Royalties, Oh Royalties, Wherefore Art My Royalties?

“It is our hope that Hachette, in light of the loyalty its authors have shown throughout this debacle, takes this opportunity to revisit its standard e-book royalty rate of 25 percent of the publisher’s net profits.” Roxana Robinson, president of the Authors Guild

So here we are. Hachette has a deal. Simon & Schuster has a deal. They have the pricing responsibility they wanted. Amazon has its “specific financial incentives” to compel them to use that power to price lower. Now we’ll get to see just how badly publishers want to institute a price-based windowing system for new releases (I’m setting the over/under on new release ebook prices at $16.99. And I’m taking the over.) But what did writers get out of this? I’m glad you (rhetorically) asked, because nobody else seems to be.

I’ve read all the coverage I can find and, as far as I can tell, the sum total of what writers got from this is that Hachette writers will have preorders reinstated and be back on two-day shipping. That’s about it. Oh yeah, there’s all the sales they lost during the past seven months. They’ve got that, too. There’s no Macmillan-like pool of recompense for those folks; no extra royalty payout for the damage done to their business. And they’ve got the hit yet to come from all those lost sales when their next contract rolls around. But at least, like the Robinson quote above, they’ve got hope that possibly Hachette (and others) maybe might take some time to reconsider their ebook royalty rates, if it’s not too much trouble. Because loyalty. My dog is loyal, but if I screw with his food, he bares his teeth and growls. I don’t screw with his food. Loyalty unrespected is subservience.

The blatantly obvious here is that anyone who thought writers would get anything but screwed on this was deluded. Especially after their authors interjected themselves into it in, bluntly, the stupidest possible way. They threw all their weight behind one side, not coincidentally, the side that needed them and they had leverage with, and asked nothing in return. Now we’re told they did it out of loyalty as if that’s some kind of honorable thing and not horribly misplaced naivete. Now we’re told authors are going to try to get better terms. My thoughts on that strategy were summed up nicely:

“What opportunity would that be? The one where they’ve settled up with Amazon, already have you all under contract at that standard, and don’t need to name-drop you morons in an obviously coordinated PR assault on a rival anymore? The opportunity to do a hell of a lot more than “hope they revisit the standard” was the past seven months when Amazon had Hachette over a barrel and the other publishers were all worried they were next.”

But don’t take my word for it. Let’s see what some publishing executives have to say:

“Speaking at a Society of Authors (SoA) panel on hybrid authors, Little, Brown CEO Ursula Mackenzie defended publishers from criticism by audience members that they now only take on books that will make money.

“Every book can’t make money,” she said. “There are careers we support for years…there are many books we publish lovingly where we don’t make money.”

Mackenzie said that publishers “are not taking a disproportionate part of the profit”, and that “no one benefits if publishers go out of business.” Little, Brown has a “fair rate for our e-books,” Mackenzie said.”

Good luck parsing the logic out of that one. “We publish lots of stuff that doesn’t make money, so we can’t pay you fairly for the things that do or we’d go out of business.”

That’s a helluva sales pitch. So even if I’m succesful, I’ll still be underpaid? Where do I sign up?!? This is the ultimate conclusion of the cultural enrichment argument. They’re not regular businesses, they’re a public good. So you can’t expect to be paid like a regular business. The company has to reap most of the proceeds so they can continue to underpay you to pay for all the stuff they produce that nobody wants. It’s all bullshit, of course, and pretty blatantly so. These are all huge, multi-billion-dollar publicly traded corporations. Do you think they’re shareholders are down with pissing money away in business-threatening chunks for culture’s sake? Or are they simply feeding you a line they know plays to your sensibilities to justify squeezing suppliers (you) to maximize profits?

Think about that last part for a minute. Just the idea of paying a better royalty rate caused her to pull the going out of business card. If you can’t even consider paying me a fair (or even just slightly higher) ebook royalty without it triggering fears of going under, does that make you more or less attractive to me as an author? You’re leveraged so thinly that fair recompense to writers can threaten the very existence of your company? What’s the upside for me to sign with you? A “quality” product no one buys or a product they do buy but I don’t reap fair reward for?

Now, of course, she claims to think their ebook royalty is fair, which is the problem. I don’t really believe she thinks that but enough of you do that they can continue to get away with pushing this nonsense. Here’s another:

“Questioned on author earnings, CEO Tom Weldon said that Penguin/Random House was always looking at how much authors were being compensated, but for the moment the 25% digital royalty rate would not be changed.

“Authors are, alongside readers, the foundation of our business,” he said. “We are always, always looking at our commercial arrangements with authors to make sure they’re fair and equitable. With e-book royalties, firstly and most importantly, the business model is as clear as mud. Rather than arguing about what slice of the cake we should distribute, we need to work out how big the cake should be.”

There you go, fair and equitable and the rate would not be changed. Get a load of that last sentence. We need to work out how big the cake should be? What the hell does that even mean? Is he talking about pricing? Is it a more ominous suggestion of further attempts at limiting the ebook market itself to a certain market share? Or even more ominously, is he talking not about how big the whole cake is but deciding how big the portion of the cake is that your portion comes from? The cake is a pretty big one, dude, I think portions are an appropriate topic of discussion at the moment. Look at how he phrased that, too: “Rather than arguing about what slice of the cake we should distribute…” They’re planning on keeping the whole damn cake and then deciding what tiny sliver they can afford to slice off for you. Do you need any more evidence that they see the proceeds from your book as “their cake”? Funny how they’re not waiting to work out how big the cake should be before touting the increased profits they’re reaping from this particular literary confection. But let’s not argue about it. Then they might actually have to address the issue rather than keep enjoying all that delicious extra cake they’ve got. Did you catch him wiping the crumbs from the corner of his mouth as he said “fair and equitable”?

