Contracts

The Beginning of the End for Patreon

9 February 2019

From The Digital Reader:

There comes a time in the life of many companies when the owners (or investors, or vulture stockholders) decide that they want to extract more profit than is healthy for the company to survive. This is one of the things killing American newspapers, and it’s even impacting B&N, and now it’s about to kill Patreon.

Patreon is fairly healthy, but apparently not profitable enough for its capital investors.

From CNBC:

The number of active patrons supporting artists on the platform in 2019 has seen significant growth, up 1 million over the last year, the company said. The company is also on track to pay out $500 million to content creators in 2019, pushing the company to surpass $1 billion in payouts since its inception in 2013.

Under the company’s current business model, 90 percent of funds are paid directly to content creators. Patreon takes 5 percent, and the remaining 5 percent covers transaction fees.

Patreon CEO Jack Conte said in an interview with CNBC that the platform will soon be facing the challenge of maintaining a profitable model as the company continues its growth.

“The reality is Patreon needs to build new businesses and new services and new revenue lines in order to build a sustainable business,” Conte said.

The company does not currently provide contracts, which allows users to retain 100 percent ownership of their work and full control of their brand.

The company plans to provide creators with new “value services,” like options for merchandising, to generate new revenue. Creators will be given the opportunity to participate in these services, and it could ultimately reduce Patreon’s generous 90 percent pay-out model.

What this means is that Patreon’s investors want the company to be more profitable, and if necessary they’re going to force the company to pay its users less.

. . . .

I do not currently use Patreon; I closed my account when they tried to jack up costs in late 2017. But I had been thinking about going back to Patreon in order to fund the blog through donations and pledges.

Now I think I’ll just still with Paypal (not exactly a nice company either, but beggars can’t be choosers).

The thing about Patreon not being profitable enough is that Paypal has a very similar model and they turn a profit on a smaller cut of the funds they transfer. Paypal only collects payment processing fees (the 5% transaction fees mentioned above) and yet Paypal is so profitable that they spun off Ebay as not being worth the hassle.

Of course, Paypal had a unique advantage when they were starting out; they were acquired by Ebay, which then forced buyers and sellers to use the service (when you’re growing your business, there’s nothing like having a captive audience who can’t say no).

. . . .

Folks, Patreon’s attempts to increase its profitability are doomed not because this is going to drive away users but because their niche is too damn small. Patreon only handles one small segment of payment processing (what are essentially charitable fundraising campaigns); in comparison, Paypal covers dozens of segments.

Link to the rest at The Digital Reader

PG suggests that, unless an internet-based business has some sort of moat around it (patents, must-have technology, unique voices or expertise, etc.), raising prices is very difficult because someone else is always ready to clone the business plan and offer the service for less.

PG is only passingly familiar with Patreon, but is not aware of any patents or similar limits to those who might build a similar platform for the same purposes – providing an online means for people to help fund various creative endeavors.

However, while PG was looking at Patreon’s Terms of Use to see if there were any mentions of patents, trade secrets, etc., he did find a rights grab that may be troubling to authors and other creators:

You keep full ownership of all content that you post on Patreon, but to operate we need licenses from you.

By posting content to Patreon you grant us a royalty-free, perpetual, irrevocable, non-exclusive, sublicensable, worldwide license to use, reproduce, distribute, perform, publicly display or prepare derivative works of your content. The purpose of this license is to allow us to operate Patreon, promote Patreon and promote your content on Patreon. We are not trying to steal your content or use it in an exploitative way.

You may not post content that infringes on others’ intellectual property or proprietary rights.

Patrons may not use content posted by creators in any way not authorized by the creator.

On the front page of Patreon’s site, the company makes a representation that some might construe as conflicting with the quoted portion of the Terms of Use:

You own your content

There are no contracts to sign and you retain 100% ownership of your work. You made it, not us.

Under Patreon’s equivalent to an FAQ, the following is a question and answer about ownership of creative works:

Wait, does Patreon own my content?

Nope! Your content is 100% yours, unless a record label or studio owns part of it, in which case it’s partly theirs too, but it’s definitely not Patreon’s — not even a little.

PG suggests that Patreon’s Terms of Use are, in fact, a contract between Patreon and its creators. It is a “click-to-accept” contract with an electronic signature by the creator which is not physically “signed”, but is still enforceable by Patreon against the content creator.

In the United States, the Electronic Signatures in Global and National Commerce Act (15 U.S. Code Chapter 96) explicitly authorizes electronic signatures in interstate commerce and makes electronically-signed contracts enforceable. Here are the first paragraphs of the law:

(a) In general Notwithstanding any statute, regulation, or other rule of law (other than this subchapter and subchapter II), with respect to any transaction in or affecting interstate or foreign commerce—(1)a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and
(2) a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.

In particular, the quoted portion of the Terms of Use above explicitly create a license, which is most definitely a species of contract, between the content creator and Patreon.

Furthermore, the license cannot be unilaterally canceled by the content creator – it is a “perpetual, irrevocable”, “sublicensable, worldwide” license.

What about all the “you own your content” messages on Patreon?

In a traditional publishing contract granting a publisher all rights to an author’s book, the author continues to “own the content” in that the author is the owner of the copyright to the book. However, the publishing contract grants the publisher the exclusive worldwide right to print, publish and sell the book in all its various forms, including the right to license subsidiary rights for movies, television shows, etc.

Under such a contract, the author owns the content, but can’t do anything with it because the publishing contract grants the publisher all rights to exploit the contract.

Let’s briefly unpack the licensing paragraph:

By posting content to Patreon you grant us a royalty-free, perpetual, irrevocable, non-exclusive, sublicensable, worldwide license to use, reproduce, distribute, perform, publicly display or prepare derivative works of your content. The purpose of this license is to allow us to operate Patreon, promote Patreon and promote your content on Patreon. We are not trying to steal your content or use it in an exploitative way.

PG suggests that the first sentence is inconsistent with the second sentence in tone and, perhaps, in the manner in which it may be enforced.

The portion of the first sentence beginning with “you grant” is precise and definitive. The second sentence is squishier. “The purpose of this license is to allow us to” . . . .

