Are ‘second-hand e-books’ possible?

usedbooks Nick Harkaway has posted on the Bookseller’s “FuturEBooks” blog wondering about the possibility of selling “second-hand e-books”. He points out (as I did in this TeleRead post on the idea) that, since there is no physical artifact to depreciate, an e-book couldn’t really be considered “used”, so either people would pass on the e-book for exactly the same price as they paid for it or else they’d drive down the value of the book by selling it at a discount.

Harkaway then proposes the ideas of “returning” an e-book to the seller in return for store credit to apply against future e-book purchases, or of letting e-book buyers keep but also “resell” e-books to others. Neither of these ideas would really fly, however, given how easy it would be to game the system.

All it would take would be cracking the DRM to be able to keep a copy of the e-book you “return” and hence have your cake and eat it too. And why would a publisher want to let a reader “resell” one of its titles when it could make more money by having the reader pass on a referral link? (Not to mention that there would need to be some mechanism for authors and publishers getting royalties from resales.)

One of the comments below Harkaway’s editorial points out that, in the US, the First Sale Doctrine only applies to IP that is attached to physical objects, such as paper books. (See also this TeleRead post.) Furthermore, nobody on the producers’ side of the market would want to let a used market become established.

Legality aside since there is no difference between a "used" eBook and a "new" eBook the establishment of a secondary eBook market has the potential to significantly harm publisher’s profitability in the eBook market by devaluing the perceived value of the eBook and driving down retail prices at the same time alienating our authors by denying them royalties from the sale of their work. No publisher or author would want a used market to undercut the full retail price of their work. Every publisher and retailer will fight it tooth and nail.

Another commenter wonders whether a DRM framework could be established to allow a “returns” system. Certainly it could—as I mentioned last month, an IEEE working group is working on that very idea. The problem is that, as I’ve said, all it would take is cracking the DRM and copying the file to defeat the goal of reliably removing the work from the user’s hard drive if the user gives up his rights to that work. (This is also why e-book lending libraries equate to free e-books for people who know how to crack DRM.)

So far, just about every e-book DRM format that anyone has cared enough about to want to crack has fallen, and there’s no reason to expect future efforts to be any more secure when the vulnerability is built right into the nature of the system.

It might simply be best to accept that there will always be some things paper books can do that e-books cannot, and adjust the pricing on e-books to compensate.

41 Comments on Are ‘second-hand e-books’ possible?

  1. DRM is dead. The sooner Publishers wake up to this the better. It’s a pathetic and doomed attempt to control the uncontrollable. As far as second hand eBooks goes I just find the whole attempt to discuss it too funny for words.
    The whole concept of owning, lending, borrowing and returning is now dead. Yes DEAD. It just makes no sense whatsoever in this new world. So what gives ? what gives is that a whole new model needs to be conceived of.
    The important factor for publishers to keep their eyeballs on is the price point. It is the price point that controls everything.
    In a future where anyone can copy anything and give it to someone (note to any publishers ready – this is how it is, whether you like it or not), the only solution to persuading people to buy new, as it were, is the price point.
    Sell the book (just like the mp3) at the right price and the customer is instinctively happy to buy ‘his own copy’.
    In the short term this might be conceived of as selling less copies, but I suspect not. All those who previously bought and enjoyed second hand books, as well as those who borrowed books from friends and family, will now be potential customers and in my view the numbers will hold up.
    The key thing here is for the Publishers to get their heads around a new model of the whole pattern of customer behaviour and not cling to concepts that are now dead.
    An additional note. As I have commented many many many times, though no one seems to pick up on it, the concept of ‘added value’ is one that Publishers need to embrace. If an ebook is made up solely of a file of text and that file consists solely of the contents of the piece of writing in question, then it’s attractiveness is only of a very narrow specific kind. If additional benefits come with the purchase, especially benefits that are less easily and satisfactorily transferred to a third party, then a customer is far more motivated to buy their own copy.
    Think back to Albums and their great artwork and lyrics. The decision of the Music industry to abandon this and give people nothing else except the CD was part of their demise.
    If I were in Publishing I would be dedicating a development group to this concept of ‘added value’. I can think of a number of very interesting options they could look into.

  2. A second-hand market in ebooks makes no more sense than a second-hand market in mp3s. This is bad news for used book stores, but technical tweaking of DRM systems isn’t going to save them.

  3. Thanks for arguing :)

    A few responses:

    I’m definitely not making a case for DRM here. I knew DRM was a losing proposition before I came to the book trade, and I’ve said so frequently since. (Quite often sending people here to read about why….)

    It’s true that these ideas would rely on it; it’s therefore unlikely that they’re feasible. On the other hand, whereas it’s easy to argue that unsanctioned copying is not theft, gaming a system like this would be straightforward fraud; would that not make a difference?

    I don’t agree that these ideas must necessarily devalue the book and the ebook; one is basically rental and the other is becoming a reseller like an Amazon Associate and getting paid in discounts – the perceptual bridge is pretty clear. (And if publishers are really worried about falling value, it’s not online they need to look at, it’s deep discounting for supermarkets and bulk sellers).

    That being the case, I’m not really sure that discussions of first sale really apply, but legal issues, Heaven knows, are for lawyers.

    Added value is quite clearly the way to go – which is why I thought this discussion was worth having. Granted, this doesn’t add value to the individual ebook, but it does add usability and flexibility to the back end, the owning experience, and that’s just as important. My gig at FutureBook (call it editorial if you like, but basically they emailed and said: “hey, you, we’ve got a swirly logo and a big trade audience, wanna talk about stuff?”) is basically to keep nudging the industry to do more interesting things. It feels to me as if the industry is finally waking up to digital. We’ll see.

