In our recent report on HarperCollins lawsuit against e-book publisher Open Road Media (See Can Open Road Beat the Harper Lawsuit Rap?) we wrote: “Our own guess is that this case will never go the distance and will instead be settled.”

Shows how wrong one can be, and it proves once again that when great principles are involved, litigants will fight harder than they will over mere money.

Today Publishers Weekly reports that Open Road has decided to lawyer up. The e-book publisher recently launched by former Harper CEO Jane Friedman, accused by Harper of infringing on the latter’s rights, has retained the team of attorneys that represented the Authors Guild in its class action case against Google.  Open Road Chief Operating Officer Chris Davis said “It appears to us that HarperCollins is trying to intimidate authors, overturn established law and grab rights that were not in existence when the contracts were signed many years ago. We are confident that we will successfully defend authors’ rights and we look forward to filing our response in court.”

Considering that copyright authority Lloyd J. Jassin calls it “The Court Battle that Could Determine the Fate of the Book Industry,” authors and publishers may get their wish to see contradictions and ambiguities in book contracts, respecting digital rights, resolved once and for all.

But at what fearful price? The cost of litigating the issues to the max, including appeals that could rise as high as the Supreme Court, will be millions. Both parties have deep pockets. The whole world will be watching.

For Jassin’s superb analysis of the issues and potential legal strategies, read Who Controls eBook Rights?

Richard Curtis

Copyright authority Lloyd J. Jassin calls it “The Court Battle that Could Determine the Fate of the Book Industry”, and that’s no exaggeration. The principles are of the very highest order, and every author, publisher and agent has a major stake in the outcome.

We are referring to HarperCollins’s infringement lawsuit against Open Road Media about which we reported the other day. Open Road, the independent e-book publisher started by former Harper CEO Jane Friedman, issued an e-book edition of Julie of the Wolves, a children’s book classic that is still in print with HarperCollins.

In his masterful analysis, posted on his “Copylaw” blog, Jassin cites a number of key arguments in Harper’s brief. Principal among them:

1. Does the “exclusive right to publish in book form” – the phrase in Harper’s original contract – cover digital formats undreamed of when that contract was originally framed?

2. Similarly, does contractual language like “computer storage and retrieval,” “future technologies” and “now known or hereinafter” apply to a medium three decades over the horizon?

3.Does Open Road’s e-book violate the noncompetition language of HarperCollins’s contract?

Significantly, Jassin doesn’t see a knockout punch for either contender. The publishing establishment could either score “an unfair competition protection windfall, or meet their digital Waterloo.”

One huge factor he doesn’t mention is the expense of staging this legal battle. If litigated to the max, including appeals that could take the issue to the highest court in the land, the costs could run into the millions of dollars. In an earlier lawsuit brought by Random House against another indie e-book publisher, RosettaBooks, the parties settled after Rosetta won early rounds in the court system and the price tag for both parties started to get prohibitive. If Open Road decides to fight it out, it will look at the arguments presented by Rosetta. But it will also look at the expense.

One other interesting note is that Harper has elected not to sue the author.  As she signed the Harper contract she is the logical party to go after for the infringement.  But suing authors is bad public relations. What about Open Road? They too have a contract with the author, one that relies on the author’s warranties.  Open Road has the option to claim that the author breached those warranties and licensed rights she didn’t clearly own.  But that doesn’t look so hot either. So, looking to the author for satisfaction is simply not an option for either Harper or Open Road.

Our own guess is that this case will never go the distance and will instead be settled.  Though that’s the prudent thing to do, it will just leave the issues hanging for another day.  Too bad. We’d all like to know where we stand. Thousands of contracts containing language as ambiguous as the old Julie contract hang in the balance.

Read Lloyd J. Jassin’s The Court Battle that Could Determine the Fate of the Book Industry:A Review & Analysis

Richard Curtis

Though the friction between book publishers and libraries over the issue of loaned e-books has been simmering for years, it recently burst into bright flame when HarperCollins announced a policy that after 26 loans a library’s lending rights vaporized. (See Harper Redefines Forever).

Harper’s action became a metaphor for the threat of disintermediation that libraries face from the relentless onslaught of digital technology. Though Harper’s rationale for the policy – how can a publisher make a living selling one book for unlimited use? -may make good business sense, the public’s response was visceral and nasty.

Though a petition against Harper might seem to be marginally more effective than spitting into the wind, some 53,000 sympathizers have signed one, reports GalleyCat’s Jason Boog. The full title of the document initiated by a librarian named Andy Woodworth is “Tell HarperCollins: Limited Checkouts on eBooks is Wrong for Libraries.” You can visit the boycott website here and decide if you agree with the petition that “If left in place, this policy would threaten public access to eBooks by making them disappear from the virtual shelf.”

