Category Close-Ups

Whither Online Rights Trading?
John F. Baker -- 10/30/00
It's been going on for a year now, and here's how some leading practitioners see their progress

Kip Parent (l.) and Jim McHugh
of Rightscenter.com:
senior citizen.
At one of the two traditional annual Frankfurt parties given by Bertelsmann this year, the Grand Ballroom of the Intercontinental Hotel was decorated with the name of Gutenberg in lights along one entire wall, surrounded by twinkling stars. It was apparently designed to show the first printer as he appears in today's electronic age, but seemed more like a fulsome tribute to old-style printing and publishing--not at all what one might expect from a corporate giant anxious for a starring role in the online age.
But despite all the new alliances, the technological innovations, the determined proselytizing and the money and effort being expended by major publishers on becoming digitally viable, electronic publishing is still in its infancy. A more immediately attractive proposition may be online rights trading. Nobody disputes that as presently constituted this is a time- and labor-consuming, long winded, costly and inefficient business; heavy manuscripts have to be expensively shipped often over long distances, and there is a huge amount of copying, and faxing and phoning at international rates, with often only a comparatively small reward. Why not, indeed, work it all out online: post catalogues, properties, partial manuscripts on the Web, e-mail pitch letters and offers, conduct auctions. In fact, why not--now that electronic signatures are regarded as legitimate--even sign contracts?

In This Article:
Plus, Online Pros & Cons

This was roughly the pitch Nick Webb, former president of Simon & Schuster in London, and now the head of European operations for Rightscenter.com, was giving agent Ed Victor when the latter stopped by Rightscenter's Frankfurt stand the other day. "You must have a stake in the Jiffy Bag business!" he cried. "You don't have to go through all that!" But Victor was obdurate. "You make it sound as if all you are is a kind of electronic post office," he declared. "But that's not enough. When it comes to selling, I have to be able to talk to the person, put something in their hand, look them in the eye." Both large and voluble men, they were reduced to an impasse, with Webb apparently unable to prevail with his impressive logic of saving time and money, and Victor unable or unwilling to give up the procedures that have served him so well over the years.

It's a situation that has often faced Webb in his efforts to sell the concept of online rights trading to editors, publishers and agents. "So many of them are twonks," he sighs after Victor has gone--using a word his small daughter has coined for what he called "the IT-challenged." Still, for a process that has only been seriously on offer for little more than a year, the results have been quite impressive, especially when one considers how entrenched publishing habits are. "Things haven't changed nearly enough since Gutenberg," as Webb puts it. "It's really pretty embarrassing."' He points out that online trading not only saves time, money and resources, but also expands the turf. "Publishers in emerging markets were previously just not on our map," he declares. "It wasn't worth the effort to reap the small sums involved in selling to them. Now, however, all these previously marginal markets become exploitable." And to drum home his point he notes that Rightscenter now has on its roster no fewer than 419 Chinese publishers--far more than publishers would previously have believed even existed.

A Year-Old GranddaddyWebb's new employer is by far the granddaddy of online rights traders, having actually been in business for a little over a year; it was launched just before last year's Frankfurt fair. The technology that makes online trading possible actually began at the prompting of science superagent John Brockman, who was the first major literary agent to turn to the Web for all his dealings, boasting that he now has an office where the telephone seldom rings. Silicon Valley veterans Kip Parent and Jim McHugh put the elaborate system together, and now define it as an "online application" rather than a Web site, stressing that its aim is to provide a secure neutral ground on which rights traders can do business.
J l Fishman and Jacqueline LeDonne
of Subrights responding to customers.
CEO Parent notes that the operation has been making its way against "a lot of resistance" from editors and agents--
resistance that, as the encounter with Victor demonstrates, has by no means entirely dissipated. To build its customer and title base it has been particularly generous with its terms, offering free listings of titles (which normally cost $250 each to activate, or make them available to trading) to anyone joining up at such major book fairs as Frankfurt, London and BEA (in fact it has a partnership arrangement with the latter two). These free rides expired as of the end of July and Rightscenter is now in the process, in Parent's words, of "converting try to buy." Unlike the other major online trading operations, Rightscenter d s not charge a commission on deals that are concluded there. "Where d s that extra 5% come from?" Parent asks rhetorically.
Parent is helped in the expansion of his subscription base by the adherence of some strong publishing names--Callaway Editions just committed to making Rightscenter its online rights manager--and by the sheer numbers it has managed to put together in its first year of operation: more than 8,000 registered members, from 1,000 different agencies and publishers in 60 countries, and more than 20,000 activated titles in its rights database.