Under general principles governing the interpretation of contracts, if there is a conflict between a specific and a general provision, the specific provision will govern. If PG were representing a content creator, he would suggest that the second sentence above be reworded for clarity:

“The license granted in the preceding sentence is expressly limited to grant Patreon the ability to include content created by the author in various ways that are reasonably calculated to promote the author’s content on Patreon’s website. All other rights of author in and to the content are expressly reserved to author, including, without limitation, the exclusive right to grant others the right to print, publish, license and/or sell the content and/or any derivative rights arising from the content to any third party. After termination of this Agreement for any reason, at author’s request, Patreon will provide a document disclaiming all rights to author’s content if reasonably requested by author disclaiming any and all rights in and to the content.”

 

 

The Growing Importance of Intellectual Property

31 January 2019

From Kristine Kathryn Rusch:

I need to be clear as I start this post. We writers create intellectual property. We license our copyrights. We do not sell stories. In fact, the stories we tell, along with their titles, are often not copyrightable. The form in which we tell that story—the order of the events, the order of the words we use,—those things are copyrightable, but the basic boy meets girl, boy loses girl, girl discovers she’s fine on her own storyline can and does fuel a thousand books and movies. (That’s why so many memes over the holiday season made fun of the romance movies on Hallmark. Because the movies—all copyrighted in their own right, all different in the copyright sense—share a lot in common.)

If you don’t understand copyright and you consider yourself a professional writer, then you do not understand the business you are in. If you have published a novel, traditionally or indie, and you do not understand copyright, you are volunteering to get screwed over and over and over again. I say this often, and I’m saying it loudly again, because the trend for 2019 and beyond is that every organization you do business with will try to take a piece (if not all) of your copyright on each and every one of your projects.

Your job is to protect that copyright.

. . . .

Forbes actually published an article in fall of 2018 titled “What Authors Should Do When Their Publisher Closes.” You can click over there if you want. The advice isn’t good, because as someone in the article says, what an author should do varies based on the author’s contract. And if the author has an agent, then they’re probably screwed. If the author doesn’t understand copyright, then they’re definitely screwed.

. . . .

I recommend publishing indie, because that’s the best way to protect yourself and your writing income. You’ll have a career if you do that. Your career might vanish on you if you try to remain traditional. Or, rather, you will write as a “hobby” while you make your living doing something else.

Yes, I’m being harsh, but that’s because the intellectual property apocalypse that I’ve been warning you about is upon us. The trends are there, and the signs that traditional publishing (and all of the other big entertainment organizations) know about the value of intellectual property are becoming clearer and clearer.

. . . .

For years now, the Big 5 traditional publishers have had contracts that essentially transfer the entire copyright of a novel from the author to them. The contracts don’t say that explicitly, but when you read the contract as a complete document (which is how you should read it), you realize that the sum total of what the clauses mean is that the writer retains no part of the copyright, and is only entitled to a tiny percentage of the money that copyright earns.

The reason these contracts changed about a decade ago had nothing to do with publishing and everything to do with mergers. As these publishing companies became part of big international conglomerates, many of them entertainmentconglomerates, the legal teams redrafted the contracts to do the copyright grabs.

Most writers had no idea what they were signing, and most of their agents didn’t either. Agents are not trained lawyers. A handful of the big agencies have lawyers on staff, but most of those agencies are concerned with making the agency money, not with making the writer money. So a lot of the contracts are structured to pay and protect the agent, while bilking the writer.

. . . .

Up until a year or so ago, most of the Big Five continued to operate like traditional publishing companies have since the 1990s—a focus on publishing a lot of titles, hoping that some will stick and become bestsellers. But that strategy isn’t working, and sales are down precipitously.

. . . .

[Simon & Schuster] has been in a media conglomerate since the 1980s. I’m not going to go through its tortured history, which runs from Paramount to Viacom and beyond, but realize this: It became part of the CBS Corporation officially in 2005. Around then, it became impossible to get book rights reverted, which is one of the tricks that is recommended for writers in the Forbes article I cited above. (How 1995. Sigh.)

S&S has experimented with electronic books since the 1990s. Dean and I personally made a lot of money in the early 2000s when S&S realized they hadn’t licensed e-rights for Star Trek books. (Dean and I wrote a bunch of them in the 1990s). S&S has tried to have a self-publishing arm since 2012, and they’re doing a lot of things that require writers to pay for services that publishers used to provide.

. . . .

The more IP a company acquires, the more its value goes up. Even if they don’t create anything from that IP. Acquiring a novel’s copyright—with all its potential spinoffs, TV shows, toys, comics—increases a company’s value tremendously.

Read that paragraph again, because the information therein is the key to this whole piece.

The more IP a company acquires, the more its value goes up. Your novel is IP. If they acquire it, their bottom line goes up, even if they never do anything with that IP. Got that?

That’s why S&S stopped, in 2000 or so, reverting the rights to the novels they acquired. Those novels equal more earnings potential—and they allow the company to maintain a value that it wouldn’t have otherwise.

I’ve been warning writers about this copyright grab by corporations for some time, but it was easy to ignore me because the Big 5 have not been (for the most part) exploiting (the legal term for developing or making use of) that copyright.

S&S finally is. That’s what Simon & Schuster’s CEO Carolyn Reidy’s heady year-end report was really all about. She called 2018 “the most successful year in Simon & Schuster’s history,” and yet she didn’t cite a single print bestseller as something that caused the success.

Instead, she touted the rise in audio . . . as well as a mention that sent a little shiver through me.

She wrote:

…[backlist sales now] comprise a higher portion of our revenue than at any time in memory…while readers wanting the tried and true is an industry-wide phenomenon, our concerted effort during the last few years to acquire books with the potential for long-term backlist sales has yielded dividends.

This article does not specify what exactly she means by “backlist sales.” Does she mean actual ebook and print sales, or other licensing, such as foreign rights and so on? Clearly S&S is exploiting the audio rights clauses in their contracts.

