Self-published authors earn more than traditionally published counterparts, according to ALLi report

From The Bookseller:

New research by the Alliance of Independent Authors (ALLi) claims authors who self-publish currently earn more than traditionally published authors.

ALLi circulated the survey to its members and subscribers, as well as “through other key self-publishing and author organisations” in February 2023. It was answered by more than 2,000 respondents – 60% of whom were in North America, with 21% from the UK and 8% respectively for Australia/New Zealand, and Europe. It found the the median revenue for independent authors in 2022 stands at $12,749 (£10,229).

This compares to the findings of a report into authors’ earnings commissioned by The Authors’ Licensing & Collecting Society (ALCS) and published in December 2022, which showed that median earnings from writing alone for authors with third-party publishers stands at approximately $8,600 (£7,000).

The ALCS’ report showed “a sustained fall in professional writers’ real terms income from writing over the past 15 years of around 60%, pushing median earnings down to minimum wage levels,” a trend which ALLi suggests self-published authors are “bucking” in light of its survey’s findings, which suggest average incomes of self-published authors are rising, with a 53% increase in 2022 over the previous year.

By contrast, its report goes on, “previous author income surveys, which have focused on revenues received by authors with third-party publishers, have repeatedly reported falling incomes.”

. . . .

ALLi has commissioned the UK Copyright & Creative Economy Centre, CREATe – which conducted the ALCS’ survey – to expand analysis of the findings, particularly in relation to “key demographic groups and factors that contribute to higher incomes.” ALLi will publish the full report including demographic data in June 2023, together with a collection of insights from several peer self-publishing organisations, as the Big Indie Author Data Drop. This compilation and final 2023 report will be presented at the Self-Publishing Live conference in London in June 2023 and will repeat as an annual event, which the organisation says will fill “a notable gap in author income research”.

Orna Ross, ALLi director, said of the findings: “ALLi has always believed that authors are financially better off self-publishing. Now that the results of this survey confirm that belief, we want to make sure all authors know that they can make a living as an author, if they do the work and acquire good publishing skills, alongside good writing skills. And that they are not alone. There is full support for talented and dedicated authors at ALLi and throughout the self-publishing community.”

Link to the rest at The Bookseller

PG notes that Orna Ross, the founder of The Alliance of Independent Authors, has been doing good things for indie authors for a long time (ALLI was founded in 2012).

Those who recall 2012 (including PG, just barely), will remember that this year included a notable antitrust suit filed by the U.S. Justice Department against Apple, Hachette, HarperCollins, Macmillan Publishers, Penguin, and Simon & Schuster for trying to fix prices for ebooks, and strangle Amazon’s ebook business in the crib.

Basically the five big publishers agreed to refuse to sell ebooks to Amazon unless Amazon sold their ebooks at the publisher’s list price. The agreement was made at the instigation of a top Apple exec and provided that Apple would sell the majority of e-books between $9.99 and $14.99, with new releases being $12.99 to $14.99.

Apple also adopted the agency model which it used in its App Store for distribution of e-books. This let Publishers control the price of the e-books with Apple receiving a 30% commission. The joint agreement provided that the Publishers would establish ebook prices on Amazon so ebook prices on both platforms would be identical.

On the day Apple launched its ebook store, a Wall Street Journal reporter asked Jobs why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that “The price will be the same… Publishers are actually withholding their books from Amazon because they are not happy.”

As PG has opined on more than one previous occasion, doing this reflected the rank business and legal stupidity of the major publishers. What Jobs and the publishers agreed to do was a classic example of illegal price-fixing that was (and still is) clearly prohibited by US antitrust laws.

Jobs was a highly magnetic and innovative individual who built Apple from nothing into a major world-wide computer brand, a wonderful American business success story.

However, Jobs was dying of cancer at the time, kept this information secret and (PG suspects) decided to propose this agreement without any input from Apple’s lawyers at all. A law student who had taken a single antitrust class would have recognized this was prohibited conduct.

After being sued, the publishers quickly caved, took their financial licks from the Justice Department and some state attorneys general who joined in the suit, and went back to business as usual. Apple lost at the trial level, lost at the United States Court of Appeals. The US Supreme Court declined to take the case.

Amazon kept pushing ebooks, including more generous royalty terms than authors could get from traditional publishing, and never looked back. PG has suggested on numerous occasions that traditional publishers missed a wonderful opportunity to earn a lot of money from ebooks because they didn’t want to harm their printed book sales or relationship with traditional bookstores.

It was a classic example of one bad decision after another.

Orna Ross and ALLI have provided a lot of help for indie authors ever since the Apple antitrust case was still roaring along, so she’s seen the thick and thin of indie authors. You may want to check out the membership benefits the organization offers.

Texas County to Consider Shutting Down Library After Book Ban Ruling

From Publisher’s Weekly:

After a federal judge ordered the return of more than a dozen books improperly pulled from the Llano County Public Library shelves for their content, the county’s commissioners have called a special meeting for April 13 to discuss shutting the library down altogether.

According to a notice and agenda posted to the Llano County website, the Llano County Commissioners Court has set a meeting to discuss whether to “continue or cease operations of the current physical Llano County Library System,” the continued employment of library staff, and the “feasibility of the use of the library premises by the public.”

A tweet from the American Library Association’s Unite Against Book Bans account shared news of the meeting, and urged local library supporters to contact their local officials to support the library and to show up to the special meeting to advocate for their library. ALA officials say Unite Against Book Bans and ALA will continue to work closely with the Texas Library Association to support “at-risk library workers” in Llano County, as well as with Texans for the Right to Read and other Texas activists “who are on the front lines of the fight to protect every person’s right to read in Llano County and across the state of Texas.”

