Monthly Archives: September 2010
Earlier this year, when the Borders bookstore chain seemed to have entered the death-rattle stage of its troubled life, we posted an article suggesting that the perfect rescuer would be a book publisher.
Today, as Barnes & Noble faces the prospect of being put up for sale, it seems appropriate to propose the same solution.
We’ve reproduced pertinent passages of the Borders article below, with Barnes & Noble bracketed to make our point. We think it would be smart business for Borders, we think it would be smart business for Barnes & Noble, and we think it would be smart business for a publisher. Or is “smart publisher” an oxymoron?
When Galley Cat invited me to make some predictions for the coming decade, I conjectured that sometime in the near future we would see the merger of a major retailer and a major publisher. Here was my reasoning: “A combined publisher/retailer solves many problems for both.The retailer owns the content and doesn’t have to pay a premium for it. The publisher does not have to pay a premium to distribute its books. There would be huge efficiencies of manufacturing and distribution.”
I’ve had about a month to think about what I said, and I want to revise it. The efficiencies of a retailer/publisher combine would not merely be huge. They would be decisive. If you don’t believe it, ask Amazon.
Amazon started as a retailer but has become a publisher too. It started with its Encore program aimed at identifying overlooked books and authors. That was followed by the creation of a service called CreateSpace aimed at self-published authors. And now Amazon has begun publishing mainstream authors.
Though Amazon has no qualms about becoming a publisher, publishers are terrified of becoming retailers for fear of provoking the wrath of their key accounts – B&N and Amazon. When publishers do dip a timid toe in the water and try to sell their books direct to the consumer, they offer them at full list price, which cannot possibly compete with the deeply discounted prices charged by B&N and Amazon. Yet, if they wanted to, publishers could sell their books directly to the public at 40% discount or higher and thus level the playing field.
The solution? To survive, to remain competitive, publishers may have no choice: they must either become retailers or end up being acquired by them.
At this moment Borders [Barnes & Noble], one of the best and most popular bookstore chains in the business, is in a life and death struggle to remain viable. If a publisher were smart it would rescue Borders [Barnes & Noble] and go into the retail business.
Retailers, I said a while ago (see Direct Sales: Publishing’s Last Stand), are intermediaries in a world that is rapidly disintermediating. As big as they are, retailers are vulnerable to market forces bent on eliminating middlemen, and that’s precisely why they have begun publishing books. The digital revolution demands a direct relationship between content provider and consumer. Merging a publisher and a bookstore chain like Borders [Barnes & Noble] would bring both struggling enterprises a little closer to that direct relationship, to profitability and to competitiveness.
Do I hear any bids?
After we posted an article about piracy last year we awakened to find that a self-styled book pirate writing under the handle “jap” had posted some provocative comments.
Far from stereotypical, our correspondent articulated a viewpoint that we felt demanded a respectful hearing. (See The Wicked Wisdom of an E-Book Pirate) This is what we wrote at the time:
“From his cover of anonymity jap responded to many comments and amplified on his original contention that ‘You have your morality and I have mine.’ Though we deplore piracy and are reluctant to offer a forum for its practitioners, we happen to think that it’s sometimes better to listen to our adversaries than ignore them, however diabolical their reasoning may seem. This is especially true when they offer cogent suggestions about where we should be focusing our efforts to deal with piracy.”
Jap is back.
Last week after we launched a weekly feature about piracy he reappeared to leave some comments. They were rebutted by Rowena Cherry, a staunch anti-piracy partisan who gave as good as she got.
We invite you to read jap’s comments (A Bootleg E-Book Bazaar Operates in Plain Sight) and join the debate. You may share some of the responses that he originally provoked ranging from vituperative (“Pirate is too sexy a term. What you are is a petty thief”) to respectful (“You have me intrigued, jap. I would suggest you are not a typical pirate…”) to grudging agreement (“In a world without pirating, a majority of people would just not buy the book. So yeah, I definitely think the impact is overrated (or over-agonized about.”). But we don’t think you’ll sit still for them.
For a complete archive of E-Reads postings on piracy, visit Pirate Central.
