Random House chairman Markus Dohle may have sent this letter to agents in the spirit of collaboration, but that isn’t how the Authors Guild is seeing it. In a message sent to its members this morning, the Guild said it was “regrettable and unhelpful that Random House has chosen to try to intimidate authors and agents over these old book contracts.” The Guild rejected RH’s argument that its older contracts that grant rights to publish “in book form” or “in all editions” is a grant of electronic rights. (The Guild has no problem with RH’s interpretation of more recent backlist contracts since over the last 10 years electronic rights have been licensed with print rights).
The Guild argues that when RH changed its contracts in 1994, it did so “quite plainly, because its authors did not grant [electronic] rights to it under Random House’s standard contracts prior to 1994.” The Guild notes that in the Random-Rosetta Books dispute earlier this decade, Judge Stein of the Southern District of New York found that authors did not grant publishers the e-book rights in the old book contracts at issue. “Judge Stein specifically dismissed notions, raised by Mr. Dohle in his letter to agents, that the non-compete clauses of these old contracts in some manner acted to grant Random House electronic rights to the works, saying that this ‘reasoning turns the analysis on its head,’” the Guild wrote.
Random spokesperson Stuart Applebaum said the publisher "respectfully disagrees" with the Guild's position. "We believe we hold these e-book backlist rights contractually and that we are the best positioned to maximize them creatively," Applebaum said. "We look forward to further discussions with the author and the agent community about the dynamic initiatives presented in Mr. Dohle's letter."
The Guild noted that while it is “sympathetic with the difficult position the publishing industry is in at the moment,” --observing that “everyone with knowledge of the dynamics of the industry properly fears that Amazon's dominance of the online markets for traditional and especially e-books will give it a chokehold on industry profits”-- that still does not “justify this attempt at a retroactive rights grab.”
The Guild advises Random to stick to using its marketing muscle to benefit the owners of e-rights and to offer a better royalty for electronic rights. Suggesting that a 50/50 split of proceeds is a fair deal, the Guild said that “we're confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail.” E-book royalty rights are so low now simply because sales were too low to fight over, the Guild said. “That's beginning to change,” predicting that e-royalty rates “are at a low-water mark.