Closing the library would be an extreme reaction, notes ALA’s Deborah Caldwell-Stone, director of the American Library Association’s Office for Intellectual Freedom.

“Rather than return twelve books to the library’s collection that reflect the lives and experiences of LGTQIA+ and BIPOC persons, the members of the Llano County Commission and its Library Board are prepared to fire the dedicated staff of the Llano County Library System and deny Llano County residents access to all the information and community services that the library staff provides,” Caldwell-Stone said, “simply to prevent anyone from reading certain books that these officials don’t ever have to read.”

The new developments come after a federal judge found that the library board in Llano County likely infringed the constitutional rights of readers in the community by unilaterally removing books it deemed inappropriate. In a 26-page decision, judge Robert Pitman affirmed that “the First Amendment prohibits the removal of books from libraries based on either viewpoint or content discrimination,” and found that the evidence presented in the case showed that county officials illegally “targeted and removed books, including well-regarded, prize-winning books, based on complaints that the books were inappropriate.”

Link to the rest at Publisher’s Weekly

PG did a little research and determined that Llano, Texas, is a small rural town – about 3500 people – that is located about 65-70 miles from the state capital, Austin.

When PG says small town, Llano has what appears to be a struggling newspaper that includes stories and photos of the local high school athletic teams and contestants for the annual Rodeo Queen contest. The town is surrounded by ranches raising livestock and and doing crop farming.

The population of Llano is about 80% white, including descendants of early German settlers, 15-17% Latino – mostly Mexican – with a sprinkling of a few other races.

PG expects that the library lawsuit was probably the biggest thing Llano (and Llano County) had experienced in a very long time. He doesn’t know if the county paid for its legal representation in the lawsuit or if some or all of its litigation expenses were covered by some type of insurance.

The honor of serving on the King’s Island Library Board sounds like a post that doesn’t attract very many candidates. While a federal lawsuit was certainly a source of a lot of publicity, PG suspects that the members of the County Library Board found that dealing with out of town reporters who regarded them as hicks from the sticks and spending time talking with the Library Board’s attorney during the runup to the trial was not what they had in mind when they decided it was their civic duty to support the local library.

PG found an article from TheDailyTrib.com (covering the news from Marble Falls, Burnet, Kingsland, Llano, Spicewood, Horseshoe Bay, and ALL of the Highland Lakes) that described what appears to be the current situation:

Closing the three libraries in the Llano County Library System will not affect the Little v. Llano County lawsuit, which will move forward, according to an attorney for the plaintiffs. Also, Llano County Precinct 4 Commissioner Jerry Don Moss and Library Advisory Board Vice-chairman Bonnie Wallace still will have to appear before the court as ordered by a U.S. District judge on April 27 or face possible sanctions.

“We will continue to see a permanent injunction against censoring books in case they ever reopen the library,” said Katherine Chiarello of Wittliff Cutter law firm in Austin, when asked about what would happen if the libraries were closed. 

Llano County commissioners are meeting at 3 p.m. Thursday, April 13, to discuss that possibility. According to the agenda, they will meet in executive session to also discuss “action regarding the continued employment and/or status of the Llano County Library System employees and the feasibility of the use of the library premises by the public.”

The county’s four commissioners and County Judge Ron Cunningham are holding the special meeting in response to an order enjoining the county to return 17 books to library shelves and the digital catalog system. The books were back in circulation on March 31. 

In a different ruling, U.S. District Judge Robert Pitman of the U.S. District Court for the Western District of Texas, Austin Division, ordered Moss and Wallace to appear in person at 10 a.m. April 27. The two did not appear for depositions on March 22 and 27, respectively. They could face sanctions that would include contempt of court charges, rendering a default judgment against the disobedient parties, or paying expenses accrued, including attorney fees, for missing the scheduled appointments. 

The U.S. District Court does not have a say in whether the libraries should remain open, but people supporting the libraries can have an impact, according to Chiarello.

“The citizens of Llano can make themselves heard,” she said. “It is un-American, it is against the rule of law, and it is not good for the people of Llano County to be deprived of the many services the library offers to the community.” 

People on both sides of the issue plan to show up in force at the meeting, which is being held in the Justice of the Peace Precinct 4 courtroom, 2001 Texas 16 North in Llano. The small room holds about 40 people and is often crowded, even when a meeting is not controversial. 

“I am aware that several people are very upset by this,” said Leila Green Little, one of seven plaintiffs in the case. “I think there will be a big turnout.” 

Buchanan Dam resident Wayne Shipley is also upset over the issue, but for different reasons. He plans to be there and hopes to speak during public comment. He, too expects a big crowd to overflow the small courtroom. 

“I was taken by surprise that the county is having to look at this step,” he told DailyTrib.com. “Seems to me this issue is being forced by the plaintiffs. It’s not about banning books. The books in question are explicitly pornographic in nature. They should not be available for children to pick up off the shelves.” 

Shipley did agree that not all 17 books listed fit in that category, including one about the Ku Klux Klan, another about the caste system, and a children’s series about farting animals and imaginary figures.

“Those aren’t the ones driving the issue,” he said. “I think those are put in there to blur the issue.” 

PG is sympathetic with residents of Llano who get upset by being ordered by a Federal District Judge to show up in court in Austin to be potentially held in contempt of court and/or ordered to pay attorneys fees to a relatively large law firm (17 attorneys) in Austin. PG’s quick and dirty research into the fees charged by Austin attorneys leads him to believe that they’ll be about $300 per hour.

The quote from one of the attorneys on the winning side was, in PG’s personal legal judgement, really stupid:

“We will continue to see a permanent injunction against censoring books in case they ever reopen the library,” said Katherine Chiarello of Wittliff Cutter law firm in Austin, when asked about what would happen if the libraries were closed. 

