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Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

U.S. authors: Kindle lending library is 'contract breach'

By | November 16, 2011, 6:44am PST

Summary: Amazon is in hot water with publishers, after accusations that the online giant “boldly breached contracts” with its new Kindle lending library service.

It has been less than two weeks since Amazon launched its Kindle owners’ lending library, giving Amazon Prime customers additional perks to borrow a book a month for free with no due-back dates.

But some American authors are furious over the new Kindle lending library after accusations were made that the online book giant is “boldly breaching its contracts” with publishers, the Guardian reports.


(Source: Flickr, CC)

The library has over 5,000 titles available, including bestselling titles and Booker-winning novels, Amazon said during the library’s announcement that the books came from publishers under “a variety of terms”. Most will have come from publishers after agreements were struck to include the books for a fixed fee, while others will have been purchased under standard wholesale terms each time the book is borrowed.

Publishers and authors are like, however, are failing to see how the library works in the “best interests” of the novel writers.

In a statement released by the Association of Authors’ Representatives (AAR), it said:

“The agent and author community have not been consulted about this new sort of use of authors’ copyrighted material, and are unaware of how publishers plan on compensating authors for this sort of use of their books, which is unprecedented.”

The group added: “Without a clear contractual understanding with their authors, it is unclear to us how publishers can participate in this program”, whilst making it clear that it “isn’t about Amazon”, more rather a rebuttal to subscription models.

The Authors Guild, who this year began legal action against a number of U.S. universities after the guild moved to prevent their authors’ work from becoming digitized, called Amazon’s lending library a “mess” and that the online giant has “simply disregarded” the wishes of publishers.

But this controversy is part of a long list of issues over the years, with publishers wanting one thing for its clients and writers, whilst major industries often attempt to take advantage without realising what a powerful collective force these groups and guilds of writers can be.

Amazon seems to believe that it does not require the permission of publishers to include the books as part of its lending library, with some publishers reportedly only learning of the service as news of the lending library broke less than two weeks ago.

Amazon was not immediately available to comment.

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Topics

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

Disclosure

Zack Whittaker

I worked briefly with Microsoft UK in 2006 but no longer have any connection with the company. Regardless, I remain impartial and unbiased in my views.

I don't hold any stock or shares, investments or industrial secrets in any company, but have signed confidentiality agreements with a number of UK and U.S. organisations, whose names I am not at liberty to disclose.

I was involved with Kent Union, the University of Kent's student union, undertaking voluntary, non-salaried, elected positions between early 2009 and mid-2010.

No other company, body, government department, non-governmental organisation or third sector organisation employs me or pays me a salary in any capacity whatsoever.

As a freelance journalist, whenever expenses are given and taken by a company that is not CBS Interactive, these will be disclosed in each relevant post to ensure transparency.

I currently work with a UK law enforcement unit, but this is an entirely separate position which bears no connection to other work.

(Updated: 23rd October 2011)

Biography

Zack Whittaker

Zack Whittaker, criminologist who studied at the University of Kent, UK, is a journalist, writer and broadcaster.

After studying criminology at university, though still in his early-20's, he has already had a series unconventional work and voluntary positions. He has worked with researchers studying neurological illnesses like Tourette's syndrome (which he suffers from), has given lectures on the nature of disabilities in the public community, and occasionally ends up speaking on television and radio discussing the events of the day.

He first had academic work published at the age of 22, then still an undergraduate, and has been cited by a wide range of publications: from CNN, the Huffington Post, AllThingsDigital, The Atlantic Wire and CBS News.

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RE: U.S. authors: Kindle lending library is 'contract breach'
ArdRhi 22nd Nov
@grayknight Have you ever LOOKED at the Kindle system? In most cases, the author IS the publisher! There is no third party involved! It's not like a book deal, where there's some agent, and a publisher, and an editor, so there's some evil corporation you can say is sitting in some New York office twirling his moustache and sticking it to the poor author. Most Kindle authors represent THEMSELVES.
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Contributr
Well, speaking as a book author here, I'd welcome having my books in the Amazon lending library. I'm all about reaching as many readers as I possibly can.

So, uh, Amazon, call me. We'll do lunch.
@David Gewirtz ... If you did and it was fudged and or ignored you'd be miffed and rightly so. After all you'd have thought you and Amazon were simpatico and you had the reach Amazon supposedly gave you with the agreement only to find well everything you thought you had was now questionable.

Pagan jim
@David Gewirtz

Good for you, altruism is alive and well besides some folks can truly live on fresh air and water.
Yeah, I'm not understanding their complaints on this one. The article says that either the publisher already agreed to this, or Amazon is giving the wholesale purchase price to the publisher each time the book is lent. How is this harming the author in any way? I think these people are just complaining to complain... Perhaps someone should explain to them how they're not losing any money and it gets their book out for people to read and pass along word-of-mouth reviews.
@Unusual1
The issue is what the author's compensation is...
???The agent and author community have not been consulted about this new sort of use of authors??? copyrighted material, and are unaware of how publishers plan on compensating authors for this sort of use of their books, which is unprecedented.??? Sure, the publisher may be compensated by Amazon, but what about the author who created the work - what's the relationship between the publisher & the creator?
@earljgray@...
But how is any of that Amazon's concern? Worst case, publishers may determine they didn't have the rights to let Amazon get fixed-price usage and end those contracts. And then Amazon could switch to paying wholesale rates per use.

