Tremendous Complexities on Royalties: An interview with Kris Kliemann
We asked Ms. Kliemann what she saw as the key business challenges faced by publishers and agents. Ms. Kliemann observed that the single most significant challenge faced by rights sellers is the proliferation of titles and content, a by-product of industry consolidation and globalization, and the urgency to get books ‘seen’. For example, consider how the Random House rights holdings have grown since the addition of Penguin. When we add discovery options created by digital delivery, the licensing opportunities potentially created with increased visibility expand dramatically. It’s equally challenging for rights buyers; even if they know what books they want to secure, confirming who holds the rights to any particular IP, and whether it has already been licensed, is not easy.
Secondly, both buyers and sellers are faced with a constant stream of new business models for content use. Not too long ago, rights opportunities were limited by the available formats for books – hard and soft cover. Now we have downloaded audio, digital delivery through publisher and/or aggregator platforms, and sites with miscellaneous collections of fractional content, all serving content in new ways. Publishers want to provide content that institutions and consumers demand, but they are also concerned that licensing rights to all these new models will cannibalize their traditional business. There is no question that the world of rights is no longer as simple as it once was.
And finally, while many publishing business processes have been fully both automated and integrated, the business of rights has seen only limited process improvements, with many organizations still heavily dependent on manual workflows, and only rudimentary investment in technology. “Rights sales are often regarded as ‘nice-to-have,’ unbudgeted revenues – publishers are certainly delighted when the money comes in, but as many publishers do not budget for or track rights at a detailed level, they consequently don’t understand that rights activities and revenues can be significantly improved when supported by robust technology.”
Ms. Kliemann believes that this is a challenge that can be solved, given the currently available rights systems, and the incremental revenue could come from many sources. These include those rights that publishers don’t license but could if they had data on availability, as well as monies that would come from being able to track those instances where we “just don’t get paid, whether advances due after contracts are signed or book royalties due when advances have earned out”.
“A typical publishing contract has a tremendous complexity around royalty”, says Kris, resulting in the fact that every single payment must be analyzed. But with the help of a few simple technological set ups, we’ve had much greater insight and greater revenues. “Sure, it’s complicated, but databases can make things clearer. We need to move past the current situation where mistakes are made ALL THE TIME and the rights holders suffer most.”
So where is the low hanging fruit for addressing rights data with technology?
Ms. Kliemann is very active with BISG’s Rights Committee (and was recently appointed as the Committee’s chairperson), and their work on a taxonomy for rights. The Committee has worked diligently over the course of the past year to develop licensing rights definitions for components, and recently released these standards to a group of industry partners to test and run pilot projects with the long-term objective of building an electronic data exchange. Ms. Kliemann observed that “We’d like an agreement across the industry on a set of standards for rights. From there, the first thing we must do is find a way to automate rights and royalty payments”. “The pain points today around pdf statements and a lack of transparency lead to a waste of time (and money) at every link in the chain. With agreed standards, a US company could send a file to a US literary agent that was easy to vet and transmittable onward to authors; and a translating publisher could send a local co-agent a royalty report that would be simple to transmit back to a US publisher or author agent”.
Ms. Kliemann further observed, Rights and licensing doesn’t work simply. But back in the day, we would have said that processing an order from a bookstore was also a complicated problem. Contracts are complex and work needs to be done to capture the data in a software environment, but it is absolutely do-able. And we simply cannot manage a rights business on file cards, or even spreadsheets, anymore.
Kris Kliemann is President of Kliemann and Company. The company consults with a wide range of businesses on a wide range of topics including workflow and processes related to rights, royalties and permissions, as well as other interesting publishing problems. Kris’ LinkedIn profile can be found at https://www.linkedin.com/in/kriskliemann.
knk Software is a software solutions provider solely focused on the publishing and media industry with about 450 clients on three continents.