting over. For many of us, it meant a boxed set of Caedmon records of Dylan Thomas reading his play Under Milkwood in 1953. But as recording media evolved from vinyl to tape to CD to streaming, the audio business became a billion dollar one, and authors and agents began demanding separation of those rights from the fundamental package just as they had done early in the 20th century with movie and television rights.
The turmoil of the last few weeks, capped by the dramatic announcement by business book author Stephen Covey of his intention to sell his e-book rights to Amazon, should make it crystal-clear that severance of those rights from a publisher's franchise is now a viable option for authors. At the moment it is an option for big-name stars only, but don't so many revolutions begin on the backs of the mighty? As we recently wrote, agents have been sitting on the sidelines waiting to hear the words "e-book" and "advance" used in the same sentence. Now they smell money. A recent all-expenses-paid junket by agents to Amazon's headquarters may have had some influence on these developments (See Why Don't Agents Want to Play? Amazon Flies a Bunch to Seattle to Find Out).
The implications of separation of e-rights are profound and for publishers they must be excrutiatingly threatening, for their biggest nightmare is that Amazon will become a publisher. Now that Amazon is a bidder for electronic rights, that day has arrived.
It must be said that publishers have brought some of this on themselves by pegging the e-book royalty rate at 25% of net proceeds or even less. There are enough independent e-book outfits offering 50% (including - full disclosure - E-Reads) that it was only a matter of time before authors and agents did the math and came to the conclusion that 50% was twice as large as 25%.
The nightmare is out of the box. Is there any way for publishers to get it back in and contain the threat? The answer is yes, if they are willing to bite the 50% royalty bullet. Earlier this week in connection with Random House's dictum, the Authors Guild urged that very condition. Random House, said the Guild, should "start offering a fair royalty for those rights." Their statement went on to say:
Authors and publishers have traditionally split the proceeds from book sales. Most sublicenses, for example, provide for a 50/50 split of proceeds, and the standard trade book royalty of 15% of the hardcover retail price, back in the days that industry standard was established, represented about 50% of the net proceeds of the sale of the book. We're confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail. Savvy agents are well aware of this. The only reason e-book royalty rates are so low right now is that so little attention has been paid to them: sales were simply too low to scrap over. That's beginning to change.
While it's well and good for publishers to pore over their old contracts, they really need to examine the boilerplate in their current ones, and where it says "25%" they should consider amending it to 50%. Otherwise they may see their digital book rights calve off irretrievably like glaciers falling into the sea.
Like a wolf marking its territory against rivals, Random House served unequivocal notice today on what it perceives as potential e-poachers seeking a loophole in Random's definition of "book". The warning was embedded in a letter from Random CEO Markus Dohle mailed or emailed to literary agents describing the company's plans and initiatives in the digital world. Authors were also put on notice that they are "precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained."
"The vast majority of our backlist contracts," writes Dohle, "grant us the exclusive right to publish books in electronic formats. At the same time, we are aware there have been some misunderstandings concerning ebook rights in older backlist titles. Our older older agreements often give the exclusive rights to publish 'in book form' or 'in any and all editions'. Many of those contracts also include enhanced language that references other forms of copying or displaying the text that might be developed in the future or other more relevant language that more specifically reflects the already expansive scope of rights. Such grants are usually not limited to any specific format, and indeed the "form" of a book has evolved over the years to include variations of hardcover, paperback and other written word formats, all of which have understood to be included in the grant of book publishing rights. Indeed, ebook retailers market, sell and merchandise ebooks as an alternate book format, alongside the hardcover, trade paperback and mass market versions of a given title. Whether physical or digital, the product is used and experienced in the same manner, serves the same function, and satisfies the same fundamental urge to discovery stories, ideas and information through the process of reading. Accordingly, Random House considers contracts that grant the exclusive right to publish 'in book form' or 'in any and all editions' to include the exclusive right to publish in electronic book publishing formats. Our agreements also contain broad non-competition provisions, so that the author is precluded from granting publishing rights to third parties that would compromise the rights for which Random House has bargained."