    Lastly: I don’t think I’ve read your post on 2nd hand ebooks – I’m about to click through and see – but if you feel I have, and accidentally replicated any of it, let me apologise without reservation. The post was generated pretty spontaneously off the back of a conversation on Twitter, and I took two minutes to brainstorm and went for it because it was obviously interesting. It is far from impossible that I had the previous discussions of the same ideas kicking around in my noggin and didn’t realise.

    Anyway – all the best for Monday morning –

    NH

  4. Nick: There’s nothing you need to apologize for. I wasn’t suggesting anything, just providing a convenient back-link for people to read more about the issue (and, coincidentally, spend more time on the TeleRead site :)). It’s not as if the insight isn’t terribly obvious.

    As to whether the ideas “devalue” the book or not, something publishers sometimes don’t seem to understand (see this morning’s piece about pricing) is that they don’t get to decide what the “value” of their book is. Consumers are the ones who set the value; publishers only get to set the price. If they set the price higher than the consumer’s value, they don’t sell as many e-books.

    And right now, a lot of consumers are irritated by the publishers’ methods of pricing.

    “Added value” is great, but the publishers need to be sure that the “value” they’re adding is actually going to be valuable to the consumer. Right now there seems to be kind of a fundamental disconnect between what publishers “value” and what consumers do.

  5. The Bat says: Maybe in the future when e-readers have fallen to a nominal price…or folk want the latest all-singing-all dancing new upgrade e-reader…we may see some old-edition 2nd-hand e-readers hitting the market with any unwanted e-books left on board.

  6. Thanks for linking to my article on the legal issues of “used” ebooks and why “First Sale Doctrine” will never apply to ebooks.

    Enhanced ebooks sound like a great idea for nonfiction, but it’s extremely problematic for fiction. Beyond the problem of how you can enhance a novel without spending a small fortune when the return will be far less than a small fortune, there’s now the very real possibility that by enhancing a novel, the author and publisher will destroy any chance of selling the audio, media, and film rights to the novel. These rights are often of more value than the digital rights.

    For more info. on the dangers of enhanced books and other rights, I suggest this blog.

    http://pubrants.blogspot.com/2010/05/how-enhanced-ebooks-will-cause-havoc.html

  7. Good to hear :)

    Your point about price and value is well taken. By way of response…

    It seems to me that the process of assigning value is not pure, it’s influenced by rhetoric and perception as much as by the assessment of a good itself. I’m very nervous of arguments which assert the market will assign a ‘right price’ and suppliers must match it or fail. Market perceptions can vary wildly over time and are not rational – Dan Ariely’s “Predictably Irrational” gives the lovely example of the price of black pearls, which had almost no value until they were positioned as ridiculously expensive, whereupon they became very valuable. (Actually, one of the things I think we have to learn to do as human beings in this period in history is recognise when a product or service represents buy-in to a bad situation – as with the housing crisis or buying energy from a dirty supplier.)

    So while I agree that some ebooks are ludicrously priced, I think publishers will move increasingly towards more recognisable prices as the market is better understood – and indeed, as it is created. Many of the present anomalous prices are about fear; fear of destroying the paper market, fear of piracy, fear of getting it wrong. And publishers are not wrong to be cautious; this is a situation in which a lot of money will be made or lost, and not all houses will necessarily survive. Andrew Wylie’s recent decision to take on paper publishing over ebooks is fascinating to watch – though I’m quite glad not to be in the front line of that one – but in the long term I don’t see how a major publisher can ever allow ebook rights to be separate from paper, unless the entire ebook market turns out to be a damp squib – or unless it evolves so far that the ebook publisher ends up carrying the full costs of editing and publicity, something I suspect would change the posture of electronic publishers regarding price…

    So when I say that publishers are concerned about devaluing, I suppose what I mean is that they see a market which is created by perception, and specifically by Amazon’s aggressive prices early on. They feel – not without reason – that current consumer perceptions of ebook pricing are based on heavy discounting and cross-subsidies in an attempt to capture a majority of market share; the loss-leader has become the anchor price, and that’s not sustainable. (Or, if it is, it will require such a major restructuring of the industry as to amount to the same thing from a conventional publisher’s perspective.)

    Now, there’s a moment coming when someone will break ranks and try to see whether a mainstream ebook at two pounds or two dollars or whatever sells ten times as many copies. (My guess: some will, some won’t, it’ll depend on the specific title). If volume really can make up for price, we’ll see some interesting shifts, and the ebook may end up replacing the paperback – or we may end up with a strange mixed market, or something completely weird may happen.

    It’s all to play for, and for my money the vital thing (alarmingly and oddly my spellcheck wants that to say ‘coital’… Go figure…) is to keep throwing new ideas at the wall and see which ones stick… Because everyone talks about the market emerging or maturing, but what’s really happening here is that it’s being invented, and what it needs above all right now is to find the things people want which they haven’t yet thought of; the snowboards and the parabolic skis of ebooks; the rollerblades, the peanut butter and jelly sandwiches, the chocolate-coated grasshoppers, the decision to give away packing machines and sell Tetrapak supplies… Things which until you try them sound nuts.

    So… Why would anyone ever want DRM? If it meant that they could finance their reading habit by selling on. Probably never happen. Probably, to turn Bohr on his head, it’s not ridiculous enough to work. But something will be.

    Anyway – I’m supposed to be writing a novel…

    NH

  8. This is not really a new issue: much of the stock in most modern second-hand bookstores is physically indistinguishable from new books, and nearly all of it provides an identical reading experience to new books. What is different is that although the second-hand store usually has a much wider range of books, the books don’t have a novelty value. (Some second-hand bookstores are still very hard to search, but most of them have learnt by now that they can charge higher prices if the books people want are easy to find there.) And anyone with a digital camera or scanner can now sell a paper book and keep a copy.

    Where am I going with all this? Basically, saying that the price of second-hand eBooks will depend on many other factors in addition to the price of the original: how easy it is to find, how new it is, how rare it is, how easy it is to copy, and the value it has to the current owner, among others.