What is clear, however, is that a big traditional publisher has finally figured out that not only does their backlist have value in raising the company’s worth, but it also has earnings potential that can be exploited in 2019.

Why does this send a chill through me? Because if one traditional publisher learns it, the others will learn it as well. And the ability of writers who have sold their work into traditional publishers to get the rights reverted will go down to almost nil.

Big traditional publishers will finally join their counterparts in the entertainment industry—the movie/TV companies, the music studios, the game companies—in demanding control of every aspect of the copyright from the original author.

Which means that if an author signs one of those agreements, the author will get pennies on the dollar (if that) for any rights—audio, movie, TV—rather than the kind of earnings writers could have gotten as recently as 10 years ago.

. . . .

And those of you who licensed mass market rights a few years ago, thinking you’d get your ebooks into stores, you probably already signed away most of the copyright, particularly if you went with Harlequin or Simon & Schuster.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

As usual, Kris incorporates a lot of intelligent business thought and advice into the OP (and her other posts in this series).

As PG has mentioned before, he has negotiated, drafted and/or reviewed a great many contracts during his legal career, including some large technology copyright and patent licensing agreements. As he has also mentioned before, the typical contracts between authors and traditional publishers are some of the most unfair and one-sided agreements he has seen.

In a prior era during which it was impossible for an author’s works to reach any sort of meaningful audience without a publisher to cover the costs of printing books and provide meaningful access to buyers for large numbers of physical bookstores, perhaps the value of a publisher’s services was an extremely large portion of the income generated by sales of a book.

However, in an age in which:

  • Amazon is the largest English language bookseller in the world; and
  • Opens its electronic doors to self published authors on terms substantially equivalent to those it provides commercial publishers; and
  • Ebooks have the highest profit margin of any edition of a book a publisher sells; and
  • Ebook editing, formatting and cover design of a quality comparable to that provided by a commercial publisher can be had for a few hundred to a few thousand dollars;

the real value of a publisher for a typical author compared to the effective cost of a publisher to that author has declined precipitously.

PG was about to discuss the value of branding for either an ebook or a printed book, but he will be uncharacteristically brief.

Does anyone go to an online or offline bookstore seeking out a Random House book? Of course not. They’re looking for an author, a genre, etc.

With respect to promoting and selling books, which brand name is most valuable, James Patterson’s or Little, Brown and Company’s?

Without singling out any particular literary agent or agency, PG will say, as a general observation, that agents famous and obscure don’t do anything significant to improve the contract terms for publishing contracts other than increasing the amount of the advance on some occasions. In particular, agents rarely if ever do anything to address the issues Kris discusses in the OP.

In some types of contracts — consumer loans, for example — federal and/or state legislatures have passed laws that prevent commercial lenders from including some contract provisions that are unfair or harmful to borrowers. Compared to the number of individuals who take out loans to purchase a house, automobile or dishwasher, however, authors are a tiny constituency and elected officials have much bigger fish to fry than commercial publishers.

However, perhaps as a result of such consumer protections, some authors may believe they are somehow protected from  unfair provisions in publishing contracts between themselves and large publishers. That belief is incorrect.

Some of the most unfair provisions in a typical publishing contract are presented in the most innocuous manner imaginable.

 

 

Finally, there is nurturing. Publishers don’t just produce books. They nurture. Literary agents also provide nurturing in case publishers fall short in any way.

Like a baby duckling, a baby author needs to be nurtured and petted and encouraged and gently guided if she/he is to grow into a beautiful swan.

Who better to nurture such a delicate creature than a Kommanditgesellschaft auf Aktien headquartered in Gütersloh?

Off the top of his head, other than publishing, PG can’t ever remember ever having a business discussion that included the word nurture or any of its variants.

PG is reminded of a quote attributed to former president Harry S. Truman, “If you want a friend in Washington, buy a dog.”

PG suggests that if you want someone to watch over you, steer clear of the publishing business.

.



Publishers Endanger Free Speech

9 January 2019

As PG has mentioned before, unlike many other places of online discussion, TPV is not about politics.

The cited article includes political commentary, but the portions PG is excerpting may be of significant importance to authors regardless of their personal political preferences.

From National Review:

The First Amendment has never been stronger. Yet freedom of speech is under dire threat. Both of these things can be true, and both are.

. . . .

Publishers are presenting authors with contracts containing clauses that essentially say, “We will cut you loose should a Twitter mob come after you.” It’s a revolting, shameful trend.

As Judith Shulevitz writes in the New York Times, Condé Nast, publisher of The New Yorker, Vanity Fair, and many other magazines, recently started burying in its standard writers’ contracts a landmine. If the company should unilaterally rule that the writer has become “the subject of public disrepute, contempt, complaints or scandals,” the publisher can void the contract. Shulevitz mislabels such stipulations “morality clauses.” To paraphrase Mae West, morality has nothing to do with it. “Cowardice clauses” would be nearer the mark.

. . . .

Book-publishing giants Simon & Schuster, HarperCollins, and Penguin Random House have added cowardice clauses to their standard book contracts, and Shulevitz says she’s heard that Hachette Book Group is considering doing the same. (Penguin, to its credit, allows authors to keep their advances, but others don’t, says Shulevitz.) Penguin’s clause justifies itself with a reference to anticipated adverse impacts on business, warning authors not to do anything that might cause “sustained, widespread public condemnation of the author that materially diminishes the sales potential of the work.” That rationalization won’t withstand much scrutiny. Bill O’Reilly’s latest book stands at number four on the Times’ nonfiction bestseller list, and he was not only pilloried for years but actually fired by Fox News Channel due to scandal. Ann Coulter, Dinesh D’Souza, Tucker Carlson, and many other commentators who are vilified daily on social media (and in D’Souza’s case, actually spent time behind bars) sell books by the truckload. If anything, “being the subject of public disrepute, contempt, complaints or scandals” seems to boost sales, and publishers are well aware of this. Calumny, contumely, and controversy sell. I’m On the Fence About Trump is not a title Simon and Schuster wants to publish.

. . . .

