Business Musings: Copyright Savvy

Business Musings: Copyright Savvy

Gloria and Emilio Estefan have an estimated net worth of 700 million dollars. Jimmy Buffett has an estimated net worth of 550 million dollars.

What do those artists have in common? They kept control of the copyrights to their songs. They maintained control of those copyrights starting in the 1970s, when other musicians signed away those rights because they were told that to keep those rights was a deal breaker.

Both Buffett and the Estefans walked from deals that wouldn’t allow them control. They understood the value of hanging onto the work they created—and they eventually learned how to leverage those works into a variety of other businesses. (Dean calls this “The Magic Bakery.” Look here for more.)

For example, Buffett maintained the rights to “Margaritaville,” which was such a major hit in 1977 that it seemed to be on the radio 24/7. Songs that sold better in 1977 aren’t even played much anymore, including “Undercover Angel” (yeah, that song), and “Best of My Love.” Yet “Margaritaville” has spawned restaurants, hotels, and casinos, as well as a tequila brand, beach wear, and shoes, among other things.

And Buffett didn’t just expand his empire with that one song. For example, he now has a bunch of bars named for a hit song he had with Alan Jackson called “It’s Five O’Clock Somewhere.”

The licensing and business opportunities don’t keep Buffett from pursuing his art. He still writes songs, and tours, playing music and managing his empire (which has more than 5,000 employees).

All because he was both savvy enough and desperate enough to hang onto his copyrights.

Fiction writers who are traditionally published rarely hang onto their copyrights these days. It’s almost impossible to do so and sell a book into traditional publishing. The contracts have changed so much from the 20th century that writers are essentially signing their rights away just to get $5000 and the chance to see their books “in print.”

I put the “in print” in quotes because, by going indie and doing the work themselves, writers can get their work into print now and have it sell wider than it ever would through a traditional publisher.

Traditional writers don’t get this. They want to “see their work in bookstores.” In the previous post, I wrote about the changes at Barnes & Noble, and the fact that B&N only accounts for one-fifth of the print book sales in the U.S. while Amazon accounts for more than half. Writers are selling their copyrights to traditional publishing companies that promise them the world and deliver next to nothing.

It is the very definition of a scam. However, it wasn’t a scam twenty years ago. It was the only way to do things.

So these writers are stuck in the past. It doesn’t matter how much evidence they get that their pursuit of the old ways is bad for them and for their career. They continue to do so. I’m beginning to think they’re irredeemable.

When writers sell to traditional publishers, they get ego boo, and very little else.

But with the disappearance of major bookstore chains, and the decreased distribution of paper books, as well as the downward sales trend of overpriced ebooks, you’d think that traditional publishers would go the way of the Dodo, but they’re not.

And why not?

Because their business model is changing.

The major traditional publishers, the ones we call the Big Five or Big Four or Big whatevers, are part of international conglomerates. And those conglomerates have become rapacious—not for works they can publish effectively—but for intellectual property.

Since the rise of Silicon Valley and the growth of venture capital in the past decade or so, intellectual property has become a valuable commodity. Technically, it was always a valuable commodity, but convincing courts and financiers of that used to be difficult as hell.

Not any longer.

In fact, the growth in IP (intellectual property) valuation—figuring out (guessing) how much a particular intellectual property will increase in value over the 70 years after the author dies—has become a business in and of itself.

I discussed some of this in a blog titled “Stealing Intellectual Property” from last year. Take a look in particular at the information in that post about IP Valuation.

I wrote about stealing intellectual property in terms of movies and TV. Those thefts are often hidden—and are outright deceptions. Some companies actively squat on copyright registrations, making writers prove that the copyright registration they’ve filed is the accurate one. This will take years of litigation, and sometimes the writers lose. (I’m not going to explain this in great detail except to say never ever give out your registration number.)

What the large traditional publishers are doing, though, isn’t copyright theft at all. They’re taking advantage of writers’ ignorance. They’re legitimately buying all of the licensing rights in a copyright, and hanging onto those rights for the term of the copyright. They are transferring value from the writer into their own traditional publishing company.

Publishers aren’t the only ones doing this. Major literary agencies are doing the same thing. Their contracts with writers call for a shared piece of the copyright of anything they represent, usually 15% of that copyright.

Fifteen percent of Jimmy Buffett’s net worth is 82.5 million dollars. And that’s in 2016 numbers. Who knows what 15% of his empire is worth in 2018 dollars.

