Transcript: Digital Backlist Rights Fight

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An interview with Skott Klebe

For podcast release Monday, May 27, 2013

KENNEALLY: 2013 is a milestone year for copyright. On January 1, US copyright law began to allow authors or their families to terminate valid contracts signed after January 1, 1978, once 35 years have elapsed. The revolution in digital publishing that has begun to tip the balance of power from publishers to authors will likely get a boost when the so-called termination rights are executed.

Welcome to Copyright Clearance Center’s podcast series. I’m Christopher Kenneally, your host for Beyond the Book, and joining me in Copyright Clearance Center’s offices near Boston is my colleague Skott Klebe, who travels later this week to New York for BookExpo America, where he’ll join a panel, Taking Your Backlist Digital: Who Controls The Rights? Skott, welcome back to Beyond the Book.

KLEBE: Happy to be here, Chris.

KENNEALLY: It’s good to see you. We look forward to this. We do this almost every year now. You’ve been a regular visitor to BEA, talking on a variety of subjects related to copyright, authors, and publishing. We’ll tell people that you are the product evangelist here at CCC, and have worked in copyright and licensing technology for more than 15 years, leading development of some of the largest licensing systems in the world, so you know your copyright.

I guess the thing to do is to start with some definitions here. It’s fascinating timing for this new twist in copyright law. Let’s separate for people termination rights, which is what we’re talking about, and how they differ from reversion of rights.

KLEBE: Thanks, Chris. Sure. The termination rights feature is an interesting feature unique to copyright. The actual Copyright Act of ’76 provided a termination right that would allow authors and their surviving family members to terminate transfers of copyright signed with publishers, music publishers, however constituted, on a date starting 35 years after the date of publication, for work signed after January 1, 1978.

If you do a little math, you’ll see that we are now in that 35th year. Some of my copyright lawyer colleagues have told me that they’ve heard from publishers who have already started to receive termination notices on some works.

KENNEALLY: Well, we’ve seen some coverage in the media about some very famous musical recordings. I believe the Village People, for example, are involved.

KLEBE: Right. In music, it becomes very complicated, because every single creator of a work has a termination interest in the work as a whole. Those collaborations require the adding up of all the partial termination rights to see whether any party has the greater than 50% interest in terminating.

KENNEALLY: Thankfully for us, we’re stuck with books, where it’s really just limited usually to two parties, the author and the publisher.

KLEBE: Right. This termination right was created to remedy what Congress saw as one of the problems in the 1909 act, where they created a copyright renewal privilege that was intended to allow authors to, say, renew it under their own name instead of under the publisher, if they’d made a deal that was less valuable for them than the work merited.

But over time, and in the aftermath of a Supreme Court decision over an author named Fred Fisher, that right became something that was typically signed away to the publisher at the outset. So the publisher would simply renew the copyright on the author’s behalf, retaining ownership.

Termination right is something else. In the law, it can’t be transferred to anyone. In fact, it outlines how the termination right is passed explicitly from the author to a surviving spouse, and to the children in equal measure, in a way that’s unusual. It contravenes contracts. One of my patent lawyer friends exclaimed aloud when I pointed this out. He says, what about contracts? Because he was so amazed that copyright law had this provision.

In some of the cases that have come to light to date, the relationships have been pretty complicated, even though it’s the creator and the rights-holder. In the case of the Steinbeck estate, which was a high-profile termination rights case, the parties involved were the second wife, who was also the literary heir, surviving children of an earlier spouse, and his grandchild through one of his sons. We all know families are complicated, and those family relationships and interfamily negotiations kick in to these termination rights questions.

KENNEALLY: We know families are complicated. We also know copyright is complicated. I always tell people, if you’re confused, you’re beginning to understand the problem. That seems to be true with this particular matter of termination rights. As I said at the outset, we should separate for people what termination rights are from this clause that’s typical in an author’s contract called reversion of rights.

KLEBE: Absolutely. I’ve talked to people who are mistaking one for the other. It’s been customary for quite a long time for author contracts to include a provision called reversion of rights. Prior to digital, and prior to print on demand, it was typical for an author to have a privilege of reverting their rights, to recapture the rights, when a book went out of print.

Now, out of print was a special status. The publisher would put an out-of-print notice in Publishers Weekly saying that they would no longer take orders for it, and that was when a recapture phase or reversion phase would begin. Now, of course, with print on demand, it’s no longer economically necessary to make a book unavailable when order volumes go below the point where you’d kick off a print run and stack boxes in warehouses. Digital means there’s no longer a marginal cost of producing an additional copy at all.

KENNEALLY: There are no more warehouses, there are no more boxes, right?

