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The case of the used digital book store

Image via Big Stock Photo

Image via Big Stock Photo

In January 29, 2013, Amazon was granted a  business systems patent for the sale of previously owned digital products. This patent was applied for in 2009 and Amazon has done nothing to indicate that it intends to set up a used digital bookstore either when it filed for its patent or when it received approval for the patent.

The news of the patent grant led to much Internet speculation that Amazon would soon be opening a digital marketplace for previously purchased digital goods.   While Amazon is not the first company to have contemplated a used marketplace for digital goods, it is perhaps the largest name to be connected with such a concept.

In fact, at least one other company related to books called book.ish  out of Australia  has put forth the idea of bringing greater ownership to readers by allowing the resale of digital goods. A popular company known as Steam commands approximately 50 to 60% of the digital distribution of videogame software.   Steam does not develop videogame software but instead is a digital rights management company which sells access to digital  video games.  While the right of first sale hasn’t been decided in the US, in 2012 the European Court of Justice determined that digital software and games could be resold so long as the original purchaser does not keep a copy of it themselves. Valve, the company that runs Steam, has been sued in Germany for the right to resell access.

In the United States, a company called ReDigi  started a business to resell iTunes MP3s. Capital Records, among others, have sued ReDigi  for copyright infringement. Currently the  parties to the lawsuit have filed opposing motions for summary judgment, or legal documents requesting the court to rule in their favor. The court has not ruled on those motions but when it does,  it will have far-reaching effects on the concept of ownership and digital goods.

While authors and publishers look at the resale of a digital good as something just a step up from piracy, consumers see this as an acknowledgment of ownership rights.   Or in other words, there are two sides to every coin.

While the ReDigi business model does not divert any funds to the original creator upon resale of a  record or album, it is likely that any  marketplace set up by Amazon for  used digital goods would be very much like the existing lending system Amazon has in place for digital books.

For those unfamiliar with the Amazon lending program, owners of Kindle devices have the opportunity to borrow  one book each month  from a pool of eligible books. The authors and/or publishers are compensated for each lend from a pool of money that Amazon makes available to those content creators participate in the lending program. It should be noted that only Amazon Kindle device owners can take advantage of this program. You cannot access the lending feature from a  Kindle app downloaded to your Android or Apple device.

For the most part, Amazon lends only books for which the content creators have given permission. when Amazon first launched the lending program, there were titles included in the program which Amazon had not received specific permission to include. For those titles, Amazon was paying  their wholesale price for each lend.   Since then, most if not all books in the lending program are included on a contractual basis with the publishers or authors participating.

In addition to the Kindle Owners Lending Library, some books have a reader to reader loan feature.   Each book that has that feature will include “Lending:Enabled”  at the bottom of the product details section of each book listing:

Lending Enabled

A purchaser of the book that has lending enabled can loan that title for 14 days to any person with a Amazon account and a willingness to download an Amazon App. Reader to reader lending via Amazon does not require a Kindle device.   During the lending period the original purchaser does not have access to the title.

One of the arguments against allowing the resale of digital goods is that the original purchaser will keep a copy for themselves while selling a copy for their own profit. This of course assumes the majority of book buyers are dishonest and criminal.   But it also ignores that readers can engage in this activity while  participating in the Kindle Owner Lending Library program as well as the reader to reader program.

Amazon has the technical capabilities of implementing a digital used bookstore at any point. I do not believe, however, that Amazon will launch a digital used bookstore without  agreement of the original content creators. It is not in Amazon’s interest to drive content creators away from its Kindle platform. Whenever I see authors accuse Amazon of anti-author behavior,  it demonstrates a misunderstanding of how Amazon is attempting to circumvent and disrupt traditional publishing.

Amazon is in a greater position of negotiating power today due to  the success of non-traditionally published books. The self published author who uses the Kindle direct platform and has success in doing so provides Amazon with greater power in the publishing industry then when it solely sold books produced by others.   Amazon has no  incentive to drive away self published authors at this juncture.

There are two legitimate concerns regarding the resale of digital products. Both have to do with the fact that a copy is nearly as perfect as the original. When you buy used product, the value of that used product depends in part on its “like new” status. The more like a new product the used product appears, the higher price the used product can command. A used digital product is almost indiscernible from its new product counterpart.