Yeah, you say, my work will never earn that kind of money and you might be right. But what if you aren’t right? What if something of yours takes off, the way that George R.R. Martin’s Game of Thrones series (which in book form is not called the Game of Thrones series) did. Or Diana Gabaldon’s Outlander. Or J.K. Rowling’s Harry Potter series?

Sometimes the worst thing that can happen to a writer is success. Because what if you signed away all those rights to your books, and those books take off? Who will make the money? Why, your agents and publishers, of course.

Traditionally published writers typically make as little as 8% of the money on their novels. Even less now, with all the discount schedules and the “percent of net” that’s in most publishing contract.

So while writers are earning pennies on the dollar for their creations, the people in the middle—publishers, agents, studios, conglomerates—are earning more than 90% of the revenue.

Those traditional publishing companies are gambling on the ignorance of the writers. The companies, remember, are small cogs in the gigantic wheel of a conglomerate. And those conglomerates aren’t just random compilations of unrelated businesses. Most of them are multimedia companies. They own gaming companies, TV networks, movie studios, and all kinds of other media companies that will allow them to easily activate parts of the copyright to a book that writers would normally sell separately.

These conglomerates want properties they can then turn into franchises. Right now, the book publishing arms are terrible at knowing what kind of IP they actually have. For example, if there is suddenly a poodle craze across the U.S., most publishers have no idea if they have novels featuring poodles.

But give the companies a decade or so. I’ve already heard of employees coming into the companies to go through the IP and list the keywords about each property. At some point in the not-so-distant future, someone at a traditional publisher might hear about a poodle craze, and have an employee compile a list of all of the poodle IP in stock. Those books might be reissued or licensed for film or become graphic novels or t-shirts or stuffed animal poodles—and the authors might not see a dime from any of it, because of the contracts they’ve signed.

In the meantime, these traditional publishing companies are sitting on IP as if it were a gigantic pile of cash. They’re all using IP valuation techniques that give a minimal amount of current (and future) value to each book they contract. If they pay $5000 as an advance on that book, they might gain ten times that in IP valuation. Or twenty or one hundred times or one-thousand times.

So for the measly price of $5,000, that company might gain a property worth (on paper at least) as little as $50,000 and as much as $5 million. Then multiply that by all of the books contracted for in 2018 by that company, and you suddenly understand what these publishers are doing.

They’re not publishing anything anymore. They acquiring assets, and bulking up their net worth.

They’re doing it legally, taking advantage of the ignorance of others. These publishers take the original work of writers, and essentially make it property of the publishing house.

The movie industry has done that for years. In fact, a producer I worked with years ago shopped around a property of mine, and there were companies that wouldn’t even talk to him unless he signed an agreement that gave them the rights to the property he was pitching. He didn’t have those rights (I did), but he wouldn’t have done that anyway. He was appalled at the rapaciousness, even though he’d worked in the industry for forty years.

As IP becomes more and more valuable without exploiting the property, you’ll see more behavior like these publishing companies. I’ve encountered it in the gaming industry, and I also encountered it just recently from an ad firm that wanted a piece of a property that they were supposed to design ads for. (Not kidding.)

I doubt this is a phase. I think it’s the face of the future.

Writers now need more protection from this kind of behavior. You have to learn the ins and outs of copyright. You’ll have to understand every contract you sign before you sign it.

To understand copyright, start with The Copyright Handbook from Nolo Press.

To understand contracts, you’ll need the help of an attorney on the more complex ones. Agents can’t help you. They don’t have law degrees. They’re English majors. And worse, they often want a piece of your copyright for themselves.

I know many of you indies think you’re safe from all of this, but you’re not. Terms of Service sometimes give the weirdest companies pieces of IP. If you do a movie deal or end up working with someone on YouTube, you could lose the ownership of your copyright to the novel that’s the subject of the deal and all of your future work. It’s so easy to sign that stuff away.

Scared yet?

You should be.

Learn the most important part of your writing career. Learn business and copyright licensing.

If you do, that’ll give you a chance to be the Jimmy Buffett of your generation instead of The Emotions, who may have been one of the most influential girl groups of all time, but that recognition has not translated into millions of dollars.

So…while writers and editors are lamenting the possible demise of Barnes & Noble, and are actively wondering what will happen next to these “endangered” traditional publishers, the conglomerates that own those publishers are increasing in value with each book contract signed.

Traditional publishing as we knew it in the 20th century is long dead. The possible demise of Barnes & Noble is just a last gasp of the old order disappearing.

Traditional publishing in the 21st century shouldn’t even have the word “publishing” attached to its name. The publishing part is skimped over, so that the asset gets activated. Then it becomes part of the company’s portfolio.