  9. Jon, since it is illegal to sell or post a used ebook in copyright online, the question is moot.

    As to its expense, if you are caught selling ebooks without the copyright owner’s permission, it can cost you up to $150,000 per upload in fines as well as lawyer expenses. That’s considerably more than you’d ever make is sales.

  10. IANAL, but I gather this is a legal grey area and not necessarily true in all jurisdictions. In any event, given time, the law will change to reflect the desires of the people.

  11. Jon, if you are talking about my comment, you definitely aren’t a lawyer, nor have you bothered to study copyright.

    There is no gray area regarding copyright and the sale of used ebooks, nor will it change as long as copyright exists.

    I’m pasting my article on “First Sale Doctrine” and ebooks below. This is about American copyright, but since you used the spelling “grey,” I assume you aren’t American, but this copyright information agrees with all international copyright agreements so it is valid for you, too.

    This is a very general overview for readers and authors, not an exhaustive legal discussion on the subject. If you want an exhaustive overview complete with all the legalese and laws, I suggest the articles I have links to at the bottom.

    The First Sale Doctrine Defined:

    “First Sale Doctrine refers to the right of a buyer of a material object in which a copyrighted work is embodied to resell or transfer the object itself. Ownership of copyright is distinct from ownership of the material object. Section 109 of the Copyright Act permits the owner of a particular copy or phonorecord lawfully made under the Copyright Law to sell or otherwise dispose of possession of that copy or phonorecord without the authority of the copyright owner.

    Commonly referred to as the “first sale doctrine,” this provision permits such activities as the sale of used books. The first sale doctrine is subject to limitations that permit a copyright owner to prevent the unauthorized commercial rental of computer programs and sound recordings.” US Government Publication 04-8copyright. http://www.cendi.gov/publications/04-8copyright.html

    One of the ongoing discussions about copyrighted ebooks is whether the “first sale doctrine” can be applied to a digital book. Can a person sell a used copyrighted ebook?

    Right now, the US Government as well as most other governments say no. (see iTunes White Paper link below)

    Look at the US Government definition above to see one of the reasons why. First sale doctrine only applies to a “material object” like a paper book. A copyrighted digital book isn’t an object, it’s content, and content can’t be copied and, therefore, can’t be resold.

    Also, copyrighted digital content like music, computer software, and ebooks aren’t technically sold, they are leased according to the licensing terms a person agrees to when they put their money down for the song, etc.

    At ebook distributor sites like Fictionwise.com, the terminology “sell” and “buy” are used, but in their FAQs, they say you are only leasing an ebook, not buying the content, so you can’t resell it, etc.

    The difference between “lease” and “buy” is also used as a justification of why an ebook can’t be resold.

    All those who say that “first sale doctrine” applies to copyrighted ebooks are wrong from a legal perspective.

    Only lawsuits, the courts, or Congress can change this, but most of the money is on the side of the copyright leasers — the publishers, music and movie companies, etc., so I doubt “first sale doctrine” will ever apply to copyrighted ebooks.

    RECOMMENDED RESOURCES

    Amazon Kindle and Sony Reader Locked Up: Why Your Books Are No Longer Yours, Columbia Science and Technology Law Review.

    http://www.stlr.org/2008/03/amazon-kindle-and-sony-reader-locked-up-why-your-books-are-no-longer-yours/

    Explores the various issues of sale versus license, first sale doctrine, etc.

    iTunes White Paper

    http://cyber.law.harvard.edu/media/uploads/81/iTunesWhitePaper0604.pdf

    The last sections explain various governments’ stances on first sale doctrine issues.

    US Government Publication 04-8copyright.

    http://www.cendi.gov/publications/04-8copyright.html

    Copyright, as well as “first sale” and “fair use,” defined and explained.

  12. Marilynn –

    Forgive me, but if I understand, your certainty that second hand ebooks are impossible is based on 1) the fact that First Sale does not apply because ebooks are not physical and 2) the fact that ebooks are not sold, but leased under and agreement which precludes further distribution. It’s this second part which I think isn’t solid; all that is required to create a market is for sellers to decide it is in their interest to allow it and change their terms of sale (or, technically, lease). That’s unlikely so long as there’s no commecial advantage to doing so – but my original post was a rather whimsical attempt to see where there might be such an interest.

    To be strictly accurate, of course, what I’m talking about isn’t a second hand market, it’s an attempt to create something with similar advantages for the consumer – and somewhat to twist the tails of publishers to get them to consider more interesting models than they normally would.

    NH

  13. Nick, in a standard publishing contract, the author leases the copyright to the publisher. The publisher and the distributor have no right to allow resale since they don’t own the copyright.

    No author in her right mind would allow resale of an ebook because it’s hard enough to stop the perpetual resale of her book on places like eBay and the pirate sites, and she’d have the burden of proof that the ebook wasn’t a resale.

    Frankly, there is no real reason for resale of ebooks. In most cases, ebooks are cheaper than paper, and if it isn’t, you shouldn’t buy it.

    So many libraries are legally offering ebooks now you can also read the overpriced “famous” author, conglomerate publisher books for free, too.

    You have to remember that publishing is a business. If the money doesn’t go in, the books don’t come out. Publishing also has a very low profit margin so resale or pirating of ebooks is a dangerous financial hemorrhage

  14. Marilynn –

    As you no doubt realise given your understanding of these issues, what I’m talking about here does not actually amount to ebook resale. It mimics some of the aspects of paper resale which people have suggested to me that they want, but in no sense is the ebook actually being sold on. In fact, in that respect both of these ideas are an improvement from our perspective (I’m an author too) on the paper model, where we get no share of second hand sales. Both are mediated by the publisher or their agent, and both directly encourage additional purchases by offering payment in the form of discounting rather than ready cash. It has already been pointed out that the only practical way to verify that a ‘returned’ book was actually not still on the consumer’s system would be to revoke access permissions to an encrypted file – with the interesting consequence that DRM would have a direct upside for the consumer for the first time. (Hence the charge levelled above that I’m making an attempt to preserve DRM.)