The second legitimate concern regarding the resale of digital products includes the  durability of a digital good. There are no studies that I can find that indicate how long a physical good lasts  although it has been said anecdotally that a used book will have nine owners. A digital book can be sold and resold an infinite number of times with little or no degradation.

In its patent application, Amazon does contemplate restricting the number of times a digital good could be sold and it may be that Amazon would tier the price of a used digital good based upon the number of owners it has had previous. Thus if you purchased a book that had been sold five times previous, Amazon’s resale value of that book would be reduced proportionately.

Digital book prices have been falling consistently since the Kindle was originally introduced in 2007. According to independent booksellers like Smashwords and All Romance Ebooks, the file has not been precipitous but steady.   It is possible that with the increase of rights associated with the digital book  such as the ability to resell and recoup the financial outlay,  consumers will be more amenable to a higher price point for digital books.

It is also possible that increased volume may result from lower priced books which could benefit the content creator should the  used marketplace created by Amazon for digital goods returned some amount of  revenue to the original content creator.   Given the  uncertain state of the law regarding use digital goods, it may be that Amazon launches a digital use marketplace in the European Union or Germany or Australia before such a marketplace is introduced in the United States.

Ownership of digital goods is an important property issue that needs to be decided with some finality here in the United States; not only for current consumer  usage but for inheritance rights as well. There are a number of rights to be balanced in this argument but I would hope we would not forget that the consumer has rights as well.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

11 Comments

  1. Christine
    Feb 24, 2013 @ 09:38:19

    I have noticed when discussing the decline in price of digital books Amazon is usually presented as the reason behind it. IMHO a lot of people use Amazon as the scapegoat in their arguments. The following are my (highly unscientific) observations and personal opinions on why the price of digital books has gone down (on average) since 2007.

    The Economy- for the same reason mid priced chain restaurants are dropping like flies (people are going to McDonalds more and Chilis less) people want and need more bang for the buck. I used to buy books willy nilly, stockpiling huge amounts of them and not reading or not enjoying a huge percentage of them. In the past few years I have become far more selective, relying on more reviews and using the library to try more expensive books I am not sure of.

    The pricing of “real books” versus ebooks. The publishers can state anything they want but they will never convince me that physically printing and shipping a paper book costs as much as me downloading a digital copy. Therefore walking into Target, Walmart, Costco etc. and finding a paper/hardcover version of an ebook I bought at 30% LESS than I paid for the digital copy drove me nuts. I refused to pay full price for these ebooks after a while and as I am not accumulating any more hardcovers or paperbacks there were some authors who didn’t make the cut for me anymore.

    The availability of other sources of reading materials. Long before I owned a Kindle or a Kindle app (and even before they existed) I had downloaded digital books in whatever format to my laptop to read. While Amazon certainly gave independent authors a huge leg up in terms of access to an audience, with the Internet a determined reader could always find interesting reading material if he or she wished.

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  2. Christine
    Feb 24, 2013 @ 09:41:03

    I also forgot to add one of my number one reasons- my irritation with the price fixing by the big publishers. It left such a bad taste in my mouth I found I was actively seeking other publishers and independents as much as I could.

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  3. Susanna Fraser
    Feb 24, 2013 @ 11:11:27

    The third issue I see with allowing resale of digital products is that an ebook need never go out of “print.” A few years ago, I bought a lot of used books because I’d discover a new-to-me author whose backlist was out of print. I never felt any guilt about buying those books used because I couldn’t buy them new and funnel royalties to the author. Now those new-to-me authors (or their publishers) have almost all released their backlists electronically, and I shop accordingly. The only used books I buy now are older nonfiction titles I use for research, ones unlikely to be released electronically anytime soon, if ever.

    That’s me wearing my author hat. But when I put on my reader hat…I do have MANY titles on my Kindle I know I’ll never read again, and I wish I could do with them as I used to do with my old paperbacks and give them to my local library so others can enjoy them, and possibly discover new favorite authors whose books they’ll buy in the future. So I could get behind a scheme allowing electronic content to be donated to libraries, literacy programs, etc., or one that allowed a limited number of resales, especially if authors and/or publishers get a percentage of the proceeds.