So why are book and magazine publishers putting such language in their contracts? Because they fear rebuke themselves. They don’t want to get dragged by association. “@PenguinRandom are you okay with what your author Mac McSmartypants just said to Chris Cuomo???” is not a comment a book publisher wants to see issuing from the Olympus of Alyssa Milano’s Twitter account and retweeted so many times it reaches more people than the population of France. The temperate response — “Publishing an author does not constitute an endorsement of his or her ideas” — will be ignored, laughed at, swept away in the tide of outrage, even though it’s true.

Link to the rest at National Review

Yet one more reason for authors to read their contracts very carefully.

PG hasn’t seen any political chastity clauses in contracts his clients have asked him to review. He would love to see any that visitors to TPV would like to send to him.

Although PG will not disclose the identity of those who submit such contracts to him, he would prefer that such contracts he receives omit or remove the names of the authors, book titles, or any other information that might be used to identify the author or book(s) in question.

PG will also note that just like no one knows you’re a dog on the internet, no one knows that you are a jealous rival, former spouse, partner, etc., on the internet, so the wildest accusations, well designed, can trigger internet outrage.

 

 

The Inner Voice

19 September 2018

From Aeon:

‘I think, therefore I am,’ the 17th-century philosopher René Descartes proclaimed as a first truth. That truth was rediscovered in 1887 by Helen Keller, a deaf and blind girl, then seven years of age: ‘I did not know that I am. I lived in a world that was a no world … When I learned the meaning of “I” and “me” and found that I was something,’ she later explained, ‘I began to think. Then consciousness first existed for me.’ As both these pioneers knew, a fundamental part of conscious experience is ‘inner speech’ – the experience of verbal thought, expressed in one’s ‘inner voice’. Your inner voice is you.

That voice isn’t the sound of anything. It’s not even physical – we can’t observe it or measure it in any direct way. If it’s not physical, then we can arguably only attempt to study it by contemplation or introspection; students of the inner voice are ‘thinking about thinking’, an act that feels vague. William James, the 19th-century philosopher who is often touted as the originator of American psychology, compared the act to ‘trying to turn up the gas quickly enough to see how the darkness looks’.

Yet through new methods of experimentation in the last few decades, the nature of inner speech is finally being revealed. In one set of studies, scans are allowing researchers to study the brain regions linked with inner speech. In other studies, researchers are investigating links between internal and external speech – that which we say aloud.

. . . .

William James had a complete disdain for the study of inner speech, because, to him, it was a ghost: impossible to observe. The French developmental psychologist Jean Piaget insisted that private speech signified simple inability – it was the babble of a child without capacity for social communication with no relation to cognitive functioning at all. Through much of the 20th century, Piaget seized the reigns of child development, insisting that children had to reach a developmental stage before learning could occur. Which came first: the chicken or the egg? Vygotsky said that learning occurred, then the brain developed. Piaget said the brain developed, then learning occurred.

Over years of meticulous experiment behind the Iron Curtain, Vygotsky continued to make his case. One thing he did was study children in the zone of proximal development as they worked with adults to accomplish tasks. In the experiments, the child would be presented with a challenge and a tool for overcoming it. In the zone, Vygotsky observed what he called ‘private speech’ – self-talk that children between the ages of two and eight often engage in. This intermediate stage, he held, was connected on one end to a prior period when we had no thread of memory (and no inner voice) and on the other end to true inner speech so crucial to self-reflection, narrative memory, and development of cognitive skills.

. . . .

By 1970, the push to validate Vygotsky’s ideas had picked up steam. A leader of that era was the American psychologist Laura Berk, professor emeritus at Illinois State University, an expert on childhood play. Berk observed children engage in imaginative, ‘make-believe’ play, and demonstrated that the substitution of objects – say a cup for a hat – requires internal thought (and self-talk) rather than impulse. Her studies show that during imaginative play, children’s self-talk helps them guide their own thoughts and behaviour and exert true self-control. She and many other child psychologists demonstrated the importance of the inner voice, beyond a doubt, elevating Vygotsky and burying Piaget for good.

. . . .

Do people in adulthood experience inner speech in the same way as children – or even as each other? Do most of us even have an inner voice – an internal commentator narrating our lives and experiences from one moment to the next?

These were deeply controversial and introspective questions in the 1970s, and they captured the imagination of Russell Hurlburt, an aeronautical engineer-turned-clinical-psychology graduate student at the University of South Dakota. Hurlburt had envisioned a way to accurately sample others’ random inner experiences. Today a professor of psychology at the University of Nevada, Las Vegas, he’s been honing the technique ever since.

Hurlburt calls his methodology Descriptive Experience Sampling (DES), and it works by sampling the inner thoughts of a given interviewee during those moments when a beeper randomly goes off. After extracting the contents of inner experience from countless interviews, Hurlburt has defined an array of phenomena typically shared by humans – auditory and visual imagery, emotion, awareness of real stimuli and a category of thoughts that occur without words, images or symbols of any kind. The main contribution here, though, is actually DES itself. Before its inception, introspective methods had been shunned for decades, if not centuries, as being too highly influenced by bias to be taken seriously. Now, with DES, Hurlburt believes in the possibility of obtaining unbiased, accurate snapshots of inner experience that includes inner speech.

Freed from the mundane confines of a laboratory, the data come from ‘the wild’, as Hurlburt puts it. A participant wears the beeper, which can go off at any moment throughout the day. They go about their daily activities and are likely to forget its presence. When the beeper does go off, the participant makes a careful note of exactly what their inner experience was immediately beforehand. Subsequently, they are questioned by Hurlburt about that experience in a thorough but open-ended interview.

The interview process itself requires an exacting, friendly yet trial-like probe of what occurred. In one unedited transcript in Hurlburt’s book Exploring Inner Experience (2006), a participant named Sandy is quoted following a beep: ‘I was reading. I was starting with the word “life”… and I had an image in my head – it was a black and white image, by the way – of… OK, I was staring at the word “life” and I had said to myself “life” in my own tone of voice.’

