PUBLISHED MAY/JUNE 2020

by Brian O’Leary, Executive Director, Book Industry Study Group (BISG) --

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The rights business is complex, but BISG makes it easier to understand by creating a standard way to talk about rights.

At its core, book publishing is a rights business. Manufacturing, distribution, and retail and library sales are all critical parts of book publishing. But the process starts with someone who has rights to a work conveying some of those rights to someone else, and it usually proceeds with payments that recognize the value of rights agreements. Authors, agents, and publishers are deeply involved in creating, interpreting, and managing the financial and operational aspects of rights and royalties. The business is complex, and practices have generally been homegrown. Attempts to create a standard format for reporting royalties date back more than three decades, with only moderate success. Contributing to the confusion: Sometimes people use different terms to describe the same things. The opposite is also seen, with different things having common or similar names. Developing a standard way to talk about rights, royalties, and permissions has been a Book Industry Study Group (BISG) priority for more than a decade. At BISG, we feel that addressing rights complexity starts with an agreed-upon taxonomy—a standard way to talk about rights. Since 2018, our Rights Committee, a group of BISG members who volunteer their time to discuss and address challenges affecting rights across the industry, has been working to update an earlier taxonomy and map it to the systems that rights solutions providers offer.

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Four Buckets of Rights Data

In thinking through how to talk about rights in a standard way, the committee used four buckets: rights data, transaction requests, transaction licenses, and royalty data. “Rights data” covers things like the work identifier, the selection, the type of right, and rights details that could include “large type,” “proprietary edition,” “condensation,” “adaptation,” and more. It also includes descriptions of format, territory, and language. In many cases, the definitions can rely on metadata that publishers typically supply using ONIX for Books, the worldwide metadata standard maintained by EDItEUR. “Transaction requests” capture who is asking as well as the licensee, payer, signatory, and rightsholder. While the actors in these categories can overlap, often enough they do not. The rights type requested and rights terms are captured for each transaction, using the detail and definitions laid out for “rights data.” Detail provided under “transaction licenses” outline the core components of a contract, including fee type and detail, due dates, and any currency requirements. It also defines licensed formats and any usage limits that might apply, as defined under “transaction requests.” Finally, “royalty data” moves past a standard reporting format. Instead, it defines the information required in five areas: statement (reporting period, royalty period, payee, and more); rules (type of sale, royalty rates, escalation type, and more); sales information that underpins royalty reconciliations; other income applicable to the license; and a summary of the agreement (advance amount, unearned advance, closing balance, and life to date performance statistics).

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Why Do We Need a Standard?

It’s reasonable to ask: “Why do we need this work for rights?” We see three important benefits:

1. 1. We think it will save time, reducing the work required to describe, document, and deliver on rights transactions.
   2. We think it will increase understanding of the many components of a rights transaction, improving the abilities of both licensors and licensees to create the agreements they want (with fewer surprises).
   3. We think it will help create more reliable machine-to-machine communication, speeding up the processing and interpretation of rights and royalties data and payments.

I say “we think” because we’re just starting to plan and conduct pilot tests of the draft taxonomy. The tests are an important step, because they will hopefully confirm the benefits. The pilot tests also provide an opportunity to refine the taxonomy, capturing additional rights information that may not have been identified in the initial drafts.

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What Happens Next?

The Rights Committee, led by Kris Kliemann (Kliemann & Company), has been working since late 2019 to confirm how rights solutions providers’ definitions map to the draft taxonomy. The committee’s immediate past chair, Tricia McCraney (Virtusales), anticipated what we’ve found: Vendors who have responded typically support much of the proposed taxonomy. That’s good news for the pilot tests, as it avoids most or all of the IT-related development work that might have been required. It’s also good news for the industry, as it shows we are closer to a rights taxonomy than might have been thought. In the balance of 2020, we expect to test several types of rights use cases: publisher to publisher; agent to publisher; and perhaps agent to agent. Results will be collected and likely anonymized, with a report to the industry late this year or in early 2021 (pandemic allowing). From there, we’ll look to expand the use of the taxonomy, with more to come on that when we have data in hand.

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Brian O’Leary is the executive director of the Book Industry Study Group (BISG). Interested in getting involved in this work? Email info@bisg.org.

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