Personally, I’d rather keep my own copyrights and control of my own work. I’ve lost some of it due to bad interpretations of old contracts, and I’m struggling to get those back. But you don’t have to lose any of it.

Avoid traditional publishers. Have help when you examine contracts from any company that you license your subrights to. And be willing to walk away from any deal—including those that seem like a lot of money. Remember that a lot of money to you (measured in six figures) is probably pocket money to the companies you’re negotiating with. Act accordingly.

Be confident.

Remember, you’re the one with the IP that they want.

You don’t have to sell it to them.

If you do want to work with them, partner with them instead. That will take a lot more savvy on your part, so if you don’t understand contracts, copyright, and negotiation, then you had better learn them. And don’t make any deals until you do know those things.

Good luck.

***

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“Business Musings: All Romance Ebooks & Visions of the Future Part One,” copyright © 2018 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / nastia1983.




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29 responses to “Business Musings: Copyright Savvy”

  1. James F. Brown says:

    Kris,

    “When writers sell to traditional publishers, they get ego boo, and very little else.”

    Ego boo? (I’m assuming that s/b ego booST). Weeelll, perhaps also ego boo boo, or ego boo hoo.

    FWIW, I can’t envision myself EVER signing a trad pub contract. Especially since I have my own (tiny) publishing company, tweaked for my own stuff and, eventually, selected stuff from personal writer/friends.

  2. kjcjulius says:

    Great post! I did note that the NOLO copyright book was published in 2000. Is there an updated version available?

  3. Art_fan says:

    Nice overview of the perils of being a writer in a corporate world hungry to capture our IP rights.

    “What do those [musician] artists have in common? They kept control of the copyrights to their songs.”

    Which copyrights are you referring to? The “musical compositions” or the “sound-recording masters” or both?

    “I’m not going to explain this in great detail except to say never ever give out your registration number”

    Once the Copyright Office has cleared a registration, it will issue/mail the author/copyright claimant the Certificate of Registration and publish it in its on-line public database. Third-parties can search this database using the authors/claimant’s name, title of work, address, and/or registration number.

    • They kept all of the copyrights to their songs. The masters, the compositions, production rights and all of the other associated rights.

      And yes, people can search for the registration, but they can’t get enough information to log into the database. The major corporations want that data as well. (Got a contract with a major company just last year with that in the boilerplate.)

      • James F. Brown says:

        I registered a copyright on a book back in June. Then I started getting junk e-mails from Dorrance Publishing. Irritating, but easy to delete. Then I started getting junk phone calls from them. Which really pissed me off. They did leave voicmail messages, which is how I discovered they were calling me. (I usually don’t answer calls from unknown numbers, and let the calls go to voicemail. If no voicemail, I NEVER call these numbers back.)

        At first, I thought Dorrance was an ASI imprint, but they’re based in PA, not IN. Still a vanity press IMHO.

      • ART_FAN says:

        Sorry, I’m still confused.

        I’ve been timely registering my authorships with the US Copyright Office for the last 20-years.

        One can visit the on-line public database to search for registrations and rights owners; however, I have never heard about “logging into” the database. Are you referring to the SR (Service Request number) aka Case Number: 1-XXXXXXXXXX?

        If the copyright author/claimant/authorized agent has completed the copyright registration application and paid the filing fee and uploaded the deposit, the work can only be changed by contacting the Public Information Office or a Registration Specialist or filing form CA.

        The major corporations want that data as well.
        (Got a contract with a major company just last year with that in the boilerplate.)

        Can you post just that provision or provide a link to view?

        • I’ve been trying to be vague here. You are right on most of the details. Squatters know how to use the data to confuse things with the office. They either tag onto your copyright filing or claim to have lost the relevant documentation and so on and so forth. I am not going to go into detail on a public website on how to do this. I’m not going to give anyone a blueprint on how to squat on someone’s copyright. Suffice to say that you should never give out the registration numbers, the case numbers, the id that you set for the office, the name you filed under, copies of the documentation or anything else. It’s easier to squat on a copyright (if you know what you’re doing) than it is to steal someone’s identity. Let’s leave it at that, and just let everyone be cautious, okay?

      • ART_FAN says:

        Art_fan

  4. Bill Peschel says:

    Just saw this and thought you might appreciate this example of why you should hang on to all your rights, no matter how insignificant it may seem at the time.

    On Goodreads, Lawrence Block mentioned that a story he wrote, “Bride of Violence, was made into a feature movie and is appearing now on Amazon Prime.

    Well and good. Except this was not a story featuring his most popular characters. It wasn’t a high-paying story. It was something he wrote in 1959 and it was published in “Two-Fisted Detective Stories,” for which he was paid $25.