PG has gone way farther along this trail than he should have, however, here is his last point.

PG just checked and the average per capita income in Llano County is a little over $44,000 per year. That translates to about $12 per hour. PG suspects that very few people living in Llano County, including the lawyers who practice there, earn $300 per hour, which is likely in the general range that the the Austin law firm will seek in the form of attorneys fees should the federal judge decides to hold anyone in contempt of court.

Business Musings: AI, Copyright, And Writers

From Kristine Kathryn Rusch:

Here we are—the mess of the mess of the mess. Right now, we’re in one of those technological befuddling moments, where the technology is ahead of the law.

What that means, exactly, is this: We’re not sure what the technology can do, so we don’t know if what it’s doing is legal, in a whole variety of ways.

The law is both a scalpel and a cudgel. If we use the law one way, it becomes a cudgel that smashes behavior and does its best to prevent the behavior from ever occurring again. Look at the laws against homicide in your state. Those laws are not scalpels. Those laws are cudgels, deliberately. As civilized humans, we don’t want other humans to commit murder for any reason. End of story.

(Please don’t write to me about exceptions. I know. I write entire novels about them.)

There are many times, however, that we need the law to be a scalpel. We need it to delicately carve good behavior from bad. We also don’t want it to accidentally smash something good to smithereens.

Just today, Dean and I were walking home in a wind tunnel created by the buildings near ours. The wind was bad anyway, but in that little area, it was extreme, like usual. Dean mentioned that there are entire computer programs that could explain why.

Those programs are often used now to examine how the wind works around bridges and tall buildings in relation to other tall buildings. In the past, those calculations were done by engineers and often by hand. One mathematical error and even brand-new bridges and buildings collapse.

. . . .

Now, though, tech allows us to prevent all kinds of wide-ranging disasters because of computer modeling.

In some ways, generative artificial intelligence in art, audio, and writing is nothing more than computer modeling. The artificial intelligence isn’t intelligence at all, at least as we know it. It’s an algorithm trained to respond in a particular way to a variety of inputs.

The inputs make the AI program reactive, not creative. My post last week titled “AI And Mediocre Work” dealt with a lot of this, but a comment by Matt Weber capsulized it with a quote from Oliver Sacks, in his book, An Anthropologist on Mars:

Creativity, as usually understood, entails not only a “what,” a talent, but a “who” — strong personal characteristics, a strong identity, personal sensibility, a personal style, which flow into the talent, interfuse it, give it personal body and form. Creativity in this sense involves the power to originate, to break away from the existing way of looking at things, to move freely in the realm of the imagination, to create and recreate worlds fully in one’s mind — while supervising all this with a critical inner eye.

These generative AI programs are useful for a variety of things, some of them mentioned in the comments on the last post, others mentioned in analysis about the programs that you can find most anywhere. What they are not is creative.

Let’s set that aside, though. We will all end up using these programs for one task or another.

What started this little miniseries of blogs was, in fact, my desire to start using AI audio. It had gotten to a level that I feel comfortable putting not only the blog posts into audio, but some of the nonfiction books as well. If you want to find out what I’m thinking about the various audio opportunities for my own work, please look at this post.

Up until that point, a lot of my readers thought I was opposed to using generative AI. I’m not. I have already used several different programs for minor things, and I’m going to use others for relatively major things.

I’m just as interested in the AI art programs as I am in the AI audio programs. I’ve used some mapping programs to help artists visualize the layout of my various worlds. I’m using the free programs, so the tools are often wrong in a variety of ways. I have to use words and bad maps to get my point across. But that’s okay.

I like some of the art I’m seeing from the various programs, and that art would be good enough to use on, say, short story ebook covers, where we don’t want to spend a lot of money. (If any.)

We’re not doing that yet, though, and there’s a really good reason.

Copyright.

The copyright issues on much of the AI usage are a complete mess and that, in my opinion, makes them dangerous to use in any commercial manner.

I don’t use the word “dangerous” lightly. Copyright issues could mean something as simple as removing the item from sale to hundreds of thousand paid in statutory damages.

The problem is that we don’t know what’s happening yet, and because we don’t know, we have to be really careful.

Some of the copyright issues can be resolved with a contract. The Terms of Service on these sites are contracts that you agree to, either by affirmatively clicking I accept or by using the site or by paying money for the service.

The problem with Terms of Service is that they can change on a whim. In its paper on artificial intelligence and copyright published in February, the Congressional Research Service made the passing comment about OpenAI, the developer of ChatGPT and DALL-E.

OpenAI’s current Terms of Use, for example, appear to assign any copyright to the user: “OpenAI hereby assigns to you all its right, title and interest in and to Output.” A previous version of these terms, by contrast, purported to give OpenAI such rights.

As I said, these terms can change drastically. It’s up to the user to check the terms constantly.

Contracts can supercede copyright if done properly, but doing the contracts properly means understanding the law.

And the law is just plain unclear. The article that I quoted above, from the Congressional Research Service, has a good overview of where the law stands right now in the U.S., and provides links.

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.

PG says AI is going to continue developing very quickly with or without changes in the copyright laws.

Yes, there undoubtedly will be changes in copyright laws, but legislators move at a snail’s pace compared with software engineers and designers. AI is a huge breakthrough and it will take some time for humans to coalesce around where lines are to be drawn between permitted and not permitted uses of AI.

There are certainly going to be some copyright infringement lawsuits and judges (who are anything but technically-oriented, but generally possess a respectable level of general intelligence) will make different and sometimes conflicting decisions for awhile.

Legislatures gonna legislate. Some will do better than others, but the first laws are going to be rough around the edges.

