Jim Baen's Universe

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Spillage: or, The Way Fair Use Works in Favor of Authors and Publishers

Written by Eric Flint

In my last essay, I said I would continue to explore the way in which fair use benefits authors and publishers. In fact, I went so far as to say that "fair use has always been the author's best friend" and I made the following two claims:

1) There is nothing that is "new" or "unparalleled" about the so-called danger of "electronic piracy."

2) From the standpoint of the narrow economic self-interest of an author (or publisher), a generous and expansive attitude toward fair use is every bit as beneficial as it is to society as a whole.

Before I start in on the first of those two claims, I need to preface my remarks by discussing a phenomenon I call "spillage." So far as I know—mind you, I won't swear to it—I'm the first person to use that term in the way I use it, but I'm hardly the discoverer of the phenomenon. It's been well known for centuries, not only by economic theorists but even more so by competent salesmen.

(If you're wondering why I invented my own term instead of taking the time to do the research to find out which term is actually used by most economists, the answer is three-fold. First, I'm lazy. Second, inventing stuff is what authors do in the first place. Thirdly and finally, the reason we get away with it is that we generally invent stuff that's way catchier and more interesting than academics do. So there.)

Car salesmen, for instance, are past masters at the art of spillage. Any car salesman knows perfectly good and well that he or she will not sell a car—doesn't have a cold chance in hell—unless they can talk the prospective customer into taking a test drive. If you don't believe me, review in your mind your experiences when it comes to buying a new car. Everything that salesman said to you was calculated, one way or another, to get you behind the wheel of the car in question and drive it around for a few blocks.

Why? Because that's how cars get sold. True, occasionally, a customer will walk into a dealership knowing exactly what they want. That happens . . . maybe 1% of the time, at a guess. 5%, tops. In such a case, the only real issues involved are choosing a paint color and dickering over the terms. The customer doesn't need—doesn't want, in fact—a test drive, because it would just be a waste of everyone's time. They know they want that specific year and model of that specific automobile.

In other words, on the rare occasions when that does happen, it only happens because the car-buyer is already very familiar with the car in question.

But the vast majority of car sales don't happen until and unless the prospective customer takes a test drive. Every car salesman in the world, being a breed of people who (judging from the evidence so far) are ten times smarter than most authors and almost all publishers—not to mention the morons who run the music recording industry—knows that perfectly well.

Now, let's ask ourselves another question. Of the prospective customers who do take a test drive, what percentage actually wind up buying the car?

I don't know the answer to that question. I don't think anyone does, in the scientific sense of basing their knowledge on a series of controlled studies. But all you have to do is talk to a few experienced car salesmen to get a reasonably accurate approximate answer.

It's a relatively small percentage. Not tiny, no, but way short of a majority. At a guess, not more than 20%. I came up with that figure simply based on my own experience as a car buyer. I'm quite sure that, over the years, I've test-driven at least five cars for every one that I've bought—and that's simply if we restrict "test drive" to the formal process of taking a test drive in a dealer's car.

In reality, I've test-driven at least fifty cars for every one that I've bought. Every time I've rented a car from a car rental agency, I'm "test driving" a car—because, far more often than not, the model they give me is one that I've never driven before.

In fact, very recently in the course of a business trip, I wound up renting a model I'd never driven before that I discovered I positively detested—despite being a well-known and supposedly "top line" model. I'm not going to name the vehicle in question, partly following my grandmother's precept that if you can't find something good to say just keep your mouth shut—admittedly, a precept I've probably honored in the breach way more often than the observance—but mostly because it's simply irrelevant. The reason I hated the car had nothing to do with the "big issues" of its handling, performance, mechanical reliability, etc., etc. I hated the car because it was uncomfortable. Don't ask me why, because I couldn't tell you. All I know is that no matter how I tried to adjust the seat, that damn car simply didn't fit my body properly. Every time I drove it, my back started aching within half an hour.

