Home » Copyright/Intellectual Property, Disruptive Innovation, Ebook Resale » Will Authors Get Compensated for Used E-Book Sales?

Will Authors Get Compensated for Used E-Book Sales?

12 March 2013

From PBS MediaShift:

On January 29, Amazon Technologies Inc. received a patent pertaining to the “secondary market for digital objects.” According to the patent abstract, the technology will enable Amazon customers to transfer — and presumably sell — e-books, MP3s, and other digital files to other customers. And, Apple too has filed for patents on the transfer of owned digital items.

The whole issue of used digital goods is a big one, with far-reaching implications for media in general, but music and publishing in particular.

. . . .

It’s still unclear however, if Amazon will actually use the patent. And if it does, how it might structure such a business. An Amazon representative declined to comment to MediaShift on the issue.

. . . .

Still, prominent authors have begun to debate what the potential sale of used e-books would mean for the publishing industry and the writers who depend on it. If used e-book sales follow the model of used print book sales, they will provide no revenue for authors and publishers. But digital copies don’t degrade the way printed books do, so the availability of used e-books could also remove readers’ incentive for buying new e-books.

In selling used digital music, ReDigi differs from other used goods marketplaces (including how Amazon deals with used physical goods) in that it pays both the copyright holder and the artist. Recently at the Tools of Change conference in New York, ReDigi CEO John Ossenmacher assured the book industry that the company would also compensate publishers and authors with e-book resales.

. . . .

Bill Rosenblatt, president of digital consulting firm Giant Steps Media, summed up at the Tools of Change conference the ramifications for authors by simply saying that they’re most likely to be the ones stuck in the middle. The winners will be the resellers, libraries and consumers. The losers will be conventional publishers and new retailers. But for authors, it could go either way.

“Perhaps the increased economic activity of digital resale will make up for any losses in new sales,” Rosenblatt said.

. . . .

John Scalzi wrote on his blog, “There’s a direct correlation between me getting paid to write novels, and me writing them.”

Do readers fail to appreciate that their book purchasing decisions affect whether or not their favorite writer can produce another book? Scalzi said this might be true.

“People don’t see creative people as they are in reality,” he said. “Ninety-nine percent of everybody in a creative field is barely eking by. Also, when it comes right down to it, people like getting bargains. They’re not following the product chain back to the initial starting point.

“People are always going to want to get things inexpensively, so part of our job these days is to remind them there’s an actual human being on the other end of the equation, and that actual human being has rent to pay, and children they’d like to feed. The vast majority of writers are not like Stephen King or J.K. Rowling or Suzanne Collins. The average author makes a four-figure salary a year from their writing. If you don’t pay them, a lot of them will decide they can’t afford to write professionally anymore.”

. . . .

In a February 7 post on his blog, Scalzi wrote, “I would rather you pirate the e-book than buy it used.” When asked to explain this comment, he said, “If you’ve made the determination that you’re not going to pay me for the book, I don’t see why [Amazon CEO] Jeff Bezos or anyone else should get paid. I’m the guy who wrote it. Why should they get paid? All they are doing is giving you a space to sell that thing. They’re going to take a cut out of work that other people did.”

Link to the rest at PBS and thanks to Jeanne for the tip.

Copyright/Intellectual Property, Disruptive Innovation, Ebook Resale

42 Comments to “Will Authors Get Compensated for Used E-Book Sales?”

  1. Totally off the wall –

    Would it be possible to define a book’s copyright in way to restrict subsequent sales?

    e.g., ‘The content of this book remains the copyright of author… The sale of this book is restricted to the primary transaction and it is not to be sold as a used book…’

    OK, Amazon then would prohibit such. But if the traditional publishers swung behind such an approach, maybe it would work.

    [This time I am with Scalzi… “If you’ve made the determination that you’re not going to pay me for the book, I don’t see why [Amazon CEO] Jeff Bezos or anyone else should get paid. I’m the guy who wrote it. Why should they get paid? All they are doing is giving you a space to sell that thing. They’re going to take a cut out of work that other people did.”]

    • US copyright law has long had a first-sale doctrine under which the author’s rights under copyright law are exhausted after the first sale of a tangible copy of his/her work with respect to that copy. This doctrine permits library lending and gifting of copyrighted works, among other things.