Wherever there are meaningful copyright laws, copyright attorneys are already thinking hard about AI and there will certainly be some lawsuits. That said, on the internet, there are plenty of places that are effectively beyond the reach of western copyright legislation. (China, Russia and a variety of island kingdoms come to mind.)

It’s going to be a legal Wild West for awhile. PG has already read articles about the various ways attorneys can use AI in litigation and contract drafting. He expects to read a lot more.

PG PS:

You should check out the comments to this post. Two valued and prolific TPV commenters elaborate on their forecasts and expectations regarding AI and courteously disagree with some of the thoughts the other has posted.

IPA welcomes Internet Archive Judgement.

From The New Publishing Standard:

IPA Secretary General José Borghino said:

“Given the enormous significance of this case to the global publishing industry, the IPA is deeply heartened by the comprehensive judgement of the US Court. Its firm backing of basic copyright principles is particularly comforting. IPA affirmed these principles in our Amicus brief to the Court, along with additional concerns about the United States’ international treaty obligations to uphold copyright protections on the Internet.”

The IPA statement further includes remarks from the President and CEO of the Association of American Publishers, Maria A. Pallante, who said:

“The publishing community is grateful to the Court for its unequivocal affirmation of the Copyright Act and respect for established precedent. In rejecting arguments that would have pushed fair use to illogical markers, the Court has underscored the importance of authors, publishers, and creative markets in a global society. In celebrating the opinion, we also thank the thousands of public libraries across the country that serve their communities everyday through lawful eBook licenses. We hope the opinion will prove educational to the defendant and anyone else who finds public laws inconvenient to their own interests.”

Link to the rest at The New Publishing Standard

Let it be noted that this is one set of statements from Big Publishing that PG agrees with.

In a Swift Decision, Judge Eviscerates Internet Archive’s Scanning and Lending Program

From Publisher’s Weekly:

In an emphatic 47-page opinion, federal judge John G. Koeltl found the Internet Archive infringed the copyrights of four plaintiff publishers by scanning and lending their books under a legally contested practice known as CDL (controlled digital lending). And after three years of contentious legal wrangling, the case wasn’t even close.

“At bottom, IA’s fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book,” Koeltl wrote in a March 24 opinion granting the publisher plaintiffs’ motion for summary judgment and denying the Internet Archive’s cross-motion. “But no case or legal principle supports that notion. Every authority points in the other direction.”

The ruling comes just days after a March 20 hearing, during which the judge sounded deeply skeptical of the Internet Archive’s case. At the 90-minute hearing, Elizabeth McNamara, arguing for the plaintiff publishers, told the court that the concept of controlled digital was “built on a fallacy” and that the Internet Archive’s scanning and lending of library books was copyright infringement on a massive scale. Arguing for the Internet Archive, Joseph Gratz countered that CDL is a carefully considered practice and that “lending books by more efficient technological means” was “transformative” and therefore protected by fair use.

. . . .

But after three years of litigation Koeltl easily found for the publishers, holding that the Internet Archive’s scanning and lending clearly constituted a prima facie case of copyright infringement and that the Internet Archive’s fair use defense failed on the facts and the law.

All four factors of the fair use test, Koeltl ruled, strongly favored the publishers.

“The crux of IA’s first factor argument is that an organization has the right under fair use to make whatever copies of its print books are necessary to facilitate digital lending of that book,” Koeltl writes. “But there is no such right, which risks eviscerating the rights of authors and publishers to profit from the creation and dissemination of derivatives of their protected works. IA’s wholesale copying and unauthorized lending of digital copies of the Publishers’ print books does not transform the use of the books, and IA profits from exploiting the copyrighted material without paying the customary price. The first fair use factor strongly favors the Publishers.”

Specifically, Koeltl strongly rejected what is essentially the most important argument for fair use under the first factor (which deals with the nature of the use, commercial, nonprofit, education, etc.)—that the Internet Archive’s program is “transformative.”

“There is nothing transformative about IA’s copying and unauthorized lending of the Works in Suit,” the judge found. “IA does not reproduce the Works in Suit to provide criticism, commentary, or information about them. IA’s e-books do not ‘add something new, with a further purpose or different character, altering the with new expression, meaning or message.’ IA simply scans the Works in Suit to become e-books and lends them to users of its website for free.”

Furthermore, Koeltl also dispatched with what he called the Internet Archive’s “first sale argument under the guise of fair use” as part of his first factor analysis.

. . . .

“In ReDigi, the Court of Appeals plainly held that the first sale doctrine…does not include a right of reproduction, and that any broader scope of the first sale doctrine should be sought from Congress, not the courts,” Koeltl held, citing the landmark 2018 appeals court decision which held there was no resale right for digital works under section 109 of the Copyright Act because, unlike physical works, the digital market necessarily involves unauthorized copies. “Although [the first sale doctrine] entitles IA and its Partner Libraries to resell or lend their lawfully acquired print copies, unauthorized reproduction, which is at the heart of IA’s online library, is not protected.”

After a cursory review of the second and third fair use factors (the nature of the works used, and the amount of the works used), which also tilted strongly to the publishers, Koeltl turned to the all important fourth factor: market impact. And despite the IA’s claims that the plaintiff publishers were not financially harmed by the Internet Archive’s controlled digital lending activities, those claims, Koeltl held, failed on both the facts and the law.

“In this case, there is a ‘thriving e-book licensing market’ for libraries,” Koeltl writes (pointing out that in 2020 OverDrive counted more than 430 million checkouts; that Penguin Random House’s library e-book licenses generate $59 million annually; and that, from 2015-2020, HarperCollins earned $46.91 million). “IA supplants the Publishers’ place in this market. IA offers users complete e-book editions of the Works in Suit without IA’s having paid the Publishers a fee to license those e-books, and it gives libraries an alternative to buying e-book licenses from the Publishers.”

