STOCK MARKET WATCH - Thursday, 5 January 2012

[Tansy_Gold]

81. I won't use the SMW as my personal soapbox, but. . . . .

I will say this much, which is enough and more than enough, and then if the discussion needs to go further, I'll start another thread or something.

The ongoing issues of copyright protection/infringement, including the battles over digital books and "DRM" or the embedded "Digital Rights Management" in some ebooks, interest me far more than I have the time to explore. I do not know anything about the software itself; I know DRM can be disabled/removed from some e-documents, but I don't know how, so I'm not even going to get into that.

But when it comes to copyrights -- which are not quite the same as patents, though close -- most of the legal battles such as what we've seen with RIAA suing over music downloads and now the class action suit against the Big 5 (or 6, sometimes) publishers -- http://www.teleread.com/paul-biba/class-action-suit-files-against-apple-and-publishers-for-price-fixing-under-the-agency-model/ -- involve the protection of the rights of corporations to rip off creative artists and performers.

This goes back to the early syndication of TV programs where the studios and/or networks reaped huge royalties over the reshowing of sitcoms and kids' shows but the actors and others never got another dime. (Peter Graves, of TV's "Mission: Impossible" was one of the lucky/smart ones: for years and years and years he received "residual" checks from his early days on the children's show "Fury." Most weren't so fortunate.)

It also involves the recording contracts that early rock n roll performers signed in the 1950s and 60s, so that the payments they received of a couple hundred dollars from producers and promoters ultimately deprived the artists of royalties. The case of Frankie Lymon was probably the best known, maybe because it continued long after his death and because it involved his numerous marital entanglements http://en.wikipedia.org/wiki/Frankie_Lymon but Lymon wasn't the only one. It's still going on with all the business of the Beatles' songs being "owned" by Michael Jackson, etc., etc., etc.

Obviously, the founding fathers who wrote the Constitution and enshrined some form of what we know now as Intellectual Property Law into it had no idea what the future would bring. But long before there were e-readers and WhisperNet, publishers were ripping off authors. One of the reasons Charles Dickens was so successful financially was that he published his own work -- Demeter!

In the early to mid 1960s, when I was old enough to have enough money to buy my own books other than through the school book club, the local paperback outlet where I lived was a little combination newsstand, bookstore, tobacco shop called Kindler's, in Arlington Heights, Illinois. Books had the price printed on the front and that was what you paid. Period. There were no discounts, becuase books were "fair traded," meaning all retailers sold them for the same price and couldn't undercut each other. Somewhere along the line, that practice was ruled illegal price fixing, and then you began to see discounts.

By the time I got into the writing business, in the 1980s, a few things had changed. Books could be discounted, but they could also be resold. There had always been used book stores, but with the explosion of mass market paperback publishing in the 70s and 80s, the "book exchange" model arose, where readers could trade in their already-read books for used copies of others.

There were authors who hated this, because they saw it as depriving them of royalties. Romance novelist Rebecca Brandewyne was one of the most outspoken against used bookstores and in favor of somehow charging both used bookstores AND libraries to get more royalties for authors. Of course, this was also costing the publishers money, too, in lost sales, but there wasn't much they could do about it. Used bookstores and libraries were ensconced in the American culture and the corporations would be seen as just too greedy. Yeah, back in the day.

So by the 1990s, when technology had made the PC and the compact disk everyday items, the publishers knew they had to make sure they didn't lose out when books went the way of the gramophone and everyone was reading electronically. I'm sure we're all familiar with the various difficulties the entertainment industry has put in the way of consumer copying/downloading of music, videos, TV shows, movies, etc. What most people don't know is that the scene had already been set to do the same with digitized books.

The publishers wrote their contracts -- believe me, authors don't write these things, and agents don't give a rat's ass -- to give themselves "all rights." They didn't exactly buy the copyrights; those are still in the authors' names, so technically the author still "owns" his or her book. But the contracts give the publishers sole and exclusive rights to make copies and distribute, and those rights go on as long as the contract remains in force.

Of course, the publishers have to pay royalties, per the contracts, but in some cases those royalty rates are obscenely low. One percent of the net proceeds isn't unheard of, and some publishers have so many subsidiaries and "overseas" offices that the "net proceeds" is determined after the publisher sells the contract to themselves fourteen times over, leaving the author to get 2 cents out of every $8 copy sold.

In some contracts, electronic rights aren't even mentioned, but in others, such as the thousands of contracts written by Harlequin Enterprises (or whatever name their home company goes by these days; maybe it's still Torstar), the publisher retains all rights in perpetuity. So for the past couple of months Harlequin has been reissuing digitized editions of old books, which have a HUGE market, and the authors are getting a pittance. Unfortunately, Harlequin has been doing shit like this for as long as I've known about their practices (which goes back to about 1984). They sell a lot of books, and give their authors a small portion to keep them happy. (See Paul Grescoe's "Merchants of Venus." Very nice man.)

Other publishers and contracts have different arrangements and terms, and in many cases, authors are able to essentially declare the contract no longer valid because the books are no longer in print. This is known as reversion of rights, and most publishing contracts contain a clause that enables the author to request that his or her rights be returned so they can either publish the book themselves or with another publisher.

Most of these reversion clauses contain very specific language -- the book has to be out of print X number of years, the author has to request reversion in writing, the publisher has X months to reply, the publisher can retain rights by doing Y or Q or N. Y or Q or N usually involves reprinting the book in a minimum number of copies. Since that involves substantial cash investment, if he publisher doesn't think they can sell enough of a new edition to recoup the investment, they don't reprint and thus allow the author to take his or her rights back and do with them what they will.