      The US Copyright Office has taken the position that the first-sale doctrine does not apply to digital copies because the tangible nature of books, CD’s, etc., is essential to the rationale behind the doctrine.

      Since ebooks are licensed, not sold, there is the question about whether the license agreement can restrict resale.

      However, The European Court of Justice has held that it is permissible to resell software licenses.

    • Smashwords does insist on the following text to be added to all books they distribute: “This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.”

      I don’t know how helpful that language is. If someone is going to steal an eText, he is going to steal it; DRM or restrictive licenses alienates readers, often harming sales more than helping. An author is forced to rely on education: if people want to read more from an author, that author must be paid somehow & buying copies of her or his work is a simple & easy solution.

      • The only required text is a copyright notice and “Published at Smashwords.” The antipiracy statement is not required, merely suggested. I do not use it.

        • It’s only suggested? Damn. I wouldn’t have added it had I read more carefully.

          But I doubt it would stop anyone from making unauthorized copies.

          • That’s why I don’t use it. To those who are honest it is annoying and vaguely insulting. To those who aren’t, it is meaningless.

            • I try to put in easter eggs with the “please don’t pirate this” bit. Sad authors write less. Happy authors dance around the living room!

              • My free stories have a blurb at the end that reminds the reader their purchase of my paid stories is what makes it possible for me to put up free stories. Then there is a link to my website. Where you can buy all my paid stories. 🙂

                The image of me dancing around the living room is not one which I personally feel would make people more inclined to purchase my books. That’s just me, though. YMMV.

  2. If Amazon decides to use its patent for used ebooks, that move will almost certainly dry up the free ebook market. I know I won’t be giving my books away when it’s likely that someone can take the free copy and then turn around and sell it. As of now, the free books show up as a verified purchase, so unless there is some way that Amazon has of electronically stamping those books as not for re-sale, no author in their right mind would give away their books any longer.

    • Why would there be any market at all for used free ebooks? Given the choice between paying money for a ‘used’ copy and getting a ‘new’ one for free, one would have to be a fool to pay.

    • Amazon know when it was bought and will almost certainly have a record of the price paid. I’d expect any resale will be based on a fraction of the actual purchase price (like a return would only get back the purchase price, not the current sale price).

  3. Why are people assuming that Amazon won’t compensate the author for used books?

    I’m assuming the opposite.

    Amazon gives 70% of its sales to indie authors. It doesn’t seem to be into gouging writers. If it decides to sell used books (it may not, it may want the patent just so someone else doesn’t get it) I would expect Amazon to give a percentage of the sale, used or new, to the person who wrote the book.

    • Actually Amazon’s standard rate for authors in KDP is 35%. The 70% rate is a special rate for ebooks priced between $2.99 and $9.99 and sold in a specific list of countries(mainly North America and Western Europe).
      For books sold in Brazil, Japan, and India you only get 35% unless you sign up for KDP select, which means being exclusive to Amazon.
      And don’t forget the $2 surcharge they apply to sales in the rest of the world, of which the author gets not a penny.
      So it’s quite possible that amazon would decide to only give a cut of used ebook sales to KDP select authors.

    • We have to remember the seller may be a private party who initially bought the book. So seller, Amazon, and author are all after the same dollar.

  4. I would suspect that these patents by Amazon and Apple are an attempt to eliminate the used ebook market by locking up any and all technical means of facilitating such a ‘regulated’ market.
    Of course, all these schemes rely on a central storage/server cloud with unbreakable DRM. As soon as an ebook gets downloaded to an open general purpose computer, all DRM bets are off. This is the case with Adobe’s epub DRM, and available for Amazon purchases as well. I think it was Bruce Scheirer (sp?) who pretty much proved that any time you have to give a user both the encrypted document and its key, some user will crack the encryption.

    • You may be correct about the purpose of the patents, Pholy.

      • If that is the reason, then eventually Amazon and Apple will be hit with an antitrust lawsuit because you absolutely can make a convincing argument that it coercively destroys a market consumers would reasonably be interested in.

  5. Just because they have a patent on a method for doing used ebook sales doesn’t mean they have a viable business model for using the patent, much less the intent to use it.

