Tools of Change – Ebook Contracts

February 22nd, 2010 · by spolanka · No Comments

Tools of Change – Ebook Contracts – Feb. 22 – 3:30 – 5:00

Cali Bush, O’Reilly Media – Cali is a non lawyer from the O’Reilly legal department.

Cali provided a perspective on eBook contracts from both the publisher and distributor side in 5 segments of her presentation.  While this was publisher/distributor specific, the terms and gotchas and gimmes are important for libraries to think about when reading their own contracts with publishers, aggregators, or distributors.  Cali referred to downstream rights where the rights going from authors to publishers to distributors decreases with each step.  This is an interesting thing to think about.  She didn’t include libraries or end users in her chart, however, but I would imagine they are even further downstream.

1. the basics – concepts and vocabulary

  • a contract should contain what the distributor is doing for you, needs from you, results of the relationship, what happens if something goes wrong, ending it
  • available titles – set of works the distributor is authorized to sell, list these on an exhibit (which can be updated)
  • copy/ebook – what the distributor is actually distributing, they take what you give them and do something to it, what happens to your content when it goes through any transformation from a distributor
  • digital list price/dlp – price established by publisher on a per title basis, usually the basis for the amount of money paid, publisher may make changes in writing
  • DRM/digital rights management – technology used to impose limitations on content by the end user
  • metadata – basic set of product info, O’Reilly conforms to ONIX 2.1 standard, describes the content and the work (author, title, pages, cover, etc.)
  • territory – they usually secure worldwide rights from authors and ask for the same from distributors
  • refresh/resupply – user who has purchased content may need continued access to content after download is complete (i.e. redownload if their original file is destroyed or lost)

2. O’Reilly uses 5 key elements when evaluating a contract:

  • available titles (some or all, future works?), does distributor have the obligation to distribute the content? (for example, is a distributor obligated to distribute works that are liable or infringe copyright?)
  • does the contract permit or require the use of DRM?  O’Reilly is completely against the use of any DRM (ineffective and not consumer friendly), must understand if the distributor will add DRM to content that previously did not have it.  If you are opposed to DRM, is their something you can live with?  (i.e. watermark from publisher)
  • do we have the ability to withdraw available titles? can you remove titles if and when you need to?  distributors will be leery of this. 2 tier structure based on the promptness of the request (3 – 5 day response time, or no rush). Can the distributor allow access to customers who have already purchased the content?
  • what’s in it for us?  payments and reporting. understand the carve outs, payment is only one upside, we want access to online, real time sales data
  • rights – what rights are we granting and why? are the rights consistent with the rights from the authors or content providers?, downstream rights – authors rights (full pie), publishers rights (3/4 pie), distributors rights (1/2 pie); exclusivity, is any part of the deal exclusive? ; can the distributor create derivative works?; are the rights you are granting conflicting with any plans you have or any deals you have in progress?; are the rights format specific?; who else is covered by the contract?, will the distributor use a sub-distributor and if so, does the publisher want to give approval?; other commitments – what kinds of commitments are you making to other works?  keep the defined terms in mind as you read the contract

3. gimmes – things that aren’t worth negotiating

  • security requirements – was there a breach in security?  if so, how long do they have to report it? O’Reilly determined it wasn’t worth the time so long as the distributor had something in place to protect the content and they are treating all publishers the same.
  • preview access – they have eased up on this.  20% of the content may be available via preview to potential customers
  • pricing and payment models – distributor pays % of digital list price to publisher or distributor pays % of sales price to publisher. the difficulty here is if the distributor sets the price so low that you are making only pennies.  set this for “no less than” a % of the price
  • duration of term/termination provisions – try to avoid automatic renewals and contracts that have long terms.  If they have the ability to withdraw their content however, they aren’t as worried about the termination date

4. gotchas – things that may be overlooked in a contract that could be worrisome or cause problems down the line

  • mutual confidentiality – if party A provides info to party B, party A owns that information. but if distributors are giving sales data back to the publisher, then that data should be owned by the publisher, not the distributor.  They will add a provision regarding the number of copies and revenue should be considered publishers confidential info
  • distributor sets and DLP if you fail to provide one – this might get slipped into the contract and overlooked by the publisher
  • pricing restrictions that create an artificial correlation between formats- ie. tether your ebook discount structure to your print book discount structure with that distributor
  • distributor may have the ability to update their documents (operating manual or submission guidelines). make sure the distribution contract governs
  • colloquialisms – if you are calling something a “XYZ contract,” like The Kindle Contract, does that contract only relate to Kindle, or does it include other items
  • Do you know: is the ebook distributor required to honor any availability dates that you provide? has the distributor already launched the service and are they capable of making your content available?  will the content render properly?

5. looking ahead

  • more coverage about updates and how content is updated
  • click through will become more prevalent

Takeaways

  • do your homework
  • confirm accuracy of key contract terms, check back with the contract after a few months have passed to make sure things are as they should be
  • keep an eye upstream (scout ahead, look outside of the box) so that you don’t get so far downstream that you can no longer secure rights you wish you would have had

Categories: Business Models/Pricing,Conferences/Events,DRM

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