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  4. JenM
    Feb 24, 2013 @ 11:36:14

    Much as I love ebooks, I do miss being able to sell or donate my books and share them with others, or even just to metaphorically clean out my closet. My Amazon archive is just humongous and most of those books are ones I will never read again. I know that I can just delete them, but that feels too much like throwing them away – something that I could never do unless a book was so tattered that it just wouldn’t hold together any more.

    If there was a way to sell digital content with a small royalty going to the author, that would be wonderful. I’d happily give up a % of the sale if it went straight to the author (NOT to the publisher) and meant the author got a little more money out of their work. Since backlist books live forever in digital format, maybe that is the income stream that will replace the traditional advance, which seems much harder to get (and much smaller) as the publishing houses consolidate. It wouldn’t help first-time authors, but it would help support established authors, and first timers can rarely quit their day job anyway until they get established.

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  5. Herne
    Feb 24, 2013 @ 11:40:35

    As a self-confessed bibliophile, I refuse to “buy” any eBook until the “right of ownership” debate is finished. Currently, anyone who spends money on an eBook (or any electronic download, such as iTunes songs, movies, etc) is merely renting that content. I refuse to pay out good money for a product that they tell me I “own” but then they turn around and tell me that I cannot lend or sell. If I own something, then I should be free to do whatever I want with it, bar making and selling copies.

    In regards to books, I fail to understand publisher’s motives when they make the claim that eBooks are cheaper than print books. Why then do we see first-run hardcover books with a cover price of $35 selling for $15? The cover price ceases to have any meaning unless you find yourself in an airport somewhere needing something to read on a plane—That is the ONLY time I think I’ve ever seen someone pay full cover price. Publisher’s then go on to explain that authors are paid on the basis of the cover price, but that just says to me that Publishers need to sit down and rethink their way of paying authors. Time marches on, and so on.

    For years, I’ve been saying that Publishers need to wake up and realize that this isn’t 1980 anymore. Media is everywhere and people want to consume it in a variety of ways. The days of publishing a hardcover, then waiting 6 months and publishing a trade paperback, then waiting another 6 months to publish a mass market paperback are over! I personally will NOT buy a new hardcover book, and I buy a lot of books. Why? The cost, the amount of resources needed to create a hardcover book, and the sheer space of storing them. A hardcover novel is a “premium” product and should be considered as such—In fact, I would be more apt to purchase a hardcover book IF it came with the eBook. Then I would OWN a print copy and I could read the eBook copy at my leisure.

    Publishers can wave their arms about all they want and talk about profit margins, etc., but the fact is that they are TRASHING (or recycling) almost half of the hardcover books that they are printing because they do not sell. Imagine if instead of printing 125,000 hardcover copies of a particular book, you only print 50,000 hardcover copies AND 50,000 mass market copies and then released everything AT THE SAME TIME. Those people who prefer hardcovers would buy the hardcover, and those people who preferred the mass market edition would buy that. So instead of trying to milk the consumer for more money by holding back the release of a particular novel’s mass market edition (I’m looking at you Bantam Spectra who has TWICE delayed the mass market edition of George R.R. Martin’s A DANCE WITH DRAGONS), the consumer would have a CHOICE of editions.

    In the meantime I will continue to purchase my dead-tree books, my CDs and my DVDs rather than downloading anything. At least then I know that I own what I’m spending money on, and don’t even get me started on the rights of consumers regarding the purchase of technological gadgets like iPods and brow-beating Terms of Service that tell us we CANNOT alter a device that we own.

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  6. Shelly Thacker
    Feb 24, 2013 @ 12:28:14

    A fellow author (much wiser about legal and technical issues than I) had an interesting take on Amazon’s patent: it’s possible that Amazon isn’t actually planning to create a used-ebook marketplace, ever. They may simply be trying to prevent any other company (such as ReDigi) from creating such a marketplace.

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  7. Ann Somerville
    Feb 24, 2013 @ 17:34:43

    I’m going to get my head ripped off for this, but I’m going to say it anyway:

    You cannot advocate for the removal of DRM from ebooks and also advocate for the right of first sale on ebooks, without being a hypocrite.