    In case it’s not immediately obvious that the second model, in which individuals become resellers, remains firmly under the publisher’s control, consider: I stipulated that payment would take the form of discounts on future purchases. That would only be possible if the publisher was party to every sale. I had envisaged a situation where what was actually happening was that the vendor would make a bridge between new customer and publisher, with money going to the publisher for the new sale and the vendor getting a credit with them. There is the possibility of a third model where each individual effectively becomes their own mini online retailer, but it seems to me frankly too cumbersome to be of interest to consumers and too alarming to be appealing to publishers.

    You are, of course, quite right to say that it is not in our interest to allow full second hand sales – that point is made in the second paragraph of my original post. It is however absolutely in our interest to improve the experience of owning legitimately downloaded ebooks. If this is the kind of thing people want to be able to do and we can facilitate it without wrecking our own industry, we must do so wholeheartedly.

    I am acutely aware that publishing is a business and that margins are tight – although exactly how tight in this arena is a very interesting question. Last week, all the major houses (including the one with which I am presently negotiating a deal) were determined that 20-25% was the absolute ceiling on ebook royalties. This week, Penguin aren’t so sure, and it seems likely that this red line will be crossed in the next few months. Beyond that, it’s unclear whether electronic sales replace or come in addition to paper sales; it’s uncertain whether lower ebook prices will drive higher volume sales and if they do whether the lower digital price will also diminish the paper market or drive down paper prices, or whether people (consumers and publishers) will treat the two as different products… and so on. And that’s before you factor in the arrival of Google Editions and the possibility (I hope it doesn’t happen) that Judge Chin will approve the GBS/ASA. In other words… it’s a rollercoaster.

    With that in mind, the two models of “resale” I’ve proposed are neither of them a threat to publishers’ revenues unless you regard all electronic book sales in that way, and indeed raise the possibility of additional sales. I stayed inside the comfort zone for publishers – and for authors – and also, probably, within the framework of the standard contracts you’re talking about; the changes are in the electronic shopfront, and would probably make use of an in-app sales system such as the one Apple has.

    In other words, I don’t believe I’m contributing to the problem!

    NH

  15. I still don’t see the value of what you purpose, and I doubt it would ever happen because of the low price of ebooks and their availability as library ebooks.

    How cheap do people want to be with ebooks? It’s rather insulting that readers whine about the high price of an ebook which offers hours of entertainment when they pay much more for a cup of fancy coffee which only lasts a few minutes or a movie which lasts a few hours.

    I don’t know about you, but I spend many months writing and editing a book that will go on to win major awards and great reviews, then more months finding the right publisher. After that, I spend lots of money and many months promoting it.

    After all that, I expect to be paid a few bucks for my effort in giving a reader a great deal of pleasure. I also get pretty darn sick of people devaluing what I do and the value of what I offer.

  16. Firstly the truth of the matter is that it doesn’t matter a jot what the law is. What matters is what happens in real life and how the law and the industry will catch up with it. No one has provided any evidence whatsoever that the very concept of a 2nd hand eBook is a valid one. The comments on law and copyright is also unimportant because eBooks can be so eaily copied and recopied and recopied again without any authorities knowing about it able to intercede. This is the truth of the matter. I can download a torrent of the complete works of Fred Forsythe in a few minutes if I find the price of his eBooks too objectionable. No one will ever be able to remove that option.

    Chris is so right when he says:

    Consumers are the ones who set the value; publishers only get to set the price. If they set the price higher than the consumer’s value, they don’t sell as many e-books.

    I sympathise with Marilynn, on a personal level, in her frustration at how customers value some writing. But I’m afraid her work is only of value if and when others value it by paying for it. Otherwise it’s worth zip.
    Readers are upset at the price of eBooks because they are well aware of the savings being made by Publishers in not having to print and distribute hard copy Books. Imho readers don’t expect 2 dollar eBooks. But I do believe they expect 5 dollar and 7 dollar eBooks and choke on >10 dollar eBooks.

  17. Nick, you seem to be making the same mistake as publishers are making now (and the music business made before them)–you’re saying “this is how the industry looks right now, so we should force ebooks to look exactly like everything else in that industry, because how the industry looks right now is the only possible way it can look.”

    You say it yourself–secondhand sales are something that exists right now, therefore we must design a way to sell ebooks secondhand. I don’t suppose it occurs to you that secondhand sales exist because there’s no reasonable way to stop them? It’s not as though publishers want there to be a secondary market–they want everyone to go into Barnes & Noble and buy stuff new. But the degree of enforcement needed to stop secondary resale would be infeasibly large; First Sale Doctrine is like the statute of limitations on crimes; it’s the government’s way of saying “we’d spend more fixing this than it costs to leave it alone, now quit bothering us”.

    Suggesting that ebooks could be sold “secondhand” is like suggesting that we ought to be able to sell ripped movie tickets “secondhand”, so that people could see the later showing of the movie for a reduced price.

  18. Duck –

    The business of lending or reselling ebooks is a recurring theme in my conversations with people about what they want ebooks to do; if anyone is trying to force the new medium to be like the old one, it’s not me. This most recent post was sparked by a discussion on Twitter, but it crops up over and over. Since the notion of consumers selling to one another rather than simply recommending titles is the kind of thing which piques the interest of publishers, I thought it was worth bringing up. In reality, of course, there’s no such thing as used data. The point is to encourage the industry to see the possibilities of the medium to create new ways of doing business which might be profitable, something which until recently wasn’t really happening, and to try to give people what they want without the industry going into meltdown – because an industry in meltdown won’t provide content.