Even the Author Guild itself admits the publishers have no will to even consider making a change in ebook royalty rate:

“Jean Craighead George’s original decision to publish an e-book edition (of Julie of the Wolves) with Open Road (which pays a 50% e-book royalty)—rather than with HarperCollins, her longtime publisher—was a principled rebuke of the major publisher’s measly 25% net e-book royalty. HarperCollins’s aggressive strategy (the publisher spent over $1.5 million to litigate a case that ended up being worth only $30,000) illustrates the importance to publishers of keeping e-book royalty rates at 25%.”

So if you already know this, please explain why you failed to do even the slightest bit of advocacy during the past year when the Big 5 in general, and Hachette specifically, were more vulnerable than they’ve been maybe in all of our lifetimes? You think it was a good idea to show unbridled loyalty to companies who, by your own admission, are being miserly with ebook royalties and intentionally underpaying your membership? Something you’ve been complaining about since, at least, 2009? That’s five years of talk with zero tangible results. Loyalty is a positive thing in some cases, but in this one, it’s high past time to bare your teeth. The question increasingly being asked, and rightly so, is does the Authors Guild have any teeth to bare? Instead of falling lockstep in line with the publishers, why didn’t you take advantage of this opportunity to make some progress? That’s what real advocacy is. What you’re doing is no different than what I do, talking. Only I’m not collecting dues or pretending I’m representing anyone’s interests.

Speaking of the blind leading the blind, here’s the Authors Guild meeting with members of Congress ahead of an upcoming review of copyright law:

“Executive Director of the Authors Guild, Mary Rasenberger’s speech was part of a panel co-hosted by the Authors Guild and aimed at giving the Congressional group a behind-the-scenes look at “a book’s passage from manuscript to marketplace.” The panel consisted of authors, editors, and publishers.

In her speech, Rasenberger focused on the “urgent state” of authorship today. “Even authors who made a living writing books for decades now need to find alternative sources of income,” she told the assembly. “This means they write less—and, in some cases, not at all. Fewer professional authors means fewer types of books that might take years of research and writing. These are precisely the kinds of books that further the knowledge and learning that copyright is meant to foster.”

Do you think her presentation of “manuscript to marketplace” included even a word about indies who skip the publisher involvement altogether? I don’t either. I’m certain it was a glowing testament to how essential publishers are, with writers and editors simply add-ons to the process, shepherded by their greatness. Maybe the urgent state of authorship wouldn’t be so urgent if authors had effective advocates. Maybe there wouldn’t be so many authors needing outside income streams if you did something about low royalties other than hope and talk. Don’t miss the loaded use of the term “professional” in there either. Who does this woman represent? They’ve done nothing about the royalty rate, they are dismissive of indies in presentation and implication if not in direct language. And they just came to heel when the publishers blew their dog whistles over the past few months, a time when they actually had some leverage to get something done. Amazon was practically begging them to do something. Is it any wonder publishers think they have you all locked down?

The question I’m asking is can authors get some real representation at these things? The only seat at the table we get is through groups like the Authors Guild, and sometimes that’s even less useful than having no seat at all. So what were they talking about at this congressional get together other than how crucial publishers are? Here’s the release from the committee:

“Great books, both fiction and non, have an incredible ability to capture our hearts and minds, taking us to another place or time with words on a page. Yet many of us do not think about the hard work and collaboration that goes on between authors, publishers, and many others to help take a book from manuscript to marketplace,” said Reps. Judy Chu and Howard Coble, co-chairs of the Creative Rights Council. “Together, this collaboration is at the heart of a $27.2 billion industry, but challenges like digital first sale, unreasonable expansion of fair use, and online piracy are threatening the livelihoods of the hard working men and women who bring these works to life. We are proud to have hosted this important panel in order to influence the conversation on copyright law as we continue moving forward.”

Notice authors is mentioned only once, in the context of the collaboration. Is it authors’ livelihoods they feel are threatened, because, as everyone should have already been expressly aware, the vast majority of traditional authors don’t have livelihoods from their work to be threatened. And that is in no way a recent development, rather a consequence of the industry’s very structure. So get ready for copyright law as publisher bailout (none of the benefits of which will even trickle down to the writers), coming soon to a congressional hearing near you.

It’s telling that both first sale and fair use were specifically cited as “threats”. Is this how the Authors Guild presented them? What exactly does Rasenberger mean by what “copyright is meant to foster”? First sale and fair use are both consumer rights granted by copyright (yes, consumers have rights under copyright law, too. Although maybe not for much longer if these folks are any indication.) How about we discuss life+70 that flies directly in the face of what copyright intended as a limited time of exclusivity for creators. It exists not for the benefit of creators, but of transferees (not mentioned there, by the way) so they can continue to profit from creators’ works for generations after their death. Or how about the fact that this standard has basically caused the public domain of recent material to wither and die (another element copyright law intended to be vibrant and available for both creators and the public).

But, alas, no. The “threats” here are like they are every time copyright comes up; the rights of consumers are given short shrift, if acknowledged at all, and the rights of creators are subverted, in direct opposition of what was intended, to protect corporate licensees’ profits. If you want to have a frank and open discussion of copyright law, let’s do it. But can we get someone other than the Authors Guild at the table please? I have no faith they’re even on the right side of these issues for authors and won’t simply fall lockstep in with publishers when push comes to shove (again). I’m sure they’ll talk a good game but when it comes time to pick a side to support, they’ll be right there with the publishers, no matter how much more ground creators and the public have to give up so Disney can continue milking Mickey Mouse in perpetuity.