    No one would have thought that a short story would be made into a feature movie 59 years later.

    That’s why you hang onto your rights!

    • Ada Kerman says:

      For items that were copyrighted in the 50’s, I believe the copyright holder had to explicitly renew the copyright, so this story could well be in the public domain.

    • And it really pays off, Bill. I only got $25 for the story 59 years ago, but when it was optioned for the film, I got…

      (wait for it)

      $10.

      Really. But I’m in for a percentage of receipts, so all of y’all better get out there and watch Bride of Violence.

      • Maree says:

        Can I ask why you only got $10?

        I seriously admire your honesty in telling us that, because this weekend I was at a con and damn so much posturing and name dropping and so little honesty about actual financial realities.

        We’re all here on this blog to learn how to not get cheated. And I’m feeling like you have a good story to tell.

        Of course you don’t owe us anything, but since you showed up to say that I feel like maybe you want to tell the story?

        Soooo…?

  5. Jason M says:

    “When writers sell to traditional publishers, they get ego boo, and very little else.”

    This is a glorious typo.

  6. Robecca says:

    Timely post. Thank you. I recently went to a convention where agents were repeatedly saying to the authors, ‘they may need to keep their day jobs.’ I got frustrated and asked the agent if she had a ‘day job’ Nope, she was quite comfortable with her 20% thank you. I will be getting a copyright handbook.

  7. They’re not publishing anything anymore. They’re acquiring assets, and bulking up their net worth.
    . . .
    As IP becomes more and more valuable without exploiting the property, you’ll see more behavior like these publishing companies. I’ve encountered it in the gaming industry…
    . . .
    I doubt this is a phase. I think it’s the face of the future.
    . . .
    Scared yet?

    You should be.

    Oh, I am. I suspect that the sharks will devise more and more sophisticated ways by which to fleece creators of IP of their rights, to the point where even well-informed and skeptical people can get taken. I find that very scary indeed.

  8. S says:

    I just did the math for several top bestsellers who started hitting the lists in the 90s and started a decade before that: their copyrights reversion periods have come and gone, and I’m not sure that even half of the writers realized it or capitalized on it to renegotiate their contracts or take back their ebook or audio rights (which collectively would earn them, if they self-published, a nice 7-10plus figure sum) at the very least: Stephen King, Nora…!

    • King is one established best-seller who’s apparently very careful about IP rights. There was an article about him a few years ago, I think in the Wall Street Journal, which discussed how he only licenses the rights to his publisher for a few years at a time, and gets a good percentage of book sales.

      If true, he could walk away and self-publish at any time, but he’s getting a good enough deal that he probably doesn’t want to.

      • He’s careful these days because he dumped his regular agent (who had caused a lot of trouble) and has an attorney handle most of the work. And yeah, he probably doesn’t want to self-pub

        • S. says:

          Don’t know the guy or more than I can fast-search, but I remain somewhat sceptical. His current agent is his ex-editor Chuck Verrill; profit-sharing is great if your profitshare partner doesn’t screw you on costs before profit/net (such as in Hollywood or music “accounting” that makes the Trump family’s inflated costs look like peanuts), and there’s other money issues besides. His time-limited contracts may be the best thing about his current contracts, afaik.

          (also: Lawrence Block! squee)

          • The agent I’m referring to is Kirby MacCauley, who screwed everyone and put most of his profits up his nose. King uses an attorney to handle his deals. I have no idea how he uses his agent. Maybe to make the sales for him. He’s not perfect on business, but with a lawyer backing him up, his contracts are solid.

  9. K. A. Jordan says:

    I’m so glad you published this, today. You’ve reminded me to break out my book on Copyrights. I’ve been contacted by a company and I’m of two minds on the subject. I won’t say anything more than this: I’m more wary than excited. I’m a complete unknown even after publishing 30 works of fiction, so I’m not in much of a position to say no. I just need to be very, very careful.

  10. Wayne Borean says:

    I was talking to a Horror writer who was signing books at a con about Indie Publishing. I was aghast at how little his advance was, and totally horrified when I found out that he’d signed over his copyrights for the equivalent of coffee money.

    That was five-six years ago, not long after I’d discovered you and Dean, and the Passive Guy.

  11. Juli Hoffman says:

    Great information! Thank you for sharing this. 😀

  12. Mark Schultz says:

    Excellent post, Kristine. You have exposed and clarified some extremely important issues. I had no idea this was going on, but it certainly makes sense. Like a famous philosopher said, follow the money.

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