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Could Amazon create a used e-book market?

14 February 2013

From TUAW:

This Slashgear writeup about a newly awarded Amazon patent just caught our eyes here at TUAW Central. Apparently, Amazon may be exploring an online used digital goods market.

Amazon proposes to establish an “electronic marketplace for used digital objects.” If that sounds a little ridiculous and yet curiously intriguing to you, well, you’re not alone.

. . . .

Obviously, the technology would cover a transfer of rights from one owner to the next, but how would one value and implement these transfers? Would there be a fixed cut or fee to the facilitator? Does the rights-holder get a cut? And how could one assign a monetary worth to a “new” license versus a “used” one? (After all, the bits are the same, aren’t they? “There are five new copies of this product and three used ones” just sounds wrong when it comes to digital goods.)

Link to the rest at TUAW and thanks to Joshua for the tip.

Passive Guy would caution that it is extremely difficult to use a patent to predict product or service plans. These days, there are many reasons a company might obtain a patent other than that it is planning to commercialize something the patent covers.

Amazon, Ebook Lending

11 Comments to “Could Amazon create a used e-book market?”

  1. Not the least of which is to prevent someone else from creating an used book market cuz Amazon can sue them for patent infringement.

    P.

  2. I’m surprised how many people get hung up on the word “used” when discussing this issue like the condition of the product has any bearing whatsoever on resale rights. First sale is a balance issue between rights holders and consumers, its about not unduly impeding the flow of commerce by granting too much power to rights holders. Ever since software companies started crafting licensing agreements with the express intent of eliminating first sale to maximize control (and subsequently profits) , I’ve been convinced that this wasn’t a positive development at all. Given that the licensing agreements themselves are only held due to one appeals court ruling overturning another court’s judgement that they didn’t eliminate first sale rights, the entire licensing structure is far from a decided matter of law. The issue will eventually reach SCOTUS, maybe through the reDigi case, and who knows how that’ll turn out? There was also a recent ruling in a European court that a software license did in fact constitute a “sale”, so we’re really only a consumer-favorable SCOTUS ruling that reinstitutes first sale away from tossing the entire digital marketplace upside down. Whatever Amazon’s plans, they’re smart for trying to get ahead of this not unreasonable chance that resale of digital goods will be forced on them, as well. It may never happen, but unlike publishers, it appears Amazon is actually preparing for multiple contingencies.

    For the record, I’m totally in favor of resale rights for digital goods. I think the licensing schemes are just thinly veiled rights grabs from consumers. I’m also becoming more and more convinced that file sharing “piracy” problems largely stem from this rights grab. These industries converted formerly second hand buyers into free downloaders as file sharing grew into the vacuum in the market swiping first sale left behind. Yes, there’s a metric ton of technical problems with digital resale, but, in my opinion, the market never should have been allowed to grow on the premise that first sale doesn’t exist in the first place. Here comes the first big disruption of the disruption.

  3. This kind of service would be fantastic for Amazon, terrible for authors.

    Digital resale is not the same as print resale. When you buy a print book, you’re buying the ink and paper in that form, essentially. When you buy an ebook, you buy… what? Ones and zeroes? Ebooks, being a non-physical collection of icons, don’t have a component for you to own. You don’t own the idea of the story, either with a paper or digital book. What is there for you to resell? Access to the book? The right to read it? Because access and rights can be sold with terms, like a term saying you can’t transfer the right or access.

    The biggest problem with digital resale is that there is no way to police it. You can’t make a file that can’t be cracked and copied. Allowing people to resell just encourages them to circumvent copyright.

    • Jim…that is the same argument that was made for used paperback stores and even libraries, yet oddly enough authors survived both. For e-libraries, the KLL has been a godsend for some authors — readers borrowing books and royalties to the author for each loan? That’s innovation that helps authors, rather than hurts them.

      Equally, there’s nothing stopping Amazon from setting up a used market that would allow resales only of previously purchased Kindle titles (the same ones registerd to your accounts, so a reader couldn’t resell it multiple times) and still giving a percentage of that sale to the author i.e. paying royalties on a used sale, something that doesn’t happen now in paper.

      It really messes with people setting their own pricing over the long term, but I think it would be a way for certain publishers (mainstream) to keep their first run sales high i.e. $15 for ebooks, and maybe Amazon could limit that an e-resell couldn’t happen for at least six months or even minimum sales levels that would keep author royalties near the same.

      Just as a hypothetical, what if authors got 40% on new at $10 per book; but they got 50% on used at $8. The author would still get $4 a book regardless, Amazon gets $6 the first time and another $4 after that. They’re still happy because that other $4 may be a sale they wouldn’t have otherwise. Lots of people will buy used that they wouldn’t buy new in paper, maybe it would hurt the $2.99 market though.

