Secondary rights: a lot of heat, not much light right now

Secondary rights are the rights to resell your work after its first publication. Before the rise of the internet, most publications didn't quibble about secondary rights, and most writers retained them. Today, many publications want all rights to your work, and contracts claiming the right to reproduce your story anywhere in the universe in formats yet to be invented are common. At the same time, some authors' groups are trying to bring secondary rights marketing into the 21st century, trying to work out collective deals and micropayments in order to facilitate reselling stories. Here, freelance Jeff Hecht relates some recent news on these efforts.

I talked last week with Paul Aiken, executive director of the Authors Guild, and Anita Fore, director of legal services for the Guild. They've been working on secondary rights and related issues, and they also are finding it a difficult area. They gave me considerable useful information.

There are ongoing questions about what's going on at the Copyright Clearance Center, which is intended to receive and distribute reproduction fees to copyright owners. Their processes seem opaque, and little progress has been made in understanding how they're handling payments and what their costs and payments are. This could be a great opportunity for a hungry investigative reporter with a little financial savvy.

The Guild formed the Authors Registry 6 years ago to be a central clearinghouse to handle secondary rights for authors. The idea was that magazines, newspapers, and other publishers could send one big check to the Registry, covering many smaller rights payments to individual writers, then the Registry could group those payments with other payments due to writers. One of the selling points to magazines is avoiding the need to file form 1099s on all royalty payments over $10 to individuals. This sounds like how ASCAP works. Implementation hit a big snag when there was an unfavorable intermediate-level decision on the Tasini case, which effectively freezing new deals. All Guild members are automatically registered, and each year 600-700 receive payments — a little over 10% of Guild members.

They mentioned that a group called icopyright is interested in authorizing reprints of articles by corporations, and suggested that magazines could also work with them. They also said that icopyright had gone through a couple of reorganizations. I checked the web site and was not impressed. There is an author service, but it charges hefty registration fees, and seems mainly interested in serving as an interface for registering copyright. The main business seems to be helping companies find where they're being mentioned, then licensing good articles for press packs and such.

They also mentioned Featurewell as a small company selling secondary rights. They're selective and don't take everybody on. I have not investigated them.

The major source of money for the NY Times and others who demand electronic rights is not in selling back articles from their database but licensing the databases in bulk to Lexis Nexis and other database companies. It's really hard to get individuals to pay enough for licenses to make it all worthwhile. The money is at law firms and corporations. The Registry is looking at this with the Guild, ASJA and other organizations.

A lot of money the Registry gets is from overseas photocopying, particularly in the UK where it goes to individual authors. The Registry has distributed upwards of $2 million to individual authors. Norway distributes money through the Authors Coalition, which sends money to writers organizations like NASW.

At this point, secondary rights markets are largely limited to regional and smaller newspapers, although Featurewell manages to sell some. They said that these markets might like science articles.

Although the Boston Globe Freelancers organization folded their case against the Globe, there is a class action suit in process against all major data bases and the New York Times on behalf of freelancers who contributed articles. This has been in negotiation for over a year, covering archival rights.

Very little has been accomplished with micropayments for individual articles. I got the impression that administrative costs for royalty accounting are significant, but I don't think anyone has quantified them.

I offered to be a liason in the future, and they promised to keep in touch.

MY COMMENTS: All in all, I don't think anybody has a firm handle on the whole secondary rights issue.

The Copyright Clearance Center deserves more investigation. It's not clear what's going on there.

The Authors Registry sounds like a good idea, and we should cooperate with the Guild and other groups trying to strengthen it into a royalty aggregation and dispersement organization. We need something like it, and there's no sense in reinventing the wheel.

The real money is in database aggregation, not in selling individual articles. To the extent our articles have significant value to a database service, it's because they were published in a particular magazine or newspaper, not because they're ours. My interpretation of this is that publishers can say with some legitimacy that they need non-exclusive electronic rights to run their business if that business includes archiving their publication. I believe those systems are not set up to count accesses to individual articles, so the best we can hope for realistically are small incremental payments. I am not a database analyst, but I suspect that a system to pay royalties to authors on accesses of individual articles would be prohibitively expensive to implement.

The magazines that don't archive are by and large marginal economically — for example, the science-fiction magazines. They also include fiction magazines, where the market dynamics are different than for nonfiction.

Another reality I see is that magazine subscribers are coming to think of electronic archives as part of the magazine package, although it's not clear how to arrange it so the magazine gets benefits from keeping them on-line.

I wouldn't be surprised to see another round or two of litigation over royalty payments. The biggest issue I see is the handling of secondary rights by publishers and database companies. From my own experience, I believe that many publishers may be licensing rights without determining if they own them, so the fault may be with them rather than the database companies. This can easily happen when database licenses are signed by administrators at corporate headquarters who have no contact with the editors of individual magazines, when magazines do not have good records of contracts, or when the staff is too busy to check fat folders full of contracts. I don't think there's a lot more money to be shaken out for writers, although I could be mistaken.

All this suggests we need to rethink what position we want to take on secondary rights issues, and what alternative markets may exist for them.

Jeff Hecht is a freelance science and technology writer with a particular concentration on fiber optics and lasers. He literally wrote the book on fiber optics, and he also writes science fiction.

December 31, 2003

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