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E-books spark crisis

21 December 2009

This has been a week of dramatic developments in the publishing world, as publishers scramble to work out how to navigate a completely new playing field. The debate centres around four crucial issues: who controls e-book rights, the timing of e-book editions and what the prices and royalty rates for e-books should be.

Lest you should think that none of this seems particularly important to you as a writer or reader, here's the way the latest news was reported by Robert McCrum on the Guardian website:

'They say the fluttering of a butterfly's wing in the Amazon rainforest can cause a hurricane in the northern hemisphere. Stephen Covey's decision to move from his traditional, conventional publisher, Simon and Schuster, to Rosetta Books, an electronic book publisher working in association with Amazon, may turn out to be one of those moments in the history of book publishing when everything changed and wild forces were released into the creative environment.'

McCrum may well be right and it's an interesting footnote, which long-term readers of News Review may remember, that on 26 March 2001 under the heading Who owns e-book rights? Random House sues Rosetta Books News Review reported that:

'Random House, the Bertelsmann-owned largest publisher in the world, is suing the Internet start-up Rosetta Books for copyright infringement. Rosetta Books was set up recently to sell e-book versions of modern classics through its website. The basic premise of Random's suit is that its existing contracts with the authors give it the exclusive right to publish in book form, which the publisher maintains includes e-book formats.

'Titles by major authors, including William Styron, Kurt Vonnegut and Robert Parker, are involved. Rosetta made deals direct with the authors through their agents. The case revolves around the question of whether or not Random's original purchase of rights covers e-books. Since the contracts for the books involved are all pre-1995, they contain no specific mention of e-books or e-book rights. The authors' agents therefore claim that these rights are reserved by the author and that the authors are not infringing their contracts with Random House by selling them to Rosetta Books.'

Well, it seems that Random House US, which lost its case in 2002, has decided to use the same argument again in an effort to protect their rights, in what looks like a straight repeat of history. But that's not quite right, as the book world has shifted, and e-book rights are now not just a theoretical threat or opportunity but something for which there is a means of delivery, with the development of e-readers, and also a market which will yield immediate and possibly huge sales.

Random House chief executive Marcus Dohle's letter last week to literary agents claimed that older contracts granting rights to publish "in all editions" grant electronic rights to the publisher. The US Authors' Guild has been quick to respond, saying that: 'It's regrettable and unhelpful that Random House has chosen to try to intimidate authors and agents over these old book contracts. With such a weak legal hand, it would be well advised to stick to its strength...the advantages that its marketing muscle can provide owners of e-book rights. It should also start offering a fair royalty for those rights.'

The royalty rate to be paid on e-books is also a hot topic for debate, with Random House and other publishers saying it should be 25%, while others are pushing for 50% and the UK Society of Authors has said it should be as much as 75%.

These aren't the only controversies relating to e-books though. Amazon appears to be trying to use its near-monopoly position with the Kindle to force low prices. It has made $9.95 standard and has just been experimenting with $7.95 for certain major authors. But these low price points threaten not only the book trade but the existing structure of publishing, because if the e-book comes out at the same time as the hardback but at a much lower price then it threatens both the sales of the higher-priced hardback edition and also the paperback which would normally follow later.

As the year ends it looks like an annus horribilis for publishers, with worse perhaps to follow in the New Year.