Open Road CEO Hails ‘Tremendous’ Performance in 2016

14 January 2017

From Publishers Weekly:

In a year-end letter to staff, Open Road Integrated Media CEO Paul Slavin praised ORIM employees for a year of “consistent and continuous revenue growth,” marked by a 23% increase in fouth quarter revenue and a 14% increase in gross profits.

Praising staff for performing “tremendously,” Slavin wrote that Open Road Integrated Media, an e-publishing and digital marketing operation, “showed better-than-expected earnings across the board in revenues from e-books, print, distribution, subsidiary rights, and affiliate.” The company reported an average quarterly revenue growth of about 8.5% and “year-over-year gross profits increased by nearly 14%,” Slavin said.

ORIM specializes in publishing, marketing, and distributing a backlist of e-books by a distinctive group of acclaimed authors. Slavin highlighted “17 backlist e-books hitting the Wall Street Journal and New York Times bestseller lists.”

Pointing to ORIM’s founding principle—“you can bring great backlist to the forefront again”—Slavin said: “Our acquisitions selection process has been honed to a highly competitive edge, and thousands of backlist titles have undergone a complete transformation of descriptive copy, metadata, and cover design.”

. . . .

Early Bird Books, ORIM’s daily deals e-book newsletter, generated the biggest growth in revenue, increasing by 232% year-over-year, which was 40% over budget. ORIM newsletters reach more than 650,000 consumers, and the company has more than 3 million social media followers. Direct-to-consumer businesses, Slavin said, contributed 7.6% of total revenue in 2016, and those businesses are expected to continue to offer “significant” growth in 2017.

ORIM also operates a network of genre-focused websites, among them the Line Up (True Crime/Horror) and the Portalist (science fiction/fantasy), that attracted 22 million users in 2016.

Link to the rest at Publishers Weekly

D2C strategy for Open Road

7 December 2015
Comments Off on D2C strategy for Open Road

From The Bookseller:

Jane Friedman’s Open Road e-book company has had one million page views for its new, direct-to-consumer online community The Lineup  in its first six months of existence, Friedman revealed at the FutureBook Conference today (4th December).

Open Road aims to get 10m unique users of The Lineup, which focuses on true crime, and it will take advertising, she said, at a panel session entitled “Face Out: Strategies that Work and Why”.

The Lineup is set to be the first of many such communities developed by Open Road, which is making a strong push into direct-to-consumer marketing, offering daily deals and giveaways via website earlybirdbooks.com, supported by a five-days-a-week newsletter.

“At the moment we are just influencing consumers, who then buy from other retailers, but there is room for an app, building our own platform, and, with investment, turning Open Road into the company we would like to see,” Friedman said.

The D2C initiative is the latest development from the five-year-old venture, which has now clocked up 15m downloads of its backlist e-books, with the help of extensive marketing on its proprietary online platform.

However, Open Road has always had good relationships with retailers, emphasised Friedman, noting that the company had 500 e-books out of 1,000 promoted by Amazon for Black Friday, resulting in a “very, very successful day.”

Link to the rest at The Bookseller and thanks to Ryan for the tip.

Open Road Fires Back at HarperCollins in Copyright Case

23 June 2014

From Publishers Weekly:

In a court filing, Open Road attorneys last week assailed what it called HarperCollins’ “extreme”proposal for an injunction and more than $1.1 million in legal fees and damages to settle claims stemming from Open Road’s unauthorized e-book edition of Jean Craighead George’s Julie of the Wolves.

Claiming that the Harper proposal is based on “a misleading portrayal” of the facts, Open Road attorneys argued that not only has Harper not suffered the kind of irreparable harm necessary to justify its proposed remedy, in fact it has not suffered any harm at all. “Harper cannot prove any present harm, let alone irreparable harm,” Open Road attorneys argued, noting that despite its win in court, Harper does not have the right to sell Julie of the Wolves e-books without the author’s consent, “which it has never obtained” owing to “a fundamental disagreement as to a fair e-book royalty.”

. . . .

 In its response last week, Open Road argued that it litigated the case in a “non-vexatious” manner only after two separate legal reviews supported its belief that George held e-book rights. The brief concluded that a damage award in the $750 to $30,000 range would be “sufficient,” given that Open Road has not made significant profits and that Harper lacks the explicit right to publish a digital edition of its own.

. . . .

 “Authors who believe they have retained e-book rights and traditional publishers who often overreach in claiming broad grants under the original contracts are often involved in negotiations over the exploitation of the authors’ works in new media,” the Open Road brief argues. “Given the disparity in economic resources, those negotiations are already heavily skewed in favor of the large publishers. The Court should not skew the balance further against authors who seek to assert their rights with the threat of million dollar attorneys’ fee awards.”

