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A few days ago in The Bookseller’s blog, Philip Jones reported on a little spat between the UK’s Society of Authors and its Publishers Association over library e-book lending. The SoA claims that e-book lending to libraries should be considered a subsidiary rights license, which pays at a higher rate of royalties than publisher print library lending. The publishers, of course, disagree. The dispute is compounded by the fact that e-book lending does not produce PLR (Public Lending Right) remuneration, the library lending royalty that the UK has on printed books.

The SoA is urging agents to demand back payments with interest. Publishers aren’t terribly happy about this, as might be expected.

It puts me in mind of the Eminem iTunes royalty ruling I wrote about a couple of years ago, in which an appeals court held that digital music sales through iTunes are not actually “sales” at all but “licenses,” which pay at a higher royalty rate. The case was eventually settled in October, 2012 for an undisclosed amount, but other musicians have already followed (law)suit.

There’s always been a lot of confusion surrounding digital media “sales.” The stores and publishers like to refer to them as “sales” on storefronts, because those are terms consumers understand. Ask the average person on the street what he’s doing when he purchases an e-book or mp3 and he’ll say he “buys” it. If you ask him if he’d like to “license” an e-book or song, he’s apt to look at you funny. But what you buy when you buy a physical book or album is the physical media—the item the data is stored in. And if you look at the terms of service for an e-book, it usually says you’re “licensing” it.

This is where the media sellers find themselves hoist on their own petard, because up to this point “licensing” has had a very specific contractual use. It’s what you do when you want to use the song in a commercial or movie. Because most such uses are one-and-done one-offs, where the licensor gives you one payment, the rates for them are higher because they don’t get the economy of scale associated with sale royalties.

My guess is that, as with many things e, the publishers/labels didn’t necessarily pay enough attention to the implications of these older contract terms when switching to e. If they used the same boilerplates with the old language, then when the author wakes up and notices that their work is being paid for under terms that look suspiciously like licensing but royalties are being paid at the lower sale rates…well. It’s headache time all around.

Of course, all the publishers really have to do is be more explicit about their terms in their contracts from here on out. But for the contracts that already have been signed, it could be a big headache.

 
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