Wednesday, July 28, 2010

The eRights Fight

The time: the early 1990s.
The place: publishing.

About fifteen to twenty years ago, publishers began specifying the acquisition of electronic rights in their contracts. While I don't think anyone necessarily foresaw the impact e-books would have on the market and the speed with which they'd come to comprise a substantial percentage of sales, I do believe publishers were forward-thinking and wanted to keep as many avenues of revenue open as possible.

Before this switch, most contracts simply granted the publisher the right to publish "in all formats" (though this was not always true, e.g. in cases where audio rights were withheld and sold elsewhere). Ambiguous language like this is at the heart of the e-rights debacle currently consuming the industry, the most notable example being the battle between Random House and the Wylie Agency.

Wylie's questionable deal with Amazon aside, the argument looks something like this.

Wylie's Point of View

The Wylie Agency's contracts show no specific record of electronic rights sales for a number of backlist titles by Very Famous Authors. Since more recent contracts specifically mention the acquisition of electronic rights, Wylie concludes that those rights (legally speaking) were not included under the "all formats" umbrella of earlier contracts (believed only to cover formats that existed at the time the contracts were signed). The Wylie Agency, being very smart, recognizes that these rights are valuable, and so they sell them to make boatloads of extra cash for themselves and their Very Famous Authors (or rather, their Very Famous Authors' estates).

Random House's Point of View

Some of Wylie's Very Famous Authors have written bestselling books that Random House has published. Random House bought the rights to publish some of these books "in all formats," so Random House concludes that they (again, legally speaking) have the right to publish these books in an electronic (wait for it!) format.

More importantly, however: Random House's Tireless and Very Talented Editors worked on the manuscripts for these books, sometimes altering/improving them dramatically. Since Random House had substantial creative input on these manuscripts, they don't think it's fair for the Wylie Agency to turn around and sell them in e-format to Amazon. (They also don't like the exclusive deal with Amazon, but that's another post for another day.)

This is a bit of an oversimplification, but I think you get the gist of it. What do you think, mes auteurs?


  1. You left out the part where Wylie created an imprint for the eBooks and, thus, became the publisher. Might be another post. :-)

    And isn't Random House, for example, already providing eBooks for some of these titles?

    I don't know if Wylie overstepped his role as an agent, but it does seem to be he's ringing in a new era. If not the agent, might not authors (or their estates) now become eBook publishers and do exclusive deals (or not) and, in effect, compete with their real-book publishers?

  2. Since these are Wylie contracts, I'd be very surprised if they contained such blanket language that covers all rights in all formats in all languages across the globe. More likely, I'd suspect, is that the contracts only covered specific formats (hardcover/paperback) in a specific language and territory, with all other rights being reserved to the Author.

    (Film deals are different in this regard - if you don't hold on to a right, it's assumed granted. Not so w/ books).

    I think it's a bit of a gray area b/c the e-book format is so closely aligned w/ print, in terms of how it looks and feels, but rights are either granted or they're not, and if it's not cut and dry that Random House controls the rights (and obviously they're concerned about it since they didn't publish their own e-book first), then I think e-book rights are retained by the author.

    I'd be surprised, though, if Wylie Publishing Co. lasts more than a few months. This seems more like a ploy to break the 25% net royalty rate throughout the industry for e-books.

  3. I'm certainly no attorney but from the way you've outlined the issues I'd say Wylie has them by the cajones.

  4. It will depend, in this simplified example as your said, whether the judge or mediator in this case decides to follow the Intent of the contract language or the Letter of the contract language. It will be interesting to see on which side this falls.

  5. I think what worries me more as a writer is Random's claim of significant creative input. That's only a step away from an editor or an agent becoming a co-author.

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  7. It sounds as though Random House is trying to claim the "kitchen sink" clause, meaning when they said 'everything' they didn't just mean everything 'right now' but everything that could ever happen.

    I seriously doubt Updike or his agents really thought about electronic rights, or the idea that it could become a viable income source/market. So does that, or should that, mean that it's 'their bad'?

    In fairness, the flip-side is also true: Random House can't be blamed because the author/agent didn't think ahead. Consequently, they probably have legit claim to the rights. However, I think they're (RH) coming off as money grubbing scared corporate folks who are trying to take advantage of weak language in a contract.

    To save face and prove they're actually not at war with authors--who last I checked actually do the work they/publishers make money off of--RH should either attempt to re-negotiate old contracts that do not have legitimate electronic clauses AND pay a royalty rate that is fair (50%), or graciously allow the authors/agents to do their thing. Instead, it seems RH is content to dig in their feet and act like a second grader who made a promise with their fingers crossed.