    If you remove DRM (which I am absolutely 100% in favour of), then the user can, uniquely for ebooks compared to books in other formats, freely duplicate, back up, lend or whatever as many times as they feel morally justified in doing. They can lend a paper book, but they can’t retain a back up of it. If the book is dropped in the loo by an adventurous child, then a replacement has to be bought. With an ebook, the owner just goes to their back up if their iPod dies a hideous death.

    For that immense convenience, and the right to be able to make free, unhindered copies, it is perfectly right to my mind that the user gives up the right of first sale.

    The only way to enforce a true right of first sale which is comparable in any way to what buyers of paper books have, is with a truly unbreakable, utterly hideous DRM system, which is punitive to the user, and removes the other benefits of owning an ebook. I am against DRM for the same reasons most readers are.

    So either insist on DRM so you can sell your ebooks legally (and then be tied to a bookstore and a device), or insist on no DRM, so your books are truly yours to move between devices, backup, and yes, lend freely. You can’t have both.

    Not without fucking over authors and killing the ebook market completely. I just ended a contract with a publisher who was so paranoid about ebook piracy that they refused to release any of their books in digital format. This was a loss for me, for them, and most importantly, for the readers who primarily wanted the book in ebook format. If Amazon – or Redigi – or anyone else tries to make ‘used’ ebooks a thing, you will find publishers will just not use that format.

    Libraries and personal lending between friends are the way to share your ebooks with people unwilling to pay full price. This second hand idea is crap.

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  8. Susan
    Feb 24, 2013 @ 23:15:15

    You mentioned inheritance issues in the last paragraph. I couldn’t agree more. When my mother recently died, she had hundreds of books on her kindle, most of which had been purchased by me as gifts. We didn’t often have the same taste in books so there are very few I’d want to keep for myself, but it’s a shame they’re probably all going to waste.

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  9. Karen
    Feb 25, 2013 @ 09:33:40

    I was happy to switch to ebooks, even though it meant paying higher prices for most of my reading. But I wonder how this will affect new readers. When I started reading romance, I was a high school and college student, and I couldn’t afford a lot of new books. The library didn’t carry many romances, but I was able to buy a lot of books inexpensively at the used bookstore, and by trading with friends. I was willing to try new authors and new genres because I didn’t pay full price for the books. If I didn’t like a book, I could trade it in and get more books when I was done. It wasn’t such a big risk. I’m not sure if I would have been so adventurous if I’d had to pay $7.99 for every new read. Readers can find inexpensive books (although some types of romance are much easier to find than others at those prices), but will readers be able – or willing – to try out a new genre if there’s no way to borrow a book from a friend or try a new author at a discount price? Many libraries still don’t carry much romance, and the options for lending are limited. (Most of the books I buy don’t have lending enabled.) There should be some way to set up a “used” ebook system or a lending system that still works for authors and publishers.

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  10. Donna
    Mar 11, 2013 @ 01:11:51

    There are already massive amounts of E-books being given away for free or for 99cents to attract readers to new authors.
    Digital books don’t wear down like print books. So “second hand” you’d be getting the exact same product as the person who bought it knew. It will be intellectual property theft and legitimized piracy period.
    There is a HUGE range of romance of all types availalbe from my local library so I’m not sure where the person posting above lives.
    There is no system along these lines that would work for authors and publishers it would mean only hardship. It could kill the ebook makret.
    Some people are talking about how this could kill the golden goose of digital publishing and return everything to traditional publishing.
    I used to be against DRM when I found it impossible to download books I bought that were DRM because it was so complicated to access them, but it isn’t any more I have no problems with the DRM books I’ve recently bought.

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  11. Hamish Hayward
    Mar 11, 2013 @ 04:10:41

    It is an interesting debate – and you make some very good points. As you say, with e-books (and software), it’s not really a case of “as good as new” – it’s more like indistinguishable from the original.

    E-books won’t wear out, get dog eared or become grubby. They could, in principle, circulate in perpetuity without loss of quality.

    In the end, why would you buy new if you could save money with a second hand e-book?

    It would be tough for authors to make a living I guess. Might you wind up with most purchases being made by distributing firms – like Steam for example – and then the majority of sales to genuine readers being made “second hand”?

    I love e-readers and e-books (hardly ever read “real” books any more), but they have certainly shaken up the world of reading, publishing and, I guess, writing.

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