If I buy a car at the dealership, how the salesman or the guy who screwed on the door get compensated really isn't my problem.
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SleepyBob, that's the problem -
William Farrell 16th Nov
@earljgray@...
this isn't about you at all, but it does effect you.
If content creators and publishers aren't compensated for their works, they (like the salesman and door guy) quit making content.

Now you have nothing to read on you new Kindle
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@earljgray@...

That is between the author and the publisher!

If the author's compensation is based on a percentage of the book sales; then the author's agent should have properly negotiated a rate that reflects "wholesale" sales .

If the author's compensation is based on a fixed fee per book sold, then the author's agent should have seen to it that the rate per book is the same; whether it is a "wholesale" or retail sale.

The only fly in the ointment may be one that would occur if the author's contract with the publisher covered print sales only, and reserved any digital distribution rights for the author. In that case, someone has a problem.

This is not that much different that music artists' beef with the labels over 'ringtones' and how musicians are compensated for them.

Note: God, do I hate this lousy forum software, whatever formatting you use in a post gets removed IF you edit it.
@William Farrell There was no copyright in Shakespeare's day. What was his incentive to create?
@earljgray@... In the Amazon Kindle system, in MOST cases, the creator IS the publisher. There are very few cases where some third party, such as a Big 6 publishing house, is representing the creator in the deal. The author has created a "publishing company" presence to address this, to hold the copyrights, and to make the contracts. So they are representing themselves.

So, saying "it's between the author and the publisher" is saying that the author should sit down and have some kind of schizoid argument with himself about how he should have predicted that Amazon was going to come out with a Lending Library and arranged for Amazon to include that in the boilerplate contract...? Come on, be real. Amazon presents a single, monolithic agreement, with allowances for the options for the 35% vs 70% royalty scheme, etc. But there's nothing in it regarding the "Lending Library", because it hadn't been invented yet. Amazon clearly just came up with a "hey, wouldn't it be NEAT?" and didn't stop to think that all those agreements they made *don't cover it*.
@Unusual1 Greed would be the Word. (sung by Frankie Valli)
Tell you what. Quit accepting your paycheck from your job.
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And that in this day and age with so much legal contract history behind us that any two parties can still sign a contract and NOT have clear understanding of what the contract says!!! Someone is wrong here either the Authors or Amazon.

Pagan jim
@James Quinn Actually, contracts have gotten so complex that anyone can read just about anything into them.
@James Quinn, actually, the publishers are the ones at fault, they already signed something that allowed Amazon to put the books in the lending library, but did not set up a way to get the authors' portion of money that Amazon paid to the author. The convoluted contracts are really the main culprit. Why can't these contracts be simplified? If we, the publisher, get paid for your (the author's) content, we'll pay you 75% of what we get.
@grayknight Have you ever LOOKED at the Kindle system? In most cases, the author IS the publisher! There is no third party involved! It's not like a book deal, where there's some agent, and a publisher, and an editor, so there's some evil corporation you can say is sitting in some New York office twirling his moustache and sticking it to the poor author. Most Kindle authors represent THEMSELVES.
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Libraries across the US are lending ebooks
DadsPad Updated - 16th Nov
Are the publishers now going after Regional Libraries now? When Amazon offered its deal to work with libraries to lend ebooks on the Kindle, nothing came under attack for this. Now that Amazon is offering the same thing as the Libraries if you pay $79 a year, it is a big deal.

Publishers, themselves, may be guilty of price fixing, which is illegal last I heard.
When someone goes to the local public library and borrows a book for 2 weeks, neither the publisher nor the author are compensated. If two dozen people a year borrow that one copy of the book, does the library owe the author and publisher royalties? I think not, or we would not have public lending libraries.

I fail to see how loaning eBooks for a temporary amount of time differs from loaning physical books, assuming that SOMEONE (Amazon or the library) paid for one copy of the eBook that they loan out, and that they limit the number of loans at any one time to the number of purchased copies intended for that purpose.
@jim@... If someone "invented" the concept of a brick-and-mortar library lending dead-tree books today, it would be shut down by the FBI for copyright infringement. You can count on it.
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And how is this any different than the "Lend Me" feature that the Nooks have had for quite some time now as far as authors are concerned? Doesn't B&N have the same type of agreements in place that Amazon does with the publishers? And really how is this any different from people lending physical books?
@Pete "athynz" Athens
The authors don't like the fact that you can get physical books from the library or lend physical books to friends, so they want to be able to do something different with digital content.

They would probably prefer, like a lot of content providers, that you pay them each time you ready the book. The problem is, they would sell a lot fewer books.
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Soooooo
rhonin 17th Nov
@tbuccelli
Physical on paper you can sell, lend or give away.
Physical on a digital device you can sell or give away.

