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profit" or similar plan, the publisher is not considered to be entitled to make his own profit on paper, printing, etc., but must account for these at the cost to him; and in any event the publishers' accounts must be fully open to the author. On the whole, the payment of royalty, on the usual American plan, is more satisfactory. The customary royalty is ten per cent, or in the case of authors of established reputation whose works have large sale, as high as fifteen or twenty per cent, when the publishers cover all expenses, except that on school books and “subscription" editions the royalty is usually five per cent. When an author pays for the plates or for the edition, the return is substantially higher, as fifteen or twenty per cent to the ordinary author. The royalty is usually reckoned on ordinary cloth binding, unless otherwise stated in the contract, and almost invari
ably not on copies printed, but on copies sold. A | royalty on “all copies sold” was construed in the
King's Bench Division by Justice Walton, in Neufeld v. Chapman in 1901, to cover all forms of publication, including royalty on a proportionate part of the
sales price of a periodical. The publish- The publisher does not, as is sometimes assumed, er's share
get the other ninety per cent as profit; he gets the difference between the receipts from the trade or public on copies actually sold averaging perhaps two thirds of the “retail price," on which the author's ten per cent (really thus fifteen per cent) is reckoned and the cost of making the entire edition and of advertising and marketing the book. The author, in any event, gets a return proportioned to the success of his book. If its sales are small, the publisher makes a loss; if large, the publisher makes a profit increasing proportionately after the initial outlay for publication has been covered.
When an author arranges with a publisher or print- "Author's er to issue a book at author's expense, such editions editions” being usually known as "author's editions," great care should be taken to make such arrangements only with publishers or printers of known and high character and to base them on a complete and exact written contract, defining particularly the amount of commission or royalty to be paid by or to the author, or the expenses to be allowed before reckoning “half profits.” Publishers of good repute make such arrangements in the case of books not likely to show adequate commercial profit, but there are publishers and printers who make a business of such transactions with authors without adequately providing to give the author the best possible market, and these, cannot always be expected to deal fairly with him. Arrangements made directly between an author (or publisher) and a printer as such, are scarcely within the scope of this work, but it may be said briefly that a printer usually has a mechanic's lien on plates he has Printer's lien made or sheets he has printed (but not on plates used by him unless he has made them), until the bills are paid; and that he may not demand payment until the work has been completed, or in case of its destruction by fire or otherwise, previous to complete delivery, in the absence of contract obligation for advance or partial payment.
The compulsory license system, often miscalled Compulsory “the royalty plan,”- discussed in England in 1877 as license the Farrer proposal and in America about 1890 as the system Pearsall-Smith scheme, – is provided by legislation under which any publisher may publish a work without consent of the author provided he pays a royalty as specified or stipulated in the law, as ten or five per cent or a fixed sum per copy. This system has unfortunately been adopted in the new American code,
with reference to the mechanical reproduction of music, though with the saving clause that the author has complete right to forbid mechanical reproduction of his musical composition so long as he does not license any manufacturer. This American precedent has been followed as to mechanical music in recent legislation by Germany and other continental countries and in the modified British measure. The Italian copyright law has, however, a compulsory license provision for the second forty years of copyright, under which any publisher can issue a book on payment to the author of five per cent royalty; and the new British measure contains a like provision applicable twenty-five or thirty years after the author's death, on a basis of ten per cent royalty.
The American provision is for two cents for each roll, under elaborate regulations, as set forth in the chapter on mechanical music provisions. It is doubtful whether those regulations can be effectively applied, and indeed the whole provision may prove unconstitutional because of its interference with the right of sale or license involved in private property. The several substitutes for these regulations proposed and discussed, were rejected as even less desirable-as the proposal that the Copyright Office itself should undertake an elaborate system of accounting and guarantee to the author as practically a ward of the state, and another proposal for a system of stamps to be affixed to each copy published, supplied by the Copyright Office or the author and sold to the publisher, a system actually in practice in shoe manufacture under the royalty system of the McKay Shoe Manufacturing Company. The answer to all these schemes is that the author should be at liberty to make such arrangements, by contract with one publisher or with many, as he may please, and that a law to compel him to adopt any one plan of marketing his wares would interfere with his freedom of choice and his natural return.
The reason that an author chooses one publisher Saving instead of many is the simple one that the original through cost of making and advertising a book is in this way publisher reduced to one outlay instead of multiplied in many, and that this cost is minimized by being distributed over the largest possible edition. It is the practice of any successful publisher to plan for such an edition as will command the widest sale, and so distribute the original cost over as many copies as possible, and when a copyright book proves to be of such general demand that different styles of editions can be sold, such editions are in fact made by the same publisher. The compulsory license system would only protect the public against the unwisdom of publishers, whose mistakes are presently corrected by business failure or by the transfer of his books by the author to more enterprising houses.
Copyrights are specifically included, with patents Copyrights and trade-marks, in the bankruptcy acts as assets in bank
ruptcy which pass to the trustee, which applies to a bankrupt author as well as to other copyright proprietors, but as previously stated, this does not include the personal contract for the publication of an unassigned work. This last doctrine was fully upheld in the English case of Griffith v. Tower Pub. Co. & Moncrieff, in 1897, by Justice Stirling, where the liquidator of a corporation was enjoined from transferring a copyright direct to a publisher not acceptable to the author. A manuscript as such is a tangible asset in bankruptcy if of value in itself, but the right of the author to copyright or to publish his manuscript is a personal and not a property right, which therefore does not pass in case of bankruptcy, and a court would
Copyrights in taxation
probably not undertake to compel an author to realize the value of an unpublished work for the benefit of creditors by publication and copyright. Nor may a bankrupt author be compelled in bankruptcy process to complete his work, as was decided in 1841 in the English case of Gibson v. Carruthers.
Copyrights, like patents, are subject to the inheritance tax, as capitalized on the basis of income. In the appraisal of 1911 of the copyrights of Mrs. Mary Baker G. Eddy, author of “Science and health," and other Christian Science books, the valuation returned for tax purposes reached $1,400,000, which is probably the largest valuation ever put upon the copyrights of any one author. The copyrights of the late Marion Crawford were appraised by the New York State tax authorities, in the same year, by valuing his last novel at the income during its first year of publication and his earlier novels at the income for three years passed. Neither method afforded a fair valuation, as a work may be dead after its first year, and the test by income through successive years would depend on whether sales were decreasing or increasing during the period. Standard school books are sometimes estimated as worth three years' income, but such a generalization would not apply in other cases. Each valuation, for tax or sales purposes, must depend upon the circumstances in each case. An inheritance or other tax on copyrights, which are intangible property, may fairly be questioned, in view of the uncertainty whether the legatees may realize any future return from the property.