There's an interesting little copyright kerfuffle afoot in regard to the release of version 2 of Amazon's Kindle e-book device. The Kindle 2 incorporates a "text-to-speech" function; that is, for books that you download onto your Kindle, a function is provided whereby you press a button and the device translates the text into computer-generated speech.
Cool stuff. The Author's Guild, on behalf of book authors, is not so enthusiastic. It is asserting -- thus far, only in public statements, and not in any court proceedings, though they may come -- that the Kindle 2 functionality infringes the copyright holder's rights to create "derivative works," and, therefore, is not within the license granted by authors to amazon to distribute their works on Kindles. [The National Federation of the Blind, incidentally (and for obvious reasons), disagrees]
It's a knotty copyright issue, actually -- though I'm reasonably certain that Amazon has the better of the argument. Here's how it looks to me. Amazon already has the right to "reproduce" and "distribute" the books it sells in Kindle format -- under the terms of which the copyright holder gets a royalty for each reproduction/distribution. So far so good. The license covers reproduction and distribution only; it does not give Amazon the right to "publicly perform" the copyrighted work, or to "create derivative works" based on the copyrighted work.
A sound recording of the book -- an "audiobook" -- is, clearly, a "derivative work" under copyright law. In the Copyright Act, a "derivative work" is defined to include "sound recordings . . . or any other form in which a work may be recast, transformed, or adapted," and "sound recordings," in turn, are defined as "works that result from the fixation of a series of musical, spoken, or other sounds." Because the audiobook "fixes" sounds (onto a CD, or a computer disk, or some other tangible medium), it's a derivative work. So when Audible.com sells you an audiobook copy of a book, they need a "derivative works" license from the copyright holder.
Pre-Kindle 2, in other words, copyrightholders have two separate sources of licensing revenue: Amazon (for the reproducing and distributing copies their book) and Audible (for making "sound recordings" = "derivative works" based upon their book).
Along comes Kindle 2. There's no "audiobook" involved in the Kindle transaction. The copy that customers receive is just the (marked-up) text, in Kindle format - same as before. The sounds are generated on-the-fly when the user presses the right button -- the sounds aren't "fixed" anywhere, i.e. they're not stored separately from the text itself. Therefore, no sound recording; therefore, no derivative work; therefore, no additional royalty revenue for the copyrightholder.
There may be more to it than this - the Author's Guild may be able to come up with an argument that the generation of the sounds, while not a "sound recording," nonetheless creates a derivative work because it "recasts, adapts, or transforms" the original work into a new medium. There are some messy precedents out there on which they may be able to rely to make this argument. I doubt it, though. They face a very difficult slippery slope -- if Amazon needs a separate license because Kindle 2 is creating a derivative work, then presumably so does everyone who reads a book out loud, even to him/herself. That looks a little harsh to me, and I very much doubt that that's the law.