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you must also tie in all your other rights. As a result, when these subsidiary rights are exploited, they are exploited by the publisher rather than the author. Unlike book publishing, where the author gets 50 percent of all the income from those subsidiary rights, magazine authors and illustrators and other authors impacted by section 101 (2) do not share unless the publisher who has taken all the rights, at its whim, decides to give them a share.
That is the principal evil of both section 101 (2) and other provisions on the conveyance of copyrights.
So, we would say by all means pass S. 2044. But we would like the committee to consider at a later time proposals to remedy the more important problem, which is the publisher's still-uninhibited power, because of its superior bargaining position, to compel these tie-in transfers.
Senator MATHIAS. Just so we are clear on the record what we are talking about, Mr. Karp, you talk about subsidary rights. Do you want to give us a few illustrations of those?
Mr. KARP. Yes.
Senator MATHIAS. Ms. Brickman gave the illustration of her experience, in which a drawing made for an illustration in a book was adopted for the more prominent role of jacket cover. Would that be the kind of thing?
Mr. KARP. Yes. Actually, in the field of publishing, they are much more significant financially. For example, the publishing right that the publisher exercises, the book publishing right if it is a book publishing house, or the magazine publishing right if it is a magazine publisher, is considered the primary right-but only because it comes first. One of the subsidiary rights in a book or magazine contribution is the right to make a motion picture out of it. Now, the money from the sale of motion picture rights can far exceed the money from book publishing.
Most authors of books are able, under our recommended contract and industry practice, to retain motion picture and similar rights. A magazine contributor who sells an article or story under either section 101(2), the for-hire section, or under an outright grant of all rights, would not share in the income from a motion picture based on his or her article. And there have been motion pictures based on articles or stories in magazines.
A more usual aftermarket is the reprinting of the magazine piece in other magazines or anthologies: for example in the Reader's Digest or in the Eastern Airlines Digest that you get when you come to and from New York or Boston-for which the second magazine pays a fee. If the author has signed away all rights or been compelled to, because no author does it voluntarily, all of that aftermarket income goes to the first publisher.
Recording rights, television rights, all of these are called subsidiary rights because they follow after the first publication.
Senator MATHIAS. When I earned an honest living as lawyer
Mr. KARP. I'm glad you said that.
Senator MATHIAS. I was a country lawyer and dealt with rather homely issues. We generally followed the rule that the calf goes with the cow. Now, why should not the calf go with the cow in this case, unless it is specifically agreed otherwise? There is some special reservation that in the case of a particular calf it has got to be separated from its mother in the transaction.
Mr. KARP. The calf should go with the cow. The only reason it does not is that the person buying that first right insists on the calf, the cow, and everything else the publisher can get. Having superior bargaining power in many instances, he gets it. Where an author
Senator MATHIAS. That calf and all succeeding calves.
It is only where an author in the magazine industry has sufficient bargaining power-and a few do—that they can reserve all other rights.
Some magazines are more enlightened than others. I do not mean to suggest that every publication follows this policy. But I would say hundreds of freelance authors who earn their living in the magazine industry are subject to the policy. Their publishers do not follow an enlightened policy. Some magazines go so far as to ask authors to sign an agreement which says anything you write for us in the future will be considered a work made for hire, even though the author is going to write as a freelance author and even though the work has not even been commissioned.
So, the use of the superior bargaining power accounts for this following of the calves after the cow.
Senator MATHIAS. Let me ask all of you this question. Suppose we adopt S. 2044. Will that stop buyers from the current practice of buying
all the rights for a single price? Mr. KARP. No, it will not. It will only stop them from doing two things. It will stop them from becoming the titular owner of the copyright, therefore eliminating the author's right of termination. It will stop them from converting the term of copyright from life and 50 to 75 years from publication. But it would not stop any publisher who so desired from insisting on acquiring all rights in the contribution, as publishers have done and would continue to do. There is need for additional legislation to deal with this problem. But S. 2044 is a good first step.
Senator MATHIAS. Do you want to say something on that point?
Ms. Roth. Yes. While it is true that work for hire strips the writer of all opportunity for ever using his or her creative words, again in just the same order, all-rights sales can be just as insidious, as Mr. Karp said. The only redeeming feature about an allrights sale is that the writer retains the copyright and may regain the right to use it after 35 years, if the writer lives that long. If this period of years could be shortened to a reasonable few years, giving a time of the essence to the publisher to use the right that they want and return the others to the author, this type of sale would be improved. Otherwise, it is in all likelihood as much of a financial disaster for a writer as work for hire because both types of sales strip the author of any chance to make a decent living despite having a great deal of ingenuity and talent.
I do have an example of one of our author's ability to spinoff other revenue. If you would like to hear it—I do not want to take your time I would like to illustrate it.
Senator MATHIAS. Well, if you can do it briefly, yes.
One member of ASJA wrote a series of columns for Family Weekly magazine. One of them was sold for $1,100 first North American rights only. The column became a chapter in a ninechapter book published by Macmillan with an advance of $7,500 for the book. The book also included other columns that were thus spunoff. The book rights have just returned to the writer, who may now sell it again as a paperback or in other forms. Meanwhile, the first column was sold for a second reprint right to Cosmopolitan magazine for $500. This author only gives permission for one-time use. So, several foreign editions of Cosmopolitan magazine also purchased reprint rights for one-time use of the article. The Australian edition paid $200. The Japanese edition was $200. The French edition was $150. The South American was $150. The British edition was $200. The Italian edition was $100. Other chapters in this book were broken apart and sold in a similar way. One was sold to Kiwanis magazine for several hundred dollars. Another, which was originally sold to Family magazine for $1,200, was sold to a corporate magazine, the John Deere Company magazine, for $500.
