The rise of the e-book: issues for publishers and the impact on translation rights Lynette Owen, Copyright and Rights Consultant Moscow, September 6 th 2013

Electronic publishing: the last 20 years In the Anglophone countries, academic and professional publishers moved to publishing electronically in the early 1990s, first on CD-Rom and then online Legal and scientific publishers took the lead; subscribers were legal firms and universities Users needed to search large databases of content, and accessed via desktop or laptop computers

Electronic publishing: the last 10 years Mass market publishers have come to electronic publishing far more recently and have been more influenced by the second generation of dedicated e-readers (e.g. Amazon’s Kindle, Kobo, Barnes & Noble’s NOOK) and by tablet devices and smart phones. Users tend to want to read a complete work rather then search a database; portability is the main advantage

What have been the challenges for publishers? (1) The need to acquire clear contractual permission from authors to publish in any digital format, in whole or in part, and to be able to license to third parties; authors’ agents have been resistant Authors and agents expect higher royalty rates on electronic versions than on print, arguing that publishers have lower costs Also need to acquire permission for electronic use of any third party copyright material e.g. quoted text, photos, illustrations

What have been the challenges for publishers? (2) The need to reach satisfactory financial arrangements with e-book retailers (e.g. Amazon, Apple, Kobo, Sony, Google) and with e-book library aggregators (e.g. Proquest, Credo. MyiLibrary, Books 24x7)

Other issues (1): e-book pricing Publishers supplying e-books direct to customers from their own websites have varied policies: some price the e-book at the same price as their own edition or (if they publish in hardback and paperback) at the price of their paperback edition; others price e-books at less than the print edition There are issues with VAT – e.g. in the UK, VAT on print books is 0% but VAT on e-books is currently 20%; publishers are lobbying for 0%

Other issues (2): financial arrangements with retailers Publishers initially allowed e-book retailers to set e-book prices, but low e-book prices impacted on publishers’ own print sales Major trade publishers moved to the “agency model” with publishers setting e-book prices and e-book retailer retaining 30% share US and EU authorities contested the model, claiming that e-books would be more expensive; in April 2012 US Department of Justice instituted anti-trust suit against Apple and 5 major trade publishers; publishers have settled.

Other issues (3); financial arrangements with retailers In July 2013 Apple were convicted of conspiring to fix e-book prices. The US Department of Justice has required them to terminate any price-fixing agreements with the five publishers, and also to provide links to the sites of competing e-book retailers so consumers can compare prices

Other issues (4): should e-books be DRM-protected? Most Anglophone publishers continue to use Adobe DRM protection; however, some are experimenting with “social DRM” – watermarking the files so that the source of any unauthorised copies can be identified NB the music industry has tended to abandon DRM on the grounds that it encourages rather than deters piracy

Other issues (5): piracy Like the music and film industries, publishers have been affected by illegal file sharing and torrent sites To date, most unauthorised copies originate from scanned print copies rather than pirated e-book files In 2009, the UK Publishers Association established its Copyright Infringement Portal, which enables members to issue notice and takedown to offending sites; they expect about one million notices to be issued this year

Other issues (6): piracy (cont.) The site has been very successful in deterring amateur infringers (e.g. students posting copies of textbooks). Commercial infringers may re-emerge on other sites

The impact of e-books on translation rights (1) An increasing number of publishers who already have print translation licences are seeking to add e-book rights to their licence Many markets are not as well developed as the Anglophone market In some markets e-books are priced far lower then the print edition and intermediate retailers take a large percentage of the e-book price There are many different financial models: direct sales to customers, sales via e-book retailers, via aggregators on subscription basis, rental models

The impact of e-books on translation rights (2) Rightsholders may be reluctant to grant e-book rights in new markets where financial models are unclear Different supply models mean there cannot be a single standard contract In many markets, low e-book prices mean that rightsholders will expect a much higher royalty on the e-book than on the print edition (e.g. 25% of net receipts rather than 10%) Western publishers have particular concerns about piracy; many torrent sites are located in Russia

The impact of e-books on translation rights (3) If the print licensee is reliable, it is better to give them e-book rights even if revenue is modest; as investors in the translated edition, they should be motivated to take action against piracy With e-book sales unpredictable, there will always be concern over whether e-book sales will cannibalise print sales Rightsholders are unlikely to agree to grant translation rights in e-book form only; authors will want a print edition as well

Questions for potential licensees What is their e-book pricing policy and supply model? What share will e-book retailer take? Will e-books be DRM protected? What can the end user do: download? Store? Bookmark? Annotate? Use on more than one device? Lend? Print out material (and if so how much?)

Questions?