  19. Nick: I think Marilynn is probably right about the current state of copyright law. E-books aren’t print books, and all the efforts of people trying to make them like print books will probably come to naught—the law will say that if it looks, walks, and quacks like a duck, it’s a duck, even if you try to disguise it in a tuxedo, wig, and Groucho glasses.

    The law doesn’t make a distinction between data protected by DRM and just plain data, except insofar as it’s illegal to crack the DRM. Thus, it doesn’t make a distinction between e-books and e-books trying to pretend they’re paper books—they’re all e-books in the end. And anyone who institutes a system that would theoretically let “used” e-books be resold will be sued out of existence by publishers who have no interest whatsoever in letting such a system come into being.

    Look at what happened to Michael Robertson, who had a really good fair use argument for his MP3.com streams-you-music-you-can-prove-you-own service that the record labels (and courts) didn’t buy. He was trying to make the cloud act like a (perfectly legal) rip-and-listen MP3 player, but because the law didn’t regard his venture as what it was acting like but rather as what it was at root, he lost.

    A number of publishers and authors hate the used book trade now. Now that they see the light of a never-resellable format at the end of the tunnel, why would they want to turn it into an oncoming train of used e-books? (Boy, I’m really cranking out the metaphors today.)

    Just look at what the video game industry is doing with digital technology now. Many new games come with a single-use access code that locks down advanced features, like sharing music libraries between the different Rock Band games, or accessing DLC for Mass Effect 2, or playing multi-player for some recent sports game whose name I’ve forgotten.

    They’re trying to kill the used-game industry (and also piracy, but you’re fooling yourself if you don’t admit it’s the used-game stores they’re mainly after) by removing useful features from used games. You just know the publishing industry is eying them enviously and trying to figure out how they can adapt this kind of solution to their problem with used-book stores.

  20. Chris –

    Your example of Michael Robertson’s adventure makes my point for me about the legal situation; the law is not interested in appearances. For all that I introduced these ideas as ‘second hand ebooks’, part of the point is that neither of them actually is second hand selling. One is a basically a rental scheme with indefinite loan time for multiple books using a deposit system, and the other is a conventional ebook store with customer recommendations given the power to convert directly into sales, with the recommender being paid a referral fee in kind. In both cases the transaction which takes place is legally unremarkable. I’m quite sure Marilynn is right about second hand sales, and actually I suspect they’d be worse in terms of price depreciation than straightforward piracy.

    In other words, the Groucho glasses are on the other nose – I’m not dressing second hand sales as ordinary and hoping to get away with it, I’m dressing legal sales as second hand because – as I observed to Duck – people keep asking about them. My basic breakdown of second hand sales was that one was able to leverage future purchases by disposing of old books – so here are two ways of saving money which sort of mimic the experience of second hand without actually being second hand.

    From my perspective, this exercise is about working out what features will make the ebook ecosystem flourish. That’s something in the interest of publishers and purchasers alike. If we can arrive at a system which allows readers to get what they want and at the same time allows publishers to continue to make some money – not, as Marilynn points out, an unreasonable amount of money – they will not only not sue over it, they will implement it themselves.

  21. Oh, drat. I wrote an elegant reply here and now it’s vanished without hope of return…

    Briefly then: I think the Groucho glasses are on the other nose. What I’m proposing here is not a second hand sale which looks like a conventional one, but a legal, conventional sale which feels like a second hand one. My analysis of second hand selling of physical objects is that basically you leverage new purchases with sale of old ones. Both of these ideas allow that, but basically one is a library model based on the ‘returns’ system you mentioned, and the other is a conventional ebook sale where customer recommendations are transformed into a bridge to an actual sale in exchange for a referral fee. Note that in both cases, the ‘fee’ paid is paid in kind; it ties the consumer in to further purchases with the same supplier – the publisher. In other words, publishers will not only not sue, if this could be made to work they’d probably fight to make it happen.

    NH

  22. Actually, it was caught by our occasionally hair-trigger spam guard. (The occasional false positive we have to clear manually is a small price to pay for blocking out the literally thousands of spam comments we get every week.)

    What I don’t understand, then, is if you’re going to come up with a referral system, why bother to tie that to the referrer getting rid of his copy of the book? If you’re going to refer a book to a friend, why are you going to want to lose access to it yourself? It’s not as if that book takes up limited space in your house rather than virtually unlimited space on your hard drive.

    Fictionwise has a great referral system (or at least did before Agency Pricing. Not sure it’s still in effect now) where you can give the referree 10% off on the title you refer. And I think it gave the referrer some micropay credit if the referree ended up buying, too, though I could be misremembering. It did that without the referrer “selling” or losing access to his own copy.

    Why is it necessary to try to pretend the customer is “reselling” the book? It’s just going to make people who misunderstand angry.

  23. Chris –

    I’m not tying the referral system to getting rid of the book – that was option one, the returns system – you just give back the book (access to the book) and use the credit to buy more. I don’t fancy it myself, but I threw it out there because it was the simplest thing I could think of; not a wide second hand market, but at least a dealer-return.

    As to ‘pretending’ – again, I’m not. Apart from anything else, I’m not in a position to decide how the industry portrays a given option :)

    No, look: the discussion emerged from a question about second hand ebooks, so that was how I framed it. And as I say, it *is* about trying to provide a similar utility – getting money back out of the book system in order to be able to buy more books – to the one served by the paper second hand trade. (Assuming that I have correctly characterised the second hand trade in that way; if it’s just that people like creased books with old-fashioned covers and coffee stains, that’s something else.)

