Does an e-book edition mean that my book never goes out of print and rights don’t revert to me?

Posted on August 25, 2012August 25, 2012 by Mark Levine Leave a comment

Q. Both my publishers are telling me that my books will never go out of print because electronic and print-on-demand editions will always be available. Is there any way to deal with these claims?

A. You raise an important question. The subject is likely to remain a contentious one and will probably be resolved only after several definitive and consistent decisions are reached in future lawsuits involving the issue.

Assuming that a contract does not specifically grant e-book rights to the publisher, the decisions in those lawsuits will largely depend on the specific language in each contract’s “out of print” clause. If, as the Authors Guild has been advising members for at least the past 35 years, your contracts specifically say that “in print” is based solely on the sale of hardcover and paperback editions, you don’t need to worry about e-books being a factor and even the most recalcitrant publisher should agree. If you also included language long recommended by the Guild that copies produced “by reprographic processes such as Xerox” are excluded for in-print determinations, a publisher is unlikely to have much success claiming that POD copies should be included since both photocopies and POD are single-copy on-demand production methods made possible by new technology. Failure to have either of these provisions in your contract, however, in no way means that your publisher is entitled to include e-books or PODs in its in-print calculations. Authors are not required to be prescient when reviewing proposed book contracts.

If your out-of-print clause has the very broad language widely used 20-30 years ago, viz., that the book is out of print “when the Work is no longer available for sale” — without any criteria for determining availability — it may be tougher to convince obstinate publishers. But your position is no less meritorious, especially if your contract is from that time period. Here, it will be important to argue that since the publisher had no right to print e-book or POD editions in the first place, sales of those editions cannot rightly be considered proof under your contract that a book is in print.

In both situations, your case will be even stronger if your contract has the fairly standard “reservation of rights” clause that all well-advised authors should have in their contracts and which virtually no publisher has ever objected to, viz., “All rights in the Work not specifically granted in this Agreement to the Publisher are reserved to the Author.”

There are many other types of out-of-print clauses, most of them narrower in scope than the broad “no longer available for sale.” The specific criteria typically listed in those clauses, combined with the points mentioned above, may help you in negotiations with your publishers. Unfortunately, even many of these narrower definitions of out-of-print may not suffice to convince a publisher that you are right (nor clear enough for the publisher to convince you that it is right). This is because it is rare for contracts of any sort to provide specific exclusions for technologies not yet invented. Virtually all of these contracts were drafted by publishers, however, and any vagueness or ambiguity in them should be resolved against the draftsman, a concept often found in court decisions involving a broad variety of contracts.

Because this issue is such a common and important one, it would be good if authors with the same publisher and the same language in their contracts, or with different publishers but where the language in their contracts is the same, got together to share costs and hired a top-notch litigator to bring the case, or some organization did so on their behalf.

In any event, if you believe your book is out of print and your publisher says it isn’t because it has (or intends to) license an e-book edition or because an online, POD or e-book edition is available through Google Book Search or another site, you should promptly give a written out-of-print notice to your publisher. Be sure to carefully follow the procedures outlined in your contract’s out-of-print clause. Sending that notice will start the clock running on the time period in that clause. Delay in sending the notice helps only the publisher since it risks nothing by taking no action while “considering” the issue or stalling you.

State in that notice—which typically requires a demand that the publisher put the book back in print itself or via a licensee—that an e-book or POD edition will not satisfy that requirement. Also consider stating, after consultation with your lawyer, that if the publisher attempts to sell or license any such edition, or print any version whatever after the termination of the 6- or 12-month period specified in your contract’s out-of-print clause without having properly put the book back in print before that deadline or licensing it by that date, you explicitly reserve the right to exercise all rights available to you under law and will hold it liable for all damages that result if it publishes the book without authorization. Add that your remedies will include the right to injunctive relief and that those damages will include statutory damages under the copyright law.

Crucial to determining whether sales of e-books (or PODs) should be included in determining whether your books are out of print, however, is determining whether your publisher has the right to publish or license e-book (or POD) editions. Given your question, I have assumed in this answer that your contract does not specifically grant these rights (which, of course, may not stop some publishers from claiming otherwise). If your publisher clearly has those rights, then unless you had the foresight to include some sophisticated provisions in your contract, you likely have no good argument. But if your contract is one of the older ones where publishers were simply granted the right to publish books “in book form,” you are right to contend that it did not get e-book rights too. Although decided under circumstances that may limit its use as conclusive precedent, Random House v. Rosetta Books LLC, a 2001 case available online, is strong support for this view.

A final note: When signing any new contracts, try to include provisions that will enable you to regain the rights to traditional print editions of your book even while the publisher or its licensee retains the e-book rights if the latter are what keeps the book “in print.” How to do this is too lengthy to explain here. The “Out of Print” chapter in the new edition of my book explains how to do this.

