Class action: publishers paid writers "sale" royalties on ebooks whose fine-print says they're "licensed"

When you sign a publishing deal, the contract spells out different royalty rates for different kinds of commercial activity; you get so much every time a copy is sold, and significantly more from every licensing deal for the book.

When you buy an ebook, it, too, comes with a contract, a long, boring EULA, that inevitably says, "You have not bought this book" (because otherwise you'd have the right to sell it or give it away), and "You have merely licensed this book," meaning that you have to abide by the terms set out on the accompanying "license agreement."

In 2012, Eminem and Universal settled a lawsuit over this very issue, with Universal agreeing to pay Eminem the licensing rate on the digital music sales it made to customers who also got a "license agreement" with their purchase. It

Now, writer Sheldon Blau has filed a class action lawsuit against Simon and Shuster (who appear to have purged wording mentioning "licensing" from their fine-print after the Eminen/Universal settlement), saying that the publisher owes him, and other S&S writers, license-level royalties on all the ebooks they sold.

Simon and Shuster is trying to scuttle the suit at the outset by arguing that they assigned their rights to Blau's book to another party, and that his beef is with them. Nevertheless, you can expect more of this to come, and damned right, too: publishers put themselves in this bind by arguing that they got the best of the deal in both directions, with their customers and with their writers. They had to know it was bullshit when they did it, and it's time they were called on it. The best possible outcome from this? Publishers all drop the "licensing" language from our ebooks from now on, and writers get a big payday besides.

Statute of limitations runs out after six years, though: so lawyers, start your engines!

In its 2010 decision, the F.B.T court held that digital downloads should not be treated as auditable physical units for royalty accounting purposes. The Ninth Circuit ruling was important for the recording industry, because recording artists (like book authors) receive 50% of the record company’s net receipts from rights licensed to third parties -- as opposed to 12% to 20% of the retail price when a recording is "sold."

In the wake of the Eminem decision, most publishers amended their contracts, so the sale or license of an "eBook" is unambiguously treated as a sale. The lawsuit, therefore, challenges the publisher's interpretation of their legacy or backlist contracts.

Simon & Schuster Slapped with eBook Royalty Class Action Lawsuit [Llyod Jassin/Copylaw]

Summons [Supreme Court of New York]

(via Techdirt)

(Image: Fine Print, CJ Sorg, CC-BY-SA)

Notable Replies

  1. Is there a reason things can't be a very simple straight forward thing between person that wants to get the thing they wrote to a wider audiance and the publisher that wants content to sell to the public?

    Other than the obvious...

  2. It sounds like more recent eBook sales have found some language that allows them to treat them as sales while still not giving the buyer the rights they should have for a sale. That's unfortunate.

  3. I'm not a big fan of this. I'd have considered it unethical if the big guys used a technicality to try and extract more money from the little guys, and the ethics don't change simply because of who is victimizing whom.

    As just to forestall the obvious, we've seen far too clearly what the result is of using somebody else's unethical behaviour as an excuse for our own.

    No thanks.

  4. Only that we have always done things this way.

    Writers are working on resolving the issue. I don't know how successful we'll be or how soon you can expect "results."

    It's not a technicality that publishers are making all their money off writers but 99% of all writers can't make a living off what they're being paid.

    Writers' royalties on ebooks are a minuscule amount.

  5. I'm not a fan, in the sense that I'm not a fan of the shift to "licensed, not sold" as a circumvention of first sale and a host of other unpleasant things; but I am very much a fan of this in the "All they that take the sword shall perish by the sword" sense.

    The playing with 'intellectual property' in order to create 'sale-like' conditions that provide the buyer with few or none of the actual advantages of a sale is deeply obnoxious; and if the publishers doing so are also screwing over the writers, they are egregiously trying to have it both ways: whenever it's more profitable for it to be a 'sale', it's a sale, whenever they have more leverage because its only a 'license', well, it's a license. That is unacceptable.

    If they want to 'license' it, and the contract stipulates different payments for 'licences' than for 'sales', they should shut up and pay.(or just sell, which would be an improvement).

    Vendor fuckery.

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