    A lot of patents are filed because if they don’t patent the method, somebody else will. And if it turns out that a viable market for “used” digital content emerges (or is forced upon them), it is best to have a royalty free way to play in that market.

    Realistically, the ebookstore vendors would much rather see consumers buy new content from them than used from somebody else. But they may not have much choice; european courts have already ruled that digital content licenses can be resold. Amazon and Apple may have no choice but to provide a mechanism for license transfer or risk the usual billion euro fines…

    I can see ebook retailers selling transferable-license ebooks at one price and non-transferable license ebooks at a lower price. And then charge a transfer fee. Add the two charges together and they’d satisfy the bureaucrats while making it impractical to buy used ebooks.

    • I’d forgotten about the European Court decision, Felix. So these patents could be implemented as you describe to create a two-tier market world-wide. Of course, my comments above re DRM still apply.

      • Or to *kill* ebook resale either by blocking other players (as suggested above) or by giving the PTB what they ask for literally, but with a pricing structure no consumer would enjoy.

        For example, they could charge $2 extra for books with transferable license and $2 every time it is transfered. So anybody looking to resell ebooks would start out paying $2 up-front just for the option, even if they don’t actually resell the book. And since the average ebook price at amazon sells for $7, that would mean the reseller would be paying $9 to buy and couldn’t sell it for more than $5 and most likely have to go lower to entice buyers away from a “new” buy.
        Such a system would effectively block resale of any book listing at $5 and under and really drag on everything priced $5-8. (Plus it would bring in an extra $2-4 to be split between vendor and publisher, either 50-50 or 30-70.)

        Most likely only BPH titles running $10-12 would get resold under such a scheme. 😀

        And that’s just one possible evil scheme.
        I’m sure Apple and Amazon could do even better.

  6. I don’t know if Scalzi is a hypocrite or a fool, but the idea that a resale market for ebooks will hurt the typical writer is nonsense. Markets are dynamic. Resale markets may increase the sales of new items by lowering the lifetime cost of new purchases. Thinking about it as a zero sum game is misinformed. Lowering the barriers to someone finding out about your work is a good thing.

    A resale market would call for new strategies, but there is nothing inherently bad or unfair to writers about it. It would just be different.

    • I was going to say something sarcastic about how there hasn’t been any money in being an author since Franklin started public libraries on the road to popularity. Yours was a much better way to say the same thing.

    • I would disagree only as far as I am worried that digital resale could become insanely convenient and cheap while still providing a product identical to the “new” product. A “good” digital resale system would have you buying, reading, and reselling a book within several hours. It wouldn’t take long for the market to be glutted with cheaper identical products.

      • “Cheaper identical products”

        No element of that phrase is inevitable. No real world system takes a substantial shock without other things changing. Use your imagination. How could you sell each person the same story, but a different product, in a way that provides value to the reader?

        What would a “bespoke” ebook look like? Digital technology is capable of much more than cheap reproduction.

    • Excellent point and well said. I will just add, some readers reread. I reread more than I read new books. If I am selling a book it is because I know I will never read it again. That means you, the author, either wrote a s***** book in which case why should you be rewarded infinitely for sucking as person after person sells your book to some new sucker, OR I am not your audience in which case why should I be punished for taking a chance on your work and not be allowed to recoup some of that loss? I realize not everyone rereads, but all serious readers do. Make them your audience.

  7. Game publishers have been fighting used games well before the current digitial markets. These days they use a lot of 1 use codes for things as a way to prevent it. That and their DRM fights are not going well for them and have built up a lot of hate for various studios.

    Part of the SimCity problems currently are due to the online only authentication/play requirement that Maxis put in to stop piracy and used copies.

    • The bundled DLC scheme EA used with Dragon Age, Mass Effect 2, etc is an approach that is likely to endure. (Original buyers get a “free” bundled day-one bonus and a lot of other post-release DLC. Used game buyers either miss out or have to pay extra.)

      Online activation and always connected schemes aren’t going to fly any time soon, especially after the SimCity debacle.

      • “Used game buyers either miss out or have to pay extra.”

