Changing World of Digital Rights and Publishing Agreements – O’Reilly webinar summary

Dana Newman and Jenny Bent presented at the O’Reilly webinar, The Changing World of Digital Rights and Publishing Agreements.  My interpretation of the content is below; best efforts were made to ensure accuracy. Follow the comments on Twitter at #TOCCON.  Kat says the slides will be on slideshare and a recording will be available in about 24 hours.

Kat Meyer introduced the speakers.  Dana Newman is a transactional and intellectual property attorney (@DanaNewman).  Jenny Bent is a literary agent who founded the Bent Agency.  She represents writers and has had 5 make the NYT Best Sellers list.  (A twitter post suggested adding the publisher perspective to this session)

Dana Newman’s presented the content and Jenny inserted responses throughout.

  • State of Digital Rights and Contracts:  Older contracts were vague on electronic rights, Dana cited a case between Random House and the Wylie Agency. Courts said the right to exploit in book form did not include an e-book format.  Review existing contracts look at grant of rights and subsidiary rights section, were digital rights provided for and if so, how?  Negotiate amendments if they are not present in old contracts.
  • How are electronic rights being defined in current contracts?  There are many subcategories in current contracts: verbatim text converted into an ebook, is it apps, multimedia rights, or web-based content?
  • Suggests that authors put some limitations on the digital rights for a certain time after the manuscript is accepted to determine if the relationship is going to work.
  • Royalty Rates – standard from big publishers is 25% of net receipts.  It’s no longer based on the list price.  RH offers a sliding scale royalty for backlist titles that have gone digital. Harlequin changed rate to 15% of net receipts for series and 25% of single titles, retroactive decision.  Harlequin’s ebook only imprint, Carina (and other romance publishers) is in the forefront of this new moment, offering authors more frequent payments, limited term on copyright for publisher, etc.  SmashWords, Amazon, and other online venues have higher royalty rates, but the author is responsible for most of the services that traditional publishers provided (editing, cover art, rights, etc)  Jenny inserted – as an author, if you didn’t give the publisher the digital rights, you should hang on to them now because you’ll get more royalties going alone.  Jenny suggests her mass market authors go crazy advertising their ebook titles because the royalty rates are better.  Jenny tries to carve out print rights for her authors as much as possible.

Stay tuned, royalty rates are in a state of flux.  Larger publishers will face competitive pressure to raise the royalty rates but right now they will try to maintain the status quo as long as possible.  Most costs incurred by publishers are in recovering the cost of first copy, so authors would like to see more of a sliding scale royalty approach.  Suggests that authors include a provision that an ebook royalty rate is similar to those offered by other publishers or that an ebook rate be negotiated in good faith after the print has been published.  This way it can match the current market.  The authors guild suggests that authors set a royalty floor (minimum ebook royalty based on print price). – service to track royalties, authorsregistry – clearinghouse to pay authors for royalty.

Other issues to think about:

  • representations and warranties – must get permissions for all 3rd party materials in the book to be digital. What are all of the possible rights you might need to exploit the work?  Must have all of these in place.  Make sure you have a written work for hire contract in place. Copyright Clearance Center can be a helpful tool here.
  • Out of print clause – old definitions don’t work anymore, ebooks can be in print forever. Peg contract to a minimum # of sales during a certain period. Is the publisher actively selling it? If not, the rights should revert back to the author, but make sure the language says this. (Jenny agrees, this is very important language to pay attention to)
  • Non-compete clauses – if ebooks aren’t expressly granted in the contract, they have been preserved by the author for exploitation and the author should be able to sell the ebook on their own.  Again, check the language.   Jenny said – non compete and out-of-print are key clauses in contracts today due to the ability to bring an old book to new life with the e-format.

New business models we are seeing

  • Agency model applies to most ebooks sales – permanent downloads offered by online retailers.  Booksellers pay a license fee to the publishers for the rights to distribute the title. Publisher’s set the retail price.
  • Subscription Model – accessing the work via the cloud or a streaming service. Freemium models exist – free access supported by advertising with separate subscription level for those willing to pay more.  Great for readers – lots of books at a fixed price.  Privacy concerns?  Will reader history be used for research/marketing?  New authors can gain valuable exposure through this new model. Some publishers are offering subscription services as well – O’Reilly, Angry Robot, Baen, etc.) Pottermore site another example direct from author.
  • Deaggregated content – book looked at as components; pieces/portions of the book might be distributed via various streams.  i.e. sell a chapter? create a customizable package of materials from various items (think textbook/learning materials)
  • Co-publishing/360 deals – 50/50 split of ALL revenue b/t publisher and author for a certain period of time.  Sharing profits from all sources of revenue (books, ebooks, speaking/seminars, corporate sponsorship, etc)
  • Short license agreement instead of life of copyright contracts
  • Trademark license model – set license fee
  • Administration deals – author pays a certain % to a publisher to manage all content. ie. Agents as Publishers.  Jenny suggests getting a third party to look at the contract since the agent is supposed to be representing the author to the publisher and not serve as the publisher.  Some ethical considerations here.  She doesn’t think this trend will continue as publishers figure out the e-publishing environment and authors move back to publishers.

One thought on “Changing World of Digital Rights and Publishing Agreements – O’Reilly webinar summary”

  1. Thanks for putting together these notes! It’s going to be really interesting to see how the % of net revenue split between publishers and authors changes. I would expect that over the next 2-3 years the revenue splits will flip with all the self-publishing tools coming available.

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