Sandy was referring to inner speech using the word ‘life’. For the next six minutes Hurlburt probed her about this experience. His questions eventually helped Sandy divulge that as she was inwardly speaking the word ‘life’ she simultaneously ‘saw an image of that word in an old-courier like font – black on a white background’ and a moving image of ‘sand pouring’ from a hand of unknown agency below her face.

. . . .

‘There are a lot of people who believe that you talk to yourself allof the time, so that’s a form of external pressure to say you were inner speaking when maybe you weren’t,’ he notes. For example, noted consciousness researcher Bernard Baars has asserted that ‘overt speech takes up perhaps a tenth of the waking day; but inner speech goes on all the time’. Hurlburt’s research shows this isn’t true; he finds that inner speech consumes about 25 per cent of an average person’s day, and thus, he is careful to not communicate any assumption about what type of inner experience a DES interviewee may have had at the time of the beep.

Thanks to the accuracy of DES, Hurlburt has found thought patterns associated with various clinical populations, including those with schizophrenia, bulimia nervosa, and autism. In a sample of bulimic participants, for instance, he’s found the propensity for multiple inner voices experienced at the same time. Take ‘Jessica’, a patient watching television when the DES beep occurred. In the front of her head, Hurlburt explains, she was inwardly saying ‘blond’, ‘skinny’, ‘guys’, and ‘stare’ in what was her own, unspoken voice. At the same time, in the back part of her head, she was saying, in another, quieter inner voice, still her own: ‘Why is it that movies and TV shows always have ‘girls for’, ‘to’, and ‘at’? Importantly, such experiences are not often perceived by the experiencers themselves, let alone revealed to anyone else.

. . . .

Fernyhough calls the most familiar level of inner speech ‘expanded’ because it is basically the same as external speech – grammatical and fully formed, but not vocal. He believes this kind of inner speech is most likely engaged when we are under stress or cognitive pressure. Imagine, for example, while travelling, that you are making an important phone call regarding a lost passport. While on hold there’s a good chance that you’ll mentally rehearse exactly what you are about to say to the official on the other end – your story about how your passport went missing – in language that is full and complete.

. . . .

The second broad category of inner speech defined by Fernyhough is considerably more mysterious and enigmatic. He calls it ‘condensed’ inner speech, borne out of Vygotsky’s belief that as speech becomes internalised it can undergo profound transformations that set it distinctly apart from the expanded version. Condensed inner speech is defined as a highly abbreviated and ungrammatical version of regular speech. Although possibly linguistic – comprised of words – it is not intended to be communicated or even understood by others. For example, as a habit in the winter since my younger days, I often think to myself, ‘passlockmoney’ before heading out the door to go snowboarding. For you to understand what I mean, I’m required to expand this term: Remember your ticket or pass if it is still valid, your snowboard lock, and cash or credit card for getting lunch (and après beer).

Link to the rest at Aeon

While PG was reading the OP, he realized that one of the instances in which he is most aware of his inner speech is when he is composing a legal document, often a contract.

His objective during such exercises is to be extremely precise with the words he uses and their operations in sentences and paragraphs. He actively seeks for possible alternative meanings and changes what he has written to avoid such alternatives and to create an expression that can only be interpreted to mean a single thing.

To this end, PG (and other lawyers) will sometimes insert a sentence that begins with something like, “For the avoidance of doubt”. The purpose of such sentences is to rule out a possible misinterpretation of a prior contract provision.

A greatly simplified use of this technique might be, “Author grants Publisher the exclusive right to publish the Work in hardcopy and paperback form. For the avoidance of doubt, Author retains all rights to publish the Work or derivative versions of the Work in the form of one or more comic books or graphic novels.”

If a single “For the avoidance of doubt” sentence doesn’t do the trick, another sentence beginning with, “For the further avoidance of doubt” can be employed.

The technique is used to state as precisely as possible what rights each party owns or controls and help deal with potential edge cases by describing what each party does not own or control.

PG’s inner voice is, to the best of his knowledge, always hard at work on such occasions and he is actively seeking to discover any ways in which the contract language might be misinterpreted or used to support a double meaning.

You Don’t Own the Music, Movies or Ebooks You ‘Buy’ on Amazon or iTunes

15 September 2018

From Two Cents:

When you purchase music, movies or books from Amazon or Apple’s iTunes store, you might be under the impression that that material is yours to enjoy forever; that’s how CDs and paper books work, after all. Why rent You’ve Got Mail for $3.99 every few months when you can “own” it and watch it whenever, forever, for $9.99?

But you’d be mistaken. Anything digital is temporary, even if you clicked “purchase” rather than “rent.” One unfortunate side effect of that you won’t experience with a physical book or record: Your purchases may just disappear if licensing agreements change.

. . . .

As outlined in the Twitter thread, Apple states the content provider of the movies in question removed them from the store. And that removed them from the user’s library, even though he had paid money to buy them. It’s easy to see why that’s frustrating (especially since Apple wasn’t willing to cough up a refund for the purchases he no longer has).

“This wouldn’t happen in the physical world. No one comes to your door and demands that you give back a book,” Aaron Perzanowski, a Case Western Reserve University law professor, who studied these digital purchases, told the LA Times in 2016. “But in the digital world, they can just go into your Kindle and take it.”

. . . .

For example, Amazon notes in the fine print that “Kindle Content is licensed, not sold, to you by the Content Provider. The Content Provider may include additional terms for use within its Kindle Content.” You also can’t sell or redistribute your ebooks, as you might with a physical copy. Apple’s fine printstates that the licensor “reserves the right to change, suspend, remove, disable or impose access restrictions or limits on any External Services at any time without notice or liability to you.”

. . . .

The best option? If you can, buy a physical copy of a movie or TV show that comes with a digital download. At least you’ll have a backup in case your digital copy disappears—assuming you still have a player to watch it on.

Link to the rest at Two Cents

When PG read the OP, one of the first things to pop into his mind was, “born yesterday”.

The author of the OP apparently discovered licensing of intellectual property shortly before writing the article and assumed at least a portion of the Lifehacker audience didn’t know much about the topic either.

“Born Yesterday” was the name of a Broadway play with two revivals plus three different movies.