    There are lots of roadblocks to this kind of thing – the one no one has mentioned here is taxation – but all of those can be overcome if there’s a will. The point is to establish the culture of experimentation, the basic idea that digital is a vibrant and adaptable environment where there’s room for consumers to get what they want (I hate that word, consumer, but anyway) and publishers to get what they want. Because – and this is changing, at last, but when we were doing The Gone-Away World contracts in 2007 it was pretty clearly still the case – for a long time publishers have believed that either digital was never going to happen or if it did it would be hugely destructive. And when one party feels that way, no one gets a good deal.

  24. Copyright applies to original works fixed in a physical medium. If you distribute a copy to a purchaser then they can sell that copy – it stands to reason that since they would make no copy in the process of selling it that they can do so.

    If you argue that eBooks aren’t original works fixed in a physical medium (indeed that it is impossible for them to be copied) then copyright doesn’t apply to them – therefore the purchaser can break the ‘DRM’ of the reading device they have and manufacture copies of the works not protected by copyright.

    You can’t have it both ways. :-)

  25. @Crosbie: “If you argue that eBooks aren’t original works fixed in a physical medium (indeed that it is impossible for them to be copied) then copyright doesn’t apply to them…”

    I’d actually argue the inverse. They are original works, but they can no longer be fixed in a physical medium. It is impossible for them to be fixed, since data is now vastly mutable whether on paper or in bits-in-the-cloud. I have no idea what that implies legally, but practically, it means piracy is impossible to prevent, and therefore copyright must be concensual or it won’t work.

    Regards,
    Jack Tingle

  26. Copyright is inherently consensual, as are all property rights. Without that consensus, though, society is impossible. This is something that a lot of self-styled “copyfighters” don’t seem to understand.

  27. Property derives from privacy (exclusive physical possession, enclosure, occupation, etc.). Therefore intellectual works are naturally as much property as material works are, when private (physically enclosed, etc.).

    State granted monopolies on the other hand suspend the liberty of all in order to reserve it as the privilege of a few, e.g. the liberty to make/manufacture or speak/communicate things such as replicas or copies (of those things ‘protected’ by the monopoly).

    So, property goes back to the caveman, whereas monopoly requires holy/crown/state fiat and a submissive/obedient/consenting populace.

    You can expect to protect your natural exclusive right to your intellectual works in your possession, but frankly, if you expect to be able to distribute copies of your intellectual work to others AND expect them not to make/distribute further copies you’re expecting a considerable amount of consent.

    You might have been able to get away with it if reproduction technology was extremely massive and expensive, i.e. rare, bulky, immobile and so economically policed by the privileged.

    This is the difference between the 18th century and the 21st. Strangely, monopolists are stupefied that their monopolies are no longer being respected.

    Really, it should not be strange that people fail to recognise why they should bow down to Queen Anne’s edict of 1710 that the individual’s liberty to engage in cultural exchange should be suspended until such time as immortal publishing corporations have exhausted its value (over an indefinitely extended period exceeding any mortal lifespan).

    So, don’t worry DensityDuck, property rights aren’t consensual, they’re natural and easily enforceable. The thing that society has never needed are monopolies, and if they need the entire populace to surrender their cultural liberty those monopolies haven’t got a chance, however harshly you attempt to enforce them against a non-consenting society.

    The DRM ‘protected’ eBook represents a final fling of a snowball in hell, an amazing triumph of hope over adversity.

    However, all is not lost. The vendors of copies may disappear, but the producers of intellectual work will not. There remains a bright future for authors of novels and any other intellectual work. What there is no future for are vendors of copies at monopoly protected prices. If people want novels written they will pay for them to be written – handsomely. What people will not pay for are copies that they can make themselves for nothing.

  28. Crosbie, using “monopoly” to describe publishing is totally inaccurate as well as demonizing. Big publishing isn’t remotely a monopoly although most of the books found in the bookstore are by the big six conglomerates.

    There is also a robust independent publishing industry.

    A vast majority of the copyrighted material available is owned by individuals who are not wealthy, have no part in a monopolistic conspiracy against readers, and have everything to lose if a majority of readers stop respecting copyright.

    I’ve always believed that educating readers that not respecting copyright hurts them because a writer who isn’t paid for his work will stop writing and the publisher who doesn’t make a profit on the writer will stop printing those books.

    A very dear friend who has been quite successful with a NY publisher and whose books have been on all the bestseller lists has just been told her ongoing novella collections will be cancelled because her sales numbers have dropped dramatically while the pirate numbers have skyrocketed.

    On her website, blog, and Facebook account, a majority of the readers blithely admit they only read pirated editions and don’t believe they are hurting her and themselves. Boy, are they in for a rude awakening.

  29. Crosbie: You’re following the classic infant reasoning of “if I can’t touch it then it doesn’t exist”.

    But, y’know, put up your fence, put up your signs, claim legal enforcement…I can still walk on your land if I like. Maybe I need a bulldozer to take down the wall, but there is, ultimately, nothing stopping me walking on your land.

    Such a reductive view of property rights really boils down to “I own what I can hold”, which means that the only one who really has property rights is the biggest meanest monkey.

  30. DensityDuck, no, the individual’s natural power indicates their natural right. A government is empowered by ALL individuals to protect everyone’s natural rights equally. What a government is NOT empowered to do is to grant monopolies as favours to its wealthy industrialists and potentially seditious publishing cartels.

    I’m pointing out the difference between a natural right to intellectual property and the privilege of a reproduction monopoly. Monopolies cannot be enforced except with the power of an army to overcome the inclination of individuals to ignore that monopoly.

    This really is academic. You cannot rescue the monopoly of copyright by kidding yourself you’ve defeated my argument as to why the monopoly was doomed from the outset.

    Copyright is over. DRM is a wet paper bag.

    If you are a manufacturer of copies and want to know how to sell them at monopoly protected prices, when everyone is ignoring your 18th century monopoly, then I cannot help you except to suggest you find another business.

    However, if you’re a producer of intellectual work and want to know how to exchange it for the money of those who would commission it, then I CAN help you. And that’s because you do not need copyright for such an exchange. If you sell work to those who want it, instead of copies to those who can make their own, you’re selling the right thing – that which there remains a market for.