KLEBE: Or all the warehouses are owned by Amazon and their peers. In author contracts that I have seen, there will be a reversion clause, but it’ll talk about units sold or annual revenue, or some other kind of metric that talks about when the author has a right – they serve notice of reversion and thus recapture those rights or kick off renegotiation. But that’s a feature of the contract, not of the law. The termination clause in the copyright statute overrides all of the copyright assignment features of the contract.

KENNEALLY: But what interests us here, and I think is going to interest the audience at BEA, is that balance of power and that shift that’s underway from publisher to author. It’s part of a much bigger picture. We should tell people that you’ll be joined in a panel that will be moderated by our colleague, Michael Healy, also a frequent visitor to the Beyond the Book studios. He’s the executive director at CCC of author and publisher relations.

Your co-panelists include Devereux Chatillon, who is an attorney based in New York, and very familiar with contract law with publishing and authors. Jan Constantine, likewise very familiar with these matters – she’s the general counsel of the Authors Guild. And finally, Jennifer Weltz, who’s a vice president at the Naggar Literary Agency.

You’re all going to be talking about this from a variety of perspectives, and I wonder if you could address that matter about this balance of power point. The timing here is fascinating, because of course in 1976 when they wrote the copyright law that we’re talking about, they were concerned about photocopiers. They couldn’t have imagined either Amazon or the immediate publishing that’s available to everybody on the World Wide Web. All of that has begun to change this author-publisher relationship, and now termination rights kick in. It must be a challenge for everyone.

KLEBE: What’s going to be interesting is keeping track of all these matters that happened so long ago. Because we talk about how hard it is to digitize old books – what about digitizing old contracts? One of the issues in knowing who owns what rights in older works is contracts lying in file folders and boxes.

KENNEALLY: I was going to suggest, Skott, wouldn’t it be funny if Google offered to digitize those contracts? I’m not sure anybody would let them, though. (laughter)

KLEBE: It would be an interesting discussion, to say the least. So contracts are not – they start from a place where they’re quite similar, and negotiations between the author, the author’s agent, and the publisher can induce changes. Not all contracts are identical.

One important clause for the digital backlist, and something that we’re talking about with this balance of power all the time, is what sort of future-proofing old contracts might have contained. Some contracts just say that the exclusive right to publish in book form is what’s granted to the publisher.

KENNEALLY: Then they can argue about what book form means.

KLEBE: Right. But other contracts can say that it’s to publish in book form or in any other form existing or to be created in the future.

KENNEALLY: In this or any other universe.

KLEBE: I’ve seen things that are almost that far-reaching. Certainly, to be created in the future is potentially generation-spanning, as is the term of copyright, of course. There were two cases, one that landed without a clear answer, and one that’s still ongoing, that highlight the differences in contract terms.

The case of Rosetta v. Random House was one where a very forward-thinking e-book publisher sought to publish e-book-only versions of older titles, older successful titles, where there was no clause but the book form clause present, arguing that prior to 1981 or so, nobody could have imagined that book form included publishing on my slick little iPad or a Kindle that I might have next to me.

KENNEALLY: You mentioned a forward-thinking publisher. Rosetta, that case occurred in 2000 or 2001, I believe. We’re talking about long before iPads and Kindles.

KLEBE: Absolutely. This is looking to publish books to people who were interested in reading on their PCs. Not everybody even had a laptop in 2000, either. Random House saw that as an infringement of its exclusive right to publish in book form and sought some preliminary injunctions to shut down the service, but those were denied. It went into negotiation and some sort of settlement was reached. So no court has ruled on these old terms that say to publish in book form, and whether that means any sort of logical or imaginable book form – words on something simulating a page.

Then the more recent case is Julie and the Wolves, Open Road Media’s publishing of a digital edition to that famous children’s title. Now, a difference there is that that contract appears to have something that speaks toward future forms where books are not paper bound between slabs of cardboard.

KENNEALLY: Remind us where that stands today.

KLEBE: It is continuing to move forward through the legal system.

KENNEALLY: They’re both battling it out tooth and nail. HarperCollins, I believe, is the publisher involved, and Open Road Media, which is, interestingly, Jane Friedman’s startup company, and she was once CEO at HarperCollins.

KLEBE: Very interesting. I think we’re all waiting with bated breath to see. Those of us who are interested in the copyright law want to know what the answers are. And those of us who are readers want to know how those books are going to get into digital form.