There is no way in hell I will ever buy that car—because of that "test drive." Just as, a few years ago, it was the very pleasant experience of driving a different model that I rented that eventually led me to buying a new car of the same model. (Different year, but it was the same make and model.)

Every time I've borrowed a friend or relative's car, I am in effect "test driving" it. The reason I bought the first car I ever bought in my life—a used 1955 Ford that I still remember very fondly—was because a friend of mine had the same car and I liked it when I drove it.

Car salesmen know that. They know that you have to be willing to let your customers enjoy a certain amount of "fair use" if you want to have any chance of selling them a car. Even though, from their standpoint, that "fair use" costs them a little. Not much, to be sure. Still, there's a certain amount of wear and tear put on a vehicle every time it's taken off a car dealer's lot, even if it's only the requirement to keep it washed—not to mention that the dealer pays for the gasoline, not the customer.

That's what I call "spillage." It's a simple, basic concept whenever you deal with selling anything. The best way to put it is this:

For every sale you make, how many "freebies" did you have to pass out in order to make the sale?

Obviously, the nature of the "freebie" will vary widely, from one product to another. Car dealers will cheerfully allow a prospective customer to test drive a car—but they certainly don't hand out entire automobiles for free. The product is far too expensive for that form of spillage. On the other hand, many food companies and almost all wineries will pass out free samples of their product. Taken one at a time, the samples simply aren't that expensive.

But regardless of the specific manner in which it's done, most businesses dealing with retail customers—and a fair number of businesses selling to other businesses—engage in "spillage" as a matter of course.

So does the publishing industry, and it's been doing it for centuries. I think the reason so many publishers and authors are so much more dim-witted on this subject than car salesmen is because the specific form that spillage takes in the publishing industry—leave it to intellectuals to make things excessively complicated—got all tangled up in fancy and often legalistic doctrines.

So, we call it "copyright protection" and contrast it with "fair use"—even though, from a cold-blooded business sales standpoint, "fair use" is the main way that copyright protection means anything in money terms to begin with.

I will make a flat statement. At least 90% of all book sales, outside of the narrow market in course-required textbooks, begin with fair use. Without fair use—expansive and sweeping fair use—those books would not be sold in the first place.

The reasons are similar to the reasons that's true for car sales, but not identical. In the case of the automobile market, the big obstacle is simply price. Even the cheapest car costs a big chunk of a person's annual income, and so no one is likely to buy a car without giving it a test drive just to make sure that, if nothing else, they like the costly damn thing.

Price isn't particularly a problem with books—or music, or movies—except for the very poorest people in an advanced industrial society. A hardcover edition of a book, or a CD, or a DVD, will all cost about the same—somewhere between $5 and $30, depending on where you buy it, whether you buy it new or used, whether you buy it off the shelf or as part of a special sale, and so on and so forth. To put it another way, it's cheaper than the cost of a meal at a good restaurant for two people. In fact, if you shop frugally by selecting previewed DVDs or used CDs or books, especially during a special sale, it can cost no more than a meal for two people at a fast food outlet.

Financially speaking, no great obstacle.

Instead, the obstacle is the opacity of the entertainment market. That's even true of movies, by the way, although certainly not to the extreme degree that it is for the book and music market. Of course, since a movie is so much more expensive to produce than a book or a music CD, there are far fewer of them produced in any given period of time. But there are still more movies produced than anyone except a complete couch potato with a fat wallet could possibly watch. The prospective customer still has to make a choice between far too many selections, and without knowing very much about most of them.

With books, the situation is several orders of magnitude worse. And that's the reason that prospective customers generally stick to the very small number of authors whom they know they'll like—or, at least, have a good chance of liking.

And how do they know that? Nine times out of ten, because of fair use. One way or another, in the course of their lives, they ran across Author Joe or Jane through exercising fair use. They first ran across that author through a library, through a copy lent by a friend or relative, through a used bookstore—or, most common of all, by the word of mouth generated by other people's exercise of fair use.