      People told Bezos the ebook world would never work; then they told him there was no market for self-publishing; then they told him nobody makes money at $2.99. Telling him that a used market oculd never work seems a little like waving a red flag in his face…

      P.

      • Let me be realistic for a second before I get all ivory tower.

        If you offer people a way to get money from their digital content, you create a community that has an incentive to pirate where they never did before. This is bad stuff. If piracy is easy to rationalize now, imagine when people can tell themselves, “I did pay for it, I just want to get a little money back. It doesn’t affect the writer. They already got my money. There’s no victim.” This will devastate creators in a way that modern piracy has no ability to do.

        Now, speaking idealistically. For the “used” book buyer, there is zero difference between the “used” digital product and a “new” one. There is no reason to buy new at all, in fact. It’s not like a paperback, which might be creased, torn, stained, wrinkled, chewed, etc. Buying a “used” digital product is like being handed a brand new paperback for a tiny fraction of the “new” price. So, why would you ever buy a “new” digital product if a “used” one was available?

        Here’s the key point: if Amazon or anyone else is selling a digital book “used,” they are selling an identical product to what the author sells, except they are not paying the author. Worse, digital products will never degrade, meaning that they can be resold indefinitely, with the everywhereness of the internet making them easy to find instantly and effortlessly.

        This is not at all the same as buying used paperbacks at a used book store. Buying used paperbacks has built-in limits; you have to invest time in traveling to the book to buy it or wait for it to be shipped to you, plus you have to locate the physical book in a physical store near you or wait for an online retailer to get the physical book processed so it appears on their website. This is very much the opposite of how digital books work.

        About the “zeroes and ones.” In a strictly physical sense, no, an ebook is nothing more than an arrangement of zeroes and ones. It’s more complicated than that, though. The zeroes and ones are actually the customer’s; they’re paying to have their switches flipped into a certain arrangement. In other words, “selling” an ebook involves no transfer of physical property whatsoever. It is purely abstract.

        When you buy a paper book, you have a right to the paper and ink because it is physical property. You have no rights to the intellectual property. When you resell a paper book, you are selling physical property, which is part of property rights. When reselling an ebook, there is no physical property to exchange. So what are you selling? Access rights, copyright, etc are not physical property, and so you can’t say that it’s the same as selling a paperback. It just isn’t, either logically or legally.

        As for the customer benefit of resale, this is something addressed more appropriately by competitive pricing. If I sell my ebook for $2.99 with no resale, my customers are a lot better off than if I had to sell it at $8.99 so I can recoup my losses against resale.

        Your idea about cutting the author in on a % of resale sounds more fair. However, this is basically exactly the same as forcing authors to accept discounting. The only difference would be what you called it.

        KLL and all libraries are a different matter, and I don’t take issue with those. Libraries don’t transfer ownership.

        Quick conclusion: paper book resale is based on property rights. Ebooks don’t exist as physical property, so their resale is legally not the same as with paper books. Ebooks also behave very differently from paper books, so logically their resale is not the same either. I think that good pricing is the better answer.

        I’m copying our discussion over to my blog, in case you want to comment on it over there.

        • Sorry about the length here, I get wordy sometimes and this is an amazingly complex and nuanced issue without an easy answer or simple black-and-white solution.

          Pirating in a used marketplace would consist of copying files repeatedly and selling them. I think the issue comes down to tracking not copying. Used books would exist out in the open, likely by many of the same retailers we’ve already got. They keep copious amounts of data on sales, they know what was sold, to who, when, and they’d have the same data from resale markets. Some publishers are already experimenting with watermarking. How much of a reach is it to think a system where if ebooks with the same watermarks show up for sale multiple times gets treated with a DMCA takedown notice? It’s got to be much easier to police blatant copying through open resale markets than the dark, shifting file sharing that’s going on right now. Don’t worry so much about the copying, prevent the sale of those copies, essentially. Look at Amazon. With the data they’ve got, there’s no way anyone is getting away with bootlegging copies and selling them over and over again on any scale for any period of time.

          A resale market provides a legitimate entry level for so-so customers, the type looking for something to read but not sure of what. These people will buy a book at $2 or $3 but not even consider it at $15. The current setup either shuts these people out entirely or pushes their “browsing” to illegal downloading. I would argue this is the most common type of customer we’ve got and we’re either ignoring them or handing them to pirates.