Koeltl dismissed expert testimony suggesting that publishers’ bottom lines were unharmed by the Internet Archive’s online library, holding that as a matter of law it “deprives the Publishers of revenues to which they are entitled as the copyright holders,” because libraries would be incentivized “to offer IA’s bootleg e-books” rather than to “pay for authorized e-book licenses.”

And crucially, the judge brushed aside the Internet Archive’s “public benefit” argument with a single paragraph. “IA argues that its digital lending makes it easier for patrons who live far from physical libraries to access books and that it supports research, scholarship, and cultural participation by making books widely accessible on the Internet,’ Koeltl writes. “But these alleged benefits cannot outweigh the market harm to the Publishers.”

. . . .

The victorious publishers and their supporters offered a different, blunt assessment of Koeltl’s decision.

“IA tried to justify its illegal creation and distribution of e-books under a legally absurd theory of fair use. Judge Koeltl saw through their rhetoric and false comparisons,” said Authors Guild CEO Mary Rasenberger.

“The publishing community is grateful to the Court for its unequivocal affirmation of the Copyright Act and respect for established precedent,” said Maria A. Pallante, President and CEO of the Association of American Publishers. “In rejecting arguments that would have pushed fair use to illogical markers, the Court has underscored the importance of authors, publishers, and creative markets in a global society. In celebrating the opinion, we also thank the thousands of public libraries across the country that serve their communities everyday through lawful e-book licenses. We hope the opinion will prove educational to the defendant and anyone else who finds public laws inconvenient to their own interests.”

Link to the rest at Publisher’s Weekly

PG says that when a decision comes within a few days following the end of a trial in Federal Court, you can conclude that it was a slam-dunk case.

Tracking Generative AI: How Evolving AI Models Are Impacting Legal

PG has posted quite a number of AI-related items as they impact authors.

To make certain that authors don’t feel singled out, the following article discusses the impact AI is having on practicing lawyers and their support staffs.

From LegalTech News:

With so many antiquated fixtures in the legal industry colliding with new trends like artificial intelligence, data-harvesting and an altered relationship professionals have with their careers, the legal business is ripe for disruption.

But while the disruptive forces are timely, the reasons behind them are familiar: pricing pressure from consumers of legal services and service providers striving to deliver more value at a more competitive price point.

Here are three of the most commonly cited disruptors already underway in legal businesses, according to professionals implementing them who spoke at Legalweek 2023.

Bar Associations May Not Like Alternate Business Models…But Consumers Do

Corporations’ sophisticated use of data to control outside vendor costs is rubbing off on their legal service providers through greater attention to how projects are staffed and monetized.

At the front lines of these innovations in process management are alternative service legal providers and non-standard legal business structures, according to Legalweek panelists, many of whom are themselves leaders at alternative legal businesses.

In the minds of legal service consumers, distinctions between traditional law firms and new-age law firm businesses are breaking down, according to Rachel Zahorsky, managing director of client development at legal service provider Novus Law.

Plenty of resistance remains to the formation of alternative business structures in law, but it’s coming from state bar associations, not consumers, Zahorsky said. She said changes in Arizona and Utah will catch on in other jurisdictions because demand for new ways of accessing legal representation is there.

“Now there is no hesitation about where you fit or where you are [in the legal industry],” she said. “Although all the state bars are resistant, the buyers are all for it.”

Panelists said fee arrangements that differ from traditional hourly billing will play a role in legal departments’ decision-making. Technology has made legal teams so efficient that it’s hard to justify a high number of hours billed at high, four-figure hourly rates, said Stephanie Wilkins, Editor-in-Chief of Legaltech News.

. . . .

George Rudoy, firmwide leader of the legal consulting vertical of Crowe Global, a Swiss verein, said flat pricing is attractive to in-house legal departments because it incentivizes law firms to become more efficient so lawyers don’t work more hours than is profitable for the firm.

“If things are limited to a certain number, efficiency becomes key,” he said.

And contingency fees are attractive to corporations that want their law firm to share in the risk of pursuing a claim, Zahorsky said.

Pedigree Isn’t Everything

Until recently, and still in many corners of the legal industry, long-term relationships determined who got the work and who got hired. That goes for law firms recruiting from law schools and corporations sending work to their trusted counsel.

But panelists said the “rite of passage” for a young lawyer to practice for six years at a law firm before either making partner or heading in house has evolved; indeed, many young lawyers today have transitioned directly from law school to an in-house post, according to panelists. And law firms are diversifying their own recruitment pool to contend with a dearth in LSAT admission in recent years.

Rudoy said one of his favorite clients was a firefighter before becoming a lawyer, and she paid her way through law school by working at the station.

“When I approached her about the delivery of services through project management, it made sense to her because firefighters are all about process,” Rudoy said.

His anecdote highlights not only the growing emphasis on process management as a staple of attorney-client relationships, but he said it’s also a sign of the diversifying routes people can take to becoming a lawyer.

“For the new generation graduating from law school now, the world is open,” he said. “They try out different things. They might not be lawyers for a while. It’s a much more open field that allows lawyers to be more than one thing.”

Staffing for “large scale litigation,” once a question of how many lawyers of various ranks to staff, is becoming something closer to a movie production, uniquely designed for the needs of a specific project, Zahorsky said.

“It’s not going to be same team always. It’s going to be about who has the particular skill set or expertise,” she said. “Staffing is not just about the numbers but who are the specific experts.”

This skill shake up is also taking place between law firms and the corporate clients they serve. Panelists said in-house lawyers are getting choosier about who they send work to rather than reflexively sending work to the firm with whom they have a long-time relationship or from whom they’ve been recruited.