Maybe I’m wrong. Maybe I’m being too harsh. Maybe the Authors Guild, once it sinks in that their loyalty has gotten them squat, will finally break out the snarl and get down to the real business of business and stop validating the publishers’ “enriching themselves while underpaying writers is essential to culture” argument. And maybe pigs will fly.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

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Do Editors Have Copyright Interests in Books They Edit?

“Our job is to partner with you on a journey to reconcile your vision of your book with the way your prospective readers will see it.”

–From Writer’s Digest

The relationship between an editor and a writer should be collaborative, we’ve all been told time and time again. It seems to make sense on the surface, almost to the point of common sense. The problem, though, is that it’s dead wrong. Even more than that, as a writer, it’s a potentially dangerous and expensive mistake to make. Let me explain…

“A developmental editor will take your manuscript and work with the content itself. If needed, they might reshape your work and rearrange sentences to make the book flow together better. This type of editor helps an author find their voice and help refine their vision.”

— from PBS Mediashift

So an editor of this type, or one that engages in this type of action, precipitates significant changes to the finished product. Do you think it’s fair to say the end result of such a relationship is a collaborative work? That the editor’s contributions are an essential component in the finished creative work for sale? So would I.

“Do editors have a copyright interest in the edited version of the manuscript? Maybe, maybe not, but it is a weapon in the editor’s collection arsenal that should not be ignored.”

–From An American Editor

This is from a blog for editors openly discussing whether editors have a copyright interest in the finished edit of a work. It’s not a theoretical construct, it’s an actual thing being openly advocated for amongst some editors. Albeit, editors in this case who have been stiffed by their clients, but I don’t think they’d be wrong in doing so under any circumstance. Although, I find the author’s stance that as little as inserting one comma would give an editor a copyright interest is maybe a little bit of an overreach. Appropriate stress due to “maybe” there. It well could. What I have no personal doubt of is that, if you’re making substantive content changes at the behest or recommendation of an editor, you most certainly are giving them a copyright interest.

So why aren’t we seeing courtrooms filled with editors making copyright claims? Because it’s something that was largely irrelevant in the past, and people’s perceptions haven’t quite caught up with reality yet. When most books went through publishers and most editors were employed by those publishers, the copyright interest of the work product of the editor belonged to the publisher. There was little reason for anyone to enforce it. Even after publishers started relying more and more on freelance editors, you can be sure their agreements with those editors contained work-for-hire language, meaning their work product, and any subsequent copyright interest, still belonged to the publishers.

The rights were there but everyone’s interests, as they were aware of them, generally flowed in the same direction so they were rarely, if ever, expressed. That’s why we think of editors as collaborative but not to the extent of a copyright claim, even though, particularly with deep substantive editing, it’s difficult for me to find a rational reason why they wouldn’t that isn’t based on the assumption that they’ve never had one. It’s not that it didn’t exist, but that the nature of the industry itself repressed their claim, likely without most of them even realizing it.

So what’s changed? Everything. Now we have independent writers hiring freelance editors and designers for all manner of tasks. We have writers selling print only rights to publishers and retaining ebook rights to publish themselves. We have the 35 year rights termination procedure passed into law in the ’70s only now coming into use. Everyone’s interests are no longer flowing in the same direction. Little things that were insignificant in the past because the system inherently suppressed them, like any potential copyright claim for editors, can now bubble up through the cracks these changes have opened in the industry’s very foundations. Just because we haven’t seen it doesn’t mean we won’t.

Self Publishers and Independent Contractors

Let me just say this, if you’re doing any freelance work yourself or hiring independent contractors for things with any copyright implications at all, you had better know the law relating to work-for-hire and the IRS and Agency definitions of “employee” inside and out. I see a ton of articles about how to pick an editor or how to pick a designer directed at self publishers. What I don’t see is nearly enough articles explaining how not to screw yourself on the contractual relationships with those contractors.

“(1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. (17 U.S.C. § 101)”

–From U.S. Copyright Act of 1976

Work-for-hire is a fairly simple concept on the surface. If you are an employee, any work product of doing your job, and any resulting copyright interests, belong to your employer. “Employee” is a little more complicated than just if you’re on the payroll and they’re paying payroll taxes on you, although those are considerations. Whether you are legally regarded as an employee depends on the nature of the relationship. The more the employer controls the terms of your work; the times you work, the equipment you use, where you work, etc; the more likely you are to be deemed an employee regardless of how they’re paying you.

The second part of work-for-hire, and the one you really need to pay attention to, is that the work must fit into one of those categories listed in the quote and be expressed in writing. The and is the crucial part there. If you are an independent contractor and there’s no written work-for-hire agreement, it doesn’t exist. This means whoever contracted you has limited use of the work per the terms of the contract and all copyright interests remain with you. The written agreement is not optional. No contract, no work-for-hire. And believe me, as someone who’s done my share of independent contractor work, it’s extremely useful to be aware of its absence in your agreements. Here’s a link to a pdf of the U.S. Copyright Office circular that explains work-for-hire, and the criteria for employee determination. If you don’t already know it forwards and backwards, read it now.

The point of this is, simply, don’t be stupid. Know the law and protect yourself. Understand that everything is different about the nature of your relationship to an editor you contract versus one you work with who was also contracted by the same third party publisher. And I mean everything, right down to the legal implications of the structure of your business arrangements.

