Audiobook Distributors 'Cannibalized' Author's Revenue: Complaint
Urban Audio Books, Blackstone Audio, Audible and Amazon have been “giving away” author Teri Woods’ works for free to premium subscribers of their audiobook streaming and digital download services in a way that cannibalized her other audiobook revenue streams, alleged a Tuesday breach of contract complaint (docket 1:23-cv-507) in U.S. District Court for Eastern New York in Brooklyn.
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In a December 2018 license agreement, Teri Woods Publishing granted UAB exclusive unabridged audio publishing rights worldwide for the author’s 20 works as audiobooks in exchange for royalties on a per-unit basis, said the complaint. A second-half 2019 audit of UAB showed traditional audiobook distribution channels paid TWP a per-unit rate rather than a nominal one, with prices of the author’s works ranging up to $100, said the complaint. TWP was paid 10%-25% of each sale, depending on the medium.
By second-half 2020, Woods’ royalties “plummeted,” though UAB’s royalty statements showed sales of her works had “substantially increased,” the complaint said. The “drastic drop” in royalties was apparently due to the defendants’ distribution of her works by “digital stream,” said the complaint. Some 99.9% of all TWP audiobook sales became digital streams, said the plaintiff, citing a first half 2021 royalty report: “Few readers wanted to pay $15 or more for a single audiobook when the Defendants were essentially giving them away for free to members of their streaming services.”
A royalty audit listed the price of a digital stream for Woods' works as $16.95-$22.95, but UAB received only an average 0.001 cent per stream, it said. TWP was paid 0.00026 cent per digital stream, though it was entitled to a 25% royalty of net receipts per sale, said the complaint. A June 30, 2021, royalty statement reported over 11 million digital streams across all TWP titles with TWP being owed $2,832.72. UAB didn’t remit the royalties due under the license agreement, alleged the plaintiff.
At some point after entering into the license agreement, UAB “purportedly” granted rights to Blackstone to distribute the TWP Works, and Blackstone purportedly sublicensed those distribution rights to Amazon and Audible, including as digital streams, alleged the complaint. The TWP works are currently available on Amazon for $0.00, along with the words “Free With Your Audible trial,” said the plaintiff.
There's no option to purchase the audiobook on Amazon without clicking to another webpage, the complaint said. There, the option to purchase is “disguised” with a “low-contrast gray button” with prices listed as $10-$30, directly below a “high-contrast yellow button” that reads, “$0.00 Try Audible Premium Plus Free,” it said. Audio Premium Plus members can use their membership credits to get TWP works, which they can keep forever, even if they are no longer Audible members, the complaint said.
The credit system used by Amazon and Audible’s subscription service “obfuscates the ‘net receipts’” generated by the sale of TWP’s works, thereby circumventing the fair royalties owed to TWP, alleged the complaint. If digital stream pricing listed as $16.95-$22.95 were accurate, the author would have received a payment of $60.7 million through June 2021, the complaint said; TWP received $4,403. From July 2020 to June 2022, TWP received $8,059 vs. “millions of dollars” owed per the licensing agreement, it said.
In addition to breach of contract, the plaintiff claims direct and secondary copyright infringement. TWP seeks damages of $2 million for copyright infringement, statutory damages of $150,000 per work, a permanent injunction enjoining defendants from infringing on TWP works, plus attorneys’ fees and legal costs.