“It’s common for counsel or an associate to have a relationship from the firm they came from and the corporate legal department will lean on that firm for their work, but now they are asking how much are they reutilizing knowledge,” Rudoy said.

“We see corporate entities being much more diversified with their law firms. If they have a smaller case, like an employment issue, they will look for better service for lower fees,” he added.

Artificial Intelligence Will Force Lawyers to Be Tech-Literate

It’s no revelation that data and technology will continue to play a role in the legal profession as lawyers look for ways to anticipate client needs and automate mundane functions. However, previous legal tech trends haven’t caught on the way panelists expect artificial intelligence to.

Wilkins said firms’ use of technology is going to be a differentiating factor for general counsels choosing firms, especially when it comes to artificial intelligence. Unlike other tech trends in law, AI isn’t a fad, Wilkins said, because its potential uses are so broad.

“AI will get legal to not be the tech dinosaur that it’s been,” Wilkins said.

“AI is not replacing lawyers, but lawyers who use AI are going to replace lawyers who do not,” she continued. “You have to be willing to be innovative because your competition is.”

But panelists said emerging legal tech like AI isn’t a magic bullet, and is only as good as the professionals—and processes—deploying them.

“There needs to be the right people to solve those problems,” Wilkins said. “The best tool in the world can’t help anything if you don’t use it and your people don’t know how to use it.”

Rudoy, a former Am Law 50 firm leader, said he once asked how technology would be used in the process of a certain case, to which a partner asked him why he would ask such a question if he’s not in the IT department.

“Knowledge of tech isolated from legal advice or legal advice isolated from the process is a thing of the past,” Rudoy said.

The competitive environment for gaining client business based on evolving standards has led law schools to begin developing classes on legal business management with a tech focus, said Elizabeth Lugones, COO and senior advisor at UpLevel Ops, which consults in-house legal departments. This is a contrast from a sole focus on the “black letter of the law,” Wilkins said, referring to her own legal education.

“You have got to get them young,” said Lugones. “This shouldn’t be the first time you hear about how to manage a budget or what a CLM is. These are critical concepts for lawyers. We need to start earlier. You’re going to start seeing schools offering classes on how you run the business of law.”

Link to the rest at LegalTech News

PG started talking with attorneys in various bar associations about making their practices more efficient using technology in smart ways more than forty years ago.

PG was an early convert to dedicated word processors before the personal computer showed up. His basic premise was, “Why have your secretary/paralegal/assistant type the same thing twice if you can save an electronic file of the document and, with minimal changes to customize that document for the benefit of another client and another one after that, etc., etc. etc.

When the personal computer showed up, PG bought the first one long, long before any other attorney within 200 miles had purchased one. He went through the small number of word processing software products available before he settled on WordPerfect (let us all give a silent prayer for Allan Ashton and Bruce Bastion for this wonderful product, now left to languish after the two founders sold it about 15-20 years later).

At the height of WordPerfect’s popularity with lawyers, Microsoft Word was a retrograde, difficult to use mess that wouldn’t format legal documents without an immense amount of aggravation.

Wordperfect was very handy to use with macros and PG had at least a hundred of them for his law practice. His two secretaries had their own computers with their own favorite macros on their machines.

For some types of documents, PG could finish an initial client interview, escort the client out of his office to sign a retainer agreement and write a check for an initial payment, then go back to his office, create the document and have it printing out on one of the laser printers near his secretaries before the client had left the law office.

With only a handful of exceptions, one of PG’s assistants would contact the client two-three days later to come back to the law office to review and sign the documents that PG had finished printing within 2-3 minutes after they had left his office following their initial conference.

PG performed about 70-80% of his work on a flat-fee basis instead of charging by the hour. His flat fees were typically about 10%-20% lower than the going rate of every other attorney within twenty-five miles of his office.

PG can confidently say that he had a larger income than any of those attorneys because he handled far more clients efficiently than other law offices did and could generate error-free documents because he and his secretaries used computers and top-quality computer programs as something much more than typewriters.

Charging for legal work by the hour was dumb way back when and it is dumb now. Hourly fees reward inefficient attorneys or OCD attorneys (two sides of the same coin). Attorneys typically have a higher rate of divorce than many other professions because they spend way too much time working in their offices instead of with their families.

Since PG is on a retrospective rant, he will also report that he was very popular with the organizers of Continuing Legal Education programs because he always drew a large crowd (each member of which had paid a fee that was always too high to the CLE organizers) to watch PG while he showed them how he used his computer in his law office.

But that’s all ancient history except too many lawyers are still OCD and inefficient.

At Hearing, Judge Appears Skeptical of Internet Archive’s Scanning and Lending Program

From Publisher’s Weekly:

After nearly three years of legal wrangling, the Internet Archive’s scanning and lending program finally got its day in court on Monday, March 20. And if Judge John G. Koeltl’s questions are any indication, the Internet Archive is facing an uphill battle.

Over the course of a 90-minute hearing on the parties’ cross motions for summary judgment, Koeltl appeared skeptical that there was sufficient basis in law to support the Internet Archive’s scanning and lending of print library books under a legally untested protocol known as controlled digital lending, and unconvinced that the case is fundamentally about the future of library lending, as Internet Archive attorneys have argued.

“To say that this case is about the ability of a library to lend a book that it owns ignores whether the library has a right to copy wholesale the book,” Koeltl offered at one point during an extended exchange with IA attorney Joseph Gratz. “Does a library have the right to lend a book that it owns? Of course,” the judge conceded. But the question at the heart of this case, he added, is “whether a library has the right to make a digital copy of a book that it owns and then lend that digital copy, which it has made without a license and without permission” to patrons. “To formulate the issue in this case as simply ‘does the library have a right to lend a book that it owns’ belies the issue in the case,” Koeltl said.

