Romance, Historical, Contemporary, Paranormal, Young Adult, Book reviews, industry news, and commentary from a reader's point of view

Ownership in the Digital Age, Part 1

Image via Big Stock Photo

In federal district court in the Second Circuit, New York’s Southern District, Capital Records is suing ReDigi Inc.  ReDigi’s business is the resale of legitimately purchased digital music.  Capital Records argues that a digital file resale creates a secondary, unauthorized copy that violates intellectual property rights of the rights owner.  ReDigi argues correctly that Capital Records essentially seeks to abrogate the right of First Sale doctrine.

The Right of First Sale is a provision (17 U.S.C. § 109) within the Copyright Act that says:

The owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

(Emphasis added). With physical items, like one book, the interpretation of the right of first sale is straight forwarrd.  Once you’ve bought the lawful copy, you get to do with it what you want.  It’s viewed as a tangible personal property which can be resold, traded, loaned, decoupaged, and bequeathed to heirs.

The scope of the First Sale doctrine has been limited in recent years.  Currently in front of the Supreme Court is the question of whether a foreign produced product imported without the permission of the rights holder can be resold without permission.  In Kirtsaeng v. John Wiley & Sons, Inc.,  Kirsaeng was a Thailand citizen who came to the US for college.  He sold John Wiley & Son textbooks in Thailand and resold them in the US. John Wiley & Sons (a US company who had sold the books in Asia through an Asian subsidiary) sued him.  This is a revisiting of the same issue that the Supreme Court faced in Costco Wholesale v. Omega where the court had a split decision of 4-4, with Justice Kagan abstaining.

Thus the question of First Sale implicates rights beyond the right of RESALE to those that would include the right of bequeathment.  Or rather, will one be allowed to pass on their digital library collection to their heirs?

John August, a scriptwriter and Grammy nominated lyricist, contemplates a future in which there is no ownership, only access to streams of entertainment.  Jeremy Dylan, a writer/producer out of Australia, laments this “dystopian” future and says it is the result of a devaluation of entertainment media:

This transition away from ownership and towards a renting/streaming/cloud-based method of experiencing entertainment is a consequence of the devaluation of entertainment products that has been in full force since the beginning of online music piracy over a decade. Young people don’t like paying for shit at the best of times, but these last couple of batches of young people don’t feel like music is something that should be paid for. I should know, I’m 21.

Book prices, particularly for backlist titles and new authors, are being pushed down by the influx of self published books.  According to Mark Coker of Smashwords, the optimal price of a book is somewhere between $3 and $4.  With those prices, few traditional publishers or even digital first publishers can make a go of it.  Entangled, for example, prices are relatively low, but it is publishing through Kindle Direct and PubIt! which allows the publishing company to harvest 70% of the retail price instead of 50% in a traditional wholesale agreement.

A few months ago Mike Cane posted a long piece about the applications for the .book domain extension. I really don’t understand how one organization determines who gets to “own” the domain extension, receive payment for the sale of those top level domains, and controls access to the domain. It sounds alarming but I’m completely uneducated about it. What did catch my eyes was the language in one of the applications* that Mike excerpted which suggested that digitally we are moving toward access instead of ownership.

Ownership and value march hand in hand.  Dylan argues that devaluation brings about access only business models where as I have argued in the past that ownership can increase value.

To own something means you have the right to dispose of it – either delete it, resell it, or even remake it from something like a book to a purse.  Maybe most important, it means you can bequeath it to another.  Once you lose those rights, the digital media becomes disposal.

Supporters of digitally-distributed media had a scare last week when rumors (quickly proven false) circulated that cloud-based game serviceOnLive was going out of business. In the blink of an eye, consumers were faced with the possibility of losing any subscriptions or access to full-priced games they might have purchased through OnLive. That eventuality is a worst-case scenario, but it led me to reconsider my attraction toward digital product.

Anything that is perceived as singe use or limited use will automatically be lower in value in a consumer’s eyes than property that a consumer has the right to possess exclusively against all others.  What the Supreme Court decides in regards to the right of first sale for digital media may forever affect the way consumers value entertainment.  Next week a review of the arguments pro and against in the ReDigi case.

*The application reads like a manifesto against DRM. “Moreover, the future of reading is being held hostage in a format ?standards war? over versions of proprietary technologies with little regard for a consumer?s need to collect and preserve their purchases as formats and standards evolve.” However, the arguments are being used to justify the applicant’s control over the top level domain which they intend to turn into a direct to consumer purchasing portal. I.e., hungergames.book would lead to a site which aggregates reviews but mostly provides for a direct way of purchase.

