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An Address to Publishers: Either We Swim Together or 
We Sink Together

On January 15, Executive Director Mary Rasenberger made the case for authors and publishers to collaborate at a meeting of the Books Committee of the Professional & Scholarly Publishing division of the American Association of Publishers in New York. The speech has been edited for print use. Reprinted from the Winter 2016 issue of the Authors Guild Bulletin.

I. Introduction

The publishing industry is changing at an unprecedented rate. Some see the leveling off of e-book sales as a sign of stability after a decade of disruption, but I think the change is just the beginning of the digital makeover of the publishing industry.

I remember a talk from eight or ten years ago that I heard at the Grolier Club. The speaker talked about the transition from illuminated manuscripts to published books and showed us how the first published books all looked like illuminated manuscripts. It took a century for books to be rethought in a way that suited the new technology—to be printed on paper in easy-to-read fonts for mass distribution. The speaker made the point that we are still at the beginning of the Internet age and don’t know how it will change. I agree; we still have yet to really rethink the e-book—what it is and how it will be distributed. One thing is for certain: all those toddlers who master iPads and iPhones long before they can read will be reading more on screens than we do now.

Right now it feels harder than ever to stay afloat in this business. It’s harder for authors and it’s harder for publishers, especially small publishers, and that includes both university presses and academic publishers. But I am here to talk about authors today.

From the perspective of authors—we’re seeing less and less of the sorts of advances that can constitute a livelihood. Book authors, unless they have other jobs, rely on advances to keep the lights on while the writing is being done. A talented, productive author used to be able to earn a reasonable living through writing, or at least get by. Now most authors struggle to earn a living wage while juggling several jobs at a time. Many writers live check to check, without employee benefits or the security of a regular salary. It does not take much lost income to make earning a living as an author untenable. That often means finding other full-time employment.

We surveyed our members and found that between 2009—the beginning of the digital era in publishing—and 2015, the mean income for full-time authors dropped about 30 percent, from $24,000 down to $17,500. That is a big drop when the income is already so low—particularly when you are talking about a highly educated group of people.

With the dwindling of incomes, we’re in danger of seeing the disappearance of the midlist author. This is a real problem: Midlist authors are the heart of our literary culture. They are the 99 percent of our literary talent, and we need them to keep writing. I hope we can work together to make sure that won’t happen.

If some of our best professional authors can’t make a living writing and have to seek other work, that’s not good for anyone. For that matter, it’s not good for our culture or our democracy.

So, at the Authors Guild we are looking closely at the publishing landscape, seeking to identify the causes of lower incomes, which are no doubt complex. We are taking a holistic approach to try to understand the landscape and help authors navigate it. Our goal is to protect our members, of course, but more broadly, to make sure the working American author does not become a thing of the past.

In 2016, we’ll be fighting battles on many fronts:

• We’ll continue to fight for strong and sensible copyright protection, most visibly in our case against Google, which we’re trying to take to the Supreme Court.

• We are fighting on the Hill to give authors a greater voice, working with the Copyright Office and Congress to develop the sort of effective 21st-century copyright system authors need in the digital era.

• We know that an ideal publishing ecosystem depends on the diversity provided by many different types and sizes of publishers and the participation of a variety of retailers. We’ll continue to work to promote a more diverse marketplace for books, so that a single retail giant—and here I am talking about Amazon in particular—isn’t able to dictate terms to the entire industry. Amazon pretty much controls the online market for books, and by driving down the cost of books and forcing publishers to accept oppressive financial terms, Amazon has forced publishers to focus their resources on the most commercial books. I don’t generally like to make quality judgments about books, but there is a certain dumbing-down of publishing when the big advances go to celebrities, not serious writers who have been honing their craft for years.

• We will also work with publishers (including some of you) to make sure that authors have fair contracts, fairly tailored to the realities of the digital era. We will be asking you to think more openly about contracts and to start changing them up a bit. We will encourage you to think outside the box to come up with ways that authors can do more with their books, without cutting into your profits. For instance, if you aren’t doing anything with a book anymore, selling just a few copies a year, give the rights back and let the writer have a crack at it.

The causes of the financial precariousness that plagues publishers and authors alike are manifold, but the implications are clear: both authors and publishers need to do things differently in the future in order to thrive in the new publishing environment. We will all have to adapt. And we will all have to work together.

But before I talk about some possible adaptations, let’s take a step back and look into the causes of our discontent—a few of the main culprits, at least, the enemies that authors and publishers alike share. To that end, I’ll address, in this order: (1) Amazon’s book retail dominance and ruthless tactics, (2) the unprecedented decline in our courts’ protection of copyright, and (3) the free content movement. I’ll also discuss what the Guild is doing to address each of these threats.