In its motion for summary judgment, lawyers for the publishers argue that the Internet Archive is guilty of illegally digitizing tens of thousands of in-copyright print books and making them available to readers worldwide. “No case has held or even suggested that IA’s conduct is a lawful fair use,” the publishers argued.

In its motion for summary judgment, the Internet Archive counters that its efforts to scan legally acquired physical books and lend the scanned editions in lieu of the print under conditions that mimic physical lending is protected by fair use. “The Internet Archive and the hundreds of libraries and archives that support it are not pirates or thieves. They are librarians, striving to serve their patrons online just as they have done for centuries in the brick-and-mortar world,” the IA brief states. “Copyright law does not stand in the way of a library’s right to lend its books to its patrons, one at a time.”

Opening the day’s hearing, Elizabeth McNamara, arguing for the publishers, reiterated the plaintiff’s position that the Internet Archive’s scanning and lending program has no basis in law. “In short, CDL is built on a fallacy,” McNamara told the court. “No laws support this mass duplication and digitization of millions of books to distribute the entire world for the identical purpose that they were originally published, to be read. And for good reason—if this conduct was sanctioned, it would destroy the rights and controls of copyright holders.”

Disputing the defendant’s contention that there is no evidence of any net loss to the publishers from the IA’s program, McNamara argued that the existence of a “thriving” licensed access library e-book market, and potential lost license fees, was sufficient to show harm. “Because you don’t like the price or you don’t like the terms the answer to that is not that you steal,” McNamara told the court. “That is basically the IA’s answer, that we don’t like that market, we don’t want to pay it, it’s not in our interest to pay it and so we’re entitled to just duplicate your work without authorization and distribute it to the world. Well, that isn’t the way the law works and it’s not the way we work in markets.”

Arguing for the Internet Archive, Gratz maintained that the scanning and lending of library books under CDL rules is a lawful extension of the library’s traditional mission and that the IA’s creation of digital copies is “transformative” because the digital copy at issue is merely “incidental” to the loaning of a lawfully acquired corresponding physical book.

“Lending books by more efficient technological means does not offend the purposes of copyright,” Gratz argued. “Instead, it more effectively furthers those aims.”

Gratz also argued that there is “no evidence of harm such that taking away CDL from a library will harm those libraries and their patrons with no countervailing economic benefits to the publishers,” maintaining that the publishers did not lose “one dime” to the IA’s scanning and lending program.

But Koeltl peppered Gratz with questions throughout the hearing, appearing deeply skeptical that the Internet Archive’s fair use case was properly supported by case law, and unconvinced that the publishers’ market for library e-books was not impacted by libraries choosing to scan print books under CDL protocols.

“A library whether they hold a physical copy or not, has the ability to license an e-book from a publisher. Rather than pay that licensing fee to the publisher some libraries choose to make their own copy and to lend that copy. Why isn’t it self-evident that that deprives the publisher of the fees that the publisher could otherwise obtain from licensing an e-book to that library?” Koeltl asked.

“It is because with respect to the copies at issue in the CDL situation the question is not between OverDrive and nothing. The question is between physically lending a book to a particular patron, for which no payment would be due to a publisher, or digitally lending that book to the patron,” Gratz replied, adding that to find harm “there would need to be a reason to think that the publishers were worse off than the situation in which in which the fair use did not occur at all.” In fact, library e-book lending has grown throughout the existence of the IA’s scanning program, and actually surged during the height of the pandemic.

Koeltl sounded largely unmoved, however. And in her closing rebuttal, McNamara reiterated the publishers’ claim that “if CDL were given a green light” it would have a “a significant impact” not only on the library e-book market but on the consumer e-book market as well.

Link to the rest at Publisher’s Weekly

PG says that you can’t conclusively discern from questions a judge or group of judges ask the attorneys during a summary judgement or other hearing similar to that described in the OP that the court will rule one way or another.

Judges differ in the manner in which they deal with counsel during arguments concerning a motion or during the trial of a case. They can be playing devil’s advocate to probe each side’s reasoning and their charicization of various statlues or court cases they’re relying upon to support their contentions.

That said, based upon the OP’s description of what went on, PG doesn’t give the Internet Archive much of a chance of prevailing in this judge’s court.

Publishers, Internet Archive Set for Key Hearing Today

From Publisher’s Weekly:

After nearly three years of legal wrangling, a federal judge today will hear cross motions for summary judgment in a closely watched lawsuit challenging the legality of the Internet Archive’s program to scan and lend print library books.

First filed in New York on June 1, 2020, by four major publishers (Hachette, HarperCollins, John Wiley & Sons, and Penguin Random House) and the Association of American Publishers, the copyright infringement lawsuit alleges that the Internet Archive’s scanning and lending of library books under an untested legal theory known as “controlled digital lending” is piracy on an industrial scale. The Internet Archive counters that it’s activities are legal, protected by fair use, and that the publishers’ action fundamentally threatens the core mission of libraries to own and lend collections in the digital age.

The wheels of the lawsuit first began to turn in late March 2020, in the early days of Covid-19 pandemic, when, with libraries and schools shuttered, the Internet Archive unilaterally launched the National Emergency Library, a program that temporarily removed controls on the scanned titles in the IA’s Open Library, making them available for multiple user borrowing. The move sparked outrage from author and publisher groups.

The suit, however, is about about more than the National Emergency Library (which shuttered in early June 2020, in the wake of the litigation). Rather, the suit challenges the legitimacy of controlled digital lending and the fundamental legality of scanning and lending library books without permission.