Anthony Damasco is E-Reads’ Technical Director and an intrepid explorer of underground Internet activity. We asked him to visit some e-book pirate websites and report back to us. Below is the first of what we hope will be many revealing adventures. Did we say revealing? Some of you may find them jaw-dropping.
There are many black market scenes around the Internet, each sharing files in different ways. It takes a bit of IT experience to know where to get files without getting burned by viruses or caught by anti-piracy groups. Unfortunately, it’s still too easy to gain access to stolen files and it seems to just get easier as the crack groups evolve. I won’t be giving out URLs or names, but let’s take a tour of some places where piracy is taking place. First, Let’s visit a piracy community site…
This community site allows users to share files with each other using filesharing websites like “Rapidshare” or “Megaupload”. The website itself is just a basic forum with a few plugins. However, this makes it easy to take no responsibility for what users post.
The fileshare websites ( like megaupload.com ) take no responsibility for what the users upload. Victims of piracy may submit takedown notices to the file hosts; however the fileshare community will notify the user who posted the file, who will simply re-upload it to a different location. This makes it nearly impossible to fight.
Users in this community share files for notoriety. They post a share and other users will “thank” them. In the image to the left a user who shared a Candace Camp book was thanked 6 times by other users and was thanked 4,373 times in the lifetime of the account. This motivates users to share more often and to share hard-to-find files.
This site has over 87 thousand posts in the e-book section and 20 thousand in the comic book section. Most posts have multiple files, so we can safely assume that they have shared over 100,000 e-book files.
More to come. Here’s a quick video taking us through a community site. (There’s no audio, so no, nothing is wrong with your speakers.
Stay tuned for part two, coming up soon! And for a complete archive of E-Reads postings on piracy, visit Pirate Central.
E-Reads Technical Director
Agent Andrew Wylie, whose business practices have been described as so unprincipled he has been nicknamed “The Jackal”, has been skewered in a wicked comic strip illustrated by Dan Goldman. Wylie recently met his comeuppance in a failed challenge to Random House (see Did Jackal Screw Amazon?)
The pictures are worth a thousand words and we’ll spend no more of them other than to invite you to view The Life of Wylie by Boris Kachka here.
Publishers Weekly‘s Craig Morgan Teicher and Rachel Deahl have surveyed leading e-book publishers and learned that with one exception, none of them is paying advances.
The exception is E-Reads.
Teicher writes that “Most e-book original publishers interviewed by PW do not offer advances, explaining that the rules in the e-books world are different from traditional print publishing.” Literary agent Richard Curtis, founder of E-Reads, doesn’t seem to have read the rules. Though E-Reads has worked on a 50-50 profit-sharing basis from its founding ten years ago, Curtis realized that in order to attract authors and agents he had to offer a business model they understand, and there’s nothing authors and agents understand better than advances.
Curtis also told PW he foresees a day when e-book rights will be an independent marketplace similar to the one for audio rights. Writes Teicher: “Curtis said that he sees advances as incentives in what is becoming an increasingly competitive marketplace, where authors and agents may withhold e-book rights when they sell print rights in order to get a better deal for the e-book.”
Actually, Curtis quietly revealed the news a few months ago, but PW picked up on it. In a Digital Book World interview with Emily Williams, co-chair of the Book Industry Study Group Rights Subcommittee, Curtis disclosed that “we’re beginning to pay advances.” For an industry that has operated on a back-end, no-front-money model, this is a significant precedent.
The interview was conducted in connection with a DBW webinar on the subject of literary agents who are also e-book publishers. Curtis launched E-Reads in 2000 in anticipation of the digital revolution and it currently carries a list of some 1200 previously published titles in science fiction and fantasy, thrillers, romance and general fiction and nonfiction. Also participating in the September 14th event are Arthur Klebanoff, founder of Rosetta Books, and Scott Waxman, who recently launched Diversion Books.
Typically, when making deals with mainstream publishers agents throw the e-book rights in for no further advance money. The explosive sales growth of the e-book industry now makes prepayment of royalties more feasible, and being the first to offer them gives E-Reads a competitive advantage to augment its industry-leading 50% royalty, twice the current going rate offered by trade book publishers.
The story of Curtis’s founding of E-Reads – it was called “Curtis’s Folly” by some of his mystified colleagues – how he built it into one of the leading independent e-book publishers in the business, how digital technology has enhanced his approach to agenting, and his surprising views on the future of print publishing may be read on the Digital Book World website.