    The market for copies has ended.

  31. Crosbie, using “monopoly” to describe publishing is totally inaccurate as well as demonizing. Big publishing isn’t remotely a monopoly although most of the books found in the bookstore are by the big six conglomerates.

    Except that, technically, copyright is a monopoly. It’s the government granting a monopoly privilege to people, businesses, or other entities over the printing of certain works. Otherwise, anybody could reprint anything they got their hands on (and in fact did, in America, during the 19th century when we didn’t honor other nations’ copyrights).

    It’s not the sense most people mean when they talk about “monopolies” today, but still an entirely valid use of the term.

  32. “… the individual’s natural power indicatestheir natural right.”

    Which is to say, “biggest meanest monkey.”

    “I’m pointing out the difference between a natural right to intellectual property…”

    Yeah, but here’s the thing: there is no such thing as natural property rights.

    The only thing that “protects” your property, in the end, is the threat of legal sanction. As I said earlier, it doesn’t matter what kind of barriers you throw up around your property–I can circumvent those barriers. Now, you can claim that I’d be in serious trouble if I did so, and you’d be right–but there’s only two ways I’d be in trouble. One is if the biggest meanest monkey comes and kills me for, so to speak, climbing in his tree. The other is if I get arrested and go to jail; but with this latter, we’re getting into the non-natural consensual concept of “law”. We’ve decided that it’s wrong to climb in someone else’s tree; there’s no inherent characteristic of trees that makes it wrong to climb one.

    PS: Hey, have fun with that patronage system. I’m sure you’ll be pleased when the only creative works beyond street busking are commission pieces funded by religious organizations and megacorporations.

  33. DensityDuck, let’s put it this way: I have a hope in hell of locking my filing cabinet to keep your mitts off my manuscript, but if I give you a copy of my manuscript I have zero hope whatsoever of being able to prevent you making a copy of it.

    The manuscript in my filing cabinet is my property. The copy I give you is your property, but copyright says I can still stop you making copies of it even though it’s no longer in my filing cabinet. Now that’s magic.

    Obviously, copyright is revealing its 18th century origins in its assumption that you’d have to visit one of the few owners of a printing press in order to make a copy or two, and so there might be a hope of detecting this infringement.

    Due to economies of scale and geography patronage used to be the preserve of the wealthy few, but with the advent of the Internet millions of patrons (fans) can now commission (patronise) the artist to produce new works. Just as copyright is already ineffective, the adoption of what used to be called patronage is already happening. It now tends to be called crowdfunding. See Jill Sobule and many others for pioneering examples.

  34. “PS: Hey, have fun with that patronage system. I’m sure you’ll be pleased when the only creative works beyond street busking are commission pieces funded by religious organizations and megacorporations.”

    But we already have plenty of creative works. We have far more writing available, far more music, far more plays, far more films, far more radio shows than anyone could absorb in ten lifetimes. Why do we need more? Imposing copyright just so that new novels can be written is like charging for air just so that people can be paid for making more. We don’t need more. All we need is unfettered access to what’s already there.

  35. Jon said, “But we already have plenty of creative works. We have far more writing available, far more music, far more plays, far more films, far more radio shows than anyone could absorb in ten lifetimes. Why do we need more? Imposing copyright just so that new novels can be written is like charging for air just so that people can be paid for making more. We don’t need more. All we need is unfettered access to what’s already there.”

    As someone who has tried to interest college students in novels written twenty years ago, I wish you good luck with that. You would be eye-ball rolled to death from the public’s disdain.

    Your life expectancy would be much shortened, also, if people learned that they would not be able to read the next “insert favorite author or series here” because you and your friends decreed the end of copyright.

    Public domain at this moment is more than enough to keep you busy for the rest of your life. Dickens, alone, is a year’s worth of very good reading. (That man could write a mean story.) Throw in all the legal free stuff on the web, and you have two lifetimes of reading available.

    Getting rid of copyright has no real value to anyone, even you.

  36. Marilynn – “It’s rather insulting that readers whine about the high price of an ebook which offers hours of entertainment when they pay much more for a cup of fancy coffee which only lasts a few minutes or a movie which lasts a few hours.”

    And it’s rather insulting that you lump all readers together like that. My husband and I *don’t* pay for fancy coffee, because it’s ridiculously overpriced. We go see a movie in the theater maybe 3 times a year, for the same reason. And we don’t buy e-books that cost $13-15 (or more, thanks so much agency pricing model!) because we think that, too, is a ridiculous amount to pay for something we cannot return, resell or share with anyone we want. We don’t even own an e-reader – we use the free Kindle app and read on the Blackberry provided by his employer. Our disposable money goes to travel (hence the desire for e-books) but reading is still a high priority, and we will keep buying e-books, but only those in a reasonable price range.

    I second everything that Howard (7/28 @ 2:49) said. $5-7 is what we pay, because e-books are worth less to us than paperbacks due to the limitations given above. I know people who won’t even pay that much, because they feel there is little cost to the publisher in putting out an e-format when such was already used in their internal production of the hardcopy version. Luckily they, and we, have no trouble finding lots of e-book choices in our respective price ranges. Authors and publishers are getting our money. Just not the ones who price their products too high.

  37. Angie, I didn’t say “all readers” so there’s no need to be insulted, and for what it is worth, all my ebooks are under $7 and have no DRM if it can be avoided. The Kindle store has two of my books on sale for under $3 which is a darn good deal for a 130,000 word novel from a respected publisher.

    I am a writer and a part-time teacher so I understand poor.

  38. Angie –

    Pricing is absolutely the hardest thing to sort out right now, because it’s not clear what the market will look like in the lomger term – and because Amazon initially priced very aggressively in order to make the Kindle attractive even though the device itself was not cheap.

