Random Act Opens Can Of Bookworms

When two titans the New York publishing world stop talking, Hollywood listens.

Although Random House and the William Morris Agency won’t call it a feud, the strained relations between the two companies over the volatile – and potentially lucrative – issue of multimedia rights has both film and literary insiders rubbernecking at what might be considered the first collision on the infopike. Some are predicting a gridlock that could stretch all the way to Hollywood, with some agencies – ICM, among others – sniping that the die-harders are serving no one’s interests but their own.

At its simplest – and nothing is simple in this issue – is the question: Who has the rights to exploit the multimedia benefits (read: CD-ROM) of a literary work? The answer from writers, from Hollywood producers and from New York publishers is, in each case, a resounding “We do.”

And nowhere is the conflict more apparent than in the Random-Morris stand-off. “At this point,” says Robert Gottlieb, Morris’ exec VP in New York, “Random House is at the bottom of our submissions list.”

Responds Alberto Vitale, chairman, president and CEO of Random House, “We frankly are distressed by that approach, and don’t know how they can justify to their authors that they’re being deprived of the possibility of being published by Random House.”

Given the growing industry consensus that no one really knows what to do with the rights once they’ve got them, the tension between agents and publishers is bound to seem surreal: a phantom battle over a market that has yet to develop, with the CD-ROM less a Holy Grail than a high-tech McGuffin.

Dire predictions of movie deals collapsing remain just that – predictions. The posturing, however, is all too real, with Hollywood studios and producers joining the fray in their own grab for the rights.

It’s mostly posturing

As one New York literary agent put it, “Studios say they want the rights, but the silly thing is that they are in no more of a position to exploit those rights than the publishing companies in New York. No one knows what to do with them.”

Indeed, at this fledgling stage of the multimedia game, there seems to be more angling for rights than actually exercising them. Both coasts see a potential market of immense proportions, and writers remember all too clearly the sting of being left out of the homevid action a decade ago.

“The Morris Office does regard this as a major issue,” says Morris president Jerry Katzman. “We don’t want this to be a repeat of the video situation, where our clients were forced to accept an already-established industry-wide percentage.”

While some New York agents insist the situation is improving – with both studios and publishers increasingly willing to negotiate rights deals on a case by case basis – the Random-Morris friction remains an example of the battle’s thornier aspects.

As late as last fall, the Morris agency wasn’t alone in its dismay over a new form contract devised by Random House. In a letter dated Oct. 4,1994, the board of directors of the Association of Authors’ Representatives (a trade organization of literary agents) dashed off a three-page letter to Vitale listing various contract provisions that the board believed “communicate a new and deeply troubling hostility, arbitrariness and unfairness on the part of Random House.”

The agents wrote that they were particularly upset about the contract’s “assumption” that “the right to create or license electronic and multimedia versions of a literary property should automatically be granted to Random House.”

“Movie companies,” the letter continued, “are refusing to acquire film rights to fiction when multimedia adaptation rights have been conveyed to book publishers because they fear that publishers will be able to create dramatized adaptations that resemble movies in too many respects.”

Two weeks later, in a terse, four-paragraph response, Vitale wrote that Random House was “shocked” by the board’s letter, alleging that the trade organization was attempting to negotiate contractual terms and that such an exchange of information among the organization’s member agencies “raises serious antitrust concerns.” The agents shot back that Vitale’s “veiled threats” were “utterly baseless.”

The only conciliatory note in the exchange was Vitale’s suggestion that “through individual negotiations” the publishing house would arrive at fair agreements with authors. For their part, the agents interpreted the comment as an appreciated “change of direction.”

But was it? Some Gotham agents – with the Morris office being the most notable exception – say that Random House has moved closer to other publishers in its willingness to negotiate and compromise on multimedia rights, a move that could give authors more latitude in selling film rights to Hollywood. And the value of a movie deal, the agents say, has never been lost on publishers.