KENNEALLY: We are talking right now with Skott Klebe, the product evangelist, we call him, at Copyright Clearance Center, who’ll be on a panel at BookExpo on Thursday, May 30, in the afternoon, 2:30, Taking Your Backlist Digital: Who Controls The Rights? Given the panelists that will be joining you – we’ve got an IP attorney who comes from book publishing, Jan Constantine, the GC at Authors Guild, and a literary agent, Jennifer Weltz – they’ll all be bringing their own perspectives, their own special interests to the discussion.

This is, though, an experiment where nobody knows the outcome, and it’s going to have an impact on all of the players in publishing, the authors as well as the publishers. The title implies the economic interest here about that backlist. Talk a little bit more about that.

KLEBE: What is the backlist? Publishers talk about the backlist – it’s the long list of titles that they have that aren’t the latest thing out there, the books that they’re publishing, that you see on the bestseller list, or they hope will appear on the bestseller list. The books that have been published over the decades that people either are still very interested, or in the vast majority of cases, are not that interested.

As a person myself who prefers to read in digital form, I’m always disappointed when I can’t find a book that I can put weightlessly into my library and not have to buy another shelf someday to put on. So how do all those books that were published before the Kindle was even a gleam in Jeff Bezos’s eye – how do those get on there?

It’s not a free process that turns a book from paper into pixels. For older titles in particular, there may not be a digital master, where it was keyed into a form that’s easily flowed onto the Kindle. You might have to re-typeset. You might have to re-edit. The automated processes of scanning and optical character recognition produce errors that don’t produce a good product in the end.

Those costs to produce a nice digital edition like we’re accustomed to reading – those don’t just go away by wishing them. Publishers can’t necessarily afford to turn every title that’s ever been published into a digital edition. Things could languish in the backlist – out of print, out of digital availability – because nobody can afford to bring them to market. So I see this termination rights facility as something that maybe the author is somebody who’s going to be motivated to pull those rights back and be more motivated to bring the digital edition to market.

KENNEALLY: It’s fascinating, Skott, because everyone does have a stake in this future, but nobody really knows how to get there. We’ve got authors who, as you say, would like to see their older works reappear, and maybe, therefore, seeking these termination rights, or otherwise even going to reversion of rights. We’ve got publishers who might not be able, at this particularly difficult moment in their business, to afford to do any kind of mass digitization. You’ve got agents who are beginning to act as publishers for many of their authors. But everyone seems a bit frozen in all of this.

KLEBE: There can be a lot of movement that you don’t notice until it comes above the level of the tall grass. I’m sure that we’ll see companies looking to get into this and make it easier for authors to serve termination – to aggregate and market those wares together. I’m sure that we will see higher-profile authors looking to lend their weight to schemes.

Do I know of anything? No, but nobody knew about the Kindle until it was released, but they were obviously working on it for years. The iPad seems an inevitability now, but a month before it was launched, nobody was certain it was going to be there.

Perhaps one of the most interesting features of termination is the conversations that it engenders. Sometimes notice of termination serves as a notice of renegotiation. A publisher will realize that an old property is worth hanging onto after all, and that’s a situation that can be a win for everybody.

KENNEALLY: Well, as you say, Skott, it’s a fascinating topic, and one that does spark conversations – lively ones, such as ours right now. We’ve been talking with Skott Klebe, who is Copyright Clearance Center’s product evangelist, and he’ll be part of a panel at BookExpo America this Thursday, May 30 – Taking Your Backlist Digital: Who Controls The Rights? Starts at 2:30.

Joining him will be Devereux Chatillon, who is a transactional IP attorney, and previously general counsel, I believe, with Scholastic. Jan Constantine, general counsel for the Authors Guild. And Jennifer Weltz, vice president of the Jean Nagger Literary Agency. The panel will be moderated, ably I’m sure, by my colleague Michael Healy, who is executive director of author and publisher relations for Copyright Clearance Center.

We’ll provide a link and information about this session, which I expect will really draw a good crowd, because there are so many people who this really concerns. Again, the authors, the agents, and the publishers alike. So Skott, thanks so much for teeing it up. It’s great to have you back.

KLEBE: Happy to be here, Chris, as always.

KENNEALLY: Beyond the Book is produced by Copyright Clearance Center, a global rights broker for the world’s most sought-after materials, including millions of books and e-books, journals, newspapers, magazines, and blogs, as well as now images, movies, and television shows. You can follow Beyond the Book on Twitter, find us on Facebook, and subscribe to the free podcast series on iTunes, or at the Copyright Clearance Center website, copyright.com. Just click on Beyond the Book.

Our engineer is Jeremy Brieske of Burst Marketing. My name is Christopher Kenneally. For all of us at Copyright Clearance Center, thanks for listening to Beyond the Book.