Thoughts on EULAs (amidst the iBook controversy)

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My writers group has been passing emails back and forth today re: Apple’s new iBook EULA.  I know this is also a hot topic across the ‘Net today, so I wanted to share with everyone what I sent to the writers group.

I would put forth that EULA’s are, for the most part, universally bad for the end user and intended solely to benefit and cover the ass of the service provider – no matter who that provider might be.  They are also a contract not unlike any other contract you might encounter in your life, albeit one that 99% of us never bother to read.  We check the box to continue and move forward.  (South Park did a particularly gross episode on this very subject)

A plain English breakdown of the Microsoft Windows EULA, posted online by a lawyer, explained that by installing Windows on a computer, you agree that you have no expectations whatsoever that the software will wok, run, or be compatible with the hardware in your computer or any other software you might have or install, or with any peripheral equipment you might have such as printers, monitors, scanners, etc.  Anything that the software does outside of that is considered an ‘unexpected benefit’ of the software.

In other words – if it works, good for you. If it doesn’t, oh well – you can’t hold MS accountable for it because it was never intended to ‘work’ in the first place.

The Apple EULA’s have been criticized quite a bit for iTunes, iPod, iPhone, iPad, etc and so on – and in a lot of those cases, the criticism is justified.  But we click ‘accept’ anyway.

DropBox, a popular online cloud storage solution, used quite a bit by writers and content creators because they developed seamless integration/backup for wireless devices, laptops and smart phones, last year changed their EULA to state that by using their service, you agree that they own all content uploaded to their servers.  Essentially, this meant that if you wrote a book, and you used DropBox to store a copy of that book digitally, you released the rights to that material over to DropBox including copyright.

This was heavily criticized on the Internet and DropBox saw a massive reduction in its userbase, prompting a change in the EULA’s wording.  Many authors still avoid this service.

Amazon’s EULA’s have also been heavily criticized for, among other things, giving Amazon the right to remove content from your Kindle if they want to or are pressured to by a copyright holder.  They don’t even have to tell you they’re doing it.  There is also a provision on each individual download/purchase of a Kindle eBook stating how many times that book may be downloaded to your device per purchase.  What this means is that some people found that books purchased for Kindle 1 could not be downloaded to their shiny, brand spanking new Kindle 2’s because the publisher had a download limit associated with the eBook.  It’s in the fine print.  No one knew this and there has been a lot of outrage over it, but Amazon has not changed the EULA.

Have a website hosted on one of those $4.95/mo discount web hosting companies?  Ever read the EULA?

When you signed up for web hosting, you agreed to their terms of service (EULA) which includes things like:

  • You agree not to engage in unacceptable use of any of (Web Hosts) products and/or services
  • It is a violation for anyone to employ posts or programs which consume excessive CPU time or storage space
  • You are responsible for ensuring that there is no excessive overloading of (Web Hosts) DNS system or servers
  • You agree to follow generally accepted rules of “Netiquette” when sending e-mail messages or posting to newsgroups
  • You affirm that you are not a spammer
  • You affirm that you will not host or distribute any material that, to a reasonable person may be abusive, obscene, pornographic, defamatory, harassing, grossly offensive, vulgar, threatening or malicious;
  • You affirm that you will not host, distribute, disseminate or transmit files, graphics, software or other material, data or work that actually or potentially infringes the copyright, trademark, patent, trade secret or other intellectual property right of any person
  • If You elect to sell or resell advertising or web space to a third party then You will be responsible for the contents of that advertising and the actions of that third party (and you affirm it won’t be porn)
  • In the event that You exceed Your allotted bandwidth and thereby overload (Web Hosts) DNS or servers, You shall be assessed any and all fees, costs and penalties associated with such overloading

Lastly, have you ever seen some of the things publishers try to slip into their version of a EULA?  (book contract)  Non compete clauses (if you write an epic fantasy for me, you agree not to write one for someone else until after our series is complete), character locks (you write this character for us and we have first rights and refusal rights on any other stories involving this character so you can’t write other books with other publishers after our contract is up).

How about this one: Upon termination of the Contract, the Publisher retains the right to sell or dispose of any media format, of inventory. The Author will receive applicable or adjusted royalties on these copies, and the rights not used by the Publisher, will revert to Author for the manuscript, but not for the cover art. The Publisher will have an inventory amounting to 1000 copies per any media format at termination of Contract. Rights for the book will stay with the Publisher, until all copies are exhausted. This is any media format…e-book, print, pod, audio, etc., which the book is published. All media formats are considered published and in inventory, when they go up for sale.

