In a dynamic panel at Digital Book World about rights in the electronic age, a number of hot-button, complex issues were broached on Tuesday. One of the best rights panels of the afternoon, "Tomorrow's Book Contract," moderated by Richard Curtis (of Richard Curtis Associates), saw lawyers, agents and an executive at one of the "big six" coming up against pressing problems regarding the fact that the industry has no solutions for how to address certain rights snafus that have arisen as a result of the increasingly fractured, digital retail market for books.
Devereaux Chatillon, who's worked in the legal department at Scholastic and Miramax Books and is currently at the law firm Sonnenschein Nath & Rosenthal, kicked off the panel by tackling one of the head-scratching problems in current book contracts--the fact that the reigning system is a territory-based one built around the limitations of physical production and distribution. Print books are sold by language and by territory and, traditionally, one English language publisher--usually a British house--handles the open market. (The open market right refers to the one that allows a publisher to sell English language books in European countries other than the U.K.) Because of England's proximity to Europe, the open market has largely remained the domain of English publishers.
Now, with digital rights and no barrier on distribution or production, the issue becomes what to do with e-rights in the open market. Can you mimic with e-books the reigning print system of having a print edition in English sold in America, a different print edition in English sold in the U.K. and then a third edition sold in the open market?
Chatillon, who said she'd like to see digital rights controlled by one publisher in one language, was quickly challenged by Writers House agent Simon Lipskar. Lipskar, who admitted he didn't have a solution to the problem, said he agrees that it is not ideal to have two titles available to custmores at two different price points in two different currencies--i.e. having customers choose between an American e-book for sale in dollars and a British ebook for sale in pounds. But, given the fact the publishers essentially won't buy a book without buying the e-rights, it's hard to aribitrarily assign the open market to one publisher. As Lipskar put it, if he proposed all open market e-rights went to American publishers, "British publishers would puke up their breakfasts."
Penguin's John Schline said American publishers are equally perplexed about how best to handle open market e-rights. Schline noted that, even in seemingly simple situations where the same publisher in the U.S. and the U.K controls the rights--say Penguin USA and Penguin UK--you still need to create different ISBNs for different editions of a book. That there could be one English-language ISBN for a title seemed like "an elegant and simple" solution, he explained, but it isn't currently do-able when there is a print U.K edition and a print U.S. edition.
Miriam Kriss, an agent at Irene Goodman, brought up one of her ongoing concerns about digital rights in contracts--the issue of 'digital adaptations.' As she explained, the term "digital adaptations" has been one used by publishers to stand in for e-books and anything digital, like an e-book, spun off from that initial form. As more e-reader devices flood the market, and enhanced e-books, like vooks gain traction, Kriss said she grows more uncomfortable about clumping that adaptations clause into the sale of e-book rights. "Selling things that I even don't know what they are yet, it makes me break out in a cold sweat," she said.
Lipskar, when given the chance to bring up the point he most wanted to address about today's contract, took on the much-debated digital royalty rate. For years now agents have been crowing that the royalty rate on e-books, which has remained at 25%, is too low. Agents claim that, when the low price point retailers like Amazon have set for e-books (which is usually $9.99) is taken into account, along with the fact that publishers aren't paying the same production or distribution costs for electronic books that they are for print titles, authors are getting less of the profits on digital at that royalty rate. The problem though, as Lipskar explained, is that no one knows what retail model will come to the fore as the dominant one for ebooks.
Lipskar trotted out a dizzying array of scenarios--and mathematical breakdowns for possible revenue splits in said scenarios--to ultimately prove that the math is no good since no one knows what consumers will ultimately be paying for e-books. If the "agency model" that Apple is reying on for its iPad--a device which, when Lipskar was speaking, had not yet been unveiled--should take hold, it's still remains to be seen how this model will work. Will the iPad gain traction in the marketplace? If it does, what price point will stick for e-books on the iPad? Not knowing these things--and therefore not knowing what kind of competition Apple will represent for Amazon (and its wholesale model)--makes it nearly impossible, Lipskar said, for anyone to assert what they want for the long haul. Knowing what a fair royalty rate will be on a digital book, when you don't know how a digital book will be sold, or what the reigning price point for that book will be, is nearly impossible. Given that, Lipskar said he would like to see more wiggle room in contracts for renogotiation on this front. "My proposal is that we need to accept, all of us, that we don't know," he said. "These royalty rates are fictions."