Perry Knowlton, CEO of the Curtis Brown agency and president of the board of directors of the AAR, says most publishing houses have backed off from blanket demands for multimedia rights. He cites Putnam as an example of a house that has gone from a “strong position” to a more “modest and usable approach, and this is true with most publishers.”

Yet there seems to be little thawing in the chill between Random House and the Morris office. Sources say talks between the two companies have routinely broken down, with little advancement toward resolution.

Explaining why Random House lingers at the bottom of Morris’ submissions list, Gottlieb says “when all of (Random House’s) competitors are not demanding those kinds of rights, we’re advising clients that they might be better off with other publishers.” Random House, Gottlieb says, “pretty much stands alone” in its staunch insistence on multimedia rights.

Ironically, the same charge is leveled at the Morris Office by rival agents. “Who else is having a problem in this town?” asks ICM’s Amanda Urban. “It’s in no one’s interest to take diehard positions if at the end of the day the rights are going to lay fallow.”

And what exactly does Random House want? Essentially, the publisher’s standard contract demands the right to first negotiations with authors when and if the opportunity for multimedia projects occurs. If, after negotiating, the author opts to bypass a Random House multimedia project, the author must license his text from the publisher.

“What Random House is saying,” says Gottlieb, “is that it owns the text electronically.” This, he says, makes doing business with the house “less attractive.”

Says Vitale, “We certainly are willing to discuss every deal individually, but it seems that it’s too much work for William Morris to negotiate point by point on behalf of their customers. That’s their choice.”

The sparring, not surprisingly, has the New York lit community taking sides. Urban isn’t alone in her suggestion that Morris “is not a big threat to Random House.”

Meanwhile, Morris supporters are quick to say that ICM, among others, has been all too quick to cave in, or at least to adopt a softer stand than the Morris position. Their argument goes that, with studios demanding greater access to multimedia rights, agents should naturally gravitate toward publishing houses that are more amenable to compromise.

“This could seriously hurt them,” says Gottlieb about Random House. “Their competitors are seeing books that we represent that can help make the difference in a season.”

Although he wouldn’t comment on specific deals, Gottlieb did say that the Morris office recently sold the publishing rights for the second “Gone With The Wind” sequel to St. Martin’s Press, sans electronic rights.

Vitale gets more specific. He says Random House recently made a tentative offer for singer and Morris client Aretha Franklin’s autobiography, an offer that included the publisher’s multimedia demands.

Stories differ

“They refused several times to submit it to the author” unless Random House conceded multimedia rights, Vitale says. The publisher refused, the CEO now claiming that the agents “are depriving Aretha Franklin of a substantial offer and that’s an understatement – it was a very substantial offer.”

Gottlieb tells a different story. Random House, he says, made an offer on the Franklin project before a book outline was even available. “We feel we can make a better deal in a book auction,” Gottlieb says.

Impasse or not, Random House’s Vitale insists that the tussle with Morris will have little, if any, impact on the flow of product from New York to Hollywood.

How badly could Random House – or any publisher for that matter – really be hurt?

More than one agent said that despite the huffing and puffing, book writers and their reps still are interested in the best publishing deal, with the possibility of potential film sales remote to all but a relative few scribes. Furthermore, publishers’ interest in multimedia rights is strongest in the non-fiction and kiddie lit arenas, two markets not overly attractive to Hollywood.

And then there’s the small matter of the multimedia market itself. As recent reports suggest, the hype surrounding the fledgling CD-ROM industry far exceeds actual sales, and many CD-ROM producers are going belly-up.

Bosh, says Gottlieb. “That’s like watching Milton Berle in the late 1940s and saying, This is what TV will be like in the future?’ It’s a fledgling business in a protozoan state.”

Put even more bluntly, ICM’s Urban suggests the verbal battles and business stalemates are getting in the way of any real progress in the multimedia industry:

“We’re going to kill the golden goose before she has a chance to lay the golden egg.”

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