As the London Book Fair goes through its annual run this week, American agents are trying to figure out the best way to sell digital rights to foreign publishers in markets that are far behind the U.S. in e-book sales. Even though many international publishers are just starting to dabble in producing e-books, almost all recognize that digital books are the future and that, in a few years, their local market will look more like the current one in America, where e-books are accounting for as much as 8% of revenue among the major houses. For this reason, most American agents are including digital rights in their foreign deals, but not without caveats.
Brian DeFiore, of DeFiore and Company, said there is no question that it is a concern to do a deal with a foreign publisher that does not have an active e-book program, but that this is a reality of selling rights in the international market today. The important thing to determine, he noted, is who is “the better publisher across platforms.” In this way, DeFiore said, the current climate recalls the era when there was tension over splitting hardcover and paperback rights. “[Back then] you chose the publisher who would do the best job for the book overall. In only the very rarest of situations could you split the formats and sell hardcover to one publisher and paperback to another.”
Since almost all foreign publishers want e-book rights—no foreign house wants to see its print edition possibly undermined by a future e-book edition from a competitor—many American agents said they’re trying to sell digital rights on a short-term lease. One foreign rights specialist said that, generally, her agency looks to establish a two- to three-year lease on digital rights. This way, she said, the agency can “reassess [the deal] when the foreign e-book markets are more stable.”
Another head of foreign rights at an American agency said the U.K. is currently the only market where publishers are demanding e-book rights. This insider noted that digital deals vary widely since most foreign publishers are seeking digital rights with the understanding that these rights are “about future potential.”
Then there is the royalty rate. Since the digital royalty rate is still a contentious issue for the industry in the U.S., American agents are not eager to see foreign publishers adopt what they see as the already low 25% that dominates in America. One source said that her agency is, right now, requesting the standard 25%, “but we always caveat this with the opportunity to renegotiate as industry standards change, [which] we know they will.” This source added that her team will often offer foreign houses they are less comfortable granting rights to a first option for digital, a tack that assures the foreign publisher acquiring the title that “we’re not selling out from under them.”
Robert Gottlieb, chairman of Trident Media Group, said that while some international publishers are offering the standard 25% U.S. houses currently offer on digital royalties, others are offering less. Backlist e-rights are also coming into play in international negotiations. Although Gottlieb said there has not been a rush on backlist, he noted that now a number of foreign publishers are coming back and trying to secure digital rights to titles they publish in print.
Calling the 25% digital royalty rate an “unhappy compromise,” another agent said that piracy is also an issue when it comes to thinking about potentially splitting digital from print in international deals. This agent said that foreign publishers face an even harder time warding off piracy when they don’t own the digital rights to a book. As this source explained, a publisher can hardly combat the hacker who illegally posts a book on the Web when the company itself doesn’t have the right to release the book in digital format.
Overall, as one source noted, digital sales to foreign publishers need to be looked at case-by-case. For now, the source elaborated, echoing what many agents said: “We’re taking it slowly [and] testing the waters.”