Do editors have a copyright interest? I think they do but I don’t know absolutely. That’s for a judge to decide at some point. But do you want to be the one standing in court across from that judge when he tells you they do? I sure as hell don’t. Simple work-for-hire language in your agreements with any independent contractors who are contributing anything creative to your final work for sale will make it a moot point. Even if a clear ruling is made that they do, you, through the work-for-hire language, would own that copyright interest in the work they did for you.

If you go around leaving holes in your agreements with people, you’re going to fall into one. Know the law, use it, protect yourself and your interests. You can be damn sure others will.

The 35 Year Termination Rule

We’re just now entering an era where authors can have their rights reverted 35 years from publication just by filing some paperwork. This applies to any work after January 1, 1978, so we aren’t very far down the road on what this will mean. I expect we’ll see publishers inundated with these things in the coming years and, eventually, we’ll see some long-term lucrative works they really don’t want to give up in the firing line.

In the past, rights reversions were generally one of two things; done through an out of print clause for a book the publisher’s been getting nothing from, or a buy back where the author pays the publisher for the reversion. This new termination rule is different in that it clearly forces publishers to give up rights against their will with no recourse. If you don’t think they’ve got lawyers pouring all over their contracts and the various intricacies of copyright law to find a workaround, you’re kidding yourself.

Here’s another place where a copyright interest for editors might turn up in the future. Publishers never had any reason to acknowledge such an interest, particularly since they owned all those interests anyway through work-for-hire. But now, faced with losing money-making properties for nothing, they very suddenly find themselves with such an interest. But it shouldn’t matter because the rights are reverting at 35 years, anyway, right? Well, no, not really.

Where a typical copyright term is life of the author +70 years, work-for-hire is different; 95 years from publication or 120 years from creation. More than that, work-for-hire is not eligible for the 35 year termination. Yes, you may get your rights reverted but the publisher, through the work-for-hire work product of editors, may still retain a copyright interest in the final product you’ve been selling for over three decades. With that, they could potentially stop you from publishing that version, or licensing the rights to that version to another publisher. More likely, I’d expect they’ll use it as a nuclear option to negotiate a new deal with them at better terms.

Termination may not be what we think it is, all because folks weren’t paying enough attention to small little contract provisions like work-for-hire. You know who was paying attention? Publishers. Or do you think it’s just a coincidence they happen to own all the rights to any possible editor copyright interest for damn near every single significant book of the past 40 years? Harper Collins just won a lawsuit claiming to have bought ebook rights in 1971, for God’s sake! Their contracts may be onerous but they’re not a leaky ship full of loopholes by any means.

This may be something to keep in mind for future negotiations; provisions that keep any work-for-hire copyright interests created in producing the work attached to the rights for the purposes of any reversions. It’s something to consider.

Print Only Publishing Deals

When I first heard about Hugh Howey’s print-only deal a couple years ago, the first thing that popped into my head was, “how is that going to work?” I have questions and maybe Howey, who’s been very forthcoming in a lot of ways, or someone else out there who’s cut one of these deals can answer at some point at their leisure. Enquiring minds want to know…

What’s the deal with editing? Did the print publisher do an edit of their own? Did they just use your final edit you’ve used in your ebooks? If they did do an edit, did you use that in your ebooks, and if so, is there language in your contract that allows that? Or are there two separate edits out there, their’s for print and your’s for ebook? What happens when the rights revert at 10 years or whatever the time limit is? Does the final edit revert too or just the rights to the original before the edit? Does the contract address this at all? I could probably think of a few more but that about sums it up.

The print-only deal where you publish the same material in a different format simultaneously on your own didn’t exist even five years ago. It’s added a layer of complications to what was a fairly simple process. Who knows what kind of holes may open up? There’s no possible way we can foresee all the potential risks such arrangements may bring about. Unintended consequences are a bitch.

If we presume for a moment that editors, especially of the deep, substantive variety, have a copyright interest, then someone owns that. It’s either the editor themselves, the publisher or the author through work-for-hire. It might be a good idea to know who, and a better one to make sure, iron-clad in writing, that it’s you.

One of the great selling points of self publishing is that you keep control, you retain your rights. That’s true, so don’t encumber them unnecessarily through lax independent contractor agreements or because you don’t fully understand work-for-hire or copyright law. It may be that all of this, even the very concept of editors having a copyright interest, is speculative and will never come to pass as a significant issue. But as I look at what role editors are increasingly asked to play, and as I read the particulars of the law, I’m fairly convinced that they do, at least in some circumstances.

This could ultimately have implications reaching much farther than self publishing. We, as independents, can solve this problem by inserting clear work-for-hire provisions in our contractor agreements. But what about the matter of that copyright interest being owned by the publisher through their agreements independent of us? That’s a different kettle of fish, and much harder to protect from. Especially if most of us don’t even realize it’s a danger.

Intellectual property is the 21st Century gold rush. What they found back then was the rush very quickly was followed by claim jumping. Some of it was criminalized, but not all. I’m in favor of protecting myself at every possible angle. You just never can tell where those claim jumpers might look next.

Dan Meadows is a writer living on the banks of the Chesapeake Bay. Follow him on Twitter @watershedchron

Free The eBooks! New petition calls for supporting consumer ownership of ebooks…I think

Yesterday, I saw a link to a new petition on the U.S. government’s website to allow the “unlocking” of ebooks and reaffirmation of ownership rights by consumers for these digital goods. This comes on the heels of the Obama administration coming out strongly in favor of fully legalizing the jailbreaking or unlocking of cell phones. I agree with both sentiments, but the new petition has some issues. Here is the text: 

Protect Readers’ Rights by Unlocking Ebooks

The White House recently came out in favor of allowing consumers to unlock their own cellular telephones. We are asking the White House to apply the same laws and provisions to ebooks.

