 also be a listing of specific secondary rights and how the splits will be measured. In any case, for those kinds of rights, money is aggregated rather than measured on a per-copy basis. The publisher collects a lump sum for disposition of the secondary right -- $X for book club rights, to be split equally between author and publisher regardless of how many copies the book club sells. See the difference in the language? On all net proceeds, not On all net copies sold.
Which brings us to the netflix model. As you may know, netflix charged a monthly fee in the $10-20 range, depending on your subscription plan, and for that amount you may rent a certain number of movies each month. Can this be applied to books? Possibly, but it could be a wicked headache come royalty time. Let's start by asking into which general category such rentals would fall.
Option 1: We would have to treat it as a primary right and apportion some amount of each month's fee to each month's rentals.
This is what gave me math hives. Let's say Randy Reader pays $12 a month and rented 6 books by 5 authors published by 4 different houses. Theoretically, some portion of that $12 would then be split among the 6 books by 5 authors at 4 houses (with everyone in the supply chain taking a cut, too). And what do we do if he keeps the book through more than one rental period? And what do we do in the months where he rents 30 books for the same $12 -- how does that affect the bottom line numbers when we're calculating royalites? How can we ever hope to have an accurate accounting with such a system? You see? Hives and headaches all around. It's do-able, certainly not impossible, but ::shudder:: (I will let you do your own math to try to calculate how much an author might receive per rental come royalty day. Don't forget to withhold portions for everyone in the supply chain.)
Option 2: Treat it as a subright and do a lump payment.
The more sensible option, perhaps, would be to treat this like a book club. Charge the rental-retailer a lump fee for the right to rent the title over a set period, and then split the money received in half. Calculating the lump sums would be its own ring of hell, but it would be far better than the alternative. Of course, this presumes that the contract will allow for this kind of rights transfer. Maybe it will and maybe it won't. (If you think that's not an issue, consider all the wrangling over e-rights on backlist now in progress.)
So there you have it, everything I wanted to tweet yesterday but couldn't cram into 140-character bites. Thank you, Devon, for the great question.
Theresa
Wednesday, August 11, 2010
Contemplating New Models
18 comments:
You know, I don't think netflix gets to just go buy any old copy of the dvd off the shelf and start renting it out to people. Do you know how their bookkeeping works? Not saying that it would work for books, just that I don't know how it works for movies.
This may not be quite the same thing, but the question reminded me of the "Book rental fail" from FailBlog a couple years ago:
(On that note, my library does offer ebooks.)
@ClothDragon It probably doesn't matter how netflix handles the accounting because performance art contracts are set up differently. Yes, they have back-end clauses, but the basic structure is different enough that it might not make a good basis for comparison.
Great post, and thank you for following up on my Twitter question!
I'm still muddling around if the Netflix model can work. Without knowing what Netflix's payment model is, we really can't compare to begin with, I suppose.
And I think there are other factors too. Netflix offers some movies for free streaming.I think that selection varies, for X amount of months, Y movies are free to download. Then those go back to only being available in "hard copy".
Limiting how many books per price could be downloaded each month might help with the pricing structure, though I understand how the monthly fee would have to make sense for all portions of distribution (including being affordable for the readers) and I'm not sure that it's possible, though I'm not sure it's impossible either.
Great food for thought!
Thank you again!
Devon
@Devon, yes, but we're still constrained by the contracts we have in place already. Some contracts might cover this model, and some might not.
T
I agree that it should be a separate right granted in the contract. As you pointed out, copyright is broken down into many little bits.
I am not convinced it should be the the exclusive manner in which to "sell" ebooks (rent really, since they'd have to be removed from the reader before new books could be reloaded--just like Netflix mail-order option, not like the free streaming option) but it is an interesting model.
Thanks for the discussion!
Considering that Netflix just paid one billion dollars for the digital rights of more films, I consider the topic to be an interesting concept. Right now we have Overdrive, which is, IMO, an incredibly complicated service to use. Plus, with the rise in text-book rentals (both print and e-book), who is to say that an e-book rental/streaming service along the lines of Netflix isn't a possibility? If Hollywood is quickly hammering out new terms in this technological age--terms driven by consumer desires--why wouldn't publishers jump on this?
Okay, after eating the two cookies I earned for reading this whole post, I might be able to think coherently.
I'm of two minds on the matter.
A) Yes, the netflix model might work along the lines of the book club-type rights (but as T pointed out, current contracts might not allow for such a thing).
B) But I also wonder if the market needs something like this in the face of paperbackswap.com. In many ways, PaperbackSwap is very similar to the netflix model, but is completely decentralized (therefore outside the realm of publisher's contracts).
Wouldn't that work in the same way as UK libraries lending out limited-time ebooks and them paying the author whatever percentage has been agreed for ebooks vs print books?
Are people actually paying for what they can get for free at their local library? Curious.
I can buy books at retail, and start a rental business or a lending library. I don't have to pay anything more to retailers, distributors, wholesalers, publishers, agents, or authors. All that accounting is already done when the retailer sells the book to me. None of the contracts involved me.
There's a legal term called the "doctrine of first sale" that says once you sell me something, you no longer have a say in what I can do with it. I can give it away, loan it, rent it out, burn it, or resell it. The only things I can't do is distribute additional copies of it or perform it publicly, because those rights are retained under copyright law.
Now, you'll notice with some goods, like software, there's a clickwrap/shrinkwrap agreement that spells out what you can and cannot do with the copy. How does this work given the doctrine of first sale? Well, technically, you're not buying a copy of the software, you're entering a contract with the publisher who's licensing some rights to you the consumer. The whole thing is pretty shaky on legal terms. For example, you shouldn't have to pay sales tax on software if you're just licensing it rather than buying it.
With electronic media (movies, software, and probably ebooks), things are murky. Are you buying a copy or entering into a licensing agreement? Did the publisher apply digital restrictions management (DRM) or other technological protection measures (TPM)? If so, then other legal nonsense kicks in, and they could probably prevent somebody from renting out copies without a special licensing agreement. That agreement would specify the accounting rules.
In the old days of VHS, videos were priced very high--to the point that only video rental places could reasonably afford a copy. This was called "pricing for rental". Later, they realized there was a consumer market as well, as they started to use "priced to own" schemes. Video rental places benefited from this, since they could buy the same cheap copy as the rest of us and legally rent it out many times.
@Adrian -- Yes, I agree, except that library trade is often handled differently. Sometimes the books are even manufactured differently.
T
@Sarah - Yes, because not everything is available at the library. That's changing and will continue to change as libraries do more electronic lending.
Libraries are forming pools to purchase rights to certain digital titles. They're distributed differently than other e-books and other print books.
See, this is why I had to subtitle the post "Woefully Oversimplified." The distribution reality is a general 2-part scheme with countless exceptions.
T
@Jami - Do authors get paid anything for books that go through paperback swap? I have no beef with secondary markets or lending libraries, but we still want authors to earn decent incomes.
T
@Stevie-Carroll - Yes, similar, but the author isn't paid per download in most library lending. I haven't personally worked UK library distribution, though, so I can't get more specific than that. But the library distribution I've worked on in north America