If Random's position sounded familiar to some, it's the same one that the company used in 2001 when it sued Rosetta, an e-book startup that offered digital editions of books by Kurt Vonnegut Jr., William Styron and Robert B. Parker, having secured them directly from the authors. Random had published the books before there was such a thing as the Internet, but nevertheless considered a book to be a book no matter what form it took. Random's request for an injunction was denied by the court, and Random then filed an appeal. It too was denied.
Random and Rosetta eventually settled, allowing Rosetta to continue publishing the books but leaving unresolved the issue of who controls e-rights to books where the language defining them is ambiguous.
By issuing its letter to agents today, Random House reasserted its position that, ambiguous or not, the publisher considers the language in its contracts to grant it ironclad control over e-rights. Anyone who believes otherwise is advised to take a good sniff before venturing over the perimeter of Random's territory.
The Big Turnoff: Furor Over Kindle Audio Puts Random Between Rock and Hard Place
You shall not curse the deaf nor place a stumbling block before the blind. Leviticus 19:14
I realize it's unfashionable to feel sorry for Random House, but I think they're getting the rotten end of the stick for a problem not of their making.
You'll recall that Amazon's initiative to convert the texts of Kindle e-books to speech generated a furious response from authors and publishers because of potential infringement on their reserved commercial audio rights. Under threat of legal action, Amazon backed off, leaving the decision to speech-activate Kindle texts up to content owners. Many publishers opted out. Random House was one of them.
Now, The Reading Rights Coalition, representing more than 15 million visually challenged Americans, has censured Random House for denying audio service to its constituents. "When Random House turned off the text-to-speech function on all of its e-books for the Kindle 2," declared Dr. Marc Maurer, President of the National Federation of the Blind, "it turned off access to this service for more than 15 million print-disabled Americans. The blind and other print-disabled readers have the right to purchase e-books using this service with text-to-speech enabled. Blocking text-to-speech prohibits access for print-disabled readers and is both reprehensible and discriminatory." Maurer was joined by executives of Lighthouse International, American Association of People with Disabilities, National Spinal Cord Injury Association, American Council of the Blind and other organizations in denunciations of Random. A petition is being circulated.
It would be unspeakably callous to disregard the needs of the blind and reading-disabled. And that's the point: book publishers have always been in the vanguard of industries sensitive to the needs of the visually challenged. Language guaranteeing to them free access to published books is a standard feature of every book contract I have ever seen. A recent Random House contract says, "Random House shall have the right to grant transcription or publication rights in any Work in Braille or other non-book formats specifically for the visually impaired without charge." The subsidiary rights grant in a HarperCollins contract on my desk grants Harper "Braille, large-type and other editions for the handicapped (the Publisher may grant such rights to recognized non-profit organizations for the handicapped without charge and without payment to the Author)." I'm ready to bet that every one of the thousands of contracts in our agency's files has similar language.
I don't think the leadership of the Reading Rights Coalition is doing its members a favor by attacking publishers, who have been victimized by Amazon/Kindle's audio initiative just as severely as the visually impaired. There is a line between a function intended for the disabled and one designed for fully sighted and literate. Amazon's aggressive step across that line put publishers on the horns of a cruel dilemma: by withholding audio rights from Kindle they deny service to a genuinely needy population; but by enabling Kindle's audio feature they deprive legitimate copyright holders of the opportunity to exploit a commercial right. They also incur liability: a publisher can be sued by authors whose commercial audio rights had been given away to Amazon. And because that threat of liability is ever-present to Random House and its brother and sister publishers, it's not likely that petitions or humanitarian appeals (including to President Obama) will gain any traction.
What's the answer? We must come up with a voice-enabling technology expressly targeted to the handicapped, and segregate it from commercial audio. That's not a job for publishers. It's a job for technologists, and we wish them godspeed in solving the problem.
Amazon should be in the forefront of those supporting such an initiative, because there are 15 million visually impaired individuals ready to buy a device that serves them what they need and are entitled to. If Amazon doesn't or can't do the job - well, there are a lot of e-book devices coming on stream, and the one that solves this audio dilemma will have a huge advantage and a ready-made market.
TrueSlant.com blogger Roger Theriault has picked up a story from the MobileRead forums that Random House will go against the recent rush by its Big Six buddies to the "agency" e-book retail model recently introduced by Apple.