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

21 Comments

  1. Jinni
    Sep 02, 2012 @ 12:55:25

    And this has been my problem with e-books. I didn’t feel that it was true ownership, but more of a licensing fee. It is an expensive fee. I think the corporate idea is to move away from ownership to having you license, lease, or rent content so that you have to continually pay for the ‘privilege’ of entertainment.

    ReplyReply

  2. Moriah Jovan
    Sep 02, 2012 @ 13:16:56

    I love streaming video off Amazon. I’ve “bought” episodes of things I’ve missed on regular TV. I even bought two seasons of HOARDERS, but that was 28 hours of entertainment. But mostly I rent movies to watch like I would if I’d gone to a video store.

    Yesterday I was cleaning out VHS tapes and my son wanted to watch THE FOX & THE HOUND. We don’t have a VHS player anymore, so I went to Amazon and there was an option to buy, but no option to rent. My son started to whine about it and I said, “I am not paying that much money for something I can’t download onto my computer.”

    Maybe it’s okay for people with more money than I and I’m probably in the minority (I always am), but I’m not doing that. I have to be able to store, strip, rip, and burn. THEN it’s mine.

    ReplyReply

  3. library addict
    Sep 02, 2012 @ 13:18:54

    Anything that is perceived as singe use or limited use will automatically be lower in value in a consumer’s eyes than property that a consumer has the right to possess exclusively against all others.

    This.

    I don’t want it to be a case of everyone having to access this cloud or that cloud in order to be able to read a digial book or watch a movie/tv program. That’s one of the reasons I still buy my fave authors in print and actual DVD sets of the series I want to watch or rewatch. I like knowing I own them. But when it comes to books, I also love reading on my Sony and end up buying many books in both formats. Which I know is silly since it limits the number of books I get on my limited budget, but I want the convenience of the digital book, too.

    And I know I am in the minority, but I dislike watching TV/movies on my computer. I realize newer TVs have the ability to stream things built in, but I have an old TV that works well so I cannot justify getting rid of it just to have the latest gizmo. So in the meantime, I actually watch TV only on my TV.

    ReplyReply

  4. sao
    Sep 02, 2012 @ 13:29:55

    In the past, there were used book and record stores, church and garage sales that allowed poor students to acquire books and records at half or lower of the cover price. With the move to digital, those outlets are gone. And what helped create tiers of value is that used books and records looked used, while a digital copy will either be as good as new or, if corrupted on in an obsolete format, completely unusable.

    So, it seems obvious to me that there’s pressure on prices from people who have traditionally not been spending full price for the music or books they consume.

    I think there’s plenty of opportunity for books to be published at far lower prices than has been traditional, but I don’t think the current publishers are going to survive that transition. The fat is going to come out of the middlemen between the author and reader and that’s where publishers sit.

    ReplyReply

  5. joanne
    Sep 02, 2012 @ 14:26:12

    Ah well, I never did think that my son would be deliriously happy with his inheritance of 2000 mystery/romance ebooks – so I’ll just take them & my Kindle & my cloud content with me when I go.

    Out of the seven books I pre-ordered for September all but one (an antho) was of the dead tree variety. My keepers will always be in paper form as long as they are available.

    If I’m understanding the excerpt from the Mike Cane piece I would say that I wouldn’t mind paying a yearly fee for ongoing, never over, access to content. It would be like supporting my local library? Or not? I’m more confused then publishers and authors should want their buyers to be.

    ReplyReply

  6. Phoebe Kitanidis
    Sep 02, 2012 @ 14:48:11

    This is a good discussion that’s really making me think, and you raise excellent concerns, but there is a piece missing from the discussion of value. The convenience of instant access, combined with never having to worry about disposal, has lead me to pay for and enjoy a wide variety of digital entertainments, regret-free. I never would have paid for these things if I thought I’d have make room for them in my apartment for the rest of my life or else sell them, in my spare time, to be rid of them. (Or saddle my descendents with them.) Another way to say this is, you’re right that people will pay more dollars for an object they get to keep, but how much of what we experience do we truly want to hold onto forever? How much more open to new experience might we become if the cost (in all senses) is lower?

    ReplyReply

  7. Estara
    Sep 02, 2012 @ 15:05:18

    @Moriah Jovan:

    I have to be able to store, strip, rip, and burn. THEN it’s mine.

