Author Sues Publisher For Portraying eBook Licenses As 'Sales' To Pay Out Fewer Royalties

from the whatever's-the-most-profitable-terminology... dept

If you're a consumer, that piece of digital wordsmithery you purchased probably isn't worth the paper it isn't printed on. Like most digital media available for "purchase," ebooks are often "sold" as licenses that allow the publisher to control use of the product indefinitely, whether through DRM or by simply attaching EULAs no one will ever read to every download.

This works out great for publishers, who can make irrational, unilateral decisions to pull their catalogs from platforms as a "bargaining tool," leaving purchasers without access to their purchased goods. But publishers (including music publishers like UMG) only use the term "license" when it's most advantageous for them. When it comes to paying authors, the terminology suddenly changes. Now it's a "sale," with all the disadvantages for authors that entails.

"Sales" is a historical term, meant to reference physical sales and the additional costs (printing, packaging, shipping) built into the process. Licenses -- and the ebooks attached to them -- have none of these costs, hence the higher payout rate. But, according to a recently-filed lawsuit, Simon and Schuster is treating ebooks like physical sales in order to pay authors lower royalties.

Lloyd Jassin of CopyLaw points out why this is worth litigating:

The distinction is significant, because the royalty rate for sales is much lower than the rate for the license of rights. If categorized as a license the author receives 50% of net receipts, rather than 25% of net typically paid to authors for the "sale" of an eBook.

Jassin also points out that after Eminem's win over UMG on the sale/license issue (dealing with digital album/track sales), most publishers rewrote their contracts to make the screwing explicit.

In the wake of the Eminem decision, most publishers amended their contracts, so the sale or license of an "eBook" is unambiguously treated as a sale. The lawsuit, therefore, challenges the publisher's interpretation of their legacy or backlist contracts.   

How much of this will hold up depends a lot on when contracts were rewritten. From the consumer end, "sold" ebooks certainly looked like licenses, at least up until S&S rewrote its terms of use. Up until January 2013, the terms of use contained this paragraph:

Subject to your strict compliance with these TOU, S&S grants you a limited, personal, non-exclusive, revocable, non-assignable and non-transferable license to view, use and/or play a single copy of the Materials and download one copy of the Materials on any single computer for your personal, non-commercial home use only, provided that you retain all trademark, copyright and other proprietary notices contained in the Materials. Modification of the Materials or use of the Materials for any other purpose is a violation of S&S's or its licensor's copyright, trademark and other proprietary rights. The use of any such Materials on any other web site or networked computer environment without S&S's express written consent is prohibited.

This paragraph disappeared shortly after that, suggesting some rewriting of policies occurred as a result of UMG's settlement with Eminem in late 2012. Due to the statute of limitations, the plaintiff will only be able to challenge the publisher's last six years of royalty payments, but as recently as three years ago, Simon & Schuster was "licensing" books to customers while telling authors every ebook was being "sold."

Then there's this issue, which may result in this particular author finding he has nothing to sue about (although other authors contracted by S&S might):

According to a report in Law360, an unnamed spokesman for Simon & Schuster told Law360 that the division that published Dr. Blau's book, was sold (or was it licensed?) to another company in 1998, and that the publisher never published a digital edition of the book.

So, even if Blau's general complaint is legitimate in terms of how S&S is using sales v. licenses to decrease its royalty payouts, his specific complaint may be completely baseless.

Filed Under: author, digital content, ebooks, license, licenses, sales, sheldon blau
Companies: simon and schuster

Amazon Pulls Down Memoir Because Cover Mentions 'Star Wars'

from the overkill dept

Last week we had a story of Amazon pulling a book because of a dispute over the term "space marine," which Games Workshop insisted they have full control over due to their trademark (a massive exaggeration of what protections the trademark provides). The latest may be even worse. As a number of folks are reporting, Amazon has pulled a self-published memoir by Gib Van Ert entitled A Long Time Ago: Growing Up With and Out of Star Wars. The book has received some great reviews from places like Wired, but apparently someone at Amazon thought the title is trademark infringement. The email from Amazon seems particularly silly:

Thank you for the information you provided regarding the following book(s):

A Long Time Ago: Growing Up With And Out Of Star Wars (2353856)

Your book(s) contains references to the trademarked term, “Star Wars (Trademarked Term)”. We have reviewed the information you provided and have determined that we will not be making the book(s) available for sale in the Kindle store at this time. While we cannot advise you on trademark laws, we encourage you to conduct your own research by possibly going to your local library or using other online resources that may be available to you.

This seems silly. The use is clearly descriptive, and the memoir discusses the impact of the movie on the guy's life. No "moron in a hurry" is going to assume that it is endorsed by Lucasfilm or anything like that. The likelihood of confusion here is nil. But in our risk averse age, where too many people incorrectly think that trademark gives you 100% control over a phrase, we see more and more unfortunate stories like this. Hopefully, Amazon quickly reconsiders... and the publicity from this silly bout of blocking leads to more sales.

Filed Under: author, ebooks, gib van ert, kindle, star wars, trademark
Companies: amazon

Author Who Claimed $9.99 Not A Real Price For Books Admits Comments Were A Mistake

from the good-for-him dept

We recently wrote about how author Douglas Preston made the following comments in the NY Times about ebook pricing:

"The sense of entitlement of the American consumer is absolutely astonishing.... It's the Wal-Mart mentality, which in my view is very unhealthy for our country. It's this notion of not wanting to pay the real price of something.... It gives me pause when I get 50 e-mails saying 'I'm never buying one of your books ever again. I'm moving on, you greedy, greedy author.'"

We were among those who took offense at the comments, which suggested not an "entitlement" feeling from the American consumer, but from an author who didn't want to listen to what his fans and potential customers were telling him.

Of course, it looks like the backlash got even stronger following that quote in the NY Times. Robert Ring alerts us to io9's coverage, saying that after the NYT's piece came out, Preston's book started getting one-star reviews on Amazon, with many people mentioning the NY Times quote as a reason not to buy the book.

Preston and his co-author put out a note on their website trying to calm people down, and when he spoke to io9, basically admitted that his original comments were a mistake, saying that his readers have convinced him that ebooks should be cheap. However, given that, he still feels there should be release windows, that put out the more expensive physical book first:

I think my comments were pretty stupid, to be frank. They came after a long month of being attacked by Kindle owners who blamed me personally for the fact that my publisher delayed the Kindle release for four months. I was frustrated and said some things to the New York Times reporter that did not reflect my actual views on the subject. I have been hearing back from many readers, some supporting my comments, many more criticizing them.

I think most readers feel strongly that an ebook, which they can't pass along to friends, can't add to their library, and which comes with DRM attached, should be considerably cheaper than a real book. And I would have to agree. The real question is when this cheap ebook should be made available. Studios don't release cheap DVDs the day a feature film is released, publishers don't release the cheap paperback the day a hardcover comes out. I'm not sure why consumers should expect a cheap ebook on the day of publication either.

Kudos to Preston for admitting his mistake, though I'm sure plenty of his fans and potential customers won't like the windowing suggestion either. Hopefully they can convince him that holding back what your fans want is almost never a good business model and has a high likelihood of backfiring. If publishers want to sell more expensive hardcover books, they should focus on making sure that the scarce value people get for the physical book is that much greater than the ebook version. That is, rather than limiting how you can connect with fans, publishers should focus on creating positive reasons why fans would want to buy the physical book.

Filed Under: author, douglas preston, ebooks, fans