Please note that there are additional differences and similarities between e-book and POD editions that may be relevant to answering your question more completely, but space does not permit discussing those here.

(Originally published in the Summer/Fall 2009 issue of the Authors Guild Bulletin. © Mark L. Levine)

Answers to questions on this site are general in nature only. You should consult a lawyer for information about a particular situation. For more information about book publishing contracts and issues, see Levine’s book.

Are e-books sold or licensed when bought online?

Posted on August 20, 2012 by Mark Levine Leave a comment

Q. My publisher wants to include this sentence in my new contract: ”Sales of e-books, whether by Publisher or by a licensee, shall be considered sales by Publisher for purposes of the royalty provisions of this Agreement.” It’s not in my earlier contract. Is it okay to include?

A. While I am sympathetic to a publisher wanting to include this or similar language in new contracts and would likely recommend to a client that, as a business matter, he or she accept it, I would definitely not recommend that you or anyone else amend any previous contracts to include the provision.

But before you agree to include the requested language in your new contract, be sure the contract requires your publisher, whenever it increases its standard e-book royalty rate, to automatically increase your e-book royalty rate to that higher rate. This is important because the so-called “standard” rate that most of the major publishers are paying now is half of what most author advocates believe it should be.

The reason your publisher wants to include the new language is likely because of a September 2010 California case. In F.B.T. Productions v Aftermath Records, a federal appeals court ruled that the rap artist Eminem should have received royalties on iTunes downloads of his songs equal to 50 percent of what his music company received from iTunes rather than the far smaller “per recording” royalty payable on sales of his recordings (e.g., as CDs).

The court ruled this way on the grounds that the arrangement between his music company and iTunes was a license of the right to duplicate and distribute his songs (which it was) and that, accordingly, the subsidiary rights provisions of his contract – which provided for a 50/50 split of all licensing revenue — applied. It said that the “per copy” royalty based on the price of the song applied only when the song was sold by the publisher, not by a licensee.

Although the application of this case to any particular contract (book or music) is uncertain—much depends on the exact language in several different sections of that contract and how those provisions interrelate—the reasoning clearly applies to book publishing contracts and e-books.

Unlike print-on-paper books, e-books are not individually sold by publishers to online booksellers which in turn sell the book to their own customers. The transaction is essentially accomplished through a license between the publisher and the online seller whereby the online bookseller gets a master copy of the e-book and duplicates it for transmission to its customer. As a license by the book publisher, it should be treated the way other licenses are treated under your earlier contracts (assuming they even have the right to publish and license e-books), which is a division of the proceeds received by the publisher between author and publisher. Except for movies and foreign translations, this split is generally 50/50. Many contracts even have a clause in the subsidiary rights section, “For all other rights: 50 percent to author and 50 percent to publisher.” No wonder your publisher wants to put the clause you mention into its new contracts.

For new contracts, where you and the publisher are agreeing in advance that sales by third-parties under e-book licenses will be treated as sales of individual copies by the publisher for royalty purposes, that reflects the current commercial reality in book publishing; most authors wishing to sign with traditional publishers have little leeway here. That said, there is no reason to let the publisher off the hook on prior contracts. For one thing, there may well be a question of whether the publisher has e-book rights at all. For another, the e-book royalty offered by most major publishers today is half what author advocates believe it should be. Third, the publisher drew up the original contract and, under a general rule of contract law, ambiguities in a contract are resolved against the drafter. So don’t agree to any suggestion from your publisher to amend earlier contracts and make sure that it doesn’t sneak a clause to that effect into your new contract, amending the prior ones without you even being aware of it. You’re entitled to a 50 percent royalty on e-book contracts, and if the law will give it to you on existing contracts despite publishers’ obstinacy, you shouldn’t sign that right away.

(Interestingly, the “agency model” for e-book sales being used by Apple with major publishers could undercut this argument on sales made through Apple since that business structure treats the publisher as the seller and Apple merely as its agent. Whether a court would look through that arrangement and say that, in practice, it is nonetheless a license is a separate issue, and not for today or this column.)

(Originally published in the Spring 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

What kind of hyperlinks can my publisher insert in my e-book?

Posted on August 20, 2012July 8, 2018 by Mark Levine Leave a comment

Q. I’m granting e-book rights, but not other electronic rights, to my publisher and I have been very specific in saying that the publisher can’t make any changes to the text or illustrations. The publisher is insisting on a clause that clearly states it has the right to insert hyperlinks, which makes sense to me since I know a lot of e-book programs allow the reader to click on a word to learn its definition. Is there any reason why I shouldn’t agree to the publisher’s clause?

A. The publisher’s request makes sense but, to protect yourself, you should include provisions covering the following:

The hyperlinks will be added by the publisher and at its expense, and no cost incurred in connection with the hyperlinks will be charged to you.
Publisher will remove, at its expense, any links to which you at any time object.
If any hyperlinks are to a site that result in a transaction by the user and the publisher receives revenue from that transaction, you will be entitled to a percentage of that revenue. This percentage should be specified in the contract.

(Originally published in the Fall 2010/Winter 2011 issue of the Authors Guild Bulletin. © Mark L. Levine)

What does “net” mean in the royalties and subsidiary rights sections?

Posted on August 20, 2012 by Mark Levine Leave a comment

Q. My publishing contract doesn’t define “net.” It’s used in both the royalties and subsidiary rights sections. What does it mean?

A. “Net” is one of the worst terms for authors to leave undefined in a contract.
“Net” – more typically, “net proceeds” or “net receipts” – is what is left after various expenses are deducted from a larger amount, e.g., the book’s list price (in the royalties section, for those royalties not based on list) or the total amount paid to your publisher by a licensee (in the subsidiary rights section). Since the amount an author will receive in such situations is a percentage of the reduced amount, it is important to specify exactly what the expenses are that may be deducted in computing net. If not specified, authors may discover that the publisher’s understanding differs from theirs.

In particular, with many publishers now paying authors a royalty of 25 percent of net on e-book sales, your contract should specify that the only permissible deduction from the e-book’s price is the commission to the online bookseller (typically 30 percent at the moment). Smart authors will also provide that if the commission to the online bookseller is at any time increased, then the royalty will still be computed as if the commission was only 30 percent.

Do “Print-on-Demand” Editions Keep a Book in Print Forever?

Posted on December 5, 2010August 8, 2012 by Mark Levine Leave a comment

Q. Is a book out of print if it is available only in a POD (print-on-demand) edition?

A. Unfortunately, the answer to your question in large part depends on how “out of print” or “in print” is defined in your contract (assuming it is defined at all). Some contracts, even from 20 years ago, specify that the book will not be considered in print simply because of the publisher’s ability to reproduce single copies of the book. Others state that copies only have to be “available” or “offered for sale” which, if the literal words of the contract are to be given a contemporary meaning, may well be satisfied by the mere availability of a POD edition. (Discussions about the proper way to interpret certain language in old contracts in light of subsequent technological changes can easily mirror those between followers of Supreme Court Justices Scalia and Ginsburg about how to properly interpret the United States Constitution.)

I believe authors should be able to argue successfully, at least for many contracts signed in pre-electronic days, that neither publisher nor author ever intended that a book be considered in print solely because future technology made it possible to intermittently print single copies upon a customer’s request and that “out-of-print” clauses in those contracts should be construed that way. The argument should be even stronger when the contract also contains a clause stating that “all rights not granted to the publisher are reserved to the author.” A court could well differ, however. Authors whose publishers assert that a book is in print solely because of the availability of a POD edition should contact the Authors Guild Legal Service Department.

If your publisher is taking that position, emphasize to it that the section in virtually all publishing contracts giving the publisher 6-12 months to put the book back in print would be meaningless if a book could simply and quickly be put into print at minimal cost (and no risk) via POD. Also investigate whether the publisher has separately notified booksellers that the traditional editions of the book are out of print. Virtually all publishers do this, frequently by publishing a notice in Publishers Weekly, to advise booksellers that they have a limited time to return unsold copies for credit. Publishers will find it difficult to legitimately assert that your book is still in print when it has sent a notice to the book trade that it is out of print. You can check on the status of a publisher’s editions of your book in R. R. Bowker’s Books in Print, available in many libraries.

Note that, increasingly, publishing contracts now avoid “in print” definitions that relate to a book’s availability. They focus instead either on (i) the amount of royalties paid to an author during the most recent royalty period or two, or (ii) the number of copies of the book (regardless of format) sold during the last one or two royalty periods, in each case setting a specific dollar amount or number as the sole criterion. Whichever criterion is used, make sure that it relates only to English-language editions of the book sold in the United States (or the United States and Canada). If using one of the older versions of the clause (relating to the book’s availability, e.g.) in a new contract, however, make sure to have a sentence specifically stating that the book will not be considered in print solely because of the availability of e-book editions or because of POD or other technology enabling single copies of the book to be produced.

Should My Royalties Be Reduced When E-Books are Sold at Large Discounts?

Posted on December 5, 2010August 8, 2012 by Mark Levine Leave a comment

Q. Should the typical provisions about reduced royalties on copies sold at high discounts apply to e-books?

Answer: No. Unlike print-on-paper books, where each copy sold at a deep discount represents significant expenses incurred by the publisher which pertain specifically to the copy sold (paper, printing and binding costs and, sometimes, shipping and warehouse charges), the cost of creating and transmitting additional copies of e-books sold at a deep discount is negligible or non-existent.

One way to handle this easily in your contract is to simply add the following at the end of the section dealing with reduced royalties if the point was not covered in the section:

“None of the reduced royalty provisions in this section will apply to any e-book or other electronic editions of the Work.”