Publishing and Electronic Rights - Part II

© John J. Tormey III, Esq. All Rights Reserved.

This article is not intended to, and does not constitute, legal advice with respect to your particular situation and fact pattern. Do secure counsel promptly, if you see any legal issue looming on the horizon which may affect your career or your rights. What applies in one context, may not apply to the next one. Make sure that you seek individualized legal advice as to any important matter pertaining to your career or your rights generally.

Part I of this article discussed how phrases like "digital rights" should not be assumed to be self-defining phrases, and how it is incumbent upon authors to reserve needed rights to themselves in the context of a publishing deal. Next up, this Part II examines these concepts from the standpoint of fairness - who between author and publisher should in fact hold on to these rights, once they are properly defined?

3. Yes, Electronic Uses Do Compete With Traditional Publishing Uses.

Now for a few words in defense of publishers, I suppose. There is a perception that publishers should not be taking broad grants of electronic rights from authors, since "electronic rights do not compete or interfere with traditional book publishing and other media rights".

Not true. Not anymore. For proof of that fact, ask a few news desk editors whether or not they followed, or were otherwise concerned about, what appeared on the Drudge Report during the Clinton administration.

Electronic media has already changed history. I guarantee that it will have some effect, at a minimum, on most author's individual publishing deals henceforth. The fact is, electronic uses already do compete with older, more traditional uses - particularly because electronic uses are cheaper and faster to deploy, and can potentially reach millions of users in less than the blink of an eye.

Commerce is increasingly relying upon the Internet and other electronic phenomena. After all, you are reading this article, and gleaning some information from it. The Web, for example, has already put a sizable dent in dictionary and encyclopedia sales, and anyone who tells you otherwise is probably an employee in a dictionary or encyclopedia publishing company trying to protect his/her stock options. As the recent and well-known Stephen King pilot program will attest, fiction is the next subject matter area to be affected. Many of us book lovers don't like to think about it, but bound hard-copy books may soon become the sole province of book collectors alone. Book readers, however, may soon even lose the patience to wait for their "" mailed shipment.

Very few people who work in the publishing, media and entertainment industries will dispute that electronic uses can easily cannibalize the older and more traditional forms. This cannibalization will only increase, not decrease, as time goes on. Again, the author should put himself/herself in the mind-set of the publisher, when having this argument with the publisher. The publisher otherwise may want to invest marketing and personnel support in the author's work, and perhaps even pay the author an advance for the writing. In their view, though, why should they do so, and not also capture the author's electronic rights? The last thing that the publisher wants is to pay the author - and then discover that the author has "scooped" the publication, stolen the publisher's proverbial fire, and undermined the publisher's investment in the author and the writing. The publisher's concern is rational and valid. If the publisher allows the author to potentially undercut the book by exploiting author's reserved electronic rights, then the publisher is threatening the publisher's own investment in the author and in the written work.

Compromises are available. One traditional compromise is a so-called "hold-back" on electronic rights, whereby the author promises not to use or license out author-reserved electronic rights for a certain period of time following publication. The author will need some leverage to get a publisher to agree to such a compromise, though. And a lawyer should draft the clause - the author's lawyer, not the publisher's lawyer!

An author may think that small portfolio uses (e.g., tucked inside greeting cards, on an author's personal web site, etc.) are so minor, that they will never compete with publishing rights granted for the same work. The greeting card example does seem innocuous enough, but the publisher will likely not agree with the author regarding the author's personal web site.

The distinction to be made here is between hard-copy portfolio uses, and digital "portfolio uses". The fact is that computer-uploaded text is so easy and quick to transmit, receive and read. Its popularity could also spread like digital wildfire, so quickly - for example, if a company hyper-links to the author's site, or if "Yahoo" bumps the author's site up in their search engine pecking order. Many successes have already been made, by virtue of electronic self-publishing, and more will follow. Traditional (book) publishers already realize this fact. Accordingly, traditional publishers also realize that once they acknowledge an author's reservation of "self-promotion" electronic rights, they risk losing control of a potential wildfire dissemination method. This would put the publisher's investment at risk - but smart business people and companies don't put their own investments at risk.

4. The Party To The Contract That Has The Better And More Immediate Means and Resources To Exploit The Electronic Rights, Should Be The One Who Takes The Electronic Rights.

Here is the final point. If a contracting party has no means and resources to exploit a given bundle of electronic rights, then that same party has no business taking (or reserving to themselves) those same rights by contract. To analogize, if I am a screenwriter who options or sells my script to the Acme Production Company, how should I react if Acme asks me to specifically and contractually grant them "theme park rights" in my literary property? (Don't laugh - this practice is now very prevalent in film and entertainment deals).

Well, if Acme doesn't have its own theme park, I now have a powerful argument for reserving the theme park rights to myself instead. "Hey, Acme", I say, "... how do you have the unmitigated gall to ask me for my theme park rights, when you don't even have the ability to exploit or use them yourself? You don't even have a theme park!" I then make it clear to Acme that I don't intend to be giving them any trophies that they can put on a shelf to collect proverbial dust.

The same argument can work in the publishing context. The author can cross-examine the publisher as to what successful past uses they have made of author's electronic rights. If the answer is "none", then the author can use the "trophy" argument above. If the answer is, alternatively, "some", then the author has a negotiating opportunity to compel the publisher to contractually commit to electronically publish the author's work, too. The author can argue: "I won't grant you electronic rights unless you contractually commit in advance as to how specifically you will exploit them, and how much money you will spend in their development". The author can then carve those commitments right into the contract, if the author has the leverage to do so. Again, one should not try this at home - but instead use a lawyer.

Needless to say, once the author makes the publisher commit to a development budget or other marketing or "release" commitment for the electronic rights, then both the author and the publisher might thereby also have some basis for numerical valuation of the rights themselves. And, it is an entirely reasonable argument for an author to say to a publisher that: "I will license/sell you the following listed electronic rights if you pay me the following additional amounts for them:_____________________. And in the blank space, the rights can be listed as they have been broken out in Item #1 above, each to which separate dollar values are now assigned.

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My law practice includes the field of entertainment. If you have questions about legal issues which affect your career, and require representation, please contact me:

John J. Tormey III, PLLC
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