Pearson’s ‘digital first’ announcement: A legal perspective
Interpreting, Adapting, and Amending Textbook Publishing Contracts in a Changing Publishing World
In announcing its new strategic commitment to digital courseware and its dramatic break from the traditional model of successive print editions of textbooks, Pearson addressed a letter “to our author community.” In the letter, Pearson emphasized its ties to “our authors and partners” and declared that “together we can provide updates, enhancements, and digital functionality to respond more quickly to changing customer expectations, demands, curricular shifts and developments in your field.”
One thing that Pearson did not address in its letter to its authors is how it proposed to interpret or change existing publishing contracts in order to be able to go forward in a “digital first” world. It’s what the contracts say that counts, and many of these contracts are very difficult to apply in the changing publishing world.
Interpreting or adapting existing contracts to fit comfortably in the world of digital courseware is a tricky challenge for Pearson and its authors. Some Pearson contracts were entered into decades ago when “digital courseware” was beyond both publishers’ and authors’ wildest imaginations. Other contracts were entered into between authors and other publishing companies, with Pearson later acquiring the contracts through acquisitions, mergers, and other transactions with other publishers. Many of these contracts say nothing about digital courseware.
Pearson is not the only publishing company that is pivoting toward a “digital first” strategy. Although this article is spurred by Pearson’s dramatic and highly publicized announcement, the questions we raise and our takeaways for authors apply to the moves of other publishers, as well.
Pearson’s “digital first” commitment raises central issues about the compensation to be paid to authors — or, as they are beginning to be called in some quarters, “content providers.” Most traditional textbook contracts pay royalties to authors based on the publisher’s receipts from sales of books. The contracts are often much less clear about authors’ compensation from the sale or license of digital products that may be based in whole or in part on the author’s work or that may combine the author’s work with the work of others.
Pearson’s plan to largely abandon the traditional “edition” model presents additional complications. Successful textbooks have typically been revised every few years, with a “First Edition,” a “Second Edition,” and so on. Many aspects of author participation and compensation are keyed to these revision cycles. These include authors’ contractual obligations to provide “revisions” at certain times, decreasing or “drop-down” royalty rates for retired authors or their estates, and increasing royalty rates for new or revising authors, all of which are typically keyed to successive editions. If there are no more “editions,” how will these provisions be interpreted? What will an author’s participation in a “revision” look like when the concept of a “revision” itself is changing?
Pearson and other publishers contemplating changes to the traditional model of “editions” will likely propose their own answers to such questions, involving legal interpretations of existing contracts or proposed amendments to them. In many cases, publishers may ask authors to sign entirely new contracts. In evaluating any such interpretations, amendments, or new contracts, however, textbook authors should affix a mantra to their keyboards: It takes two to contract. Any interpretation or amendment of a contract must be agreed to by both publisher and author, and cannot be imposed unilaterally by either party.
With this background, here are three takeaways for authors, applicable to contracts both with Pearson and with other publishers:
- The application of your existing contracts to the world of digital courseware may be far from clear. A publisher may have its own interpretations, but you are not bound by them. Until and unless it is amended by mutual consent, your existing contract remains in force, and needs to be interpreted by its terms. In some cases, publisher and author may readily agree on the interpretation. In other cases there may be arguments and even litigation.
- A publisher may urge a particular interpretation of your contract on the grounds that “our lawyers say so.” Publishers have resourceful lawyers and they may be right. But your own lawyer may have a different interpretation. Various legal principles can help to interpret ambiguous contractual language. One such principle is the doctrine of contra proferentem, Latin for the idea that an ambiguous provision should be interpreted against the interests of the party who proposed it. Under this principle, because your publisher (or its predecessor company) undoubtedly drafted most of your contract in the first place, it should be held responsible for any ambiguities. In addition, authors’ and publishers’ communications with each other over the years – their “course of dealing” – may shed light on the intended meaning of provisions that would otherwise remain hazy.
- If your publisher asks you to sign an amended or new contract “to take account of our new model,” don’t rush to sign it. Make sure you understand how the new contract will work, and seek legal advice if you have any questions or concerns.
In dealing with publishers, both large and small, remember: It takes two to contract.
Read the first piece in this series, Pearson announces move to digital-first
Read the third piece in this series, Pearson’s move to ‘digital first’: Perspective from a key Pearson executive (Part I)