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Digital Rights: Is E-Book Multimedia Added Value or Competition?

At the Publishing Business Conference’s “Rethinking Author Contracts for the Digital World” panel last month, a major dilemma regarding e-book rights and author contracts was revisited:

Despite the prevalence of non-compete clauses in author contracts, many authors are venturing into e-book or multimedia agreements, risking lawsuits from their print publishers.

The benchmark 2001 case of Random House v. Rosetta Books set a precedent, when the New York Federal Court refused to grant Random House a preliminary injunction against Rosetta, an e-book publisher that was trying to publish electronic versions of Random backlist titles like Styron’s Sophie’s Choice and Vonnegut’s Breakfast of Champions.

And despite non-compete clauses in many author contracts, Sara Pearl, VP and Director of Business Affairs at Trident Media Group, says courts tend to favor the authors. “The courts don’t like to cut off how someone makes their living,” she said.

Of the Random House case, U.S. District Judge Sidney H. Stein, “In [Random House’s] case, the ‘new use’ – electronic digital signals sent over the internet – is a separate medium from the original use – printed words on paper.” The court pointed out that Random House included separate language in its contracts for other forms of printed books such as large print, book club editions, and Braille editions, indicating that Random House did not believe that its contracts automatically granted the company the rights to all possible forms of its books.

Random House countered in December, when CEO Markus Dohle sent a letter to agents asserting that it holds e-book rights to all of its titles. Dohle called the 2001 judgment and other challenges to its claims “misunderstandings,” and pointed to Random House’s noncompetition clause as further proof that authors are prevented from “granting publishing rights to third parties that would compromise the rights for which Random House has bargained.”

Judge Stein made quite clear the limitations on the scope of the court’s ruling. The judgment was merely a “neutral” interpretation of contract law in Random House’s case, he noted in the decision.

“This is neither a victory for technophiles nor a defeat for Luddites,” he wrote, leaving the door wide open for new interpretations of other publishers’ claims.

Speaking at the panel, John Silbersack, an Executive VP at Trident, admitted that Amazon’s practice of selling e-books and print books next to each other on its website may give publishers possible legal ground to stand on.

“We’re talking about developing products that are going side by side” with print, Silbersack said. “It’s a little hard to argue that you’re not in the same space.”

Backlist titles are an attractive option for agents, because newer contracts often include the sale of ebook rights. “When you get to the frontlist, you cannot sell a book without selling ebook rights,” Pearl said. “The hot new thing is multimedia rights.” The new mobile or iPhone content is only restricted to 20-25% verbatim from the author’s work – the rest is “bells and whistles,” she said.

Publishers are also eager to capitalize on backlist titles; Silbersack said that agents are encountering pushback when they try to obtain termination notices for out-of-print books, something that he said his agency is “aggressive” about.

An author’s sale of multimedia rights is a publicity tool, not yet a major revenue source:

“It’s more of a forward-looking thing, a marketing thing,” Silbersack said. “They can make use of these features to reach beyond the book reading world.”

Though multimedia deals might not constitute the largest portion of a book’s revenue, it’s obvious that both agents and publishers are anticipating an major shakeout over these new platforms and neither camp wants to compromise their stakes.

“I don’t think that anyone can argue . . . that this is a battle that needs to be fought right now from a monetary perspective,” Silbersack said. “However, it’s a battle that needs to be fought to discuss what the points of tension are. Trident is beginning to test these waters.”

Pearl agreed that despite the hassle and the possible legal ramifications for authors selling multimedia rights, the panelists were enthusiastic about pursuing multimedia deals.

“I think you can’t fight it,” Pearl said. “Most of this is found money. Authors can control how the content is used, and they make a little bit of money. Right now, nobody’s doing anything with [the rights]. Net, it’s not a bad thing.”

The panel discussion also touched on Macmillan and Amazon’s agency model vs. trade model tug-of-war, and the much-debated questions over fair use that Google Books is currently mired in. In news from the OnCopyright Conference, also held last month in New York, Google’s Senior Copyright Counsel Bill Patry said the best approach to fair rights issues concerning the Internet was self-policing through privately sourced licensing agreements. Patry cited as an example the CHORUSS music copyright licensing service, which allows schools to pay a set licensing fee for unlimited use of a music catalogue within the schools. He recommended that trade groups stop lobbying so fervently for copyright as an “economic right” and instead seek actuarial solutions from the Copyright Clearance Center or ASCAP.





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