Before you sign that petition, you might try putting yourself in Harper’s place. Reread their open letter to librarians and try coming up with a solution, one that balances the interests of a business and those of the public. Not so easy, is it?

Richard Curtis

Open Letter to Librarians

Over the last few days we at HarperCollins have been listening to the discussion about changes to our e-book policy. HarperCollins is committed to libraries and recognizes that they are a crucial part of our local communities. We count on librarians reading our books and spreading the word about our authors’ good works. Our goal is to continue to sell e-books to libraries, while balancing the challenges and opportunities that the growth of e-books presents to all who are actively engaged in buying, selling, lending, promoting, writing and publishing books.

We are striving to find the best model for all parties. Guiding our decisions is our goal to make sure that all of our sales channels, in both print and digital formats, remain viable, not just today but in the future. Ensuring broad distribution through booksellers and libraries provides the greatest choice for readers and the greatest opportunity for authors’ books to be discovered.

Our prior e-book policy for libraries dates back almost 10 years to a time when the number of e-readers was too small to measure. It is projected that the installed base of e-reading devices domestically will reach nearly 40 million this year. We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book eco-system, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors. We are looking to balance the mission and needs of libraries and their patrons with those of authors and booksellers, so that the library channel can thrive alongside the growing e-book retail channel.

We spent many months examining the issues before making this change. We talked to agents and distributors, had discussions with librarians, and participated in the Library Journal e-book Summit and other conferences. Twenty-six circulations can provide a year of availability for titles with the highest demand, and much longer for other titles and core backlist. If a library decides to repurchase an e-book later in the book’s life, the price will be significantly lower as it will be pegged to a paperback price point. Our hope is to make the cost per circulation for e-books less than that of the corresponding physical book. In fact, the digital list price is generally 20% lower than the print version, and sold to distributors at a discount.

We invite libraries and library distributors to partner with us as we move forward with these new policies. We look forward to ongoing discussions about changes in this space and will continue to look to collaborate on mutually beneficial opportunities.

After reading our post about the morals clause in the HarperCollins contract, author Ursula K. Le Guin felt compelled to confess a secret sin in an open letter to Rupert Murdoch, whose News Corp owns the publisher. It begins…

Dear Mr Rupert Murdoch,

Forgive me, for I have sinned.

Because I did not read my contract with your wonderful publishing house HarperCollins carefully, I did not realise my moral obligations.

There is nothing for it now but to confess everything. Before I wrote my book Emily Brontë and the Vampires of Lustbaden, which you published this fall and which has been on the Times Best Seller List for five straight months, I committed bad behavior and said bad words in public that brought me into serious contempt in my home town of Blitzen, Oregon.

And Ends…

And here in Maine I am paying strict regard to public conventions and morals just like you do. I would not go to a Democrat Convention if they paid me and crime is the farthest thing from my mind. I would feel so terrible if I damaged the reputation or sales of my Work, or your reputation. You are my Role Model.

Please believe me your loyal and obedient author,

Trespassers W.

To read details of Le Guin’s fall from grace click here

RC

HarperCollins authors – have you read your Ten Commandments lately? How about the Seven Deadly Sins? You’d better bone up on them. It seems there’s a morals clause in your publisher’s contract. Not moral rights, mind you (for a discussion of Droit Moral click here). We mean morals. Your morals.

New language in the termination provision of the Harper’s boilerplate gives them the right to cancel a contract if “Author’s conduct evidences a lack of due regard for public conventions and morals, or if Author commits a crime or any other act that will tend to bring Author into serious contempt, and such behavior would materially damage the Work’s reputation or sales.” The consequences? Harper can terminate your book deal. Not only that, you’ll have to repay your advance. Harper may also avail itself of “other legal remedies” against you.

We learned about Harper’s morals clause in an article by Brooklyn attorney F. Robert Stein published in the November 2010 issue of the Novelists Ink Bulletin and brought to our attention by author and editor Steve Carper. (The complete text of the provision can be found at the end of this posting.)

Does this mean that if you covet your neighbor’s wife, Harper could cancel your contract? Probably not, though you should try to modify the clause to prevent arbitrary application of the provision.

Where the morals clause is more likely to come into play is when your sin damages Harper’s ability to sell your book. Stein puts it this way: “I strongly suspect that HarperCollins could care less about their authors’ morals…unless and until a moral indiscretion threatens to reduce the value of the author’s book. Imagine if former New York Governor Eliot Spitzer had, during his term in office, contracted with HarperCollins to write a book entitled I Choose to Be Purer Than Caesar’s Wife.  Once Spitzer’s dalliances with multiple prostitutes became public, the potential audience for that book would likely have dropped precipitously, and HarperCollins’ ability to recoup its advance would have been seriously compromised.”