The purchase of a book, whether online or not, is a purchase, not a license. Digital books should be legal to read on any device that supports standard text files. Legally purchased digital books should not self-destruct, expire or disapper, except under conditions of damage or obsalescence. Within reasonable limits, book purchasers have the right to lend or give books to friends, charitable organizations and libraries. Finally, libraries should be permitted to lend ebooks under the same rules as physical books.

We ask the Obama Administration to champion the rights of readers to own their ebooks.

So, typos notwithstanding, let’s discuss. And by the way, if you’re going to post a petition concerning important issues like literature and consumer rights, you really should spellcheck the damn thing, otherwise your credibility could “disapper.”

For starters, the White House didn’t apply any laws or provisions regarding unlocked cell phones, they only expressed support for the notion going forward. The relevant laws concerning this, specifically in the DMCA, clearly ban the activity. Their opinion on this is all it is, just an opinion. For cell phone unlocking to actually be legal, it’ll take a legislative fix. Good luck with that. Not to mention, they stopped short of showing support for similar unlocking of ereaders and video game consoles, etc (they did mention tablets but only in the limited sense that they were becoming more like smart phones which dedicated ereaders are definitely not). A logical view would follow that if jailbreaking phones is okay, then doing so with all devices should be as well. But the White House doesn’t stretch that far, with their stated position directed at preventing lock-in by telecomm service providers and has nothing at all to do with content providers. In fact, the White House specifically called for “narrow legislative fixes in the telecommunications space.” That’s a far cry from rallying around customer rights for content they purchase. It’s certainly a step in the right direction, but there is no law or provision in this that’s even applicable to content rights for consumers.

I completely agree with the statement that buying an ebook is a purchase not a license, but that’s far from a popular position to hold. Over the past couple months, in arguing in favor of resale rights to digital goods, I found myself in many places arguing just that point of view. Content providers, including many independent writers, are clinging to the license scheme, and with some solid justification. There have been a few conflicting court decisions, but it’s far from decided that the sale referred to here is, legally speaking, actually a sale. I believe it is, and I think the licensing regime we’ve got going on here is potentionally the greatest threat to consumer rights in any of our lifetimes, but I’m definitely on the minority side of that point of view. It’s going to take a favorable SCOTUS ruling to affirm such rights, as a legislative fix simply isn’t happening in this atmosphere, and I wouldn’t hold my breath for it, even if I absolutely believe it’s what needs to happen to retain balance between producers and consumers in the stream of commerce.

I’m somewhat confused by the statement that says digital books should be legal to read on devices that support standard text files. Ebooks aren’t standard text files and, as formats improve (epub3, html5, etc) they’re even less comparable to simple text. Unless the petitioner is advocating for stripping off the bells and whistles to bare bones text, I don’t understand the point of this statement. Seems naive and, much like the recent lawsuit from bookstores against Amazon and the Big 6 calling for “open-source DRM,” whatever the hell that is, it comes off as very tech-ignorant.

As for libraries being able to loan ebooks under the same rules as print, I have two questions. One, ebooks aren’t print so why would you want to limit libraries to a physical standard that doesn’t necessarily apply? Secondly, and most importantly, the petition plays fast and loose with the first sale provision of copyright law. The ability of libraries to lend physical books as they have comes from first sale. The petitioner’s opening statement that an ebook buy is a purchase not a license supports a first sale position, but it also seems to go out of its way to avoid even mentioning consumer’s rights under the same provision, notably resale. Is the suggestion here that libraries should be granted a waiver to exploit first sale rights customers shouldn’t have, even though it opens with a strong statement supporting a first sale argument? I don’t get it. If the point here is to free ebooks from lockdown control of content providers, why skip the most important tool to achieve that, a true ownership stake in the ebook for the purchaser?

What I see as the big flaw in the argument here is the warping of the concept of first sale rights. Libraries can have them, apparently, the license scheme used to block them is dismissed, yet for some reason, consumers should still be left wanting for their full rights under copyright law? Why? And what, exactly, are reasonable limits to purchasers lending ebooks? Why should libraries get more rights to lend books than consumers? How is it that I can give away or donate said ebook, a library can then use first sale to lend it, but I can’t use the exact same provision of copyright to resell it? I thought this was about freeing ebooks for consumers, but it seems more like exempting libraries than truly benefitting paying readers.

The petition ends with a call for the Obama administration to champion the rights of readers to own their ebooks. I agree, but that’s not what they’re calling for here. This petition still ignores first sale rights for consumers while championing them for libraries and even accepting restrictions on consumers to lend or give away said ebooks. This isn’t ownership at all, but simply a desire to read a Kindle ebook on a Nook or similar type of arrangement. If all you really want is to prevent content provider lock-in to specific devices, then say that. Don’t muddle the issue with notions of first sale or ownership that you’re not even advocating. The wording of the petition also allows for ebooks to be deleted or removed due to obsolescence (misspelled obsalescence, which is a fascinating freudian slip, as license schemes are already limiting the very idea of what constitutes a sale).

I think this is a nice thought, preventing vendor lock-in has some definite merits, but ultimately this petition is poorly executed and unnecessarily convoluted. And again, spellcheck, dammit!

Stop Stealing From Your Customers! Eroding non-creator copyright protections hurts us all

The past week, I’ve been caught up in philosophical meanderings related to the digital goods business and the notion of copyright law. I’ve read quite a bit here and there around the web on the subject and I see more than a few disturbing things.