II. Amazon

The Authors Guild has spoken out against Amazon’s dominance of the online market for years, and we have been pushing for a government investigation into the ill effects of that dominance and the sometimes unfair practices that sustain it.

Why do we pursue this? We’ve gotten some criticism from indie authors and others along the way, but the Authors Guild’s mission is to protect and support working writers. And part of that mission means ensuring that the markets for books and ideas remain both vigorous and free.

When a single e-tailer—one that sells 75 percent of print books sold online and close to half of all books in the country—deliberately suppresses the works of certain authors, those authors are harmed, plain and simple. That’s what happened when Amazon removed the buy buttons for Macmillan authors in early 2010, and when it pulled pre-orders for Hachette authors in 2014. Some authors completely lost the window for an entire book. It was blatantly unfair, and a huge number of authors stood up and opposed it. Council member Douglas Preston formed Authors United as a single-purpose, grassroots organization in response, and we helped by providing administrative support.

In the U.S., Amazon commands a share of over 40 percent of new book sales across all platforms. That’s 64 percent of the online sales of physical books and 65 percent of the e-book market. As we all know, Amazon employs a predatory pricing strategy. It set an artificially low price for e-books, which no doubt helped fuel the growth of the e-book market. But it also altered consumer expectations of the value of e-books (and, indeed, of books in general) and sent readers to the Internet to buy books instead of at bookstores, even encouraging readers to buy on Amazon while in a bookstore! It willingly lost money on bestselling titles in order to squeeze retail stores, and now it jacks up the price to the reader of “long tail” books to make up for the losses. Even with agency pricing, Amazon penalizes publishers and authors for charging full price. Since small publishers cannot live without Amazon, Amazon can force pretty bad terms on them. The point is that it exploits its dominance at the choke point in the distribution chain to extract an ever greater share of a book’s price from publishers, especially smaller publishers.

The Second Circuit Court of Appeals, in U.S. v. Apple, recently upheld the district court’s finding that Apple was liable for collusion. Apple has asked the Supreme Court to review that ruling. In early December, the Authors Guild filed a friend-of-the-court brief supporting Apple’s petition to the Supreme Court as part of our efforts to prevent the nation’s book markets from being controlled by a single, dominant player.

In the brief—which we filed with Authors United, the American Booksellers Association and Barnes & Noble—we argued that the government’s focus on Apple’s allegedly anticompetitive activities was misplaced, because Apple’s conduct in fact enhanced competition by increasing e-book output, the number of e-book titles and the number of e-book distributors. That led to technological improvements in the e-book market, enhanced freedom of expression and expanded access to e-books.

At the same time, we continue to urge the government to take a closer look at Amazon’s outsize market share and anticompetitive practices in the publishing industry. In 2014 we prepared a white paper on Amazon’s anticompetitive conduct, which we sent to the Department of Justice and other government entities. We hosted a meeting with DOJ representatives in our offices in August 2014 so that a group of authors could make their case directly. In 2015, we met with the FTC and once again with the DOJ to present our case, bringing several authors to the meetings with us. We found some sympathy, but the DOJ requires evidence of harm to consumers, and the only way they apparently know how to measure that harm is in terms of prices, although we were advised that other information that demonstrates harm to readers, such as showing a reduction in the quality or diversity of books, might help.

While we all know that advances are down for most serious fiction and nonfiction projects and way up for celebrity books and other anticipated bestsellers, concrete evidence of a decrease in book quality is a hard thing to measure or show. Our argument is that before long, many professional authors—who have spent their careers honing their craft—will have to leave the book writing business for more sustainable work. The public suffers by having fewer or a less diverse group of works of real literature.

The next threat I want to discuss is the unprecedented expansion of fair use and the general weakening of copyright protection in this country. In some ways, the effects of copyright abuse are even harder to measure than the damage Amazon has wreaked, but it is palpable.

III. The Decline in Copyright Protection

Copyright protection is a linchpin of democracy. The Founders wrote copyright law into the Constitution because a democracy needs an informed citizenry. And an informed citizenry benefits greatly from the existence of a class of authors who can support themselves in a free economy, without patronage or the need to rely on payment from special interests.