. . . .

 At its heart, however, as Open Road’s brief suggests, the case is more about e-book royalties. HarperCollins signed George’s Julie of the Wolves in 1971, for a $2000 advance and has since sold over 3.8 million copies in print. But according to court filings, Harper has refused to budge from a 25% net royalty on e-book sales, which George, before her death in May 2012, deemed fundamentally unfair. Open Road paid George a 50% e-book royalty.

Link to the rest at Publishers Weekly and thanks to Dana for the tip.

Harper Seeks Injunction in Dispute with Open Road

25 May 2014

From Publishers Weekly:

Calling it a case of “blatant infringement,” attorneys for HarperCollins have asked the court for a permanent injunction blocking Open Road from publishing its unauthorized e-book edition of Jean Craighead George’s Julie of the Wolves, as well as more than $1.1 million in damages and attorney costs.

The request comes after HarperCollins’s recent win in its copyright suit against Open Road, and after the parties were unable to come to a voluntary settlement to resolve the case. Under a court order, Open Road is set to file its opposition brief no later than June 20.

. . . .

HarperCollins attorneys said a meaningful damage award was necessary to “deter Open Road, and others, from arrogating to themselves the new-media publication rights of legitimate licensees like HarperCollins,” and to bolster “an orderly market” for electronic publication rights.

“This case will surely be looked to as an important precedent in this area,” the brief states. “Hence, a sizable statutory damage award, coupled with the other remedies sought in this motion, will send an appropriately strong message to digital publishers.”

. . . .

  HarperCollins also asked the court for attorneys’ fees in the amount of $1,089,371.50 and costs in the amount of $7,040.62. That figure represents 70% of HarperCollins’ total fees of $1,556,245.00.

. . . .

[T]his case is at its heart more of a contract dispute than a copyright case, driven primarily by digital royalty rates. The author opted to go with Open Road for a 50% e-book royalty, while HarperCollins is said to have offered a digital edition, but refused to match the 50% royalty.

It seems unlikely that HarperCollins would have chosen to undergo the expense and uncertainty of litigation with Open Road only to enter into a license agreement with Open Road after winning.

It also seems unlikely that George’s estate would agree to take a lesser royalty with HarperCollins. In an earlier filing in the case, George was said to have deemed HarperCollins’s e-book royalty rate “fundamentally unfair to authors.” Given the increasing industry-wide pressure to raise e-book royalties, and the apparently lackluster sales of Open Road’s digital edition, there is surely no need for George’s estate to rush into a new e-book deal.

Link to the rest at Publishers Weekly

This is a suit between HarperCollins, the original paper publisher of Jean Craighead George’s “Julie of the Wolves,” and Open Road Media, the publisher of the ebook version of the same title. Ms. George voluntarily entered the lawsuit in support of Open Road.

Even if Ms. George hadn’t formally entered into the suit, she would have been involved in interrogatories, depositions, possible testimony at trial, etc., and would have been wise to retain her own attorney to help with those.

From the pieces of the contract that have appeared in the court case, PG hopes Open Road appeals the verdict.

Pulling back, there are some lessons for other authors from this lawsuit:

1. The standard “term of the copyright” clauses in the contracts traditional publishers ask you to sign really do mean you’re stuck with your publisher forever whether you like it or not.

Ms. George signed her HarperCollins contract in 1971. She was in her 90’s when she was draw into this litigation and died before the trial court’s decision. PG didn’t know Ms. George, but he expects she wasn’t happy being in the middle of a lawsuit during the last years of her life.

2. Be very careful what you sign. As reported in various publications, the contract clause at the center of this lawsuit was written by Ms. George’s agent and, apparently, never reviewed by an attorney acting on her behalf. Based on the court records and published accounts, the clause in question was very poorly written.

As you can see by the Publishers Weekly excerpt above, Harper Collins has spent $1.5 million (which is inexpensive for New York City litigation) litigating this poorly-written clause. PG expects Open Road has spent a similar amount.

Bad contract clauses can cost a lot of money.

3. Warranties in publishing contracts can cost real money. According to published reports, Open Road agreed that it would pay for costs arising from any suits against it by HarperCollins, so Ms. George doesn’t appear to be on the hook for Open Road’s attorneys fees.

However, this is most definitely not typical in virtually all contracts from traditional publishers. Normally, under Warranty and Indemnity clauses that nobody but lawyers ever read and understand, the author must pay for everything if the publisher is sued because of the author’s book.

Under a typical publishing contract, Open Road would be asking Ms. George to pay its damages and attorneys fees. If Open Road were required to pay HarperCollins’ attorneys fees, under a typical publishing contract, Open Road would be asking Ms. George to pay those as well.

And, unless Open Road decides to give up and pay up, the case is far from over at this point and there will be a lot more attorneys fees.