Under CDL, libraries (including the Internet Archive) make scans of their legally acquired physical books and loan the scans in lieu of the print under rules that mimic physical lending: only one person can borrow a scan at a time; the scans are DRM-protected; and only one format can circulate at a time to maintain a one-to-one “owned-to-loan” ratio. In other words, if the scan is checked out, its print counterpart cannot circulate, and vice versa.

. . . .

[L]awyers tell PW the case very likely will be decided at the summary judgment stage, as there are few factual disputes at issue in the case. Barring a surprise settlement, however, the case is likely far from over, as the outcome of today’s hearing, whichever way it goes, would likely be appealed.

Link to the rest at Publisher’s Weekly

The If-Only Lawsuit

From Kristine Kathryn Rus ch:

The United States Justice Department is suing to stop the big merger of Penguin Random House and Simon & Schuster. That I can write about without a lot of research, because I’ve been following this merger for a long time.

. . . .

However, this suit is worth mentioning…

Because it’s fifteen to twenty years too late. The Authors Guild noted that in their response to the news of the DOJ suit:

Today’s decision by the DOJ was unexpected given that so many other major mergers and acquisitions in the publishing industry have gone through recently and over the last few decades with nary a raised eyebrow, leaving us with only a handful of companies dominating the industry.

Yeah. Exactly. Those of us who suffered through the previous mergers know what bullshit the PRH and S&S are feeding the press. No effect on competition? In the 1990s, my books routinely went to auction, and we always got a higher price for the books than the initial offer.

By the end of the decade and into the early part of this century, there was no one to have an auction with. The book had to be a potential (and obvious) blockbuster. One of my editors backed out of a possible deal when she heard that another editor at a different imprint in the same gigantic merged company wanted the book.

Oh, my editor said to me, she can pay you more, and their imprint will probably take over mine in a year or so.

Guess what? My editor was right. Eighteen months after the merger, the “overlapping” departments and imprints were cut as a cost-saving measure, putting my former editor out of a job, along with everyone else on her team. The cuts and trimming, for the sake of the stockholders, mostly hit the most experienced people in the purchased company (not the one that did the buying) because experienced folk are paid more.

. . . .

All the promises in the world mean nothing when large companies merge.

I read the complaint for the suit the day the suit was announced. The complaint is worth reading because, if nothing else, it’s a what-if. What if the DOJ had been on this as the mergers started twenty years ago? What would the traditional publishing landscape look like now?

I can tell you: It would look completely different. Instead of the traditional part of the industry being dominated by five large conglomerates, the traditional part of the industry would look the same or better than it did in the early 1990s. There would be a lot of publishing houses, a lot of working editors, a lot of imprints, and a lot of competition.

Indie wouldn’t be as attractive for many big name writers because those writers would still be working. Just this morning, I discovered that a writer whose work I loved decades ago has gone indie. Why? Because he hasn’t been able to get anyone to buy his books for…you guessed it…twenty years.

This happened to a worldwide bestseller who hit the top of the major lists for decades and whose work was made into three feature films. He couldn’t sell another book because his genre was “passé.” His genre? Horror. No one at the big houses would touch horror twenty years ago, and even the smaller ones looked askance at it.

If anyone had any brains, they would have seen that the genre would become as big as it is now. Right now, the people greenlighting movies and TV shows and buying books are the generation who grew up reading R.L. Stine. Of course, they want more horror. It was on the horizon.

The multitudinous publishing houses of the 1980s and 1990s could have afforded to play the waiting game—at least one or two of them, or maybe even three of them. Even better, the editors there who would have had long careers would have seen the writing on the wall and pushed out reissues of this writer’s books as the horror boom started.

The five large companies that exist now have no idea what they have in inventory. They have no institutional memory because they’re really not an institution. They’re parts, slammed together to make a great stock portfolio, so that they can be traded and bring in profits for the stockholders. Forget the books, forget the product, forget the employees, forget the readers. The books literally are widgets that are, in the minds of the people running the company, interchangeable.

If this weren’t true, then Simon & Schuster would not be up for sale. ViacomCBS would keep it and mine the inventory for projects for various TV, streaming, and movie projects, not to mention gaming rights and other things. A book publisher owned by a media company? Sounds like a surefire way to make even more money, right?

Nope.

There’s no vision here.

And the suit by DOJ is as stuck in the past as that little dream of mine was. Yes, this merger by PRH and S&S is truly anti-competitive, just like all the other mergers were.  And the impact, should the merger go through, on the traditional publishing industry will be profound…although not as profound as all of the mergers that preceded it.

What has changed is the rise of indie publishing. Writers do have somewhere else to go. They can publish their own works. They can reach the same readers that these large companies can, because these companies are no longer interested in publishing books. They’re just manufacturing widgets.

One very ironic thing that has emerged during the entire discussion of the merger is this: For about a decade now, companies like PRH and S&S denied that indie writers in any way contributed to the publishing industry. “Flotsam and jetsam” were some of the words floated around about indie publishing; “garbage” was another.

Now, though? Now that they need us? We’re part of their defense.

Oh, no, the attorneys for PRH and S&S have been saying all year, we’re not in control of the market. See this large thriving market over here? Those indie writers? They’re part of the industry too.

. . . .

The traditional publishing industry, as I have written many, many, many times, is broken. New writers can no longer anticipate having a career in the traditional publishing industry, let alone making a living at writing. And even a lot of the big guns are watching their income fade because of the policies and behaviors of these megacorporations.

Sure, there are always a handful of books that make millions. But once upon a time (twenty-five years ago), there were hundreds of books that made their authors millions. Enough books that Publisher’s Weekly devoted an entire month of issues every spring to cover the sales figures, never going below 250,000 for hardcovers and 500,000 for mass market paperbacks.

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.