Very little is known, publicly, about the terms of the deals the major publishing houses recently struck with Spotify to make audiobooks available to stream as part of Spotify’s premium subscription service. Nor, does it seem, have publishers shared those details with authors and their agents. Agents complained about a “lack of detail” from publishers about how, and how much, authors will be paid from the deals, while the Society of Authors in the U.K. demanded “transparency” and “urgent action” from publishers to inform authors and agents of the terms.
“As far as we are aware, no authors or agents have been approached for permission for such licenses, and authors have not been consulted on license or payment terms,” the trade guild said in a statement posted on its website. “Publishing contracts differ but in our view most licenses given to publishers for licensing of audio do not include streaming. In fact, it is likely that streaming was not a use that had been invented when many such contracts were entered into.”
Some of the authors’ wariness can be chalked up to the usual angst that greets any new use case or business model that threatens to disrupt long-established rules of engagement between creative workers and the suits in the front office. Although, the publishers were certainly asking for blowback by blindsiding authors and agents with the announcement.
But the contretemps also reflects the challenges authors and publishers will face as the audiobook business tries to squeeze itself into a business model designed to accommodate the very different licensing strategies and usage patterns of the music business, and without the institutional structures in place to support the adopted methods.
In copyright terms, audiobooks are derivate works. They are adaptations of original literary works into a new format and means of presentation. Publishing audiobooks also involves the reproduction of the original literary works in copies, just as selling CDs involves making copies of the composition they embody.
Both or those rights are well understood within the book business and routinely accommodated in the standard contractual terms between publishers and authors. If audiobook streaming follows the pattern of the music business, however, it would also constitute a public performance and distribution of the literary work by Spotify. In the U.S., at least, that’s not something typically addressed in standard publishing deals, leaving it unclear whether publishers have those rights to convey to Spotify.
There are some in the music business who claim it’s unfair that streaming services must pay twice for the same bits — once for reproducing a composition when they stream a track, and again for publicly performing it. But to date, no court or regulator has told music publishers they can’t double-dip. And at least music publishers, unlike book publishers, typically have clear claim to both rights.
“Of course we have carefully reviewed our contracts, only making titles available to Spotify where we are cleared for distribution as streamed audiobooks,” a spokesman for Big 5 house Macmillan told the Guardian, without quite clarifying the issue.
Also unclear is whether the publishers signed individual licenses for each of 150,000 audiobooks included in the Spotify program, which seems unlikely, or granted some sort of blanket license for the titles in their respective catalogs.
By the time streaming came to the music business, the industry had a century’s worth of history with blanket licensing of public performance rights, and the infrastructure in place to collect and distribute royalties, through public performance organizations like ASCAP and BMI in the U.S. The audiobook business, in contrast, has no such dedicated infrastructure in place, although publishers have some history with collective management and blanket licensing of reproduction rights dating to the introduction of photocopying.
Nor does the publishing industry have experience with the degree of regulatory oversight the music industry has reluctantly accommodated itself to. ASCAP and BMI, for instance, have long operated under court-supervised consent decrees with the Justice Department that constrain how blanket performance licenses are granted. In other cases, such as so-called mechanical royalties, licensing is compulsory by statute at rates set by government decree.
If audiobook publishers come to rely on the same infrastructure to manage streaming rights, they could find themselves subject to the same rules.
How Spotify’s audiobook license fees will be allocated and distributed to authors in the form of royalties also remains something of a mystery. For now, audiobook publishers appear to be following the music industry’s model, although to what extent is not yet clear.
“There is a pooling model for a segment of our partners and generally its partners who are slightly smaller scale” while “some people, particularly larger providers, wanted to do something different,” Spotify’s VP of business affairs David Kaefer told The Bookseller.
Music streaming royalties for the most part are pooled and distributed to rights owners on a pro rata basis according to each owner’s share of the total tracks streamed. That system has been a source of controversy, however, as critics claim it benefits the biggest labels and publishers, and the most popular artists, at the expense of everyone else.
“We know the devastating effect that music streaming has had on artists’ incomes, and the impact of streaming and subscription video on demand platforms on screenwriter incomes and their working conditions,” the Society of Authors statement read. “We have long been concerned about streaming models for books.”
There is, of course, a vast difference in scale between music streaming and audiobooks. Spotify has more than 100 million music tracks on its platform, with nearly a million new tracks being added every day. The system of pooled royalties and pro rata distribution arose largely as a rough-and-ready solution to coping with that scale.
With a mere 150,000 titles to date, the new audiobook streaming program likely can accommodate a more granular approach to remittances. Should audiobooks prove popular among Spotify subscribers, however, and the program were to expand in scope and spread to other streaming services, the bespoke licensing system now seemingly in place could quickly become impractical, requiring standardized industry terms and the organizational infrastructure to administer licenses and collect and distribute royalties. And publishers are starting at the bottom of that learning curve.