1. Most people, including creators, don’t really understand copyright

I am continually bothered by the number of writers, musicians, etc who seem to believe copyright gives them some sort of all powerful right to totally control what happens with their work, even after it’s been sold and is out in the world. Copyright doesn’t do that. It grants you a limited monopoly right to use your work commercially, nothing more. One of the primary reasons there is so much consternation about copyright is that those limitations are slowly being eroded away. Life plus 70 years is a flat-out joke that totally spits in the face of what copyright is all about. Think about this for a second and tell me that copyright’s ends of protecting the public interest even still exist: Not one single American creative work entered the public domain statutorially this year. None. Nada. Zero.

Things like the upcoming Kirtsaeng decision in the Supreme Court, depending on how they rule, and the intricate licensing schemes pioneered by the software industry and dove into whole hog by the media industry purposely erode first sale rights, giving creators control of secondary markets (or the ability to prevent them altogether). That also undermines the idea of limited protections. The newspaper industry fighting against Google News and aggregation is an all-out assault on fair use, yet another attempt to wipe away or severely lessen copyright law’s limitations.

I can’t totally blame creators who behave as though they have some kind of all encompassing powers under copyright, media companies have been working very hard behind the scenes to make it that way for their own benefit. But those limitations exist for a reason. Take them away, and the entire purpose of copyright gets perverted away from a protection that gives creators a fair chance at exclusivity for a while to try and make a buck and allows the public to benefit from these works in a way that promotes future progress. Without those limits, the very progress copyright law is supposed to promote gets stunted.

Copyright law grants you the opportunity to make money, it doesn’t guarantee it, and the value to society on the whole is supposed to be balanced against creator’s interests, protected from the very exploitation the erosion of those limits is actively causing.

2. Very few on the creator side seem to give a damn about consumer rights

This, to me, is the most disturbing trend I see emerging, especially when it comes from Indie authors. You can’t talk out of one side of your mouth about appealing better to readers, then ignore or argue against the idea that readers also possess protections under copyright law that we’re actively taking away through the licensing scheme ebooks are sold under. The digital goods market is built upon a foundation of taking away consumer rights. What’s worse, is that we also have creators out there throwing around loaded terms like piracy and stealing that aren’t accurate. Many times, they’re used to demonize people bahaving in ways they always have with regards to sharing material. Every man, woman and child in this country commits an infringing act on par with downloading a torrent file every single day. Probably several. We just don’t see it and most probably don’t even realize we’re doing it. The internet has brought part of that behavior out into the light of day. That doesn’t mean it wasn’t happening on a major scale before the internet. It absolutely was. It didn’t destroy these industries, in fact, I believe it made them considerably stronger. File sharing won’t destroy these industries today, either. What will, however, is if we continue on a path that makes copyright effectively infinite, steals rights from consumers at every opportunity, and tries to force unprecedented controls onto people for works they’ve already bought. It also doesn’t help if creators act like entitled assholes, throwing accusations of theft around while totally ignoring the fact that their entire business model is based on gutting consumer rights. Take a deep breath, go read up on the history of copyright and try to grow a little perspective.

And remember, the perversions of copyright are being driven by giant media conglomerates for their own ends. They don’t care about your rights as a creator any more than they do the rights of consumers. Don’t confuse your interests with theirs. When they’re done wiping out consumer rights, they’re very likely to turn to undermining yours, if they haven’t already. And don’t expect what fans you have left to sympathize when that happens.

3. Everyone seems to believe digital goods are infinite despite the obvious reality that they’re not

I still don’t understand how otherwise intelligent people buy into this heaping load of bullshit. A big part of the argument justifying swiping consumer rights is that digital goods are infinitely perfect. Come on! Do you really believe that we’ll be reading these same epub or mobi files on these same devices five years from now? Or ten? Technological progress is just going to come to a grinding halt, is it? We’re not going to have better, more capable devices in the future with improved or even radically different formats for these works?

If consumers don’t have any ownership rights in these products, what’s to stop an entire generation of culture from being essentially erased on the whim of corporate interests the next time a shift in standards or new technology comes along? One of the key arguments I’ve seen against second hand goods is the idea that no one will ever buy new if the used versions are identical. To begin with, nothing gets sold second hand without it being bought first hand. And don’t give me the line about people wholesale copying the same file and selling it over and over again. That’s a tech problem no one has bothered to solve because the entire industry was built upon the notion that readers were never going to have these rights. More importantly, when we do have a media shift of sorts, these current files will no longer be identical or the best thing going. If we have resale rights, I could be buying today’s epub files cheaply used or choose to buy the newest holographic version that hits the market in 2025. The long tail may be somewhat infinite, but that doesn’t mean the specific containers we’re using today are. I’m not a big fan of the notion that corporate interests can remove a giant swath of our creative culture just by switching standards or technology. Show me where in copyright law that kind of thing is allowed. It runs directly counter to its stated intent of benefitting the culture.

My perusings through this issue, mostly because Amazon filed a patent they may never even use, have been pretty eye-opening. As much as I love ebooks, and the new digital frontier, there’s always been this nagging little voice in the back of my head and I finally figured out what it’s saying: “Hypocrite!” Despite the fact that I frequently argued against increasingly controlling software licenses during my years in the industry, I never really connected the fact that, when I sell an ebook to a reader, I’m engaging in the same activity that I felt was so exploitative from the other side. I’m starting to get a picture of the weaknesses in selling digital goods, and most all of them stem from the erosion of limits in copyright law. Economic karma, perhaps. It may seem odd that I, as a writer who earns money because of copyright, would argue against more power granted to me as a creator, but I take the long view. It’s simply bad business to rip off the people paying us, and that’s what we’ve been doing from day one. By advocating for or even turning a blind eye to the giant theft of customers’ rights we’ve all taken part in, we’ve created a system that is already doing damage to our culture. Copyright doesn’t just protect creators, it protects consumers and society on the whole in a fine balancing act. What it shouldn’t be doing is warping that balance in support of business models that wouldn’t function without the self serving perversions.

