Random House adn RosettaBooks Settle into a Partnership

[Ann Okerson <ann.okerson@yale.edu>]

>From the Financial Times, online, Friday Dec. 6th:
http://news.ft.com/business/companies

****

Random House settles e-book rights fight
By Christopher Grimes in New York
Published: December 5 2002 0:43 | Last Updated: December 5 2002 0:43

Random House has abandoned its legal fight against Rosetta Books, allowing
the tiny e-book publisher to significantly expand its online library of
titles.

Random House chose to settle with Rosetta on Wednesday following a number
of court rulings that did not work in the Bertlesmann-owned publisher's
favour. The settlement does not involve legal payment by either party, but
the two groups did agree to launch a licensing alliance for electronic
books.

Random House sought an injunction in 2001 to prevent Rosetta from offering
eight e-books by authors whose original print contracts were with Random
House.

The works in question - which include Kurt Vonnegut's "Slaughterhouse
Five" - were written before contracts specified who owned their electronic
rights. Rosetta contracted directly with the authors for e-book rights,
but Random House cried foul.

Under terms of the settlement, Random House will give Rosetta the
exclusive rights to publish e-book editions of "several dozen" new and
backlisted titles. Rosetta will pay an advance and a royalty to the author
and publisher of each e-book it offers. The scheme resembles typical
agreements used in paperbacks and audiobooks.

The licenses are valid for three years, with Rosetta having the option to
renew.

In addition, Rosetta will be allowed to continue offering the e-book
versions of the eight books that were the subject of the original suit.
Amoung them are two books by William Styron, including "Sophie's Choice",
five works by Mr Vonnegut and one by Robert B Parker.

The settlement is a victory for Rosetta, a New York-based company with
just five full-time employees. Rosetta was formed in January 2000, a time
when the publishing world was abuzz about the potential for e-books. Since
then, though, the phenomenon has not taken off as quickly as expected.

"One of our principle accomplishments is we're still alive," said Arthur
Klebanoff, Rosetta chief executive. "Today there is relatively little
dollar volume in e-books."

Both groups said they were optimistic about the long-term potential for
e-books, however. "We are very supportive of this initiative, which we
believe has the potential to increase sales and readership for the books
RosettaBooks has chosen,"said Katherine Trager, Random House general
counsel.

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