Here’s a plot summary of the original Broadway play, Born Yesterday, which premiered in 1946, from Wikipedia:

An uncouth, corrupt rich junk dealer, Harry Brock, brings his showgirl mistress Billie Dawn with him to Washington, D.C. When Billie’s ignorance becomes a liability to Brock’s business dealings, he hires a journalist, Paul Verrall, to educate his girlfriend. In the process of learning, Billie Dawn realizes how corrupt Harry is and begins interfering with his plans to bribe a Congressman into passing legislation that would allow Brock’s business to make more money.

As a general proposition, the creator of intellectual property is its owner. Everybody else who wants to observe, read, listen to, etc., etc., that intellectual property is not the owner of the IP, but only has limited rights created by statute or license to do some things with their copy of the IP.

The owner of a physical book can’t make copies of the book and sell them to others because the book’s owner doesn’t own the IP depicted in the book. He/she is only the owner of the paper, ink and binding of that particular copy of the book. The copyright law (statutory and otherwise) which creates and defines the IP in the first place permits the book’s owner to do certain things with the physical book – read it, lend that copy to someone else, sell that copy to someone else, donate it to a library, deface the book, use excerpts or quotes from the book for various purposes, etc., etc.

The same basic rules, adapted to different media by which IP can be duplicated, transmitted, etc., govern copies of the IP in digital form. Just as making a copy of a book to give or sell to someone else is a violation of the creator’s IP rights, generally speaking, making a copy of a CD, a digital file, a photograph, or other protected medium incorporating such IP to give or sell to someone else is, absent permission from the creator or permission granted via copyright law, a violation of the creator’s IP rights.

Enough of this type of blathering.

The OP caused PG to wonder whether an author self-publishing with Amazon via KDP could make digital copies of his/her ebooks disappear from Kindles everywhere by unpublishing the ebook.

The short answer is probably not.

Here are some excerpts from the current Kindle Direct Publishing Terms and Conditions that describe what rights an author grants to Amazon:

Paragraph 3 Term and Termination (excerpt with PG highlights)

Following termination or suspension, we may fulfill any customer orders for your Books pending as of the date of termination or suspension, and we may continue to maintain digital copies of your Digital Books in order to provide continuing access to or re-downloads of your Digital Books, as well as digital copies of your Books to support customers who have purchased a Book prior to termination or suspension. . . . All rights to Digital Books acquired by customers will survive termination.

Paragraph 5.1.4 Book Withdrawal (excerpt with PG highlights)

All withdrawals of Books will apply prospectively only and not with respect to any customers who purchased the Books prior to the date of removal.

Paragraph 5.5 Grant of Rights (excerpt with PG highlights)

You grant to each Amazon party, throughout the term of this Agreement, a nonexclusive, irrevocable, right and license to print (on-demand and in anticipation of customer demand) and distribute Books, directly and through third-party distributors, in all formats you choose to make available through KDP by all distribution means available. This right includes, without limitation, the right to: (a) reproduce, index and store Books on one or more computer facilities, and reformat, convert and encode Books; (b) display, market, transmit, distribute, sell, license and otherwise make available all or any portion of Books through Amazon Properties (as defined below), for customers and prospective customers to download, access, copy and paste, print, annotate and/or view online and offline, including on portable devices; (c) permit customers to “store” Digital Books that they have purchased from us on servers (“Virtual Storage”) and to access and re-download such Digital Books from Virtual Storage from time to time both during and after the term of this Agreement

It appears to PG that Apple’s agreement with the owners of the copyrights to some iTunes movies did not include anything like the language in the KDP T&C’s and that the movie owners could force Apple to terminate rights of its customers who had paid for licenses to those movies.

It appears to PG that an author or publisher operating under the KDP T&C’s or something similar can’t force Amazon to terminate a customer’s rights to access an ebook they bought through Amazon. Amazon can decide to do so, but an author can’t make Amazon pull a digital move like iTunes did.

As usual, PG is a lawyer, but nothing PG posts on TPV is legal advice. If you would like to obtain legal advice, you need to hire an attorney to give you that advice, not read what a lawyer might post on a blog.

PG invites comments that agree or disagree with his half-baked (or fully-baked) blatherings on this topic.

Universal Music Settling Big Class Action Lawsuit Over Digital Royalties

6 September 2018
Comments Off on Universal Music Settling Big Class Action Lawsuit Over Digital Royalties

From Billboard:

An important chapter in the legal history of the music business may be coming to conclusion soon as Universal Music Group is close to submitting a settlement resolving claims that it cheated recording artists of royalties from digital downloads.

The putative class action from artists including Chuck D. of Public Enemy, Rick James (by way of trust), Dave Mason of Traffic, Whitesnake, Andres Titus of Black Sheep, Ron Tyson of The Temptations, among others, alleges that record labels should be treating digital download income off of venues like Apple’s iTunes as “licenses” rather than “sales.” By accounting the other way, the artists get about 15 percent of collected income rather than 50 percent they allege is due.

. . . .

The monetary value of UMG’s coming settlement haven’t yet been disclosed, but The Hollywood Reporter has learned that it will likely cover EMI, which was acquired by UMG in 2012 and has been dealing with its own litigation on the digital download front. Following settlements by Warner Music and Sony, UMG’s deal if approved would mean that all of the record majors have resolved claims following the 2010 appellate ruling in F.B.T. Productions v. Aftermath — dealing with Eminem songs — which suggested that “licenses” rather than “sales” were the more appropriate accounting treatment in an era where record labels no longer spend huge amounts on packaging physical CDs.

According to sales data released this week by the RIAA, digital downloads is the top revenue producer in the music industry. Download sales are at $2.64 billion, which beats physical music sales of $2.27 billion.

. . . .

As streaming gets closer to dominating downloads, the litigation may shift likewise as well.

The digital downloads cases may be on the precipices of conclusion, but scrutiny may follow as to whether record labels are cheating artists on money collected from outlets like Spotify. For instance, on Tuesday, a judge refused to reject claimsthat Sony breached agreements and good faith dealing with 19 Recordings — the label of former American Idol contestants Kelly Clarkson, Carrie Underwood and Jordin Sparks — by allegedly mischaracterizing income from streaming services as as “sales” or “distributions” rather than as “broadcasts” or “transmissions.”

Link to the rest at Billboard

Starting several years ago, PG blogged about this issue before in the context of book publishing agreements. For a great many years, standard publishing contracts included royalty provisions that paid a much lower royalty for books that were sold than for books that were licensed.

PG hasn’t surveyed Terms & Conditions for online ebook sellers for a long time, but the last time he did, the major online retailers all said something to the effect that the publishers were licensing ebooks to readers, not selling them.

Here’s the relevant portion of Amazon’s current Kindle Store Terms of Use, located in Paragraph 1, “Kindle Content”:

Kindle Content is licensed, not sold, to you by the Content Provider.

If you pull up a publishing contract that’s more than ten years old and search for the royalty rates payable when the publisher licenses the book, you may well find that, like the music business, Big Publishing paid much higher royalties for licenses than it did for sales.

AI reveals potential Amazon, Facebook GDPR problems to regulators

5 July 2018

From c/net:

AI [artificial intelligence] software reportedly uncovered suspected GDPR breaches by Alphabet, Amazon and Facebook.

The software — created by EU Institute researchers and a consumer group — looked at the privacy policies of 14 major technology businesses in June, the month after the EU’s new data privacy laws went into effect, according to Bloomberg.

Researchers named the software “Claudette” — short for automated clause detecter — and Alphabet (Google’s parent company), Amazon and Facebook were among the companies whose policies were under the AI microscope.

It found that a third of the clauses within the policies were “potentially problematic” or contained “insufficient information,” while a further 11 percent of the policies’ sentences used unclear language, the academics noted.

The software also noted that some policies failed to identify third parties that the company could share data with.

. . . .

Despite the software’s findings, researchers admitted that the results of the automated scan “are not 100 percent accurate” since the software has only viewed a small number of policies.

Google insisted that its policy is compliant and highlighted that the updated version doesn’t expand or make any changes to how it collects or processes users’ information.

. . . .

The EU has been enforcing the General Data Protection Regulation since May 25 and the law requires the companies adopt greater openness about data they have on EU residents, as well as with whom they share the data.

Link to the rest at c/net

PG suspects that AI might not be the best solution for reviewing 14 terms of use or similar documents today (he suspects it took more time and effort to create the artificial intelligence application than simply having lawyers or paralegals simply review the 14 documents would have required).

However, over the longer term, he thinks it quite likely that AI apps will become common tools for creating and reviewing legal documents.

From the MIT Technology Review:

Meticulous research, deep study of case law, and intricate argument-building—lawyers have used similar methods to ply their trade for hundreds of years. But they’d better watch out, because artificial intelligence is moving in on the field.

As of 2016, there were over 1,300,000 licensed lawyers and 200,000 paralegals in the U.S. Consultancy group McKinsey estimates that 22 percent of a lawyer’s job and 35 percent of a law clerk’s job can be automated, which means that while humanity won’t be completely overtaken, major businesses and career adjustments aren’t far off (see “Is Technology About to Decimate White-Collar Work?”). In some cases, they’re already here.

“If I was the parent of a law student, I would be concerned a bit,” says Todd Solomon, a partner at the law firm McDermott Will & Emery, based in Chicago. “There are fewer opportunities for young lawyers to get trained, and that’s the case outside of AI already. But if you add AI onto that, there are ways that is advancement, and there are ways it is hurting us as well.”

. . . .

So far, AI-powered document discovery tools have had the biggest impact on the field. By training on millions of existing documents, case files, and legal briefs, a machine-learning algorithm can learn to flag the appropriate sources a lawyer needs to craft a case, often more successfully than humans. For example, JPMorgan announced earlier this year that it is using software called Contract Intelligence, or COIN, which can in seconds perform document review tasks that took legal aides 360,000 hours.

These programs are, simply put, changing the way legal research is carried out. Workers used to have to trudge through stacks of dusty law books and case files to find relevant information.

. . . .

People fresh out of law school won’t be spared the impact of automation either. Document-based grunt work is typically a key training ground for first-year associate lawyers, and AI-based products are already stepping in. CaseMine, a legal technology company based in India, builds on document discovery software with what it calls its “virtual associate,” CaseIQ. The system takes an uploaded brief and suggests changes to make it more authoritative, while providing additional documents that can strengthen a lawyer’s arguments.

“I think it will help make [entry-level lawyers] better lawyers faster. Make them more prolific,” says CaseMine’s founder, Aniruddha Yadav. “If they are handling a couple cases at a time, they will learn the law faster.”

. . . .

Other legal tech startups with AI at their core have been gaining steam as well. Kira Systems, which makes a contract review platform, counts four of the top 10 American law firms, as well as several international firms, as clients. Meanwhile, investors plowed $96 million into Zapproved, a startup that makes a cloud-based electronic discovery tool. Overall, it’s been a banner year for new legal tech companies, with funding up 43 percent in the first three quarters of 2017 compared with the same time last year, according to a report by the research firm CB Insights.

. . . .

There are, however, still obstacles to further adoption of AI in the legal profession. Chief among them is a lack of accessible data to use in training the software. Take the contract analysis company Legal Robot. In order to train its program, a team of developers built their own database of terms and conditions by collecting examples from major websites. But that wasn’t enough—the company also had to strike deals with law firms to gain access to their private repositories. In total, they compiled over five million contracts.

Link to the rest at the MIT Technology Review

PG notes that the MIT article is not the only one about the legal profession which is primarily based upon the methods of practice followed by large American law firms. He doesn’t blame the authors of the article or the firms profiled therein because most of the large sales opportunities for these technical products or services will be in major law firms.

However, only a small percentage of practicing attorneys work for major law firms in the US. About 85% of American attorneys work in firms of 50 lawyers or fewer and about half of all American attorneys are sole practitioners. The legal “market” is really fragmented into business organizations that may have less in common than non-experts first assume.