This same author sold a short article to Working Woman magazine for $400 and one to Working Mother magazine for $500. An Australian magazine has just seen both of them and purchased them for $300 each.
All of these articles and the entire book with its component chapter parts are the property of the author to sell again and again as possible. Writers are a cultural resource, but the original fees are so low that it takes this kind of reselling to make it possible to maintain a freelance writing career. Thank you.
Senator MATHIAS. That is a very interesting illustration, and I am glad you gave it.
Mr. CRAWFORD. Mr. Chairman, I would like to speak on behalf both of the Graphic Artists Guild and the American Society of Magazine Photographers to emphasize certain of the points that were just made by Mr. Karp and Ms. Roth. It really will not be of great assistance to our members if work for hire is simply eliminated and all-rights contracts are immediately used by the publishing community to replace them.
We feel that Senator Cochran's bill is a valuable initiative because, after 5 years of experience with the new copyright law, we have found, and in our submitted statement have shown, that the use of work for hire is overwhelming for our freelance community.
You cannot really analogize a commissioned author or artist who is doing an assignment to an employee. The employee is paid a salary. The employee works at the premises of the employer and under the employer's control. Ultimately, the idea and the expression of that idea and the financial risk all fall on the employer.
On the other hand, a freelancer is someone who is trained, who has his or her own studio, who carries that overhead, who, when they take an assignment, really takes the risk of the assignment. They are not paid a lump sum before they commence work. They have to wait until they have finished that work to the approval of the commissioning party. That approval is not something obtained on a day-by-day basis. They go away to their own studio, and they come back with a job which is either accepted or rejected. If it is rejected, the usual risk is entirely on the freelancer to go ahead and complete it to the satisfaction of that party.
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Senator MATHIAS. Let me ask you this question right on that point. I suspect that the publishers would say that the major risk is on them, that, true, the freelancer takes a certain amount of risk but also controls that risk because it is his or her own talent and his or her own creativity that is producing the product up to the point of sale. But, from the point of sale onward, the production, the distribution, the sale, all of that is at the expense of the publisher. Therefore, the publisher is taking the risk, the real financial risk here.
Mr. CRAWFORD. I would like to expand a little bit on what I said previously. The risk is truly borne by the freelancer. Take, for example, the photographers in the American Society of Magazine Photographers, who may expend tens of thousands of dollars on the equipment that is in their studios. They bring this to any assignment-as well as being leading professionals in their field. If there was not a reservoir of freelance talent such as this available for assignments, this work would never come into existence, regardless of whether the publishers wanted to give such an assignment.
Furthermore, in any contract with the publisher, it is not the publisher who bears the risk of such things as the indemnity clause. If there is a copyright infringement, the standard provision places that risk on the freelancer.
No salaried employee works under such conditions. A salaried employee is paid a salary and receives employee benefits regardless of satisfaction and the other matters I mentioned.
Mr. KARP. There is another distinction, Senator. In book publishing, the publisher does take a risk on that author's work. If the work does not meet the desires, needs-
Senator MATHIAS. It ends up on the remainder shelves and the publisher is out.
Mr. KARP. That is right. But a magazine publisher is not taking a risk on any particular contribution. First of all, his risk is really, on the magazine as an ongoing entity, usually underwritten by advertising. His risk has nothing to do with the merits of any given contribution. As Mr. Crawford says, he has the ultimate protection of peremptorily rejecting anything the publisher does not like. So, the risk is quite different in this area than it is in something like book publishing.
Senator MATHIAS. Let me ask you just one further question, Mr. Karp. Is there any situation in which work made for hire is appropriate? Is it useful in the textbook area? Are there any-
Mr. KARP. Ironically, the textbook area is one where it really is not necessary because a publisher can acquire the material on an all-rights basis, which they do. Book authors are not subject to section 101(2), I am glad and modestly proud to say. But the author of a book or a textbook can be compelled to transfer all rights subject to the termination right.
It is hard to believe that any textbook written in 1982 is going to be alive and usable 35 years from now. A large part of the argument by textbook publishers for this provision is totally meaningless. If the book has any value 35 years from now, it is not going to be as a textbook; it is just going to be as a general-interest book.
Senator MATHIAS. Is Herodotus a general-interest book?
Mr. KARP. I think so. I do not think anybody would be out selling it to the California board of education for adoption as a textbook.
Senator MATHIAS. Well, go down to St. John's College in Annapolis, Md.
Mr. KARP. I know St. John's. That would be my exception to prove the general rule I am announcing.
Senator MATHIAS. Not good enough, Mr. Karp, not good enough. [Laughter.]
Mr. KARP. I did not answer the rest of your question, Senator. Is it ever appropriate? Actually, the only place that employment-forhire has any real justification that I can think of is where the publisher hires authors on a regular basis, pays them a weekly salary, gives them all the benefits of employment such as staff writers on a magazine. Yes; that is an employment-for-hire situation that makes some sense. They are not being compelled to accept all the risks and vicissitudes that Ms. Roth and Mr. Crawford have mentioned.
Mr. CRAWFORD. Mr. Chairman, if I might just briefly address that. In our submitted statement we indicate that, to our knowledge, at least 7 out of the 10 of the top elementary and high school publishers are in fact using work for hire contracts when they can. Our experience has been that these are not negotiable contracts. In other words, one of our members cannot go and say: I don't want work for hire, may I have a limited-rights contract? The answer is that they will not work.
Senator MATHIAS. Thank you all very much for your testimony here. We will test it in the fire of the opposing witnesses and ask the publishers panel to come next. Then we will have the audiovideo panel
Without objection, we will insert into the record your prepared statements.
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