July 21, 2010

Pass the gestalt, please


Really good glasses

Really good glasses

In a piercingly smart article called “Pass the Gestalt, Please” on his Black Plastic Glasses blog, Evan Schnittman gives a master class on ebook royalties that transcends to a luminous consideration of even larger core issues besetting the place where literary art meets commerce.

He was set off, Schnittman says, by repeatedly hearing “forcefully stated pronouncements” from people such as Andrew Wylie and British writers’ union head Tom Holland declaring “The publisher has little or no incremental out of pocket cost to create ebooks, therefore the income should be split in the same manner as subsidiary rights, which is generally 50/50.”

But, Schnittman — who runs the runs Global Business Development at the Oxford University Press — says…

… there is a huge flaw in this view, as it is built on the self-serving and reductive assumption that ebooks can and should be viewed as separate from the book’s overall economy. By attacking ebook royalties in this manner, a trap is set by those seeking to maximize short-term profits at the expense of all else. The object of this ploy is to dissect the intellectual property into as many different pieces as possible and negotiate them on the open market in order to maximize the “deal.”

For example, it’s pretty much a bald faced-lie — not an error or inaccuracy but a lie — to call ebook rights “subsidiary rights.” As Schnittman deftly explains,

Publishing contracts grant two kinds of rights to publishers – primary rights and subsidiary rights. Primary rights grant the publisher the right to create and sell a product, be it in print, audio, electronic, or any other form that the publisher invests and distributes directly to buyers, resellers, and/or agents.

Subsidiary rights, (aka subrights, rights, licensing) enable the publisher to license the work to a third party for the purpose of that party creating a new work–one that the publisher may not be equipped or desire to do. A good example of a classic subsidiary right is translations. Traditionally, the publisher shares the income it receives from this license 50/50 with the author, as the publisher does not bear the expense of creating and selling the translated work.

Looking at ebooks, publishers have clearly, universally, and without hesitation, put ebooks into the primary rights category. We all create ebooks and sell them directly and through resellers and agents. Any implication that ebooks are a subsidiary right is flat out wrong.

But agents such as Andrew Wylie know this (which is what makes it a lie). So what’s going on? “It all comes from a long established program of negotiations that I call ‘win at all cost,'” says Schnittman.

When one decides on a win at all cost negotiation strategy, one is looking only at the deal on the table and how to get the absolute most for oneself, and ostensibly one’s clients.  One of the most effective tactics in win at all cost negotiation is divide and conquer. Divide and conquer purposely disaggregates issues and boils them down to one issue at a time negotiations. Examples of this in publishing are when territorial rights are sold separately for English language books, when e-rights or translation rights are sold for additional advance income or, worse, withheld and sold elsewhere, etc. Publishers have seen a marked acceleration in the practice of disaggregating rights to works.

The net result of this practice is that no one can create anywhere near a coherent marketing and publicity program for trade books as no one knows who owns what. Furthermore, it is impossible to align efforts, as competing publishers often own different portions of rights to the same work. It’s the authors who suffer in the end.

Thus does the discussion of dishonesty about ebooks spread to a brilliant dissection of a core problem facing the industry today: the fracturing of intellectual properties from the champions who would invest in their promotion, while simultaneously embittering the creators of those properties against those champions.

As Schnittman observes, “a books value is a very gestalt concept. The whole work has FAR greater value than the sum of the individual rights. Allowing each individual part, or right, to be disaggregated and auctioned to the highest bidder serves only those who make profit from short-term gain.”

So who might that be? Schnittman makes clear who he holds responsible for this scenario in a final, telling anecdote:

Recently a colleague told me of a letter he received from an author bitterly complaining that the publisher in question had not been selling his book in the UK. The publisher responded, in a state of incredible frustration, that the author’s agent had withheld UK rights in order to try and extract an additional deal for the UK. This strategy backfired, no one bought the rights in the UK without corresponding US rights, and the author and the publisher were harmed in the process.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.