We are not aware of any other major publisher with a morals clause, and though we can appreciate why Harper might want to protect itself against scandals that damage book sales, it’s an extremely mischievous innovation and we urge Harper to reconsider it.

Besides, it could backfire. For who is to say that scandalous behavior cannot actually increase book sales? We’ve seen it happen again and again.  Therefore, if you one day run afoul of Harper’s legal eagles because you left your hanky in the wrong panky, you might consider invoking The Bentley Defense.

What’s The Bentley Defense?  Toni Bentley is a former ballerina who published a memoir entitled The Surrender. It happens that what she surrendered to was the bliss of anal sex.”My ass,” she rhapsodized, “is my very own back door to heaven.”  But instead of causing her book to tank, her graphic descriptions of her predilection had the opposite effect: The Surrender was an international bestseller. Publishers Weekly described it as “wonderfully smart and sexy and witty and moving, a tale of unbounded passion that leads to transcendence.”

If this had been a Harper book, what would they have done about this author with her taboo-shattering parade of iniquity and degeneracy?  Actually we don’t have to speculate, because it was a Harper book!

And what did they do about the author? Send her lots and lots of royalties, we imagine.

Richard Curtis

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8. PUBLISHER’S RIGHTS OF TERMINATION
If (i) Publisher determines that any of the representations of Author set forth in Section 6(a) is false, or (ii) Author breaches the covenants set forth in Sections I(f), I(g), 2(c), or 2(d), or (iii) Author commits a breach of any covenant contained in the Special Provisions section of Part I above for which Publisher is given a right of termination, or (iv) Author’s conduct evidences a lack of due regard for public conventions and morals, or Author commits a crime or any other act that will tend to bring Author into serious contempt, and such behavior would materially damage the Work’s reputation or sales, Publisher may terminate this Agreement and, in addition to Publisher’s other legal remedies. Author will promptly repay the portion of the Advance previously paid to Author, or, if such breach occurred following publication of the Work, Author will promptly repay the portion of the Advance which has not yet been recouped by Publisher.

At the World Science Science Fiction Convention in Australia, HarperCollins announced that its science fiction imprint Eos has joined forces with Voyager UK/Australia/New Zealand to become Harper Voyager, “the first global imprint for HarperCollins Publishers world-wide” according to Eos’s Executive Editor Diana Gill.

“We are already globally publishing some of the biggest names in science fiction, fantasy, urban fantasy, and horror, including Raymond E. Feist, Robin Hobb, Kim Harrison, and Sara Douglass,” said Brian Murray, President and Chief Executive Officer of HarperCollins Worldwide. “Uniting our sister companies in the United States, United Kingdom, and Australia/New Zealand allows readers globally unparalleled access to books and authors.”

You can read the complete press release here.

Richard Curtis

HARPERCOLLINS TO CREATE
GLOBAL SCIENCE FICTION & FANTASY PROGRAM UNDER VOYAGER IMPRINT

U.S., UK, and Australia Join Together to Form Global Imprint

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NEW YORK, NY (September 3, 2010) – Announced today at Aussiecon IV (the 68th World Science Fiction Convention), Eos Books, a U.S. imprint of HarperCollins Publishers, will be rebranded as Harper Voyager, joining together with the celebrated Voyager imprints in Australia/New Zealand and the UK. The move is anticipated to create a global genre-fiction powerhouse.

“We are already globally publishing some of the biggest names in science fiction, fantasy, urban fantasy, and horror, including Raymond E. Feist, Robin Hobb, Kim Harrison, and Sara Douglass,” said Brian Murray, President and Chief Executive Officer of HarperCollins Worldwide. “Uniting our sister companies in the United States, United Kingdom, and Australia/New Zealand allows readers globally unparalleled access to books and authors. This move enables us to offer authors a strong global publishing platform when signing with HarperCollins – whether the acquiring editor is in New York, Sydney, or London.”

The Voyager/Harper Voyager editorial leaders are: Executive Editor Diana Gill in the U.S., Editorial Director Emma Coode in the UK (working with Publishing Director Jane Johnson), and Associate Publisher Stephanie Smith in Australia.

Each country has a vibrant, robust list of science fiction and fantasy icons; merging the lists under one imprint will bring readers around the world access to the masters of these fiction genres.

Two authors, Karen Azinger and David Wellington (writing as David Chandler), have recently been signed and are expected to publish with Harper Voyager and Voyager for a worldwide debut.

The Eos imprint will officially change to Harper Voyager starting with the January 2011 hardcover, trade, mass market, e-book, and audio publications.