    One thing I'm sure of is that this is going to get even uglier than it already is

  8. This seems like a difference between the spirit and the wording of the agreements.
    Short term, I guess the authors are happier.

  9. As a writer, I'm very sympathetic to the authors' case, but trying to look at it objectively, I think the publishers have the right of it.

    Suppose I buy a piece of land with a contract that says that I "will place no structures" upon the property. Then, someone invents a new type of building. Do I get to put one of those on my property, since there was no specific intention to prohibit that kind of structure at the time the contract was signed? Of course not. The contract says "no structures." The question is, is it a structure; if so, it's banned.

    For ebooks, the question is, is it a "format"? Of course it is; the fact of it being on a different medium doesn't make it any less a format for delivering the same words. Audiobooks are a different medium; aren't they covered by "all formats"? It could be argued that an ebook is more like a printed book than an audiobook is.

    The agents had the option of asking for the wording, "all currently extant formats." They didn't do so.

  10. I'm trying to puzzle it out in my brain, but I am not a lawyer, so I can't determine if it's likely the literal wording will be upheld (ALL formats, whether they existed at the time of the contract or not). The best thing would be for the agency and the original publisher to renegotiate, obviously. I think I side a little more with Random House, though, since their editors helped make the product what it is.

  11. I think Wylie opened a can of worms which may be beneficial to authors (in general) in the long run.

    If I'm not mistaken, the royalty rate Wylie contracted with Amazon for the estates were 70% compared to the typical 25% which comes with big traditional publishers. With all the talk of agents deserving raises, wouldn't this be one way of earning it without taking from the authors' cut?

    Agents earn a standard commission, but the $$$ amount they receive fluctuates by what they're able to negotiate and book sales. If publishers have a united front in terms of royalty rates, it doesn't really give agents much negotiating power. Being able to go to companies such as Amazon is a wild card in the game.

    Amazon isn't like a small print house with little pull. It has a large enough customer base and distributors to actually compete against the larger traditional publishing houses. It's kind of scary when considering the stunt they pulled with removing the authors' links a while back over a disagreement. But whether we like it or not, I think this deal sets a precedence. If one agency is able to find a way to make writing more profitable for agents and writers, others will also.

    After all, it's hard for publishers to keep that united front if someone isn't playing by the same rules.

  12. @Kristin ~ No doubt the publishers put a lot of work in the finishing product. Some might even think the publisher is responsible for the success of a book. However, saying the publishers have rights to the author's work because they helped with the editing would be like saying a critique partner has writes to author's work because of their help. The work still belongs to the author along with any editing changes.

  13. Most of the legal aspects here were settled in the court case Rosetta Books versus Random House some years back. The case proved that if ebook rights aren't specifically mentioned in so-called legacy contracts, then the author has the right to sell them elsewhere.

    RH should have learned their lesson then, but they are still trying to bully their way into controlling all book rights without having to negotiate them.

    All RH had to do to avoid this problem was to negotiate a fair ebook royalty rate with these authors and their agent, but they refused.

    Their bullying tactic of refusing to a contract with any Wylie author is a cut off their nose tactic since Wylie handles so many major authors and up-and-coming authors.

    Pardon me if I shed no tears for RH.

  14. Not to make this sound really simplistic, but it sounds like it boils down to: Money talks and suckers walk.

    Sounds like publishers are trying to become like the yahoos in the music industry, with lifetime rights and whatnot.

  15. My publishers are predominantly digital first, print second, so it's kind of a backward situation for me.

    My one "exclusively" print publisher has apparently opened its eyes and no longer gives e-rights to the author until the book has been on the shelf for a year.

  16. Reena: as publisher, Wylie gets (using your guess) 70% of RETAIL - of what the eBooks sales for.

    Currently, authors get 25% of NET (what the publisher receives).

    The difference between the two is staggering compared to simply 70% Vs 25% of the same number.

    If a publisher NOW gets 50% of what an eBook sales for (which is 9.99 or less if amazon etc. have their way) - the author gets $25% of the NET to the publisher -- which works out to 12.5%

    Now compare 12.5% to 70% given to the person who pubs the eBook. And, meanwhile, with most ouit of print books having had rights revert (for non use by the publisher - standard in book contracts), the author may publish the eBook herself and earned 70% of RETAIL. I think you're going to see a lot of authors making their own o.p. backlist available as eBooks.

    I wish them well!