Fair use is, by a country mile, the most important way that the opacity of the book market gets penetrated, at least to a degree—and it costs authors and publishers absolutely nothing. Any publishing house, much less any individual author, who tried to substitute for the promotion they get through fair use would go bankrupt within a month. Period.

What's amazing are the number of authors and publishers who don't understand that—who even view fair use as costing them money.

Yes, it's amazing, but it's true. I've heard authors complain bitterly that used book sales hurt their income, because they get no royalties from such sales. I've heard authors complain just as bitterly that public libraries do the same. In fact, in one particularly grotesque display of cretinism not too long ago, Patricia Schroeder, the president of the Association of American Publishers, launched a general attack on public libraries for being a source of "electronic piracy" because they were too permissive toward their patrons' use of electronic texts.

Perhaps the single most outlandish instance of this sort of authorial imbecility I ever observed personally came a few years ago at a book-signing during a science fiction convention. I wound up sitting next to a midlist writer at the signing. I felt a little sorry for her because I had a fairly constant line of fans asking for my autograph, and in the first half hour no one at all came up to her. Sympathetic, too—because it hadn't been that long since I could well remember myself the near-complete obscurity I had as a new writer.

Finally, though, someone came up to her with a big smile and laid one of her titles down for an autograph. At which point, after giving the book a short scrutiny, the author lost her temper. "This is a remaindered copy! I didn't get any royalties from this sale. No, I will not sign the book."

A prime candidate for the Darwin Award, if I ever saw one. Of the few fans she had, she just lost one—not to mention that the ten or so people standing in line for my autograph heard her outburst also. I didn't ask, but I'm pretty damn sure each and every one of them made a private mental note to avoid that author in the future.

For those of you not familiar with the term, a "remaindered copy" is a copy of a book that a bookstore decides to sell at an extreme discount. Depending on the specific language of an author's contract, they may theoretically be entitled to a very small royalty on such sales—but, in the real world, authors assume that any copy of their books sold on the remaindered table is the equivalent of a used copy and they won't see any money from the sale.

Someone asked me once how I felt whenever I saw a copy of one of my books on the remaindered table. (Almost all big bookstores have them, usually right in the front of the store.)

My answer was twofold. First, I very rarely saw any such copies in the first place. Which is not good news. Why? Because—you can test this proposition yourself, the next time you go into a bookstore, by looking at the remaindered table—it's usually only the bestselling authors who get remaindered in the first place. Only once in a while does a title by Joe Neverheardofhim get remaindered—for the good and simple reason that the bookstore never buys more than one or two copies of his titles, so there simply isn't a big stack to be remaindered.

Hopefully, at this point, it will dawn on you that the situation with remaindered books—and used books, and library copies, and free copies borrowed from a friend or relative—is exactly the same with so-called "electronic piracy." In a nutshell, the more popular an author is, the more likely it is they will:

a) Get "pirated;"

b) Get remaindered;

c) Get their titles into libraries;

d) Get their titles in used book stores;

e) Get their titles in new book stores;

e) Sell copies of their books all over the place

f) Make a good living.

Duh. This is not rocket science. For Pete's sake, why is it that something any supposedly lowbrow car salesman can understand perfectly well is beyond the grasp of authors, editors and publishers, almost all of whom have college degrees and many of them advanced degrees? You can't sell books unless you're willing to let the public have a lot of free or cheap copies. Any more than a car dealership can sell cars without letting their potential customers have test drives at the dealership's expense.

C-a-n-n-o-t. The market is simply far too opaque to expect many people to buy a book "the way they should."

Here, apparently, is what a book buyer is supposed to do. They're supposed to walk into a bookstore, browse the shelves, and buy a book based solely on what they can glean from looking at the book's covers and maybe flipping through the pages.