Say what you like about copyright, but its value is much more than simply protecting my rights as a creator. Our system has lurched away from any semblance of balance, and it’s getting more slanted every day.

Over the past few years, I’ve read many articles from creators containing a plea for people to “stop stealing” from artists through downloading. I’d like to end this by throwing that plea back at creators.

Stop stealing from your customers!

Here are the links to the other copyright related pieces I’ve written lately, for you reading pleasure.

The Benefits of Globalization Don’t Apply to the Little People

Second Hand Blues: First Sale Rights and Used eBooks

Amazon and the Mystery of the Great Used eBooks

The Benefits of Globalization Don’t Apply to the Little People

The U.S. Supreme Court is set to rule on a case that has profound implications for the concept of ownership, (See SCOTUS blog here and read up. It’s fascinating) and could conceivably eliminate the last lingering vestiges of the notion that copyright law has any limits.  If the court rules the wrong way on this, copyright ceases to have any pretense of societal good. And why is it that we’re faced with the possibility from SCOTUS? To defend a publishers’ right to segment the world into territories.

In the past, I’ve argued that the idea of territoriality is already outdated and should be done away with. This case illustrates pretty clearly why that’s the case. Given the technological realities we have today, there is simply no easy way to defend this practice in statute that doesn’t have the unintended consequence of severely undermining first sale, fair use and ownership and resale rights for nearly everything we buy. The benefit to society for allowing territoriality to stand is negligible. In fact, it’s the consequences of doing so that are severe and destructive.

First, let’s look at the publisher, John Wiley & Sons. They are textbook publishers who, as many do, routinely use the concept of territoriality to both exploit poorer markets and maintain the ability to overcharge more affluent ones. The key issue in this case is that an individual, Thai national Supap Kirtsaeng, purchased textbooks sold by Wiley at lower prices in Thailand, brought them to the American market and sold them on eBay to help pay for his education at USC, where the exact same textbooks are priced much, much higher. My first response to this was, “good for him!” This guy identified a seam in the sales channels and exploited the price variance for the same product in different markets to make a buck. That’s market-based globalized free enterprise at its best.

But Wiley was having none of it, suing (in my opinion, inexplicably) for copyright infringement. The guy in question didn’t copy anything. He legally purchased said textbooks at full price offered by the publisher, then used his first sale rights to turn around and sell them for whatever the hell he wanted. There’s no copyright infringement here at all. (Note: I’m speaking in practical terms. Yes, I’m aware that there are portions of copyright law dealing with importation of foreign goods, but those parts were written long before globalization and free trade took hold, before the internet was even a thing and back when importation was a little more complicated than a few mouse clicks and a week’s wait for shipping. Those rules have about as much relevance to modern life as the use of grindstones to make bread). But the 2nd District Court disagreed, invalidating his defense through first sale, declaring his actions as infringing and fining him a substantial amount of money. The key problem lies not just in the decision, which I believe is catastrophically wrongheaded, but in the justification used. The court ruled that first sale rights don’t apply to any goods manufactured outside of the U.S.

Apparently, the judges of the 2nd District missed the memo about the new global economy we’re all supposed to be giddy about. They seem to have not noticed American corporations offshoring jobs and manufacturing at economy-gutting levels to save on labor costs and such. They’ve obviously never set foot in a Walmart or any other retail outlet and taken a few minutes to check the “made in” labels or they would have realized that a plurality of goods we buy every day aren’t manufactured in this country. If first sale doesn’t apply, then this court just swiped ownership rights to the majority of our possessions.

To make matters worse, how many foreign manufactured components do you think are present in our homes and cars? If I own a home that has a central heating system installed that was put together from any amount of foreign made components, do I even have the right to sell my home without first buying licenses for every non-U.S. element it contains? What if I want to sell my home complete with appliances, also made from foreign manufactured components? Do I need separate licenses for my refrigerator, washer, dryer, dish washer, etc? What will the costs of acquiring these licenses do to the overall value of my home. If you said “plummet” you hit the jackpot.

I can no longer legally even sell the smartphone I’m currently typing on. And what about the licenses HTC acquired for the plethora of foreign-made components that make up the phone itself? Does those licenses transfer? Is it enough to get resale permission from HTC or do I also have to get permission from every component manufacturer too? The same applies to cars. Can an ok from Toyota allow me to sell my car, or do I also need an okay from the stereo manufacturer, the maker of the chips in the car’s computer, and whoever made the tires, brake pads, oil filter and anything else in the vehicle that wasn’t American made. What does this do the value of your car? Again, “plummet” is the correct answer.

Yet, this value loss is totally on the consumer side. When the resale market gets gutshot in this way, there is no logical reason to expect car makers to do anything except up their prices. Really, all they have to do is refuse permission for resale and the used car market ends instantly. No more competition on that front.

There’s two key problems I see here. One, this kind of ruling creates a massive incentive for businesses to continue and actually speed up offshoring jobs and manufacturing. If first sale doesn’t apply to foreign goods, companies that trade in foreign made goods will control not only the primary market, but any secondary markets would only be allowed to exist on their terms at their discretion. The entire point of first sale was to prevent this very thing.

