UK: Society of Authors Questions Spotify’s Publisher Deals

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From Publishing Perspectives:

In a statement provided to Publishing Perspectives for today’s report (October 11), the 12,400-member Society of Authors in London is expressing “deep concern” in learning from press reports last week that ‘all major book publishers’ have agreed new limited streaming deals with Spotify.’”

As our readership knows, Spotify CEO Daniel Ek led an invitational press conference on October 3, announcing the opening in Australia and the United Kingdom of its premium audiobook offer. The move is said by the company to make available at least 150,000 audiobooks as part of Spotify Premium subscriptions, subscribers receiving 15 hours of listening time monthly.

As Anne Steele pointed out in her article for the Wall Street Journal, Spotify says it has made agreements with the Big Five publishing houses and many independent publishers.

“As far as we are aware,” the society’s leadership writes, “no authors or agents have been approached for permission for such licenses, and authors have not been consulted on license or payment terms.”

“Publishing contracts differ but in our view, most licenses given to publishers for licensing of audio do not include streaming. In fact, it is likely that streaming was not a use that had been invented when many such contracts were entered into.”

. . . .

“We know the devastating effect that music streaming has had on artists’ incomes,” the Society’s statement reads, “and the impact of streaming and subscription video on demand platforms on screenwriter incomes and their working conditions. We have long been concerned about streaming models for books.

“The streaming of audiobooks competes directly with sales and is even more damaging than music streaming because books are typically only read once, while music is often streamed many times.”

. . . .

The organization references Sian Bayley’s October 3 announcement story at The Bookseller in making its point.

In that article, as the Society of Authors points out, Bayley wrote, “Book publishers have long expressed reservations about subscription deals for digital content, but Spotify has offered variations of the typical pooled income arrangement, with a more limited offer that publishers believe will assure agents and authors that their income streams will not be undermined.”

The Society of Authors statement goes on even to allude to what might be an appearance of collusion, writing, “Authors and agents have simply not been contacted about such offers, let alone reassured. The fact that all major publishers have entered such arrangements at the same time seems to raise questions that perhaps should be reported to the competition authorities.”

The Society of Authors then concludes with a concise list of what it sees as its requirements in this development. It writes, “We demand that all publishers:

• “Inform their authors and agents with full transparency about the deals they have negotiated, to seek permission in full respect of their right not to give permission and to remove their books from the Spotify catalogue.
• “Negotiate an appropriate share of the receipts on a clear and equitable payment model, which should equate to no less than the amount that would be received from a sale of the same audiobook.
• “Ensure that with all licenses that Spotify applies frictions, as with e-lending, such as time limited loans and guarantees of payment, whatever proportion of the book is read.
• “Ensure that licenses are time limited and should not allow sublicensing or use on other platforms.
• “Indemnify authors if the unauthorized use conflicts with existing film or other such deals, or if it leads to claims of copyright infringement by rights holders of quotations or images included in that.
• “Ensure that licenses include safeguards to prevent pirating of authors’ and narrators’ works and voices including for use in AI systems.”

The controversy here is based in serious considerations about how authors, their literary agents, publishers, and distributors handle the agreements behind the kind of offer Spotify and others may make to consumers for streaming access to copyrighted content.

Link to the rest at Publishing Perspectives

PG doesn’t know more about the details of the streaming agreements signed by publishers or how publishers think they are entitled to grant licenses to Spotify for streaming or how publishers intend to compensate authors and audiobook narrators for the rights they are purporting to grant to Spotify.

PG speculates that publishers have the idea that there is no real difference between the sale of audiobooks under existing publishing agreements with authors and narrators and what they’re planning to do with Spotify.

Will revenues received by the publisher from Spotify be broken down by author and book title? What happens when a Spotify user streams 20% of an audiobook? In a more conventional audiobook sales environment, when a reader acquires an audiobook, the reader pays a lump sum and the author’s royalties are calculated and paid as a percentage of that sum.

A typical publishing contract permits the author to conduct an audit of the publisher’s sales records for the books the publisher has under contract. Typically, the author is entitled to perform the audit in person or designate an individual, individuals or an accounting firm (usually through its auditing department) to perform the audit on behalf of the author.

PG has always believed that the audit rights in a publishing contract include not only the sales records of the publisher with respect to the author’s books but all of the contracts the publishers have made with book wholesalers, bookstores and bookstore chains, etc.

Audiobooks have their own licensing issues that are different from those for printed books and ebooks.

The right to create and sell an audiobook is a derivative right owned by the author of a book and can be licensed by the author separately from the license to “sell” an ebook or a printed book.

An audiobook requires a narrator. Absent a contract stating differently, the narrator has exclusive rights to the audio narration he/she has performed.

Someone needs to create a recording of the narrator. Whoever creates the recording – turning on an audio recorder or overseeing the recording process as it takes place to make certain the recording is audible and meets commercial standards for the audiobook industry. The creator of the recording is the owner of that recording, absent a written contract granting the author or publisher the ownership rights to the recording, including the right to create duplicate recordings that can be sold/licensed to audiobook purchasers.

If music or bits of music are added to the audio, the composer and performers of the music are the owners of their own creation and performance rights, etc. etc.