Writer’s beware explains: This puts a unique spin on a publisher’s traditional right to dispose of unsold inventory when a book is taken out of print or a contract term ends, either by selling the inventory through traditional sales channels (and paying a royalty on those sales) or remaindering (in which case, usually, no royalty is due). The publisher can’t produce more inventory, it can only sell off what it has on hand; and “inventory” is understood to mean “physical inventory”–i.e., not ebooks, which should be removed from sales channels immediately (though it usually takes a little while for vendors to comply). Moreover, the fact that the publisher is allowed to try and recoup some of its expense for unsold product does not delay rights reversion, or indeed, affect reversion at all.

With this publisher, however, termination triggers a refill at the inventory pump. Whatever the publisher may have on hand (and ebooks are never really “on hand”), termination causes inventory to magically shoot up to 1,000. Worse, it delays the reversion of rights, making reversion contingent on all inventory being sold, down to the last book. Suppose your book was available from this publisher as an ebook and a POD print edition; just imagine how long it might take a small publisher to sell 1,000 copies of each format.

In effect, termination isn’t really termination–it’s an indefinite extension of your original grant of rights, rendering the official 3-year contract term moot. And–talk about a Catch-22–because the contract has officially terminated, you’re no longer covered by its guarantees and protections. Is this even legally enforceable? Perhaps a lawyer or two will weigh in.

Plus, you’d have to trust the publisher’s accounting. This particular contract does include an audit clause–but with the contract terminated, the publisher could argue that your right to audit had terminated too.

SO – What the hell is this all about, P?

  • All EULA’s are in place to benefit the service provider, not the end user
  • All EULA’s pretty much screw you, the consumer
  • Always read a EULA (or attempt to read it) before you click that little accept button – if something bothers you, don’t click it.  You can actually do that, btw – there are other places/websites/service providers/vendors/publishers out there
  • Realize that services providers like Amazon & Apple are out to be the only game in town (they don’t exactly hide this fact any more than Microsoft does), so they release tools like this one to make it easy for content publishers to use their systems, but almost ALWAYS have a gotcha hidden somewhere in the agreements.  I believe Amazon’s CreateSpace has exclusivity clauses in some of their agreements.
  • If it looks too good to be true, it probably is
  • Nothing is ever ‘free’
  • Money should always flow towards the Writer/Content Creator (not away) (whole other subject) (probably) (ie Never use Publish America or any other service that wants upfront money from you)

~P

6 comments for “Thoughts on EULAs (amidst the iBook controversy)

  1. January 20, 2012 at 5:11 pm

    I seem to recall, maybe its an urban legend, that some minor software company, for fun, added a clause in their EULA that the user was signing over their immortal soul to the company. As a sort of practical joke.

    • Patrick Hester
      January 20, 2012 at 5:29 pm

      Crossroads Development?

      Devil May Care Design?

      Sign on the Dotted Line, LLC?

      Got Your Mojo, INC.?

      ~P

  2. January 20, 2012 at 11:52 pm

    Actually, the part about Dropbox’s EULA meaning that you release copyright over to them is not true. When they changed the EULA back in July, it clearly stated that you retain ownership of your stuff and you’re only granting them the rights necessary to perform their service. The latter was meant to cover their own asses. As often happens, a bunch of non-lawyer artist-types misread the EULA and overreacted. So Dropbox revised the EULA a couple of times in order to assuage unfounded fears. Check out the discussion on Mur’s Google+ post.

    • Patrick Hester
      January 21, 2012 at 11:10 am

      Thanks for the clarification!

      • Evan Edwards
        January 21, 2012 at 3:23 pm

        Seriously, the whole Dropbox thing a really big lie that is damning a company that provides a great service. That lie is perpetuated by articles like these: well meaning, but still pushing that “fact” out to more eyes. Sysadmins need to duplicate, backup, move, copy and otherwise mangle your files. It’s part of providing a hosting service. It’s in their EULA because they are honest about what they need to do to provide you the service you pay for. If a backup/storage service says they won’t ever copy your files… then they aren’t actually storing your files nor backing them up.

        Paranoia and attacking the good guys creates a fog that allows the actual reprobates to get away with their ugliness in an assumption that there are no ethical services out there.

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