And you can read Teicher’s PW article here.
§ 203. Termination of transfers and licenses granted by the author
(a) Conditions for Termination. — In the case of any work other than a work made for hire, the exclusive or nonexclusive grant of a transfer or license of copyright or of any right under a copyright, executed by the author on or after January 1, 1978, otherwise than by will, is subject to termination under the following conditions:
(1) In the case of a grant executed by one author, termination of the grant may be effected by that author or, if the author is dead, by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author’s termination interest. In the case of a grant executed by two or more authors of a joint work, termination of the grant may be effected by a majority of the authors who executed it; if any of such authors is dead, the termination interest of any such author may be exercised as a unit by the person or persons who, under clause (2) of this subsection, own and are entitled to exercise a total of more than one-half of that author’s interest.
(2) Where an author is dead, his or her termination interest is owned, and may be exercised, as follows:
(A) The widow or widower owns the author’s entire termination interest unless there are any surviving children or grandchildren of the author, in which case the widow or widower owns one-half of the author’s interest.
(B) The author’s surviving children, and the surviving children of any dead child of the author, own the author’s entire termination interest unless there is a widow or widower, in which case the ownership of one-half of the author’s interest is divided among them.
(C) The rights of the author’s children and grandchildren are in all cases divided among them and exercised on a per stirpes basis according to the number of such author’s children represented; the share of the children of a dead child in a termination interest can be exercised only by the action of a majority of them.
(D) In the event that the author’s widow or widower, children, and grandchildren are not living, the author’s executor, administrator, personal representative, or trustee shall own the author’s entire termination interest.
(3) Termination of the grant may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant; or, if the grant covers the right of publication of the work, the period begins at the end of thirty-five years from the date of publication of the work under the grant or at the end of forty years from the date of execution of the grant, whichever term ends earlier.
(4) The termination shall be effected by serving an advance notice in writing, signed by the number and proportion of owners of termination interests required under clauses (1) and (2) of this subsection, or by their duly authorized agents, upon the grantee or the grantee’s successor in title.
(A) The notice shall state the effective date of the termination, which shall fall within the five-year period specified by clause (3) of this subsection, and the notice shall be served not less than two or more than ten years before that date. A copy of the notice shall be recorded in the Copyright Office before the effective date of termination, as a condition to its taking effect.
(B) The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation.
(5) Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant.
(b) Effect of Termination. — Upon the effective date of termination, all rights under this title that were covered by the terminated grants revert to the author, authors, and other persons owning termination interests under clauses (1) and (2) of subsection (a), including those owners who did not join in signing the notice of termination under clause (4) of subsection (a), but with the following limitations:
(1) A derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination, but this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant.
(2) The future rights that will revert upon termination of the grant become vested on the date the notice of termination has been served as provided by clause (4) of subsection (a). The rights vest in the author, authors, and other persons named in, and in the proportionate shares provided by, clauses (1) and (2) of subsection (a).
(3) Subject to the provisions of clause (4) of this subsection, a further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is signed by the same number and proportion of the owners, in whom the right has vested under clause (2) of this subsection, as are required to terminate the grant under clauses (1) and (2) of subsection (a). Such further grant or agreement is effective with respect to all of the persons in whom the right it covers has vested under clause (2) of this subsection, including those who did not join in signing it. If any person dies after rights under a terminated grant have vested in him or her, that person’s legal representatives, legatees, or heirs at law represent him or her for purposes of this clause.
(4) A further grant, or agreement to make a further grant, of any right covered by a terminated grant is valid only if it is made after the effective date of the termination. As an exception, however, an agreement for such a further grant may be made between the persons provided by clause (3) of this subsection and the original grantee or such grantee’s successor in title, after the notice of termination has been served as provided by clause (4) of subsection (a).
(5) Termination of a grant under this section affects only those rights covered by the grants that arise under this title, and in no way affects rights arising under any other Federal, State, or foreign laws.
(6) Unless and until termination is effected under this section, the grant, if it does not provide otherwise, continues in effect for the term of copyright provided by this title.