In PG’s experience, the most technically-savvy lawyers are either in very small firms (many with a single attorney) or as small groups in very large firms (fewer than 5 lawyers in a firm of 500 attorneys, for example).

Tech companies and venture capital firms typically misjudge the true size of the legal market for advanced tech products. The average gross revenue (not profit) per lawyer (not including paralegal, secretary, other support staff, etc.) for the 100 largest law firms in the United States was somewhat less than $1 million in 2017 and about $850K in 2016.

Additionally, the management structure of many major firms is not well-suited for supporting the acquisition of major technology products via a capital spending budget. A typical industrial firm will calculate profits after including all costs, including salaries and bonuses.

Generally speaking, a law firm’s “profits” don’t include all salaries and bonuses the firm routinely pays year in and year out. These law firm “profits” are divided among the long-term partners or major shareholders of law firms and distributed each year rather than retained or accumulated to fund long-term growth.

It is not unusual for the controlling partners/shareholders to take relatively small salaries or draws against distributions based on equity compared to their end-of-year distributions. Using money to acquire new technology products or services typically means that each of the firm’s big shots takes home less money at the end of the year.

The bottom line is that, as a group, major law firms are not big-time purchasers of new technology products and services because of the immediate hit to the partners’ income. For example, it took many years for the original computer-assisted legal research services, Lexis and Westlaw, which had a clear and compelling value proposition for lawyers, to achieve any sort of respectable penetration of and associated revenue from these firms.

Morality clauses: are publishers right to police writers?

16 June 2018

From The Guardian:

When the American Libraries Association awards its Andrew Carnegie medals in New Orleans later this month, there will be no winner for excellence in non-fiction. Sherman Alexie, the poet and novelist who was due to receive it for a memoir, You Don’t Have to Say You Love Me, has declined the award following allegations of sexual harassment.

Last month, the novelist Junot Díaz withdrew from the Sydney writers’ festival and from chairing the Pulitzer prize board after being confronted by his own accusers. As the allegations swept through social media, another writer, Mary Karr, joined the fray, tweeting of her distress that her testimony to DT Max, the biographer of her one-time partner David Foster Wallace, about Foster Wallace’s abusive behaviour had been marginalised. “Deeply saddened by the allegations against #JunotDiaz & I support every woman brave enough to speak. The violence #DavidFosterWallace inflicted on me as a single mom was ignored by his biographer & @NewYorker as ‘alleged’ despite my having letters in his hand,” she wrote.

Such high profile cases are far from rare as the #MeToo movement spreads across the creative industries. They come at a time when writers are facing increasingly draconian attempts by publishers to police their behaviour, calling into question centuries old assumptions about the desirability – or even the possibility in today’s networked world – of separating writers’ lives from their work.

. . . .

Morality, or morals, contracts have existed in the film industry since 1921, when Universal Pictures introduced them in response to Fatty Arbuckle’s trial for manslaughter, but they are relatively new in the publishing industry. One such clause, introduced by HarperCollins in the US, stipulated that the publisher could terminate a contract in cases of “conduct [that] evidences a lack of due regard for public conventions and morals”, or in the case of a “crime or any other act that will tend to bring the Author into serious contempt, and such behaviour would materially damage the Work’s reputation or sales”. Caroline Michel, a leading literary agent, said this week that the use of morality clauses had doubled in the US over the past year. In a recent speech, Royal Society of Literature president Marina Warner warned that “being good” should not be conflated with “good writing”. But where is that line drawn?

Clearly, reputation doesn’t matter to a controversialist in the way it does to literary authors such as Alexie or Díaz, who are facing serious damage to their careers. In the weeks since 10 women came forward with accusations against Alexie, the Native American author has been subjected to a cascade of punitive measures. His name has been stripped from a scholarship awarded by the Institute of American Indian Arts, all references to him have been “deleted or modified” in the blog Native Americans in Children’s Literature, bookshops and libraries are destocking his books and his US publisher has said that it will be postponing the paperback of his memoir (though his UK publisher, Penguin Random House, says it will continue to reprint his work as required).

. . . .

The high emotions surrounding the behaviour of writers are starkly exemplified by the case of Foster Wallace. Though Karr feels understandably aggrieved that her experience wasn’t taken more seriously by his biographer, she would be wrong to think it wasn’t noted. In a blog written at the time, Kristen Roupenian – who went on to write the New Yorker short story sensation “Cat Person” – described her dismay at discovering in Max’s book that the literary hero she worshipped as a student would probably have dismissed her as “audience pussy”.

She wasn’t looking for a boycott of his work, she wrote. “All I expect is a quiet, un-showy disqualification for the role of hero, mentor or saint. I would like the ‘statue’ (Wallace’s word) of his public image to be carefully dismantled, for the overblown ideas we have of him and what his life meant to slowly begin to deflate. I would like him to become just another writer, imbued with no moral authority beyond what is contained in his words on the page.”

. . . .

As the pressure has mounted, London-based authors’ agent Lizzy Kremer has taken pre-emptive action – drawing up a new, industry-wide code of conduct on behalf of a coalition of authors, booksellers, agents and publishers. The voluntary code was partly inspired by London’s Royal Court theatre, which constructed one in reaction to its own sexual misconduct scandal involving a former artistic director. Among the theatre’s first responses was a call out for testimony about sexual harassment to help it to identify “patterns and scenarios”. In a detail that chimes strongly with the publishing industry, the report drew attention to the dangers of a “blurred social context”: “13.3% of reported incidents happened at work parties … with alcohol.”

“Publishers feel an obligation to use their personal social media accounts to publicise books and to go out for drinks,” says Kremer. “People forget that these are not friendships, they are friendly business relationships. You have to understand what’s off limits.”

In a personal blog, she recalled meeting up with a younger woman who told her of several “small yet frightening liberties” that men in publishing had taken at parties and in offices over the years. “One of the things that interested me about the [Royal Court] report was its emphasis on the vulnerability of the creative person,” says Kremer. “Obviously it’s not the same in publishing – you don’t have to get changed in communal dressing-rooms – but it’s another industry with a culture of asking employees to give something personal of themselves.”

Link to the rest at The Guardian

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