Of course, that does happen. I've bought books that way. So have you. But what percentage of the books you buy do get bought that way? Figure it out for yourself, since it won't take long. Jot down a list of all the books you've bought over any given period of time—by "bought," I mean the "right" way; i.e., a new copy that the author got direct royalties from—and then figure out how many you came to buy simply because you spotted the title in a bookstore while browsing. And didn't know anything about that author or book before you did so.

The answer will vary from one person to the next. But it will never be higher than 25%, tops, and for most people it will be 10% or lower. The fact is that the overwhelming majority of new book purchases happen as a result, directly or indirectly, of fair use.

To go back to the question someone posed to me, the second part of my answer was this:

What I like to see are copies of my books available all over the place in editions that bring me no direct income—whether that's in a library, a used bookstore, a remaindered table, or simply being passed from one person to another. Because I know that that "spillage" is simply the necessary lubricant for this very opaque market that my livelihood depends upon. It's that spillage—that penumbra of free or cheap copies, if you will—that makes everything else possible in the first place.

What I don't want to see are those books piling up, because they aren't moving. (Or the library equivalent, which is not being checked out.)

Here's the irony of it all. Those authors who fret because their titles are available in used bookstores or libraries should actually be worrying about something else.

Which is this. The real kiss of death for authors:

Used bookstores won't buy your books, because they know they won't sell.

Libraries won't order your books, because they know the library's patrons won't check them out.

New bookstores won't bother to put your books on the remaindered table, because they know they'll just gather dust. Might as well save some labor and have them pulped.

And what determines that? The author, that's who. It's the author's job to write books that are good enough—at least, in the eyes of enough people—that no matter what form of sale or distribution any given copy of a given title winds up having, it will have enough turnover to keep making it attractive to the distributor.

Looked at from this angle, what DRM amounts to is a demand by authors and publishers that e-books should be sold in a brown paper wrapper. It's, in essence, a demand that their livelihoods should be protected by making it as difficult as possible for a prospective customer to know ahead of time if they actually want to buy the book or not.

And if that sounds screwy to you, it is. It's the exact opposite of what authors and publishers should be doing—at least, if they honestly think the book they've written or published is a pretty damn good one. Which, as a rule, they do. Whatever other faults my industry has, I can honestly say it is not generally guilty of producing products that it considers shoddy. (Of course, you may think this or that book is shoddy. But very rarely did the author think so, when he or she wrote it.)

That being true, why insist on the brown paper wrapper? It's silly. It's just plain silly. I want as many people as possible to be familiar with my work—for the simple reason that I'm confident that enough of them will like it to provide me, directly or indirectly, with an income.

Not all, certainly. No book ever written in the history of the world, including the Bible, has pleased all of its readers. But so what? When it comes down to it, I'd far rather that people who don't like my writing know that without having to spend money to find out. The main the reason I make all my titles available for free online after a certain period of time, of course, is in the hope—well, the knowledge, actually; to hell with false modesty—that a good percentage of the people who read those free copies will wind up buying either that title or something else of mine. But part of the reason is also because I want people who won't enjoy my work to be able to find out at no cost.

Why? Because I'm not a dummy. What a lot of writers forget is that word-of-mouth works both ways. It's not always positive, you know. Somebody who strongly dislikes a book is quite likely to pass that opinion on to his or her friends and relatives.

To some degree, that's bound to happen no matter what. One of the things any successful commercial writer quickly learns is that you need to develop a thick skin. It is guaranteed that somebody out there is going to detest your work—and they'll say so publicly.

But a smart writer will understand that it's easy to remove most of the sting from the problem, if you support expansive fair use. It's one thing for someone to read a book of yours and decide they don't like it. It's a different kettle of fish if they also decide they were ripped off for $25 to find out. In the first instance, they'll most likely just shrug their shoulders. In the second, they're likely to retaliate by making damn good and sure that everybody they know understands that Author Joe is a bum.

