Wrapping Up 2012: Lawsuits & Silk Ties That Bind

by Lise Horton

While the #1 headline in our neck of the woods would have to be E L James and Fifty Shades of Grey trilogy, there was an overall theme to the year that can be summed up in one word: Litigation. And here’s just a sampling:

The eons long (okay, 7 years) Google Settlement case finally gave its last gasp as Judge Denny Chin refused the settlement proposal and the weary parties went their separate ways, with Google’s “a digital copy of every book in the world” plan falling apart. There’ve been some arrangements and understandings between Google and publishers that will lead to money changing hands, though authors are prominently missing from the discussion. The Authors Guild is attempting to pursue the matter on its own, on behalf of authors, but certain points in Chin’s Opinion make the Guild’s chances of success slim.

The concept of digital scans of every book? Didn’t die, though it is in stasis in the case of the Authors Guild v. Hathi Trust, an academic endeavor that grew out of the Google book scan project and likewise had the same goal. While the Authors Guild, with fair use arguments and the first ever use of Section 108 of the Copyright Act in a suit, did not prevail, the decision is being appealed. And just because the Hathi Trust started with academic and archaic texts? They didn’t stop there….unless Harry Potter’s being studied at the collegiate level!

The other massive lawsuit that hit in 2012, and one which will have far reaching implications for every party involved, but particularly authors who are basically left out of all of these equations, including settlements (in addition to the customer herself) is the Department of Justice price fixing suit against the Big 6 houses. Naturally, we can all commiserate with poor, weak, innocent Amazon ….who has now been handed the freedom to play with pricing at their whim and for their benefit. Meanwhile the publishers who’ve settled (Hachette, HarperCollins, Simon & Schuster and hot off the press, Penguin) (the courts approved the settlement agreement with the first 3, which includes among other things, $62 million in payments, and the Penguin settlement approval is pending) must now comply with a number of restrictions and oversight. The remaining publisher, Macmillan, and Apple, are set to battle it out in court. Macmillan continues to hold that they did not collude. They’ve got their legal work cut out for them, however as, along with the DOJ, numerous individual states have launched their own suits against Macmillan and Apple.

From a recent New York Times piece, it is pretty clear that Amazon was not the one having sand kicked in their face by the alleged bullies with their behind-closed-door pricing discussions:

“For Amazon, whose share of the e-book market has eroded to close to 60 percent from about 90 percent since 2010, the Justice Department action is a major victory over one of its top rivals, Apple. In anticipation of the announcement, Amazon already appeared poised to drop prices on e-books.
“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books,” Andrew Herdener, a spokesman for Amazon, said in a statement.”

Numerous amicus briefs filed from nearly every quarter in the industry, objecting to the DOJ position and outraged that Amazon was being given basically their own playing field, were given short shrift.

If you look at the numbers, it’s rather hard to see how much damage folks were doing to Amazon. Even at a low, they had 60% of the digital sales market. Barnes & Noble had 25% and Apple – a defendant in the case – had a piddling 15%.

In a smaller arena, fast on the heels of a lawsuit brought by authors against another of the Big 6 publishers in connection with foreign sales royalties, a like case has now been brought against Harlequin. From the plaintiffs’ site, the general description:

“A class action lawsuit was filed today against Harlequin Enterprises, Ltd., the world's leading publisher of romance fiction, as well as Harlequin Books S.A., a Swiss corporation, and Harlequin Enterprises B.V., a Dutch corporation, on behalf of authors who entered into contracts with the company.

This lawsuit results from Defendant Harlequin Enterprises Limited, the world’s leading publisher of romance fiction, depriving Plaintiffs and the other authors in the class, of e-book royalties due to them under publishing agreements entered into between 1990 and 2004. Harlequin required the authors to enter into those agreements with a Swiss entity that it created for tax purposes, and that it dominates and controls. However, Harlequin, before and after the signing of these agreements, performed all the publishing functions related to the agreements, including exercising, selling, licensing, or sublicensing the e-book rights granted by the authors. Instead of paying the authors a royalty of 50% of its net receipts as required by the agreements, an intercompany license was created by Harlequin with its Swiss entity resulting in authors receiving 3% to 4% of the e-books' cover price as their 50% share instead of 50% of Harlequin Enterprises' receipts.”

This case bears similarities to the one involving a Big 6 house. Royalties are a morass in and of themselves, and these machinations make it nearly impossible for an author to get a clear grasp of the issue. It is a complicated world out there that an author has to deal with, so this is just another example of how important it is to really have as solid an understanding as possible on contracts and the publishing industry’s current practices.