We were really excited when the British Parliament passed the Digital Economy Act, which is designed to punish file-sharing freeloaders by pulling the plug on their electrical feed. But now it looks like a coalition of Internet service providers and consumers has reduced the initiative to sending the perpetrators a polite letter asking them to please stop.
Thanks to pressure on legislators the “punishment” will be about as severe as a good tickle with a turkey feather. The “crackdown” will consist of letters sent to suspected net pirates. According to the BBC, “It will see those identified as illegally downloading content sent a series of letters with the threat of further measures, such as slowing down offenders’ internet connection or possibly removing them temporarily from the internet, if they continue.” Whoo! That will send them running for cover! “The government also revealed that there will be no fee charged to consumers who want to appeal against the notifications.” What’s more, “Rights-holders will bear the brunt of the costs for tackling copyright infringers.”
The rationale behind this pussy-footing is the government’s fear of “hurting innocent people if their Internet connection is hijacked by pirates.”
How many “innocent” people? “The music and film industries estimate that six million people in the UK regularly file-share copyrighted content without permission” and further estimated that “UK’s creative industries experienced losses of £1.2 billion in 2008 due to piracy.”
How many times have you been cut off in the middle of an inflight film by a pilot’s announcement – usually one telling you that you can see Zeke’s Biloxi Hot Dog Stand out of your port window? Well, you may soon have your reading experience shattered the same way.
That was our thought as we read this post by Dianna Dilworth on MediaBistro’s ebooknewser.
“Last night I was flying on Virgin America and I was playing around on ‘Red,’ the airline’s interactive entertainment system on the back on the seat and came across a ‘Read’ button. When you push the button is says, ‘Coming soon,’ which it has said since the airline launched back in 2007.
“It made me wonder if they had plans to start featuring eBooks or short stories for free or for purchase. There are a number of ways that it could work. Perhaps you could sign in to an existing Amazon or Barnes & Noble account and access your digital bookshelf directly. Or perhaps the airline could sell bestsellers or short stories directly.”
Yes, but (even if you’re not interrupted in the middle of an action or sex scene by that pilot’s announcement), how will airlines match their e-book to your reading speed? To the length of your flight? Will publishers create a short Airline Read designed to pass the time between Los Angeles and San Diego and a long one to pass the time between Los Angeles and New York?
It needs to be worked out but the possibilities are intriguing. Read Ebooks On Airplane Screens?
Since the dawn of the digital age – call it Year 2000 – publishers and agents have separated e-rights into two categories. One is verbatim text rights – plain old e-books. The second is interactive use of texts in combination with music, video, audio and other media – what have come to be called enhanced e-books. Commonly, agents struck the latter provision out of publisher boilerplate. Why? Because film studios and networks felt that enhancements incurred on their ability to dramatize the books they acquired.
But with development of vooks and similar hybrids of text and other media (“Vook” = Video + Book), publishers are challenging the assumption that interactive rights must be reserved to authors. As enhanced e-books become viable and valuable, publishers want to know why they are abandoning rights to movie and television companies.
That is the background for the memo that a major literary agency has sent to a number of film agents informing them that henceforth they cannot count controlling those interactive rights.
The memo declared in part:
“As a result of this fundamental change in publishing, we will no longer be able to agree to the boilerplate language in most studio option/purchase agreements that address multimedia. These clauses usually restrict the author’s reserved electronic book rights to digital text only. We cannot agree to this limitation. Authors’ reserved ebook rights must now include the right to grant enhanced digital rights in their work, including all the elements mentioned above.” The memo made it clear that “enhanced digital editions, as long as they are non-dramatic, are best exploited by the author in conjunction with the publisher.”
Despite this distinction it’s not likely that Hollywood is going to take this shift lying down. Where enhancements end and movie effects begin will certainly become a bone of contention, so this is going to get interesting and probably adversarial. Fasten your seat belts, it’s going to be a bumpy night.
Though enhanced e-books are on everybody’s tongue these days, we suspect you won’t see a flood of them any time soon. The cost and complexity of clearing permissions and the time it takes to produce works of real quality will in all likelihood restrict the number released to a precious few. But that may not be the point, as we will eventually see when the titans of publishing and Hollywood clash on the field of enhancements.