    On the one hand, there are obviously big savings in terms of paper and distribution (although physical costs make up a surprisingly small percentage of the cover price of a printed book). On the other hand there are costs associated with publicity and editing which don’t go away. If ebooks are going to be a big part of the market – and Jeff Bezos thinks they’ll be more important than paperbacks to Amazon in the next twelve months – then they can’t get a free ride. They have to carry their proportion of that cost.

    What isn’t yet clear is whether pricing an ebook low can reliably generate enough additional sales to make up the shortfall. If it can, then we’re all happy. If it doesn’t, then ebooks will get more expensive, and your perception of what they ought to cost is based on bad information (those deep digital discounts).

    Before you wonder whether I’m just defending my paycheque: I’ve spent quite a lot of the last couple of years arguing the other side of this with publishers. I have frequently made Howard’s argument, that we’re in competition with pirate downloads and therefore the product must be right and sold at the right price.

    I have to say, though, having found my book on any number of download sites, that it is upsetting. If you don’t want the book, you don’t have to buy it. I’m fine with that. Millions of people, every day, do not buy my book. But to tell me that because it’s more than you want to pay that makes it okay to take it for free? It’s not okay. It’s impossible to prevent and unpalatable to pursue, but it’s no more okay than littering or playing your music loud all night. It’s a minor annoyance which, if everyone does it, screws things up across the board. And yes, absolutely, litter can be compacted to make building materials and I might hear some music I didn’t know from your overloud stereo. When life gives you lemons, you make lemonade.

    It is still not okay.

  39. Nick, if you have a publisher, tell your editor about the sites with the pirated copies.

    You can also join the Yahoogroups AuthorsAgainstE-BookTheft to learn how to issue take down notices, etc. to have your books removed as well as links to the national and international copyright protective groups in charge of taking down the pirate sites.

  40. Marilynn –

    I generally choose not to do those things. Partly I don’t believe in them, partly my experience is that very little can be done. It really is like littering; it seems disproportionate to bring the force of law on someone’s head – especially as it seems that people who download a lot are also people who buy a lot. I believe the solution lies in creating a better product and a better market, making a non-abusive relationship between content owners/creators and consumers/readers. We need a social norm which includes a sense of the content ecosystem and its legitimate needs.

    I’m going to step away at this point, because I think we’ve come rather far from the original post, and I have other work to do, but thank you all for talking about this!

    NH

  41. Andrés Rojas // April 10, 2011 at 9:01 pm //

    It´s surprising that the discussion about this subject is almost inexistent.

    The secondhand market has always been an important part of the book trade, and suddenly it is at risk of disappearing in the digital enviroment, to the detriment of the readers. But it has not to be that way mandatorily.

    First, there’s a distinction that has to be made: digital “products”, digital books in this case, are no objects (physical nor “virtual”) but information “packages”, so they cannot be considered as “used” after being read, but they definitively can be considered as “second hand” products if transferred from user to user -just like a physical book that, even if sealed and not read, is sold or passed by the original buyer (costumer/potential reader) to another person.

    Now, a copy of an ebook is another thing. (The book is specifically propitious to copy, since virtuality is part of its nature. I can copy a novel by hand, word by word, and the result will be the same novel, no less, no more.I can copy a PDF book in RTF format, and the textuality at least will be the same, and the reading experience will be the same. Xerox copies are of common use since decades ago).

    Just like the music industry years ago, the editorial industry is suffering a panic attack that the shift to a digital enviroment entails. “Will the readers share their readings without benefit to us?” “will the writer become his own publisher without benefit to us?” Yes, of course, this is happening, and will continue to happen no matter what efforts are made by the industry to prevent it. People will copy cultural goods whenever is cheaper and faster and better copying them than buying it.

    Why, whitout the print, store and delivery costs, is an ebook almost equal in price than a physical book? Why, being technologically easier to share it is so difficult legally? Because, when in pannic, persons and companies act stupidly. They are mistaking the reader for an enemy, when he’s not. He´s a costumer (that is to say, a kind of partner), a friend, but not a silly one. He will go where he can find the best choice, the best buy, and if he can get the same for free, he will go for it. Because, as the song goes, “information want to be free”.

    The current regulations prevent the existence of second hand ebooks, not only by sale/purchase, but by loan or donation also. It is not forbidden (yet) but is, indeed, constrained. If a physical book can be read by an unlimited number of “users”, due to technical and legal (that are not technological or ethical) limitations, an ebook cannot. So, the mere idea of secondhand books is quashed by design.

    As a margin note: what about libaries (public, semi-public and private)? There are now experiments (limited in scope an reach) that, despite their shyness, demonstrates that a demand niche exists, more social that commercial.

    Books, always, have been read mainly when access is provided. What I mean is: 1) the purchase of a book, is only one -and never the principal- in many ways to “get” a book. And it will continue this way. and 2) just as the gutemberg press provoked at its time a social change that went far further that a simply “printing and reading” revolution, the digital publishing can, and will, and has already spark cultural shifts that will develop with or without the involvement of the editorial industry.

    Music and media industries has focused their efforts in prosecution and “re-education” of the public to “teach” them (by exemplary lessons) that sharing is a crime. But they´ll never succeed because the people know that it is a crime without victims (except, of course, of the copyright holders), and there is no real harm nor guilt in that.

    Editorial industry will do wrong following the steps of music and media industry (altought we all know they are part of the same conglomerates). Among other reasons, because it has few aggregate bussines opportunities: no live concerts, no merchandising, no franchises.

    The industry, in order to survive, has to adapt itself to the new realities, instead of trying to adapt the new realities to their interests. A new model of businnes is needed, and it has to include -technically and comercially- the possibility of re-circulation. Is the reader who has the power to invent it and demand it.

    Publishing companies can ride the wave or stay at the shore.

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