-more-

ABOUT HARPERCOLLINS PUBLISHERS
HarperCollins, one of the largest English-language publishers in the world, is a subsidiary of News Corporation (NYSE: NWS, NWS.A; ASX: NWS, NWSLV). Headquartered in New York, HarperCollins has publishing groups around the world including the HarperCollins General Books Group, HarperCollins Children’s Books Group, Zondervan, HarperCollins UK, HarperCollins Canada, HarperCollins Australia/New Zealand and HarperCollins India. HarperCollins is a broad-based publisher with strengths in literary and commercial fiction, business books, children’s books, cookbooks, mystery, romance, reference, religious and spiritual books. With nearly 200 years of history HarperCollins has published some of the world’s foremost authors and has won numerous awards including the Nobel Prize, the Pulitzer Prize and National Book Award, the Newbery Medal and the Caldecott. Consistently at the forefront of innovation and technological advancement, HarperCollins is the first publisher to digitize its content and create a global digital warehouse to protect the rights of its authors, meet consumer demand and generate additional business opportunities. You can visit HarperCollins Publishers on the Internet at http://www.harpercollins.com.

Macmillan need not feel quite so alone in its quarrel with Amazon. A day or two ago Rupert Murdoch cast HarperCollins’s lot with Apple’s “agency” e-book retail model (see Apple Promoting a New (and Radical) Business Model for Selling E-Books?), a structure that threatens Amazon’s hegemony in the e-reader space. Now Hachette has joined the bloc, meaning that half of the so-called Big Six want to recapture control over the timing and pricing of their e-books. Precincts yet to be heard from are Simon & Schuster, Random House and Penguin, but even without them, the forces arrayed under the agency model flag should signal the imminent capitulation of Amazon.

Wait a minute. Amazon did capitulate. They did it so long ago we forgot. (See If This Is Capitulation, What Does Triumph Look Like?)

In any event here is the statement issued to the literary agent community by David Young, Hachette Book Group’s Chairman and CEO.

RC
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Dear Agent -

At Hachette Book Group, we have been considering a new pricing model for some time, and have decided to transition to selling our e-books through an agency model.

There are many advantages to the agency model, for our authors, retailers, consumers, and publishers. It allows Hachette to make pricing decisions that are rational and reflect the value of our authors’ works. In the long run this will enable Hachette to continue to invest in and nurture authors’ careers – from major blockbusters to new voices. Without this investment in our authors, the diversity of books available to consumers will contract, as will the diversity of retailers, and our literary culture will suffer.

The agency relationship will allow us to make more titles available to more consumers on more platforms. This expands the author’s reach and readership, which is at the heart of what we do as a publisher. Ultimately, these new terms open doors to all online e-book service providers and create more avenues for delivering e-books to readers.

Another great benefit to our consumers is that we intend to release HBG e-books simultaneously with the hardcover (or first format print edition).

It’s important to note that we are not looking to the agency model as a way to make more money on e-books. In fact, we make less on each e-book sale under the new model; the author will continue to be fairly compensated and our e-book agents will make money on every digital sale. We’re willing to accept lower return for e-book sales as we control the value of our product – books, and content in general. We’re taking the long view on e-book pricing, and this new model helps protect the long term viability of the book marketplace.

We believe that this new model is preferable to withholding books, and is in our authors’ and HBG’s best interest. I’m happy to answer individual questions about the agency model, so please don’t hesitate to contact me.

Best,

David Young
Chairman and Chief Executive Officer | Hachette Book Group

Business World reports that HarperCollins owner Rupert Murdoch took a swipe at Amazon’s $9.99 e-book price, boosting Macmillan’s lonely public stand against the retailer’s rigid pricing tactics. “We don’t like the Amazon model of selling everything at USD 9.99,” he said, calling for a renegotiation of Harper’s deal with Amazon, and Amazon said it’s ready to hear what he has to say.

Murdoch acknowledged that he stands to lose money by opposing $9.99. “They pay us the wholesale price of USD 14 or whatever we charge,” he said, referring to the wholesale price that Amazon might pay to Harper for a $28.00 e-book. “But I think it really devalues books and it hurts all the retailers of the hard cover books.” Amazon takes a loss on such transactions but has used the loss-leader strategy to gain a dominant position for its Kindle e-book reader. It’s worked so far but publishers have worried that a day of reckoning will come in the form of a demand by Amazon that publishers lower their wholesale prices to accommodate that $9.99 retail price.

Though he didn’t refer to Macmillan, Murdoch’s position mirrors Macmillan’s and clearly indicates that the new e-book retail model introduced by Apple as part of its iPad tablet rollout has united the publishing community. “Apple, in its agreement with us, which has not been disclosed in detail, does allow for a variety of slightly higher prices,” Murdoch coyly said.

For background, read Publishing’s Weekend War: 48 Hours that Changed an Industry.

Richard Curtis

(c) Reuters