          As for the differences between new and used, there are any number of ways to add value to new that doesn’t carry over to used. Give discount coupons with new purchases, provide access to some additional content elsewhere that you only get access with a new sale, who knows? Besides, if the resale of multiple copies of the same file is policed properly, new has the inherent value of being unlimited. Nothing exists in the used market that wasn’t sold new to begin with. Used markets are entirely dependent on new sales or they’d run out of product. New has no such concern, which in digital terms means they never have a problem meeting demand. And that doesn’t even mention what happens when standards change and new ebooks are a file-type generation ahead of some used ones, another distinct advantage to new.

          You make some good points about the lack of physicality of ebooks and the notion of physical property. But consider, as you say, the ebook is at its base switching a sequence of ones and zeros, that pattern is retained on my device. It’s on my real, undeniably physical property. DRM not withstanding, that pattern is transferrable from my device. It may not be physical, but I paid for that pattern in the identical manner that I pay for a print book. Whether I’m buying a license, access, a file type or some specific pattern of digits, that’s still a sale. My argument is that the license arrangement redefines a sale as something else, and it does it in a way that intentionally takes rights from consumers under copyright law. I’m not convinced that the right way to start the new digital markets is by taking significant rights from consumers.

          And what happens when standards change? The current ebooks are only as infinite as long as they’re supported. When publishers/retailers shift to whatever next generation ebooks or devices are, what’s to prevent them from essentially wiping out an entire generation of literature? If we as consumers don’t have ownership rights of some sort, if all we’re buying is access to intellectual property, will I be given access to the next gen version of an ebook I bought today? If the container doesn’t really exist, and isn’t tangibly related to the product, then it follows that I only bought access to the underlying IP. The format shouldn’t matter, should it? But there’s no way anybody’s doing that, because even the people selling ebooks see them as a real thing that can be sold or replaced rather than purely intellectual property.

          The same license scheme that prevents resale also prevents copying, stripping DRM, donating to libraries, giving them away, etc. The only limited sharing rights you possess exist within the ecosystems of the retailers, so if they stop supporting the current file type, you lose that, too. The only way any of this material survives a shift in standards is if people break the law to preserve it. That’s way too much control over culture and literature given to IP holders. Besides, the licensing setup that kills first sale is but a short hop and skip from undermining fair use, too. We already see this in some publishers’ extortion-level pricing and restrictions to libraries for ebooks.

          I believe we have to be very careful with how these markets grow and the manner in which that happens. We’re skating a fine line right now between a healthy market and one where rights holders and retailers become dominant monopolies over IP and culture we shouldn’t possess. Technical issues, such as the copying concern, can be dealt with. When we lose rights through these licensing schemes and such, that’s much harder to get back, especially as it becomes more ingrained in commerce as digital grows across the wider economy.

          • What this really sounds like is “book rental,” which several academic publishers already do. Kindle has the Lending Library, but they could just as easily have the “read once rental library” instead.

  4. I look at the notion of a second hand digital market and I see many possibilities like some of the ones you describe. There are all kinds of means by which a system might work, some of which could possibly cut authors in, which isn’t something particularly feasible with used physical books. How is that bad for authors, as some have said?

    I don’t subscribe to the commonly stated theory that ebooks are ones and zeros therefore we’re not really buying anything, either. Those ones and zeros still need a software container, a file type to transfer the data and run on the various devices. That container may not be a physical item you can hold in your hand, but it most definitely is a thing. If something can be sold, it can be resold. To argue otherwise is illogical. I look at this more as a notion of value and rights, the physical vs digital argument is a strawman, in my opinion. I believe we should have resale rights, there’s no technical obstacle preventing it. The only reason we don’t have them is because companies have crafted licensing agreements that define an ebook sale as not actually being a sale, which is basically a self serving lie to eliminate competition and try to exert control over the entire lifespan of a product, even after sale. Copyright was never intended to give creators that much power over commerce. There are consequences to wiping out first sale, it breeds an uneven and ultimately unstable market. Those rights are in there for a reason.

    A commenter above said used ebooks would encourage copyright infringement, but that’s backwards. Too much control, too much restriction, too high prices and a lack of resale value or resale market encourages infringement. I believe it’s the licensing agreements themselves that violate copyright by reclassifying the same basic economic activity as something else specifically to take first sale rights from consumers. Building a healthy long term market is more difficult if you base it on a self serving lie. We have to start respecting the fact that copyright protects consumers as well as creators and we can’t just arbitrarily decide that buyer’s rights don’t count when its convenient for us to do so, which is what the licensing scheme does by design.

    It’s my opinion that the technical problem of copying isn’t as big an issue as swiping our customers’ rights before they even come in the store.

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