In fact, I've had it happen where someone who didn't like a book of mine still recommended it to someone else. Because, first, they understood that not everyone has the same taste, and their friend might like it. And, secondly, because the book is available for free online. So, not only were they able to discover they didn't like my book at no monetary expense, but they could also point out to their friend that they can find out whether they do like it, at no cost.

Over the years, by promoting fair use of my work instead of opposing it, I've wound up striking what amounts to an informal deal with my readers. My "fan base," if you will, understanding that the term is a very fluid one and very fuzzy at the edges. What I mean by that is that not all of my books sell in the same range, or even close. That's true of most authors.

My most popular title, 1632, has sold over one hundred thousand copies by now—"proper sales," I mean, that paid me royalties. At a rough estimate, that means that somewhere in the range of a quarter of a million to three quarters of a million people have read that book, since there are always far more people who read a book without paying for it than who do. My least popular titles sell about fifteen to twenty thousand copies, hardcover and paperback editions combined.

It's a big fan base, in short. Not anywhere remotely close to the size of someone like Stephen King's fan base, of course, but big enough to enable me to work as a full-time writer.

By now, the more enthusiastic of those fans—many of them, at least—have come to know how they can obtain a copy of one of my works. My publishers and I make them available in a very wide range in terms of cost. To put it another way, we've got lots of spillage.

If you really want a new title of mine as fast as you can get your hands on it—if it's published by Baen Books, which most of them are—you can either buy an electronic Advanced Reader Copy for $15 or buy the month's package in which the book appears through Webscriptions for the same price.

If you don't like electronic editions, wait a few months and you can buy the hardcover edition as soon as it comes out, for somewhere around $25.

If your budget is limited or you're just naturally a tightwad—excuse me, frugal—you can wait a little longer until the same hardcover edition appears in your local library. And you can make sure it does by pestering your librarian to order it. (Please do, in fact.)

If you prefer to own your own copy, but don't want to pay hardcover prices, you can wait another year to a year and a half. The paperback reissue will come out then, for $7.99—or you might run across a used hardcover copy for roughly the same price.

If you want to wait until you can get a copy for free, just wait a few more months and I'll put up a free electronic edition online.

Somewhere in that range, any customer can find a place—and there's no hard feelings on anyone's part. Not mine, not my publishers'—and not theirs.

And, guess what?

I very rarely get "pirated." It does happen, from time to time, but as a problem in my life it ranks a long ways below kids occasionally scrawling graffiti on the side of my garage, or littering my lawn on their way to and from the high school two blocks away.

Why would anyone steal from me? Leaving aside the fact that it's a fair amount of work for no big gain, there's the still more important factor of what's called "goodwill" on a business balance sheet. The truth is, the big majority of human beings are reasonably honest. Not perfect, no—but they're very far removed from the horde of slavering thieves that the music recording and motion picture industries insist is the true nature of the American public. (Which I personally think is a classic case of what psychologists call "projection," but never mind.)

Most people who read are naturally predisposed to approve of authors, for Pete's sake. They know perfectly well that authors need to make a living, just like anyone else. They are not pre-disposed to steal from an author—unless that author (or his publisher) treats them like crooks. It's only at that point that an author's customers will get their dander up, and start thinking that copyright infringement is what the bum deserves anyway.

I don't treat my readers as if they were crooks. To the contrary, I assume that they're honest people and make every effort I can to make my work available in a wide range of convenient formats that anyone can afford, at whatever price they can afford.

I'd do that anyway, simply because I detest the opposite course of action. As I once put it, none too politely, to a literary agent (not mine) whom I heard complaining about the fact that blind people were legally entitled to get copies of books without paying royalties, the day I can't make a living as a writer without stepping on blind people is the day I go back to being an honest machinist. Screw it. Unless you're a saint, there's no way to get through a lifetime without being a jackass from time to time. But that's still no excuse for working at it.

But even in the most cold-blooded terms of my own monetary self-interest, it pays off. Sure, I lose some sales here and there along the way—but I make up for it not only through the promotional value but through the still simpler factor of building up goodwill among that portion of the reading public that's heard of me.

