Commerce Issues

Commerce Issues: Basic Principles

Fair pay. It is a basic human right that everyone should receive fair pay for their labor. As creators, we have a right to earn a decent living from our profession.

Society needs freelance writers. It is in society’s interest to maintain and support professional, independent freelance creators. If the freelance book author, investigative reporter, and creative artist are denied the ability to make a decent living, the only information and art that will be available will be that produced by the independently wealthy or by hirelings who labor under orders from corporate media conglomerates, big businesses, government agencies, and other institutions that pay talent to speak for them.

Commerce Issues: Discussion

Commerce issues are those that shape our livelihoods; these address how intellectual property is bought and sold in the information marketplace. Commerce in printed information is governed by long tradition and a well understood body of copyright and publishing law that has slowly evolved over centuries.

Copyright law was originally developed to guarantee to creators the fruits of their labor. This idea, which is embedded in the U.S. Constitution, protects creative people from outright theft of their work so that they might reap the benefits of their endeavors.

In the United States, copyright law primarily protects our economic rights, giving authors exclusive rights to their own work for a limited time. This enables writers to live while they create. Later, when their work enters the public domain and is no longer protected, the public has free use. In the European Union, copyright goes further than in the United States and covers certain moral rights of artists, writers, and other creators. These moral rights include protecting the form of the work from unauthorized alteration or misuse.

But commerce in electronically stored and distributed information is in its infancy. The laws, customs, and traditions that will govern electronic commerce in intellectual property are being created right now. These electronic commerce issues will dertermine how authors will be able to electronically sell their work and what consumers will be allowed to do with electronic information.

  • For example, these issues include:
  • The sale of electronic rights to their work
  • The making of digital (electronic) copies of a work
  • The redistribution of a work to others
  • Linking to another’s work
  • The reading, viewing, or otherwise using a work by consumers (see ’End-User Issues’)

 Authors and artists can be paid for use of their work in a variety of ways. For example:

  • Per-use royalty
  • Lump-sum fee
  • Income share
  • Time rental or time access period

 These fees can be paid on a variety of bases. For example:

  • Each person’s access/use
  • Each machine’s access/use
  • Site license

 All of which means that negotiations and agreements for the sale and transfer of intellectual property are going to be more complex, but potentially fairer to authors who are able to assert themselves by acting collectively.

 The right of authors to be fairly paid for their work is self-evident to creators who, like other working people, rely on their labor to earn a living. But one faction of the technology community distorts the “information should be free” principle to mean that no one should have to pay writers for the fruits of their labor.

 Certainly information should be free in the political sense; we oppose all forms of censorship. Writers should be able to distribute their work at no cost if they so choose. Likewise, those who want to make a living and support their families from years of study and the practice of writing have a right — and a need — to do so.

 Commerce Issues: We Advocate

We urge writers to advocate and defend the following positions and to fight for them in their electronic marketplace dealings:

Copyright. The legitimacy and sanctity of basic copyright law and principles must be applied to electronic marketplaces and the electronic distribution of intellectual property.

Fair payment. Authors and other creators of intellectual property have the right to negotiate and receive fair payment for commercial use of the material they create. Unfortunately, the disparity in power between individual writers and large corporate publishers has resulted in systemic under-paying of writers. Pay rates for authors must be raised to levels that fairly reflect the value of the writer’s work.

Sale of specific rights. Since U.S. copyright law allows the author to license each individual right associated with a work (for example, movie right, paperback right, syndication right, etc.), creators should be able to negotiate each right separately, free of coercion to license all rights in a blanket deal.

Control of electronic distribution rights. Publishers often try to pressure writers into surrendering control over electronic and other rights for very poor terms. Authors should negotiate vigorously. Whenever possible, authors should retain control over these rights and surrender them only in return for favorable payment terms.

Individual author royalties for books. When publishers buy the right to sell or distribute electronically individual copies of a work to individual consumers, they must pay the author a royalty for each copy sold rather than a flat fee for an unlimited distribution right. These sales should not be treated as lump-sum sales of subsidiary rights.

Royalties should reflect relative value added. When books are sold and distributed electronically the publisher has none of the traditional printing, binding, warehousing, shipping, stocking, returns, and spoilage costs. Therefore, since the publisher’s costs are lower, the relative value of the author’s work is much higher. So payments to authors for books and book-like works that are sold or distributed electronically should be much higher than printed works.