    Me, too. So I do. If I should be persecuted for that eventually (depending which way the legality of drm-freeing content you bought for yourself is trending), well I’ll probably start rereading the hundreds of books I own more often.

    ReplyReply

  8. becca
    Sep 02, 2012 @ 15:55:50

    I don’t think any of my descendents will care one way or another about my collection of ebooks, (although I’ve told my husband that my Patricia Verianp books have value and not to just throw them away). But I periodically go through bouts of re-reading, and I’d hate to have to pay an access fee to re-read my 80-zillion In Death books every few years, or all my Jayne Ann Krentz books.

    The truth of leasing is that, over time, you spend a lot more money in the lease costs than you would if you just bought it out-right. (I’ve heard Microsoft is looking at a subscription deal for Win8, which could get me to go Linux.)

    So yeah, if the button I push says “buy now”, I strip and back up.

    ReplyReply

  9. DM
    Sep 02, 2012 @ 16:40:49

    “Anything that is perceived as singe use or limited use will automatically be lower in value in a consumer’s eyes than property that a consumer has the right to possess exclusively against all others.”

    Is this always true with entertainment? I pay $14 to see a move in a theater, but can often purchase the same DVD for less. And while I can buy mass market paperbacks for a discount in a box store, often at $6 each, I frequently choose to purchase them for $8 as ebooks and put them on my iPad for the convenience factor. On my Ipad, I can read them anywhere–even in the dark–and I can put as many books on it as I want and it won’t weigh any more or add bulk to my bag or take up space in my apartment.

    ReplyReply

  10. Courtney Milan
    Sep 02, 2012 @ 21:57:24

    I think there’s a decent chance that I own at least some of the media that I’ve purchased online–for instance, anything I buy through Samhain directly.

    (Note: this is not legal advice. I did this test maybe six months ago; this is my description of my own process. Also, I identify at least one open legal question below. So don’t go reselling your Samhain books and come crying to me when someone sues you.)

    I’ve gone through the Samhain website, and, starting from creating a new user ID through the purchase, I was never told that I was getting a license, never presented with license terms–not until I opened up the book, and was told on the page that I couldn’t resell the book. Under the 9th Circuit’s admittedly vague doctrine, this isn’t a valid license that restricts first sale.

    In UMG v. Augusto, the following text printed on a promotional CD was found not to constitute a license, but to accompany a transfer of ownership where the right of first sale attaches.

    This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.

    The actual statement on the Samhain books is this:

    eBooks are not transferable.
    They cannot be sold, shared or given away as it is an infringement on the copyright of this work.

    What the right of first sale means for a digital copy, I do not know–that’s still an open question. But going through the process as a purchaser of a book on their website, I was never asked nor shown a license, nor can I find license text on their website as it pertains to ebook purchases. Asserting that it is a license without finding any place wherein the consumer accepts such a license is a bit of a stretch. And the fact that Samhain allows you to buy multiple copies of its ebooks suggests that they allow ebooks to be given away–if the license is personal to you, there would never be a point in buying a second one.

    (Amazon, in fact, doesn’t allow you to buy the same book twice–not unless you go and expunge it from your library.)

    This is a point that can be argued back and forth, and I’ll readily admit that it’s not cut and dry. But I do think that some of the stuff I’ve bought directly from smaller publishers doesn’t meet the requirements of it being a “license,” and instead constitutes a “sale.”

    It would be completely awesome for someone who loves litigation and has a ton of resources to set up a resell clearing house to test these boundaries. And by “awesome” I mean “it would satisfy a deep, abiding curiosity on my part, and I’d love to pop the popcorn and read the briefs” and not “wow, the world would be a better place if someone would just do this.”

    ReplyReply

  11. Jinni
    Sep 02, 2012 @ 22:48:51

    @Courtney Milan: Oh, I want that too. Butter on my popcorn, please.

    ReplyReply

  12. Ebook and Publishing Industry News (Sep 1st-2nd, 2012) | @ebookmakr blog
    Sep 02, 2012 @ 23:24:54

    [...] Jane Litte of Dear Author on copy-right in the digital age: “Ownership in the Digital Age, Part 1“ [...]

  13. SAO
    Sep 03, 2012 @ 01:43:36

    I bought a Tina Turner CD in Bulgaria when I was living there. When I got home, I saw the small print which said I was only allowed to have or play it in the country of Bulgaria. Needless to say, I did not give it away when I moved.

    I think the effect of over restrictive redefinitions of sales terms is to make most people decide what is ethical and what is piracy, since the actual licenses are non-negotiable and often don’t fit with our ideas of what is fair. The conclusions people come up vary tremendously.