In a global economy where much if not most of what we buy isn’t made in America, how long would it be before companies still producing goods in the U.S. argue that first sale prevents them from competing and must be done away with here as well? I put the over/under on three hours.

Then there’s the legal illogic of somehow claiming one part of copyright doesn’t apply to foreign goods (first sale) yet other parts will (fair use). Supporters of Wiley have almost all claimed that the above concerns I’ve mentioned are scare tactics because consumers will retain fair use rights to defend their actions. But why should fair use be any more applicable to foreign goods than first sale? This is a flat-out lie by those who want Wiley to win. If the District Court decision on first sale stands, it’ll be roughly a half an hour before someone tries to invalidate fair use for foreign goods as well. And they’ll win because they’re right, logically and legally. If first sale doesn’t apply, then neither does fair use.

Get it yet? Think for a second, how many people in this country just bought, wrapped up and gave away foreign made goods as presents this past Christmas. If this ruling stands, every one of those gifts was an incident of infringement. I’m pretty sure we just rang up a $100 trillion worth of infringement penalities last month. Don’t think businesses will try to exploit this fully? Take a look at how publishers have been extorting exorbitant fees from libraries on ebooks. First sale doesn’t apply to digital goods (I believe strongly that it absolutely should, by the way) and fair use rights for the same have been willfully undermined as a consequence, resulting in absurdly, indefensibly high prices. And these are goods made in this country supposedly subject to the fullness of copyright law. Take away even those limited protections, and I think we can all see where this is heading.

All of these possibilities only exist because the courts are trying to carve a legal protection out of copyright that allows publishers to gouge rich markets while also simultaneously charging more reasonable prices in poorer ones. We could all effectively lose our right to resell virtually anything because a publisher wants the law to protect them from their own pricing strategies.

We’ve all had “the benefits of globalization” crammed down our throats the past few decades, and this case puts the lie to those notions. Corporations will readily tell you how great the global economy is as they ship manufacturing to third world countries with no worker protections, minimum wage laws or safety standards, but here, a regular guy finds a way to profit from globalization, and those same corporations are screaming that hellfire, brimstone and economic ruin will descend upon us all if its allowed to stand. If the District Court decision is held, that will be a clear sign that globalization belongs only to corporations and the wealthy. They get all the benefits and profits, while we get all the sacrifices and consequences.

There are two big societal problems made worse by an upholding of Wiley’s case: offshoring jobs and the cost of higher education. I’ve already mentioned how this decision creates a massive financial incentive for businesses to stop trading in American made goods, making a serious problem exponentially worse. The cost of education is, in part, too high thanks to textbook publishers. Territoriality is one way in which they keep textbook prices in the American market artificially high. This decision would also make that problem significantly worse as well. Textbook makers already undermine resale value by routinely producing new editions with little or no substantive changes specifically to prevent students from selling their books for any tangible return. This decision provides a clear path for them to further erode consumer rights; simply print the books overseas and now students lose all rights to resell (or give away) those books at any price.

The potential damage to the public and the overall economy from upholding the District Court decision outweighs the damage done to publishers by striking down the infringement claim defending territoriality by so many levels that even considering it scares the hell out of me.

What better case can be made that copyright is irretrievably broken than this one? The District Court ruling essentially makes copyright unlimited in scope, with manufacturers retaining not only primary sale rights, but also grabbing total control of any secondary markets as well. Considering that expansion of copyright terms has essentially made copyright length infinite (Life of creator plus 70 years. It is certainly infinite for the creator as my copyright wouldn’t expire until several generations after I’ve been dead and buried. And that’s only presuming it doesn’t get expanded again, which only an outright fool would believe won’t happen when Mickey Mouse next approaches public domain) where exactly are the statutory limits on copyright that were the principle element of the protection in the first place?

If the possible consequences weren’t so severe–as in instantly stealing at least half of the value of the goods we’ve paid for, eliminating secondary resale markets, and extorting copyright monopoly rents with additional licenses on products we’ve already paid for, not to mention possibly gutting fair use which could well have serious deleterious effects on free speech–I’d say maybe a decision this inordinately stupid needs to happen so regular people can see clearly how distorted and unfair copyright law has actually become and demand much needed change. But then, I’m opposed to further destroying what little productive economy we have left to make a point about copyright. Unfortunately, our corporate leaders and government don’t seem to agree.

The only logical choice here is to strike down the copyright infringement defense of territoriality. The alternatives do a hell of a lot more damage. I wish I was more confident that SCOTUS will get it right. We can all dream, can’t we? Unless, of course, your dream includes an infringing appearance by a copyrighted character, in which case that nap’ll cost you $150,000.

Un-Fair Use: Does Google News Actually Infringe?

“[They use] a doctrine called fair use, which we believe can be challenged in the courts and will bar it altogether.”   –Rupert Murdoch

This is a recent quote from the seemingly-really-annoyed Captain of the Publishing Industry on the subject of fair use, aggregators and search engines.  I’m not sure if Murdoch believes any of this, or if he’s just lobbing the threat of long and expensive legal action out there to try and compel a nice, fat licensing deal with Google and others.  If he does believe it, I have a hard time with a major newspaper publisher actively seeking to gut a staple of journalism.  After all, it’s kind of difficult to build stories when you can’t quote or reference anyone without having a licensing agreement.

So today, I thought I’d take a look at fair use as it relates to the internet, newspapers and whether Rupert actually may have a point.  (more…)

Published in: on November 16, 2009 at 8:21 pm  Leave a Comment  
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