A showdown in the publishing business seems all but inevitable following the letter Random House chairman Markus Dohle mailed to a number of literary agents on December 11, claiming the company has the right to exclusively publish the digital editions of much of its older backlist. The letter, which Random spokesperson Stuart Applebaum said was sent in the spirit of collaboration not confrontation, set off a firestorm of questions and opinions in the book world blogosphere—and in the media—about what was at stake and what might happen next.
Interviews with agents found most agreeing with the combative message the Authors Guild issued in response to Random House's letter. In a post on the Guild's Web site, Paul Aiken characterized Random House's move as a “retroactive rights grab.” The organization also got to the heart of the matter by noting that the works at stake are predominantly those published before 1994, since that was the year Random changed its contract to clarify e-book rights after a contentious debate over who owned multimedia rights to titles. (The multimedia fight was sparked by the then-growing adoption of CD-ROM technology in the publishing industry.) In its letter, the Guild maintained that under older contracts, e-book rights are retained by the author.
Some agents feel any battle with Random will likely be centered on copyrighted classics. Peter McGuigan at Foundry Literary + Media pointed out the issue is “massive backlist” and “estate” authors, calling this “a fight about the past more than the future.” Other agents are concerned about the precedent Random House is setting, or at least trying to set.
One of the biggest concerns among agents is that Random House did not stipulate in Dohle's letter what digital royalty rate it will be paying on the pre-1994 titles. If Random tries to institute a 25% digital royalty rate on the titles in question—sticking with the standard many houses are trying to push—there could be more unrest among agents and authors.
Random's Applebaum said the publisher won't publicly discuss the arrangements it is making with agents to publish e-editions, but noted that “all backlist titles Random House publishes as e-books will have an individually negotiated and mutually agreed-upon royalty rate.” He said that since the letter was sent, Random has received “many requests” from agents to discuss e-book publication, and Random is hopeful the dialogue with the agent community will continue.
The reality is that many authors and agents now expect more than 25% on e-editions, as highlighted last week when bestselling business author Stephen R. Covey, who is published by Simon & Schuster, struck a deal with Rosetta Books to exclusively publish Kindle editions of two of his titles. That deal will give Covey half of the net proceeds from e-book sales. The Guild also opposes the 25% royalty rate; in its letter, the organization states: “We're confident that the current practice of paying 25% of net e-books will not, in the long run, prevail.”
Agent Ryan Fischer-Harbage, for his part, thinks this is an issue that affects more than just so-called estate authors. Referring to the big-name authors like William Styron, Ralph Ellison, and John Updike who made it into the Times's initial coverage of the Random House letter, he said that this situation is far-reaching and “matters to more people than we're hearing about in the New York Times.” He elaborated by pointing out that any title published before 1994 that's still in print is “still selling” and remains a marketable property.
While many in the industry believe Random doesn't have a solid legal claim to these digital rights, whether this issue will go to court is up for debate. Agent Richard Curtis said he thinks that, of the few contract issues a publisher would be willing to fight in court, this is one of them. But, Curtis stipulated, “You would have to be a very wealthy party to challenge this through an appeal process.” Writers House agent Simon Lipskar, asked if he thought this issue could be forced into a court, said he thinks “someone will take [Random House] up on the challenge.”
Regardless of whether this issue comes to legal blows, many agents think Random, despite being the largest trade publisher, should tread lightly in this arena. As Fischer-Harbage noted, Random “is the biggest publisher in the world, but not the only publisher in the world and, if they aren't reasonable, in the long run it's going to hurt their business.” Agent Miriam Goderich, of Dystel & Goderich, echoed this sentiment in a blog post on her agency's site, saying, if nothing else, the move “will engender a great deal of ill will within the publishing community.”