Here’s a brief update to the copyright controversy created by the text-to-speech function of the Amazon Kindle 2:  I was right.

Just a few days later, Amazon changed course, announcing that it will allow authors and publishers to decide on a book-by-book basis whether or not to allow text-to-speech functionality.

Apart from making nice and preserving existing business relationships (always good reasons), why would Amazon capitulate?

Contracts, baby, contracts.
As it turns out, the contract language in a few of the existing publishing agreements with Kindle 2 authors was worded broadly enough to cover text-to-speech rights (which meant that Amazon, in relying on the publishers’ ability to pass through the necessary rights to publish on the Kindle 2, was fine). But the majority of the publishers’ agreements with their authors did not contain terms which granted the necessary rights to the publisher, which means that the publisher did not have those rights to pass through to Aamzon. (Further, the majority of those contracts probably contain typical general-purpose copyright agreement language that states that all rights not specifically granted are reserved to the authors. If you are an author doing a book deal, those are magic words). According to the Wall Street Journal update on the Kindle 2 copyright controversy, Paul Aiken, Executive Director of the Authors Guild

said that several major publishers discovered that the contracts they had with authors didn’t give them the right to sell e-books with audio functionality. “It’s possible that the majority of the titles Amazon sells via the Kindle fell into this domain,” he said. Agents, authors and publishers will now have to review contracts and strike new licensing agreements. “It will be a process of amending tens of thousands of book contracts to include text-to-speech rights.”

What’s good about this outcome?
Contracts are good. Contracts are intended to resolve uncertainty. Neither Amazon nor the Author’s Guild will be spending their time and money using the US Federal court system to resolve whether text-to-speech is “fair use” exempted from copyright licensing requirements, or is a “public performance” falling under a copyright owner’s exclusive rights under Section 106 of the US Copyright Act. Those are interesting legal questions, but it’s a far better use of resources for Amazon and the Author’s Guild to jointly spend their money promoting the Kindle 2 and the available titles, and building the e-book market. Going forward, publishers are going to provide for the resolution of this issue in every publishing agreement with every author that they make, and authors and their agents are going to negotiate new book deals with these rights in mind.

Score one for the contract lawyers.