Considering the much smaller input by the publisher, when such works are sold by an author to a publisher for electronic distribution, the fair royalty for the author should be at least 50 percent of the sales price paid by the consumer. Depending on how much (or little) the publisher expends for promotion and to what degree the author provides typesetting via desktop publishing, indexing, artwork, and so forth, the author’s share may be greater than 50 percent.

In cases in which the author bypasses the publisher and goes directly to an online distributor, the royalty split should reflect the effort and skills of the principal participants. Some distributors will simply “slap” the work onto the computer network, doing very little with it. Others will add considerable packaging, presentation and perhaps other services. The royalty split should reflect this.

Avoid and oppose work made for hire and all-rights contracts. Work-for-Hire contracts and All-Rights contracts for works intended for general mass publication are coercive, unfair, and improper. They are often used as subterfuges for gaining electronic distribution rights without fair payment.

Fair use of web links. Web creators should be free to include in their site links to other sites so long as those links are clearly identified and take the viewer to the other site as a whole. Web creators should not be obligated to obtain permission of sites they link to in this way.

Unfair use of web links. It should not be permissible, however, for a commercial site supported by fees, advertising, or other sources of income to link without permission to other sites in such a way that the other site’s content is included in, or appears to be part of, the commercial site. For example, if site “A” displays advertising, it should not be permissible for it to link to site “B” in such a way that the site “A” ads are displayed along with the site “B” material because this constitutes site “A” earning income from someone else’s work without paying them their fair share.

The Government’s Role in Commerce Issues

We also advocate that the following points be established through new laws or government regulations:

  • Copyright law. When intellectual property is sold or electronically distributed across national boundaries, the Berne Convention copyright laws apply to that work. The Berne Convention is an international treaty on intellectual property.
  • No change of terms via check endorsements. Authors should be free to retain any and all electronic distribution rights and should not be coerced into selling them against their will. It is not uncommon for a writer to find the following written on the back of a paycheck: “signing this check signifies release of all rights to the publisher.” By signing the check, the writer appears to give up everything; by not signing she may give up rent or mortgage money.
  • The practice of using a form on the back of a payment check to enumerate additional rights the author surrenders to the publisher by cashing the check is immoral and invalid, and should be made illegal.
  • Only rights that exist can be sold. Currently, many “all- rights” contracts contain explicit “now or in the future” language, which is unfair. New technologies to come into existence over the course of time, when Mark Twain wrote Huckleberry Finn, for example, there were no movie rights because there were no movies but now there are such rights. Because it is impossible to determine the value of rights before such rights exist, authors should not be forced to grant rights to media or technologies that do not exist at the time the grant is made. Even without such explicit language, courts have ruled that “all rights” clauses automatically include any rights that come into being after the contract is signed. The NWU urges Congress to amend the Copyright Act to state explicitly that “all-rights” contracts are valid with respect to only those rights that exist at the time the contract is signed.
  • Fair use. Authors are users of information as well as intellectual property owners. The interpretation of the “Fair Use” provision of the Copyright Act should continue to take into account the need for an unimpeded flow of information, while at the same time taking into account the legitimate interests of those who own copyrights.
  • No pre-registration requirement. Current law requires that a work must be pre-registered for the creator to collect statutory damages and attorneys fees for copyright infringement. The Berne Convention eliminated the requirement of copyright registration to protect a creator’s rights and U.S. copyright law should be amended to conform to Berne which is the world standard. Without such an amendment, individual writers are effectively precluded from using the courts to enforce their rights.
  • Clear track of what profit-making databases owe to authors.
  • Networks and data carriers must provide technology that allows automatic transfer of payment to the copyright holder each time they collect money from a user who accesses the book, article, artwork, or file. They must also provide a mechanism for tracking use information and providing timely, accurate, and understandable reports to copyright holders regarding the electronic use of their material. Computers are designed to track this sort of data, and it can easily be accomplished using ISBN numbers or other tracking methods. However, this data must be tracked in such a way as to ensure the privacy of users.
  • Let users know who owns the copyright. When databases containing intellectual property are compiled, each piece of information must include the author’s name and the various rights to that piece of information that are owned by the author and the publisher respectively.
  • The right to encrypt. Authors and the owners of intellectual property should have the right to encrypt their data to protect their copyrights. The right of persons to encrypt their data by any means they choose should not be abridged, denied, or limited. We oppose legislation requiring encryption hardware and software to contain loopholes or backdoors that governments can use to decrypt and read encrypted information. Creators, publishers, and distributors should not be required to decrypt their data except through due judicial process.