Authors Guild to Random House head: What's in the water over there?

[Nate the great]

You probably remember the letter sent by Random House charmain Markus Dohle on Friday. He informed agents that the existing contracts with RH granted ebook rights by default even where digital rights are not mentioned.

The Author's Guild has posted a response to Mr. Dohle's letter. They take the position that he is 100% wrong, and the evidence weighs heavily in their favor.

The misunderstandings reside entirely with Random House. Random House quite famously changed its standard contract to include e-book rights in 1994. (We remember it well -- Random House tried to secure these rights for royalties of 5% of net proceeds, a pittance. We called it a "Land Grab on the Electronic Frontier" in our press release headline.) Random House felt the need to change its contract, quite plainly, because its authors did not grant those rights to it under Random House's standard contracts prior to 1994.

A fundamental principle of book contracts is that the grant of rights is limited. Publishers acquire only the rights that they bargain for; authors retain rights they have not expressly granted to publishers. E-book rights, under older book contracts, were retained by the authors.

There's no need to take our word for this, however. A federal court in 2001 examined this precise matter in Random House v. Rosetta Books. Judge Stein of the Southern District of New York was unequivocal in his 10-page decision: authors did not grant publishers the e-book rights in the old book contracts at issue. Judge Stein specifically dismissed notions, raised by Mr. Dohle in his letter to agents, that the non-compete clauses of these old contracts in some manner acted to grant Random House electronic rights to the works, saying that this "reasoning turns the analysis on its head." The court pointed out that the license of rights comes solely from the contract's grant language, not from the non-compete clause, and that non-competition clauses, to be enforceable, have to be narrowly construed. Using the non-compete clause to secure future rights is unsustainable. An appellate court affirmed Judge Stein's decision.

from:
http://authorsguild.org/advocacy/art...ve-rights.html

[Billjr13]

I hope the Authors Guild is successful. Random House is basically trying to say, "well you didn't say we couldn't have the electronic rights so that means you want us to have electronic rights; oh and you don't get any of the profits we make off of your work."

[Kali Yuga]

Meh

This isn't particularly surprising. And for those about to jump on the "yay Author's Guild" bandwagon, just keep in mind this is the same organization that protested Text-To-Speech rights on ebook readers.

At any rate, that ruling only related to a preliminary injunction. RH and Rosetta settled out of court, so the issue is still officially open. Plus, it's really up to the language in the contracts, which vary from publisher to publisher and almost certainly changed over the years. I would not be surprised at all if earlier contracts do largely favor the artists' rights, but the issue is far from settled.

[Kali Yuga]

Originally Posted by Billjr13

Random House is basically trying to say, "well you didn't say we couldn't have the electronic rights so that means you want us to have electronic rights; oh and you don't get any of the profits we make off of your work."

Incorrect.

RH is not planning to deprive writers of their royalties; rather, they are trying to prevent authors from taking the ebook rights to backlist titles to different publishers. If the contract does end up granting RH rights, they have to abide by the royalty agreements of the contract.

RH is no more "greedy" than a writer (or a writer's estate) who tries to establish who actually gets the ebook rights. If the contracts are unclear, they are unclear, and either the parties will settle or the courts will make the determination.

[basschick]

why shouldn't the authors have rights to sell electronic versions of their titles to other publishers if that isn't specificied in their contracts? imo rh should have contacted authors with pre-ebook contracts and offered the same royalties for ebooks as for pbooks, and maybe the authors wouldn't have gotten upset.

of course, this is one of those arguments. the books are all long ago edited, covers are long since done - so why shouldn't those authors have gotten an extra 1% since those things won't need to be paid for?

Originally Posted by Kali Yuga

Incorrect.

RH is not planning to deprive writers of their royalties; rather, they are trying to prevent authors from taking the ebook rights to backlist titles to different publishers. If the contract does end up granting RH rights, they have to abide by the royalty agreements of the contract.

RH is no more "greedy" than a writer (or a writer's estate) who tries to establish who actually gets the ebook rights. If the contracts are unclear, they are unclear, and either the parties will settle or the courts will make the determination.

[fugazied]

I don't think RH take away all rights to the ebooks though right? They just treat it like a variation of the print book, authors still receiving royalties from sales. Something most authors wouldn't be concerned about.

But the authors who don't like the percentage of ebook royalties they receive or are interested in getting their ebooks into some other distribution network and have those pre-1994 contracts appear to have the legal precedents well and truly on their side. From the consumer point of view that outcome 'might be' nice because it might mean authors can move their ebooks to platforms with less restrictive DRM and cheaper prices.

[DawnFalcon]

Originally Posted by fugazied

They just...

There's no "just". It's deliberate and premediated fraud, and should lead to immediate nulling of their entire contract on those grounds.

[Kali Yuga]

Originally Posted by basschick

why shouldn't the authors have rights to sell electronic versions of their titles to other publishers if that isn't specificied in their contracts?

That is the key question; I assume the issue is whether the contract can be read to say "Random House has exclusive rights publish this title no matter what the form," or if it leaves other rights open. Keeping in mind that in classic webforum tradition, IANAL , I don't see how later contracts are at all binding on earlier contracts; you can have an unspecified right that is enforceable in an earlier contract, and make it explicit in other contracts to avoid any confusion between the parties. I.e. I might write a contract to perform services X, Y and Z "and other duties" with one company, and in my a later contract with another company enumerate those duties. That doesn't necessarily mean the first client can refuse to pay me because I performed an unspecified task. (It might but it's not automatic, especially if we get into a dispute.)

I'm surprised this wasn't largely settled when audiobooks gained prevalence. At any rate it doesn't make sense to hold a specific position without reviewing the contracts in question, preferably with an experienced lawyer. Of course, that's not what the Author's Guild is necessarily about -- their job is to vigorously defend the authors. I.e. this is PR rather than a legal analysis.

Originally Posted by basschick

rh should have contacted authors with pre-ebook contracts and offered the same royalties for ebooks as for pbooks, and maybe the authors wouldn't have gotten upset.

Well, they pretty much did notify the authors that "we hold the rights." If they hold the rights -- which clearly they believe they do -- then they hold the rights, period, and there is no reason for any sort of renegotiation. If they start out by saying "hey guys, we need to renegotiate this stuff" then they lose before they even start hashing it out, as that position necessarily presumes they don't hold the rights.

If you are a landlord and you have a tenant who isn't paying the rent, you don't need to renegotiate the lease before demanding they pay what they owe.

Originally Posted by basschick

the books are all long ago edited, covers are long since done - so why shouldn't those authors have gotten an extra 1% since those things won't need to be paid for?

Royalty rates are extensively negotiated prior to signing the contract. No one involved in this process is just going to give away 1%.

If the author is getting a smaller royalty per sale, it's because the book is selling for less, so the publisher is receiving lower revenues as well from the sale. The royalties the author should get are those determined by the contract and any subsequent negotiations. (AFAIK this should also mean that RH can't pick an arbitrary number as an ebook royalty rate, they'd have to find a justification for a percentage in the contract.)

Plus there are costs involved, especially for older books -- e.g. digitizing and proofreading. If you buy an ebook for $5, don't forget up to half of that may go to the retailer, some goes to the artist, some goes to taxes.

[Shaggy]

Originally Posted by basschick

why shouldn't the authors have rights to sell electronic versions of their titles to other publishers if that isn't specificied in their contracts?

That's exactly the question they're arguing about... what is specified in the contract.