Today, as is the case with Harlequin's digital reprints(sic), authors can digitally republish their older books (called 'backlist&quot and make more than they ever did in print. A standard royalty rate in the 1980s was 4-8% of retail, depending on publisher. So when Marsha Canham's historical romance "Bound by the Heart," to site one example, was published by Avon in 1984, the cover price was $2.95 and maybe she was in a 6% royalty, so she got 18 cents per copy.

In 2011, Ms. Canham re-acquired her rights to "Bound by the Heart" from Avon (a division of one of the huge conglomerate corporations) and reissued her own digital edition http://www.amazon.com/Bound-By-The-Heart-ebook/dp/B0046H9IBA/ref=sr_1_1?ie=UTF8&qid=1325771486&sr=8-1
It sells on Amazon for $3.99 and she gets a 70% royalty, or roughly $2.80 per copy.

As more and more and more books are purchased in digital versions, publishers are going to lose their competitive edge. I mean, seriously, WHY WOULD ANYONE continue to go to print publishers for a 10% royalty that you have to wait years for (advances are WAY down from what they used to be, so don't even figure that in) when you can publish almost instantly for 70% royalties that show up in your bank account in 90 days?

To stave off that eventuality and to lock up the rights virtually in perpetuity, the publishers ganged up against the authors with this "Agency" pricing model, spurred on in part by the notoriously "proprietary" Apple. Who loses? Readers and authors.

The publishers will make some concessions to readers, but not many. That's where the money comes from. But as long as publishers can put out digital editions for the same price as "dead tree" editions, why not? They make a helluva lot more money off them than they do print. And whatever the older generations say about the comfort of holding a book in the hand, let me tell you that I'd much rather have my 5,000 dead tree books on an electronic device that taking up space in my house! (Well, not really. I like my books.) Generations who have grown up with electronic publishing and who don't have the space for 5,000 or even 500 books are going to prefer the convenience of digital.

DRM is easily removed, so ebooks can be "recycled." The publishers don't like it, but it's a fact of life. Readers dislike the proprietariness of differences between Nook and Kindle and Kobo and whatever other devices are out there. (Anyone remember Betamax and/or 8-track tapes?) The variety in hardware/software systems protects ONLY the publishers and distributors; it does nothing to enhance the reading experience for readers or the income of the authors.

Publishers have also gone to nefarious lengths to protect their contracts and their rights, and to keep authors from regaining theirs. THERE IS NOTHING ILLEGAL ABOUT WHAT THEY DO, but there is a lot that is unethical.

For instance, one author followed the terms of her contract to request in 2011 the reversion of her rights to a book that was last printed in 1996. In the process of requesting that reversion, she learned that the publisher had, without notifying her (they don't have to), printed approximately 28,000 copies of that book in 2004 and sold them for 50 cents each to a bulk purchaser. Even at 50 cents each, the publisher made a profit, so you know what that means -- IT COSTS LESS THAN 50 CENTS A COPY TO PRINT A PAPERBACK BOOK (if you already have the typesetting done, etc.). The copies were identified as "first editions" which they are not. Changing that information on the copyright page apparently would have eaten into the publisher's profits. Even so, with that 2004 edition the book had been OOP (out of print) long enough for the rights to revert.

However, rather than saying to the author, "Hey, this book didn't sell so well in 1996 and it doesn't look like anyone else is going to show any interest in it, here, you can have the rights back," they told her they were going to make the book "available" again in a trade paperback (that's the bigger size) edition.

Now, why would they do that? Why go to the expense of printing a bunch of larger edition paperbacks when the original mass market size didn't sell all that well? Doesn't make any sense, does it. Of course not. But the key word here is "available." And that's the wording from the contract -- in order to keep from having to revert those rights to the author, all the publisher has to do is make it "available" for sale. And that's what they did. For a few weeks, they made a print-in-demand edition "available" at $19, discounted at Amazon to $15. No investment by the publisher at all.

The obvious next question, of course, is why didn't they just throw up a digital version? Why not cash in on the really new technology?

Let me tell you something -- it costs virtually NOTHING to digitize a paperback. So why didn't the publisher do that?

Simple -- they didn't have the rights. Unfortunately, neither did the author. Because when the contract was written -- remember the book was published in 1996 so the contract was from 94 or 95, and I happen to know it was 1994 -- everyone knew electronic rights were on the horizon but no one knew what they'd be. So this particular contract gives the publisher the right to release a digital version, but no royalty rate is set, and they can't publish a digital version without negotiating with the author "in good faith." Now, understand that under the contract, they don't HAVE to publish an electronic edition, but they can if they want to, provided they negotiate that royalty rate.

And in order to hang onto that digital right, they have to make the book "available" and avoid reversion to the author. The author, however, has no right whatsoever to the digital edition of her work.

Is any of this making any sense? probably not, but my point is to show you how nefarious, how greedy, how evil publishers are.

In this case, the publisher is Simon & Schuster. They can't put out a digital edition, but they won't let the author put one out either, so instead they rigged up this so-called "trade paeprback edition" to hang onto their rights. And unless the author wants to foot the bill to take it to court, the matter ends there.

Publishers are corporations and their sole allegiance is to the stockholders and the bottom line. They are just another variety of vampire squid, jacking up the price of digital books because they can. They screw the readers and they screw the authors.

That's why I was so glad to see Greg Mitchell's "Atomic Cover-Up" out in an affordable digital edition that appears to be self-published. I'm pretty sure that he got a lot more of the money than some bloodsucking corporation.

Okay, that's enough for now. It's not a novel, but it's close.

My day job calls.



TG, who is not Marsha Canham