Open Road, HarperCollins Back in Court

1 May 2014

From Publishers Weekly:

HarperCollins and Open Road were back in court last week. According to court filings, the parties have apparently not worked out a final resolution to their copyright dispute over Open Road’s e-book edition of Jean Craighead George’s 1973 bestselling children’s book Julie of the Wolves.

. . . .

The appearance comes after judge Naomi Reice Buchwald ruled last month that Open Road infringed HarperCollins’s copyright in publishing its e-book edition. Buchwald held that a clause, inserted by agent Curtis Brown in the 1971 contract, which encompassed digital technologies “now known or hereafter invented” was “sufficiently broad to draw within its ambit e-book publication.”

Link to the rest at Publishers Weekly

Judge Rules for HarperCollins in Open Road E-Book Dispute

18 March 2014

From Publishers Weekly:

In a significant ruling regarding backlist e-book rights, a New York court this week held that e-book publisher Open Road infringed HarperCollins’ copyright with its e-book edition of Jean Craighead George’s 1973 bestselling children’s book Julie of the Wolves.

“Having accordingly relied on the words of the contract, this Court holds that, by its language, the contract grants to HarperCollins the exclusive right to license electronic publications, a right which was infringed by Open Road in its unlicensed e-book publication of Julie of the Wolves,” held judge Naomi Reice Buchwald.

While some have viewed the case as a follow-up to the 2001 landmark ruling in Rosetta vs. Random House, the judge acknowledged that her ruling “dependent as it is on antiquated language,” could be of “limited applicability beyond the confines of this contract and this case.”

The suit was filed by HarperCollins in December of 2011, after George had agreed to publish an e-book edition of her 1973 Newbery Award-winning book with Open Road. HarperCollins argued that two clauses in its contract (signed in 1971) gave it the exclusive right to license an electronic edition—albeit, only to be executed with the permission of George.

Open Road, however, believed there to be no explicit grant of e-book rights in the contract, and offered to publish the digital edition, even agreeing to indemnify George and her agency, Curtis Brown.

. . . .

In 2001, Random House sued Rosetta Books, arguing that contracts for three works signed by Rosetta included the rights to publish the works in e-book editions. In July, 2001, district court judge Sidney Stein ruled that Random House’s language to “print, publish and sell the works in book form” did not include the format “that has come to be known as the e-book.” In March, 2002, the Second Circuit unanimously upheld Stein’s opinion. In 2002, Random House settled the case.

Like the Rosetta case, the heart of the issue in the HarperCollins suit is a disputed contract clause. But unlike the Rosetta case, HarperCollins argued that its contract with George included both a standard subsidiary rights grant (paragraph 23), which taken with another clause (paragraph 20), gave HarperCollins e-book rights.

Specifically, paragraph 20 of the 1971 contract stated that HarperCollins “shall grant no license without the prior written consent of the Author… including uses in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented…”

. . . .

In her reading, Buchwald held that the HarperCollins contract at issue “differs significantly” from its counterpart in Rosetta Books. First, while the governing grant in both contracts convey the right to publish “in book form,” the Rosetta contract grant is “to print, publish and sell in book form.” The word “print” does not appear in the HarperCollins contract. The inclusion of the word “print,” Buchwald ruled, “has a limiting effect and a strong connotation of paper copy,” distinguishing the case from Rosetta Books.

. . . .

“This language, encompassing as it does the forward-looking reference to technologies ‘now known or hereafter invented,’ is sufficiently broad to draw within its ambit e-book publication,” Buchwald ruled. “Although no commercial market for e-books existed at the time of its drafting, e-book technology comprises a later-invented version of the very computer, computer-stored, mechanical or other electronic means provided by Paragraph 20.”

Link to the rest at Publishers Weekly and thanks to James for the tip.

PG says this is another reason for authors to be very careful about the contracts they sign with publishers.

And a reminder that contracts for the life of the copyright really are essentially forever. The author in this case died while litigation was in process.

New Filings Hint Royalties Driving HC’s Suit Against Open Road

5 April 2013

From Publishers Weekly:

Opposition briefs were filed this week in HarperCollins’ lawsuit against Open Road over the digital publisher’s e-book edition of Jean Craighead George’s 1973 bestselling children’s book Julie of the Wolves. While both sides seek to bolster their cases for who owns the e-book rights, the filings further suggest that the case is more about e-book royalties.

“Harper had its opportunity to publish an e-book edition of Julie of the Wolves,” the Open Road brief states, adding that fact is not contested by HarperCollins. “George, who was certain she retained the e-book publication rights, would have preferred to publish with Harper because of their long print association. Harper, however, would not meet Open Road’s 50% royalty offer, insisting Ms. George accept just [number redacted]which she deemed fundamentally unfair to authors given the low costs and high efficiencies of e-book publishing. Therefore, Ms. George chose to publish with Open Road. Having lost in the marketplace, Harper then turned to the Federal Court, asking it to save Harper from its bad business decision.”