A number of lingering issues arose from the demise of Dorchester as authors sought to get back their rights as the publisher’s assets were being gobbled up by Amazon, get payment for royalties owed, and in general slog through the mudslide that was the end of the publishing house.

But wait! It’s not just folks suing the publishers. They’re doing some suing of their own. Case in point, Penguin suing a number of its authors to get back approximately $577,000 in advances paid for books the authors (allegedly) failed to produce as contractually required. Sourcebooks sued an author for breach of contract for the same issue: refusing to turn in the 3rd contracted book.

Then there’s author Bill Bryson. No, he’s not suing his publisher – he’s suing his old agent for a variety of nefarious oversights, underreporting, and such.

Fortunately, t wasn’t just the lawyers having a grand year, however.

A number of authors in romance made killings of their own. There were major book deals being made for a number of self-published authors of erotic romance as they rode the wave called E L James and Fifty Shades of Grey. While 50 has sold 40 million copies worldwide (and is still going strong as foreign translations continue), a number of well-known, already bestselling erotic romance authors are vying for supremacy on the bestseller lists. From Bella Andre to Maya Banks, Eden Bradley/Eve Berlin and the lady chasing James, RWA’s own President, Sylvia Day, they have caught the industry’s notice and their titles have been satisfying the cravings that James’ books inspired.

Hollywood’s keeping a close watch on these titles, too, as they seek out authors with a solid brand and more product to feed the passions stoked by Christian and Anastasia. The Shades film is in the works and additional options have been made, including on The Marriage Trap by Jennifer Probst (and Probst’s latest 3-book “major” deal has just been announced as well).

The import of the success of these authors to my mind is that the romance genre is now front and center. As we all know, there’s something for everyone in the genre, and with the popularity of Shades, with millions of new readers discovering the joys of romance, they’ll be looking for more great reads and they’ll find them. Romance continues to drive digital, and is the bestselling genre in print, as well. While there are the communities who will continue to denigrate the genre, money talks, and that’s the true sign of success.

Shades even provoked discussion of book banning and censorship, which on a national stage is another plus.

Economically, the publishing industry began a slow climb back after wallowing for a while. The demise of Borders changed the landscape, Wal-Mart emerged as a book-selling powerhouse and sales there will be, for the first time, included in reports from all the traditional outlets. And the tablet and digital wars continue to drive an evolving business that even insiders cannot predict from day to day.

As digital (now at an estimated possible 20% or more of the market of book sales overall) continues to grow and gain importance, the print landscape will be undergoing yet another major upheaval with the merger (not approved as yet as the deal requires international approval in a number of countries that experts expect will keep the final deal held up until later in 2013) of Penguin and Random House. The prior Big 6 will become the Big 5 and while placating press statements give assurances that there won’t be any elimination of redundant imprints, from an author’s perspective, I gotta say – not buying it. Will it mean fewer titles released? Fewer purchases of new works? Definitely a possibility and we all must keep an eye out as I am sure the digital publishers are doing as they carve out their niche.

Some traditional topics, as well as some new matters, continued to hold sway in the discussion this year. Piracy, the rise of ebook popularity and availability via the B&N/Amazon reader wars, copyright issues, trad houses hanging out digital only imprint shingles, contract changes, royalty rates, subsidiary rights, the rise of self-publishing, Amazon’s continued pursuit of control of the publishing industry along with the e-reader and tablet markets, the evolution of the literary agent’s role in a digital arena, shrinking mid-list opportunities, and the ever hearty appetite for YA paranormal titles were all issues visited routinely in the industry.

But ultimately, the biggest story of the year was E L James and Fifty Shades of Grey. Not only has it spawned a demand for more erotic romance – a demand already established romance authors have been able to fill, and newer authors can aspire to fill – but it undoubtedly has created a whole new audience of readers for books offering an HEA in this tumultuous world. It’s made romance a serious contender in the entertainment game. Don’t forget after all – we’re not just in the publishing business. We’re in the entertainment business. The books’ popularity is shining the light on women’s sexuality, on physical relationships and the discourse of same which is clearly a timely matter, as evidenced by the fact that our genre is now sharing the stage with: Creative works in film focused on the subjects of sexuality, love and relationships (Sessions, A Dangerous Method, and Hysteria), television (Girls) and theatre (Venus In Fur, Sex With Strangers).

Love her books, or hate them, E L James’ success has made romance fiction a force to be acknowledged – and reckoned with.

And in the year to come that fact will add another layer of complexity to the already wild and crazy world we writers inhabit.

Here's to all you achieved in 2012 - and to New Goals & Challenges in 2013!

Happy Solstice!
Happy New Year!