The establishment of an industry advisory board, chaired by agent Ira Silverberg of Donadio & Olson in New York, a fervent advocate after he made a $40,000 Japanese sale for a title using Rightscenter's facilities, has stressed the industry-friendly nature of the organization. The members of that board, who include publisher Karen Rinaldi at Bloomsbury USA, and agents like Ralph Vicinanza and Kim Witherspoon in this country and Luigi Bernabo and Peter Fritz overseas, as well as scout Mary Anne Thompson, is designed to assure that the interests of typical customers are being knowingly cared for.

The company has also hired notable industry figures on staff: not only Nick Webb, but also Lucinda Karter, former rights manager at W.W. Norton, who says she "began to use it and found it addictive, so I wanted to help it to move," and Helen Garrett, formerly marketing manager at Phaidon Press. Parent is continuing to interview for new staffers, and plans soon to begin building a film rights database; "selling film rights is a very antiquated area," he says. A new relationship announced at Frankfurt was with Vista International (News, Oct. 23), which already offers a number of major publishers machinery for updating lists and rights information automatically. Another new development Rightscenter was demonstrating at Frankfurt was its "enhanced negotiation machinery," designed to bring co-agents more fully into the picture while keeping agents at the center of the deal.

New Pricing at SubrightsThis was also an important consideration for Subrights.com, which is considerably younger, having celebrated its six-month anniversary on the first day of the fair. It took the opportunity to announce a new pricing plan that brought it more into line with Rightscenter: a chance for sellers, particularly bigger publishers and agencies that use large numbers of sub-agents, to pay an annual use fee instead of Subrights' previous charge of a 5% commission on each transaction completed. President J l Fishman, formerly a Doubleday editor and then an agent, explained that a number of larger U.S. and British operations, which use sub-agents extensively, found the 5% fee awkward in terms of using their sub-agents and the online service simultaneously. The new plan is open to anyone who wishes to use it, Fishman said, and for those who prefer, the 5% fee is still available as an option.

He and sales and marketing manager Jacqueline LeDonne, who cut her teeth at FrankfurtVirtual, the fair's own online rights catalogue, both stress that this change in pricing, as well as the recent addition of a feature called "My Deals," which gives a subscriber an instantly updated one-screen view of all his ongoing activities, were both adopted as a result of customer feedback.

And according to Fishman there have been a lot of new customers. Without giving actual numbers--though a list of registered sellers shows about 250 names of agents and publishers, most from the U.S. and U.K.--he says there has been a 20% month-to-month growth to date, and, based on current projections, he foresees a 200% increase in customers over the next six months. Particularly significant subscribers are National Academy Press, Taylor & Francis, NetLibrary and the Brava romance line at Kensington. "I want to see our title and client list grow to the point where it can be demonstrated that online trading is now the norm," says Fishman. "I aim to prove that proposition." The site, he says, "is a bit like an e-Bay to reflect the international publishing community, and I hope that, like e-Bay, we can go on expanding and improving."

Rightsworld.com, which launched its Web site in April but which has only been active since late summer, is even more specifically like e-Bay, to the extent that it concentrates on auctions. "We're like an e-Bay for the publishing industry," says president and c0-founder Nick Bogaty (his co-founder is former Apple exec Eric Miller), who describes his company's initial target market as independent publishers not large enough to have their own sub-rights departments, and who can therefore use the international audience Rightsworld offers. This market has just been enlarged in a significant way, however, by an outreach that's unique so far in the online rights world: Rightsworld announced during the fair an alliance with the National Writers Union (News, Oct. 23) that will enable the NWU's 6,500 members discounted access to the site to post their works and sell their own rights. (Normal rates are $19.95 to post a title for sale, followed by a 5% commission on the proceeds of any sale.) It's too soon to say how well this will work, but Bogaty is proud of the initiative, noting that this is the first-time authors have been invited to make their own online deals. Another first was also announced during the fair: a Texas Internet investment company, Jump.Net Ventures of Austin (where Rightsworld is based), took a minority financial stake in the company.