Copyright law allows authors to control use of their work and monetize it by giving them control over who can copy, publish and sell their work, and in what manner. In the last decade or so, since the rise of the Internet and the information-wants-to-be-free movement, a strong anti-copyright faction has been successful in challenging copyright protection. While there are some areas where copyright protectionists may admittedly have overreached, wants-to-be-free advocates use those instances as an excuse to demonize copyright holders and push back copyright much further than is sustainable over the long run. This movement contends that since copyright law is meant to benefit society, copyright must bend to the immediate benefits of broad access to copyrighted works. The courts have started to buy this view, most notably in our cases—AG v. HathiTrust and AG v. Google—for which we recently filed for Supreme Court certification. In our view, this reflects a simplistic and misguided view of how copyright works in practice—at least vis-à-vis the author.

First of all, copyright protection, like patent law, itself benefits society. It encourages people to create by giving them control over their work, including the right to make money from it. The idea that because a deviation from that basic right also benefits society it should be considered fair use, is upside-down thinking. All uses of most copyrighted books—and particularly educational texts—are socially beneficial in some way.

This extreme fair use movement privileges users over distributors, and technology over authorship—and it turns the constitutional premise of copyright law on its head. The problem is that this movement has infiltrated court thinking. In the words of Authors Guild Council member Richard Russo, recent fair use cases, including ours and the Georgia State case, amount to no less than “the redistribution of wealth from the creative sector to the tech sector.”

It would be wonderful to have free books for everyone, especially for educational purposes, but someone needs to pay the people who write and publish those books—just as it would be good to have free food for everyone, especially those in need, but we all agree farmers and ranchers need to be paid. In a democracy, as the Founders recognized, we need authors who can earn a living from “free expression,” and publishers who can earn back enough from their investments in that expression that they can keep investing in new books.

Unfortunately, in the Georgia State and Google Books cases, we are starting to see the courts chip away at the book market by using copyright law’s “fair use” doctrine to favor free access over authorization.

Georgia State

The Georgia State case addresses whether universities providing digital course packs to their students must pay permissions fees to authors and publishers. The decision in the lower court and the Eleventh circuit have allowed as fair use electronic course packs, even though hard copy packs were always paid for. Traditionally, universities happily paid for course-pack reprint rights; readings were compiled, printed and sold to students through brick-and-mortar copy shops. Royalties were paid to authors for these course packs. But when course packs went digital, a number of schools, including GSU, decided that instead of getting licenses (some complained that licenses were not available), they would rely on fair use, and they began using digital course packs without paying rights holders.

One of the more surprising and wrong-headed conclusions of the court was its determination that unless the publisher was already in a licensing market providing exactly the format for distribution desired by a user—in this case, book excerpts in digital format—the use at issue was a fair use. What this means is that the market for that use is then foreclosed to the copyright owner. How can the copyright owner ever reclaim a market once it is free?

The loss of permissions payments is a significant threat to authors and publishers alike: even small income reductions can mean the difference between a publisher covering its costs and not, a difference that might ultimately determine whether a particular book even sees the light of day.

Section 107 of the Copyright Act clearly states that when analyzing fair use courts must consider whether the use interferes with potential—not just existing—markets; and the Supreme Court has clearly stated that courts must look at not just the harm from the particular use at issue in the case before it, but the effects of widespread unrestricted use on those existing and potential markets. The Eleventh Circuit’s narrow view of market harm, however, failed to consider the fact that markets for the works existed in print form; electronic markets were not just potential, but were actively being developed for electronic access. Moreover, it failed also to consider the effect of widespread conduct similar to GSU’s—where every university relies on fair use in similar cases. As we said in an amicus brief I filed on behalf of the Authors Guild and the Textbook and Academic Authors Association: “A loss in excerpt permissions fees is precisely the kind of change that could take a book from breaking even or being profitable to becoming unpublishable.”

Authors Guild v. Google

On December 31, we filed for cert. in Authors Guild v. Google, a case with which you are all very familiar. The Second Circuit decision in October excused Google from obtaining permission or paying authors before it made digital copies of their books, some 20 million of them, at least 4 million of which were still protected by copyright.

Google didn’t make just one copy of each book; it made many copies, including an additional “thank-you” copy for each of the libraries in exchange for permission to come in and scan the books. So not only did Google fail to pay or get permission for its initial copies; authors were deprived of more sales to libraries.

In addition to creating Google Books, Google made significant internal uses of the full text of books it scanned, ingesting the copies into its databases so that it could make what it called “non-display” uses of those books. The phrase “non-display” sounds harmless enough. But it masks the fact that those uses allowed Google to data-mine the texts and teach its systems to understand natural language—and it did this in order to improve its search business, creating tremendous value for itself.

As the Guild’s president, Roxana Robinson, has said: “The expressive use of language is one of the most important contributions that writers make to society.”