Say what?!?
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How libraries lend e-Books
big red one 16th Nov
Many libraries are now offering e-Book "lending." You can log into the library and download the book to your computer, then transfer to your reader (if necessary).

HOWEVER, understand that, like physical books, this is limited. If the library buys "three copies" of your e-Book, they can only lend out THREE at one time. It's not a lot of free books being lent after buying only one copy. PLUS, publishers are now limiting the number of times those e-Books can be lent. After all, popular physical books get lent and handled a lot, so they need extra copies or have to buy new copies to replace the ones that are worn out. This doesn't happen to e-Books, so they need to make some arrangement to be fair to publishers and authors. Books should be cheaper since nothing has to be printed, but the author should still be getting a fair cut. And no matter how you feel about this, it's still a REALLY GOOD DEAL for libraries, publishers, authors and the public.

Did Amazon go through ANY of this before they decided to start lending out books they carry? I might add that only recently have books become available to libraries in Kindle format. Previously it was only in Nook or open-source formats.
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Hmmm....
rhonin Updated - 17th Nov
@big red one
it's still a REALLY GOOD DEAL for libraries, publishers, authors and the public.
With the increased costs of physical hardcover books and the increasing limitations on ebook lending (ie - increase in cost) I can see why I am seeing less and less physical libraries - both in public and in schools.
@big red one Limiting the number of times an ebook is lent is entirely bogus. It is just another example of how we hamstring new technologies by lashing to them OLD OLD OLD Rules based on a completely different market. DIGITAL BOOKS DON'T WEAR OUT!!! So if you MUST, come up with a model where some payment goes back up the chain every time a book is lent. Or let everyone save money on paperwork (digital or not) and come up with reasonable fees. Its a new world. Figure out how to work with it or sooner than later someone else will blow all the old world market models to irrelevancy. Keep moving forward Amazon!!!!
@big red one
Did you read the third paragraph of the article? "Most will have come from publishers after agreements were struck to include the books for a fixed fee, while others will have been purchased under standard wholesale terms each time the book is borrowed." This means that every time Amazon loans a book, they pay the publisher just as if the book had been purchased. Not once for each book and loan multiple times, but a payment for each loan. The publishers are getting paid as if each loan is a sale, even though the customer is only borrowing it to read for a short time. They are not losing anything!
The ???a variety of terms??? statement almost sounds like Amazon itself is not exactly sure how this will work.

But to be fair if Amazon and the publishers have an agreement it is up to the publishers to hash out how their authors will be paid, not Amazon. The only thing Amazon needs to worry about is if the publishers decide to end that agreement and request those works no longer be lendable through the program.

Seems like there's gonna be more fighting regarding eBooks and it's really gonna get worse before it gets better, much like how there is (still) fighting regarding musical and motion picture works, especially regarding "streaming" or "lending"
Bookflicks anyone?

Amazon is testing how delivering books as a service rather than per book.
Of course publishers don't like it. Amazon Kindle charges the same price for a digital copy of a book as it would be for a regular book.
A Service that would allow kindle users to read a new book every month for a flat service fee would be highly desireble for readers but make profits for publishers non existant for digital delivery of their books for amazon.

The lending service is just a test, a teaser for what is to come.

But in the end money talks. You can't make money allowing people to read books for free.
@Bakabaka

Which you only rent. I would much rather have a physical book, which, when I am done with it; lend to a friend, or sell. I would bet that the terms and conditions connected with a 'digital book' do not allow you to transfer it to another person. It is the same reason why I prefer to buy a CD, as opposed to a 'digital download'.

I still remember the shuttering of Plays For Sure not that long ago. I wonder how many people got screwed there!
@fatman65536
Which is why I immediately remove the DRM from any ebook that I purchase. It's probably illegal, but it's quick and easy, and allows me to keep that book forever and read it wherever and whenever I choose. I do not, however, sell it or loan it to anyone. If I really like it, I recommend that they either buy it or check it out from the library.
And, Bakabaka, read the article - third paragraph. The publisher is **getting paid standard wholesale price for each book, or a previously agreed on fixed price**, just as if it had been sold. Every time Amazon loans the book to someone. They're not losing anything! If anything, Amazon would be the one losing money. But they're not, because it pushes more people to purchase their Amazon Prime service, and they sell a LOT of product. The costs for this are just included in their cost of sales.
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Please fix this sentence...
joetron2030 16th Nov
"Publishers and authors are like, however, are failing to see how the library works in the ???best interests??? of the novel writers."
It's typical of Amazon's attitude with content creators. They already are kind of ripping small game publishers of their rights. Now they want to do the same with books.
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So how would you
rhonin 17th Nov
@atari_z
How would you make a "Spotify" for books instead of songs?
It may be that they'll sell more due to this lending library. I borrowed The Hunger Games the first day the library opened, and liked it so much I bought and read the two sequels within days. I'll buy Hunger Games itself when I get ready to reread.

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