How is this complicated? Which word in the phrase "treat people like crooks and they will surely do their best to prove you right" does anyone have trouble with?

As always, when it comes to the general issue of copyright, this was all explained perfectly well over a century and a half ago by Macaulay. I'll quote this passage again:

I will only say this, that if the measure before us should pass, and should produce one-tenth part of the evil which it is calculated to produce, and which I fully expect it to produce, there will soon be a remedy, though of a very objectionable kind. Just as the absurd acts which prohibited the sale of game were virtually repealed by the poacher, just as many absurd revenue acts have been virtually repealed by the smuggler, so will this law be virtually repealed by piratical booksellers. At present the holder of copyright has the public feeling on his side. Those who invade copyright are regarded as knaves who take the bread out of the mouths of deserving men. Everybody is well pleased to see them restrained by the law, and compelled to refund their ill-gotten gains. No tradesman of good repute will have anything to do with such disgraceful transactions. Pass this law: and that feeling is at an end. Men very different from the present race of piratical booksellers will soon infringe this intolerable monopoly. Great masses of capital will be constantly employed in the violation of the law. Every art will be employed to evade legal pursuit; and the whole nation will be in the plot . . .

Remember too that, when once it ceases to be considered as wrong and discreditable to invade literary property, no person can say where the invasion will stop. The public seldom makes nice distinctions. The wholesome copyright which now exists will share in the disgrace and danger of the new copyright which you are about to create. And you will find that, in attempting to impose unreasonable restraints on the reprinting of the works of the dead, you have, to a great extent, annulled those restraints which now prevent men from pillaging and defrauding the living.

Treat people like crooks, and they will act like crooks. Treat them with respect, and make every reasonable effort to satisfy your customers' desires, and they will respond the same way. It's that simple.

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Of course, it never is—simply because people can and will scare themselves to death by coming up with endless scenarios that project the wisdom above becoming obsolete.

So, in my next essays, I will deal with the two most common—and rational, let me say—objections to my approach to the problem.

The first is this:

What might work for one author, won't work if all of them do it. To put it another way, it may be true that if a few authors use free or cheap distribution online of their work it rebounds to their advantage, because it helps them penetrate the opacity of the book market. But if all authors did it, that same opacity would close down again—except that the level of income of all authors would have been lowered in the process.

This is by no means a silly argument. In fact, on the surface, it looks very close to the standard argument advanced by trade unions explaining the need for collective bargaining. If you allow any individual employee "liberty of contract" to negotiate whatever terms they can get from an employer, it will inevitably be those people in the weakest position whom the employer will use to set the level for wages and benefits.

That is absolutely true, and as a lifelong supporter (and former activist) in the trade union movement, I support collective bargaining.

Similarly, so the argument goes, if a few authors start handing out their work for free, because they get an immediate promotional benefit from doing do, sooner or later all authors will be forced to do it simply in order to compete—and all authors will see an overall decline in their income. Including the scab idiot who started the ball rolling, because he was too short-sighted to see the inevitable end result.

The problem is that it's a completely inappropriate analogy. Writers are not in the same position as factory workers, for the very same reasons that produce the opacity of the book market in the first place—as I'll explain in the next essay.

The second objection is this:

An anti-DRM approach to electronic publishing may work very well, so long as the principal book market remains a paper market. Under those conditions, whatever sales you lose in the electronic market are more than made up for by the gains you make in the paper market, which is vastly bigger. But, sooner or later, electronic publishing will become the dominant format for publishers—at which point the same stupid author who thought it was a bright idea to promote his works online will discover that he just cut his own throat.

You will immediately see how closely connected the two arguments are to each other. In essence, with regard to both issues, the argument is that while DRM may be penny-foolish, it is pound-wise. It may hurt you in the short run, but in the long run it's simply a necessity for the future.

Well, it isn't, as I'll spend quite a bit of time demonstrating.

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