And since the expressive use of language is the one thing that writers can create and technology cannot, its value to the tech sector is incalculable. Google’s bold appropriation of this priceless aspect of writers’ work, without acknowledgment or compensation, allowed it to gain an enormous competitive advantage by making a whole lot of copies of authors’ works—all without buying or licensing a single copy of any book.

Never before has copyright law permitted a major company to trample on individuals’ rights to make even more money, with the excuse that it provides a useful technological tool. Worse, the Second Circuit’s decision establishes a rule of law that allows any entity to create digital copies of copyrighted work and use them for internal purposes, as long is it also makes the content available on the Internet for public search and excerpt viewing.

That’s why we are still in the case and have gone for cert. After the district court rejected the settlement—where, if you recall, Google agreed to pay $45 million directly to copyright holders for its initial infringements and $34.5 million more to help fund a registry to manage future payments—it agreed with Google that Google’s mass copying was “fair use” because the societal value of the book-search engine was so great it outweighed any harm to authors and their rights to control the use of their works. And the Second Circuit affirmed. The result is that in the Second Circuit at least, it is now fair use to make full copies of works for internal purposes and data mining, and make them fully searchable, with portions returned from search results freely viewable by anyone online.

This is a slippery slope. We will go from four lines per page per search being presented by Google to entire pages, then chapters, being made available by libraries and others. And those entities won’t have the security necessary to keep full copies off the Internet. Pretty soon books will go the way of music, and copies of everything will be findable, searchable and—for nonfiction works—usable online for free. This kills the market for authors trying to bring their out-of-print books back. Close to 80 percent of each Google-scanned book is searchable and available for display, and the search results are often enough for researchers. More importantly, the books serve as mere bait for Google to collect more user data and increase ad revenue. Authors and publishers should be getting a piece of those profits. In the words of Columbia Law School professor June Besek, “the fair use pendulum has now swung too far away from its roots and purpose, now enabling new business models rather than new works of authorship.” We don’t yet know how books will be accessed and potentially monetized in the future, but my guess is that it will be through search engines, and that’s a problem.

As Mike Shatzkin recently reported in his blog, most online book sales (about half of the market today) already result from online searches. Referring to book sales, he says:

[The transactions take place primarily at Amazon, often at Barnes & Noble (still) and Apple, and occasionally at Google. But the drivers to the transactions are Google and Facebook. (And others, of course, but none approaching the importance of those two.) How successfully publishers will sell books in the future will largely depend on how well they master the opportunities presented by Amazon, Apple, Facebook and Google.

We are still in the very early stages of the digital revolution. We don’t know where the book market is going, as I said, but when I look at how young people read, and especially how they do research, it is pretty clear that it will be increasingly be online and that most books will be obtained through online search.

We’ve been attacked relentlessly as Luddites for pursuing this case, but we think that it is Luddite not to see into the future far enough to understand how important full text search will be to monetizing books. We can’t just give away our right to copy for purposes of search. We’ve already seen the slippery slope effect in the fair use cases.

As I already noted, the Supreme Court has admonished courts in fair use cases to look at the potential harm that could be done if the use in dispute were to become “widespread” and “unrestricted.” But the Second Circuit in Google did not consider what will happen when every library or website can scan books and make them searchable online—just as the Eleventh Circuit in Georgia State failed to consider the results of widespread unrestricted use and instead took a very narrow, damages-centered view of the fourth factor. In Google, the Second Circuit proposed that authors bring a new lawsuit each time someone else comes along with a new digitization-and-display program that varies from Google’s. Needless to say, authors do not have the resources to do this.

As advances and royalties for new books dwindle, it has become imperative for most authors to earn income outside of traditional publishing. The Second Circuit’s decision destroys the digital age’s promise that authors would be able to republish, repurpose and self-publish their work, a market many of our members are already participating in. What the ruling means is that, no matter what authors’ plans had been for their books, it is likely that soon their books will be available online for free.

I know authors and publishers approach this issue from a slightly different perspective, and that many publishers license books to Google Books under limited use arrangements in order to promote sales. But we hope you stand by us as we fight to protect the principle that the decision of how much to allow Google to show should be left to the copyright owner, and that private companies should not be able to make digital copies of entire copyrighted books for financial gain without permission from the rights holders. If Google prevails, then this expanded interpretation of fair use will take a huge bite out of copyright law.

To be clear, we are not trying to shut down Google’s book search program, as our detractors have claimed. We were very clear in our argument to the Second Circuit that we were seeking damages only—that is, payment for the use. We are continuing the suit in hopes that the courts have not lost all sense when it comes to copyright and that the Supreme Court will assert the old rule that rights holders must be consulted before their books are copied in full for commercial, profit-making purposes.