Contract questions aside, that contention certainly raises a business question: having published and sold more than 3.8 million copies, did HarperCollins choose to litigate over a contested phrase in a contract drafted more than 40 years ago, before e-books were invented, rather than negotiate a higher e-book royalty rate for a bestselling author? And if so, why? Although the case will almost certainly turn on how the court interprets a contested clause in the contract, the filings suggest the case could have been avoided.

. . . .

Meanwhile, the clause in question, both sides acknowledge, was inserted by George’s agent, Curtis Brown, and a significant part of the Open Road brief is spent explaining that HarperCollins’ reading of the contract is only enabled because Brown’s clause is poorly written and contans a grammatical error. But the fact that Brown inserted the clause in the first place raises questions: would an agent ever seek to insert a clause giving away an exclusive publishing right to a lucrative medium not yet imagined? And, even if HarperCollins prevails, how applicable would the decision be in settling other questions about backlist e-book rights? After all, the language at issue is not HarperCollins boilerplate language.

Link to the rest at Publishers Weekly

In PG’s perpetually humble opinion, the filings reveal distinct evidence of a short-sighted overreach by HarperCollins.

For a little background, during the early days of ebook provisions in publishing agreements, publishers regarded anything to do with computers and books as a subsidiary right and decided that ebook royalties of 50% of the amount received by the publisher were fair. After all, this would probably be a license and the only thing being delivered to the customer was a bunch of bits and bytes that represented no incremental cost of production once the digital file had been created. The publisher’s 50% share would be pure gravy.

As mentioned in earlier filings in this case, the clause inserted by George’s agent provided for a 50/50 split of computer-based proceeds, which reflected the nascent standard.

As ebooks began to sell in small quantities, in an amazing coincidence, major publishers simultaneously changed their ebook royalty provisions to pay the author 25%.

(If PG were cynical, he would point out similarities between this ebook royalty coincidence and the coincidence of five large publishers simultaneously forcing agency pricing on Amazon. Fortunately, PG is never cynical.)

As the filings indicate, after being approached by Open Road about publishing an ebook version of her multi-million copy classic, Julie of the Wolves, at the earlier prevailing royalty of 50%, Ms. George, the author, contacted Harper about doing the same deal.

Harper said no. PG suspects Harper was worried about setting any sort of precedent for other authors by giving anyone a 50% ebook deal – opening the floodgates and all that, you know. If Ms. George wouldn’t cave and accept 25%, there would be no ebook version at all.

PG would note that, if Harper was really confident that, in fact, it had the exclusive right to publish an ebook version of Julie, it would have done so. Counsel undoubtedly warned that taking this path could result in a successful suit for copyright infringement by Ms. George, likely with enhanced damages for willful infringement. And, of course, there was that problematic contract language about paying Ms. George 50% of ebook proceeds.

Unfortunately, advice of counsel is privileged, so the court will not be given the benefit of the warning Harper’s counsel likely gave about Harper not having enough rights to actually publish an ebook.

Battle Lines Drawn in HarperCollins, Open Road E-Book Suit

28 March 2013

From Publishers Weekly:

More than a year since the case was first filed, cross-motions for Summary Judgment were finally submitted last week in HarperCollins’ lawsuit against Open Road over the e-book publisher’s e-book edition of Julie of the Wolves, Jean Craighead George’s bestselling children’s book. In its filing, attorneys for HarperCollins argue that the case is not a replay of the 2001 Rosetta Books case, the industry’s previous benchmark lawsuit over digital rights, but the Rosetta case clearly looms large.

. . . .

The case was filed in late December, 2011, by HarperCollins, after author Jean Craighead George agreed to publish an e-book edition of her 1973 Newbery Award-winning book with Open Road. In its suit, HarperCollins argues that its contract (signed in 1971) gives HarperCollins the exclusive rights to license an electronic edition—albeit, only to be executed with the permission of George. Open Road, however, counters that no such grant exists for e-book rights.

. . . .

[T]he heart of the issue in the HarperCollins suit is a disputed contract clause over who owns e-book rights in contracts where the right is not expressly granted.

. . . .

In addition, and also unlike the Rosetta contracts, George’s contract with HarperCollins’ also contains an “explicit reservation of rights” provision: “All rights in the Work now existing, or which may hereafter come into existence, not specifically herein granted, are reserved to the Author for use at any time.”

Link to the rest at Publishers Weekly

Here are links to the memoranda in support of each party’s Motion for Summary Judgment:

HarperCollins

Open Road

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