Companies that actively use Rightsworld's system include such small publishers as Soft Skull Press (which sold rights to the book about George W. Bush dropped by St. Martin's after its credibility was questioned) and university presses like those of Columbia and Harvard. Deals have also been closed within Rightsworld on major titles like the Esther Williams memoir Million Dollar Mermaid and the autobiography of Mikhail Gorbachev. Not only do small publishers use the site, but bigger ones also use it for smaller deals that are hardly worth involving their own sub-rights departments--"lower-end rights sales like $10,000 and $15,000, with boilerplate contracts," as Bogaty puts it.

Like the other online trading operations, Bogaty d s not expect deals to be accomplished entirely online for a while yet, but figures that many of the ones begun online go as far as the deal memo or actual contract stage without pen touching paper. "I don't think there'll ever be a half-million-dollar deal on one of these sites," he says frankly. (The largest one we could uncover was the auction conducted by agent Linda Mead at Lit West for the book Internet Alliances by Larraine Segil; since speed was of the essence, Mead decided to sell it online via Rightscenter, and John Wiley bought it "for a princely sum plus bonuses"--the kind of wording that normally indicates a strong six figures--and it will come out as soon as this December.)
Nick Bogaty (l.) and
Eric Miller of Rightsworld.
Very much the dark horse in the online rights world is Frankfurt Virtual, which began five years ago--a lifetime in this world--as a way for fairg rs to put up catalogues or titles they wished to trade; the Who's Who at the fair, a detailed database of attendees, soon followed. At present, although it has considerably expanded its scope, now offering 18,000 titles from 80 countries in 60 languages, the online catalogue is not negotiable, to the extent that there is no machinery for actual rights trading in place. Under the supervision of Marife Boix Garcia, however, reporting to new fair director Rudolf Lorenzo, that is about to change. She told PW that they are currently interviewing to expand staff, with a view to making the Who's Who a regularly updated directory of significant players in worldwide publishing--something not currently available anywhere--and also to offer actual trading capability, which she calls "user management," beginning next summer, and ready in time for next year's fair. One development that could vastly expand the range and capabilities of Virtual is a recently announced alliance with London's Whitaker, which publishes the Bookseller and the Rights Report newsletter, and is owned by BPI, publisher of the Hollywood Reporter and Billboard. At present, however, there has been no further announcement about practical steps to implement this alliance, and Frankfurt-Whitaker remains a potential rather than actual significant addition to the ranks of online rights organizations.
Online Pros & Cons
The Frankfurt fair has moved to regularize and ease the trading of rights online with a "Rights Metadata Initiative," in which representatives of the various online operations, as well as publisher associations and other book fair folk, were invited to meet to discuss future directions for this new kind of business. They agreed to form a working group to develop standards to cover electronic rights dealing, and Editeur, the international book trade standards body, will act as secretariat for it. This made for a kind of official sanction that certainly means online rights trading is increasingly legitimate. But what do agents and publishers, its principal users, think of it?
Ira Silverberg, an obvious proponent since he chairs Rightscenter's advisory board, says he uses it "strategically," meaning that he often uses it, particularly in domestic postings of available properties, along with print--"though I could imagine using it without print in foreign dealings." At present he works online selectively, according to the technological preparedness of those he works with. "Some people out there are negative about it, and continue so; others have been turned around. But I don't think anyone can deny its usefulness in getting scouts and co-agents the information they need quickly and efficiently. I'm skeptical of doing auctions online, however. You need to know who you're dealing with."
Several New York agents either expressed no interest in online trading or had so far refrained from trying it. Wendy Weil, for instance, hasn't even thought about it. Vicky Bijur has "thought a lot about it," but so far hasn't done anything to pursue it. Maria Carvainis likewise has ignored it. Doris Michaels has signed up with Subrights.com but so far has not used it. Big publishers, of course, have their own sub-rights departments in place and feel they don't really need it--and in any case most, like Bantam Dell, the furthest along so far, have been working on establishing their own online sites
Surprisingly, Richard Curtis, one of the most electronically inclined of agents, who has his own Web site and offers his clients electronic publishing alternatives, says, "I've rejected online trading in my mind. I'm not sure that it works or will work. Like most agents, I have my own system in place for handling foreign rights. With more and more publishers taking world rights, there's not so much trading in them anyway for most agents, and to change all my systems, to re-enter everything into a new system, would be too big a disruption compared to the rather meager likely rewards. I'm also skeptical that many foreign publishers would ever use the system the way it's supposed to be used--or would they simply go on phoning and visiting as before? Selling rights is still a very personal, handselling business, after all."
--John F. Baker