Google has complained that it is too hard to license all the books from authors—that they should be excused from doing so because of the enormous scope of their infringement. In essence, they have successfully argued that they are too big to infringe. We believe these kinds of mass uses could and should be governed by collective licensing. Infringement should not be allowed merely because the use has some social benefit and clearance is hard. Let’s respond not by digging our heels in, but by making it a lot less hard. Let’s take that excuse away.

Without collective licensing, fair use will continue to determine the outcome of these cases. We have submitted comments to the Copyright Office proposing a collective licensing scheme for mass digitization that would pave the way for a real national digital library—not just the snippets currently offered by Google and others.

Indeed, applying fair use to mass digitization is a form of free compulsive licensing—one created by courts taking only one party’s interests into consideration, with the result that authors get no compensation. Congress is the body that should be determining what the rules should be for this sort of use, as it has the ability to broadly study and balance the needs of creators, users and other interested parties in the best interest of the nation as a whole.

In the public comments we submitted in response to a Copyright Office proposal, we recommended establishing collective licensing for out-of-print book rights (which authors and not publishers generally own). This would allow authors, publishers and other rights holders to be compensated at a reasonable rate and, at the same time, pave the way for a true digital library, where full books could be viewed, not just the excerpts and snippets currently offered. At the same time, users would not have to negotiate and obtain licenses on a case-by-case basis. And, critically, the books subject to the license would be out of print, to avoid disrupting commercial markets. Print and e-book distribution rights would not be part of the package—only the author or other rights holder could authorize such uses. The same platform for licensing could be used for in-print licensing, but rates would be set by the copyright owner.

Outside of the Copyright Office Pilot Program, we’ve also been working with other institutions to create a technical solution—a platform that would make online licensing a reality in the United States, enabling authors and other rights holders to make the rights to their out-of-print works available to potential end-users on licensing terms chosen by the rights holder.

IV. Small Claims Court

We’ve been supporting the creation of a small claims tribunal for copyright infringements. If created with care, this tribunal would allow individual authors and small publishers much greater access to the courts to protect their property rights, appreciably enhancing market incentives to create the literary works that the public values. Frivolous, harassing claims could be avoided by routine, automatic rejection of claims that do not raise a prima facie case of infringement. Dismissal without prejudice of claims in which a substantial fair use defense is raised would greatly speed and simplify the court’s proceedings, as would permitting the proceedings to be conducted by mail and phone. Affiliation with the Copyright Office would assure the court’s competence in copyright law. Finally, granting the court limited power to issue injunctions would strengthen the court and its credibility.

V. Contractual Imbalance and the Beginnings of Real Transformation

We know and respect the fact that publishers—
especially in this era of media consolidation—need to meet their bottom lines. But if professional authors are going to continue to produce the sort of work publishing houses are willing to stake their reputations on, those authors need a fair share of the profits from their art and labor.

That’s why we launched the Fair Contract Initiative last May. In our series, we have written about best practices for a number of standard publishing agreement clauses. We would like to start an open dialogue with publishers of all kinds to discuss the issues and what publishers can do to ensure that this business is fair and profitable for those who create the works that sustain it. We have started to reach out to many of you to set up meetings.

The issues for us are:

• half of net proceeds is the fair royalty for e-books;

• publishing contracts should be time-limited;

• standard contracts shouldn’t assign the copyright to the publisher, but should grant licenses;

• noncompete provisions and option clauses shouldn’t stand in the way of an author’s ability to write and publish freely;

• publishers’ accounting practices need to be more timely and transparent;

• deep discount clauses shouldn’t be used to unfairly deprive authors of royalties;

• a contract’s warranties and indemnifications shouldn’t place all legal risk on the author, but only for breach of fair representations that the author can make based on her knowledge;

• delivery and acceptance provisions should not give publishers a loop hole to get out of publishing a book, and they should let the author have the final say over the text of the published work.

We hope you and your lawyers will be willing to sit down with us to discuss these best practices. We are advocating on behalf of authors, of course, but we believe that authors and publishers are going to have to work together to combat all of the other forces that are trying to devalue books and the intellectual contributions of authors. No matter what forms publishing takes in the future—and there will be a variety of them—we believe that most professional authors will continue to want to work with publishers, because they help edit and market and sell, and because they pay the advances that give authors the freedom to devote themselves full-time to writing. Publishers play a major role in allowing professional authors to write quality books, particularly books that further knowledge and learning—which is, after all, the very purpose of copyright.

I hope we can stake out our common ground in the coming years and work together to make the book ecosystem robust and diverse so that our literature can continue to thrive.