    ReplyReply

  14. Ownership in the Digital Age, Part 1 | Pobre Gutenberg | Scoop.it
    Sep 03, 2012 @ 02:23:35

    [...] "John August, a scriptwriter and Grammy nominated lyricist, contemplates a future in which there is no ownership, only access to streams of entertainment. Jeremy Dylan, a writer/producer out of Australia, laments this “dystopian” future and says it is the result of a devaluation of entertainment media"  [...]

  15. Vikarti Anatra
    Sep 03, 2012 @ 04:34:14

    I usually buy ebooks in drm-free formats just because of this issue.
    With one rather big retailer as exception, where I just remove drm as soon as I have file.and just store it locally in case issues arise. ( this retailer provide additional services for ebooks, which I like and use). I think it’s fair. When I bought ebook, I press buy and not rent button ( don’nt point me to tens of pages somebody think I agreed to)

    ReplyReply

  16. Castiron
    Sep 03, 2012 @ 18:06:24

    Other places this may come up: When my parents bought books for me when I was a kid, those books became mine. Once I moved out as an adult, I was able to take the ones I loved with me.

    What if I buy my kids ebooks? Until they reach an age where they can legally have an account of their own at a vendor, I have to buy the books on my account. If it’s a license rather than a purchase, I can’t just give the book to the kid who liked it the most (even if I don’t like the book myself and don’t want to keep it on my own account); I have to buy another copy.

    What about the cases where a couple divorces? The print books and the DVDs they can argue over and distribute as they see fit, but if all their e-media purchases were made on one person’s account, the other person will have to rebuy everything, even the titles that the purchasing spouse doesn’t want and only bought because the other person liked them.

    And yes, the heirs are definitely an issue. Sure, my husband may not be interested in the ebooks I’ve purchased, but what if I purchase e-versions of the movies we both love, and then I die before him? Why should he lose access to these movies just because the account was in my name (especially when there’s no way to a couple to set up a joint e-media account)?

    ReplyReply

  17. Kaetrin
    Sep 04, 2012 @ 00:26:29

    I’m with Estara on this.

    ReplyReply

  18. V. Vega
    Sep 04, 2012 @ 01:42:21

    Yes, we seem to be moving out of the print media age. Which means that the rules of print media won’t necessarily transfer to digital media just because that would be convenient or more fair or whatever the current argument is.

    Buying a digital copy is obviously different than renting a digital copy. If you pressed “buy” rather than “rent,” by all means strip, rip and burn. But please don’t pretend that selling digital files is the same thing as selling a physical object. It isn’t.

    This whole issue is a mess right now specifically because those of us from the print media age are trying to impose print media standards onto the digital media age while those of us that are artists are imagining a day when making a buck from one’s creativity is truly impossible (rather than just unlikely) due to all media turning free-for-all once it becomes digital.

    If you disagree with what’s going on in any way, from any side, please make it known. The rules are being written now and what’s decided can impact the future of media for a long time.

    As an aside: @Vikarti Anatra When you press the “buy” button (or create an account, depending on the site), you agree to a list of terms and conditions. If you don’t agree with those terms philosophically, fine. Your ethics are none of my concern.

    Just be aware that not reading a contract you legally agreed to (which you did when you checked the “I have read and agree to the terms” box as part of the sale) doesn’t protect you in any way from the terms of that contract, if the other party wants to hold you to it. Which is why kids these days (the ones that understand the law, anyway) usually don’t make a habit of bragging about their illegal downloading prowess in mixed company.

    ReplyReply

  19. Kaetrin
    Sep 04, 2012 @ 02:33:08

    @V. Vega: I’m not illegally downloading – I’m purchasing a book. If I choose to strip the DRM so that I can read the book I purchased on multiple devices, that is not at all the same as pirating a book from a torrent site. Or did I misunderstand your last comment?

    ReplyReply

  20. Stumbling Over Chaos :: Leaves’ll be fallin’ when linkity comes callin’
    Sep 07, 2012 @ 10:31:00

    [...] Dear Author with part one of “Ownership in the Digital Age”. [...]

  21. Ownership in a Digital Society, Part 2
    Sep 09, 2012 @ 04:01:12

    [...] a day after I posted part one of this two part series, news broke that Bruce Willis was planning to sue Apple over the right to [...]

Leave a Reply

Notify me of followup comments via e-mail. You can also subscribe without commenting.

%d bloggers like this: