If you're a consumer, that piece of digital wordsmithery you purchased probably isn't worth the paper it isn't printed on. Like most digital media available for "purchase," ebooks are often "sold" as licenses that allow the publisher to control use of the product indefinitely, whether through DRM or by simply attaching EULAs no one will ever read to every download.

This works out great for publishers, who can make irrational, unilateral decisions to pull their catalogs from platforms as a "bargaining tool," leaving purchasers without access to their purchased goods. But publishers (including music publishers like UMG) only use the term "license" when it's most advantageous for them. When it comes to paying authors, the terminology suddenly changes. Now it's a "sale," with all the disadvantages for authors that entails.

"Sales" is a historical term, meant to reference physical sales and the additional costs (printing, packaging, shipping) built into the process. Licenses -- and the ebooks attached to them -- have none of these costs, hence the higher payout rate. But, according to a recently-filed lawsuit, Simon and Schuster is treating ebooks like physical sales in order to pay authors lower royalties.

Lloyd Jassin of CopyLaw points out why this is worth litigating:

The distinction is significant, because the royalty rate for sales is much lower than the rate for the license of rights. If categorized as a license the author receives 50% of net receipts, rather than 25% of net typically paid to authors for the "sale" of an eBook.

Jassin also points out that after Eminem's win over UMG on the sale/license issue (dealing with digital album/track sales), most publishers rewrote their contracts to make the screwing explicit.

In the wake of the Eminem decision, most publishers amended their contracts, so the sale or license of an "eBook" is unambiguously treated as a sale. The lawsuit, therefore, challenges the publisher's interpretation of their legacy or backlist contracts.

How much of this will hold up depends a lot on when contracts were rewritten. From the consumer end, "sold" ebooks certainly looked like licenses, at least up until S&S rewrote its terms of use. Up until January 2013, the terms of use contained this paragraph:

Subject to your strict compliance with these TOU, S&S grants you a limited, personal, non-exclusive, revocable, non-assignable and non-transferable license to view, use and/or play a single copy of the Materials and download one copy of the Materials on any single computer for your personal, non-commercial home use only, provided that you retain all trademark, copyright and other proprietary notices contained in the Materials. Modification of the Materials or use of the Materials for any other purpose is a violation of S&S's or its licensor's copyright, trademark and other proprietary rights. The use of any such Materials on any other web site or networked computer environment without S&S's express written consent is prohibited.

This paragraph disappeared shortly after that, suggesting some rewriting of policies occurred as a result of UMG's settlement with Eminem in late 2012. Due to the statute of limitations, the plaintiff will only be able to challenge the publisher's last six years of royalty payments, but as recently as three years ago, Simon & Schuster was "licensing" books to customers while telling authors every ebook was being "sold."

Then there's this issue, which may result in this particular author finding he has nothing to sue about (although other authors contracted by S&S might):

According to a report in Law360, an unnamed spokesman for Simon & Schuster told Law360 that the division that published Dr. Blau's book, was sold (or was it licensed?) to another company in 1998, and that the publisher never published a digital edition of the book.

So, even if Blau's general complaint is legitimate in terms of how S&S is using sales v. licenses to decrease its royalty payouts, his specific complaint may be completely baseless.