        Which is really just a huge incentive for them to pirate. It’s harder on the more closed environment of consoles, but not impossible. The only thing that big game publishers are able to offer that doesn’t hack well is connection. Speaking of which…

        A LOT of big titles have required always-on lately, so you can bet there will be a lot more, regardless of whether it’s a good idea. It’s the industry’s current answer to piracy, and it will take a while for the big developers to shift their thinking. Besides, their hatred of piracy is so strong that they’re willing to anger their customers in order to “win” this war.

        I agree with you that SimCity always-on was a debacle, in more ways than one, and that always-on isn’t going to fly anytime soon. It is going to be implemented, though. 🙁

        (For Non-Gamers: SimCity was launched recently requiring that the player’s computer have an active internet connection at all times, despite the fact that it is a single-player game. This is an obvious attempt by the game publisher to lock down the game and make it harder to pirate. EA also employs a digital content delivery system called Origin, which is about as invasive as you can imagine. It polices your entire hard drive to make sure you aren’t modifying their games. The gaming community in general is very much against this kind of heavy-handed DRM.)

        • Blizzard games lately have required an active internet connection, as well as logging on with a username/password and sometimes authenticator code. It’s slightly annoying when my internet is down, but that happens about once a year. Generally I don’t mind the online requirement because Blizzard games use that connection to such excellent effect (I can chat with friends, play cooperatively with other online players, play against other online players, buy and sell stuff to other players in an online auction house, etc).

          • *nod* For all that Diablo III can be a single-player game… I generally play it with my kid (and don’t mind not having to make my machine be the server), and it’s kind of nice to have tradechat around if you need to ask a question. (Much higher quality of tradechat, too, than most of the WoW servers I’ve been on…)

  8. I don’t know why I find this to be such a personal hot topic, but I had an author basically yell at me at a conference panel about this subject. I asked about the eventuality of selling your used ebooks. And he went on and on about authors being compensated ect…
    Well, I don’t have a problem with that. Especially since I write and like to get paid. But this is the only creative group that I have ever run across that expects the ability to get paid multiple times for their product. No one thinks twice about selling used furniture or antiques. And the craftsmen who put in the hours and hours of labor to make a beautiful table or whatnot never demands “well, if you go and sell that I expect a cut of it.” I have spent many lovely hours browsing used book stores, and while at the moment it is the only way to get out of print books, (which theoretically shouldn’t be a problem with digital) I have more often discovered a newer author that maybe didn’t get to be on the front of the shelves at the big stores for very long or something. And while yes they didn’t get a second cut of money for that used book, they did get a sale they wouldn’t have made in the first place when I searched them out and bought a book new. I doubt I’m the only person that has ever discovered a new author that way.

    • Maybe we’d like to get compensated for our product because, oh, let’s see — publishers and distributors have historically been making the lion’s share on OUR product and most of us have been the last paid, and the least.

    • With purely digital content, things are a bit different because the “used” product is identical to the “new”.
      Seems to me that the same logic that strongly “suggests” ebooks be priced significantly lower than print argues that any resale system return at least *some* revenue to the author/publisher and original vendor.

      So far, ebook economics and pricing is built around the idea that when we “buy” an ebook, what we’re buying is a *personal* license to read, not a file. (That is why redownloading and multiple reading devices can be supported.) Change the license and you guarantee the terms and pricing will change.

      In the software world, personal licenses are not always transferable. Especially when they’re not tied to physical media. But when they are, they come with serious limitations on how they can be used. Reselling ebooks opens a pretty ugly can of worms that has the potential to annoy everybody in the supply chain.

    • You want me to charge you for my books the way a furniture maker charges for furniture? Okay! If you want to pay me $25/hr to compensate me for my time and labor in exchange for a single copy of one of my books, I can accept you reselling it.

    • I think the issue is that used bookstores have their place in the ecology, and used books only profit the bookstore — not the author (save in being a “try one; it’s cheap” venue) nor the publisher. Amazon, however, would profit either from new or used, and possibly more from used (depending on if it chose an evil or non-evil business model for this).

      Used books are often less desirable than new ones (unless you have a particular cover you just have to have); when a new edition comes out, chances are that people will wish to replace their old, falling-apart books. Used physbooks, in short, potentially create a market for new books — both the same ones and new ones by that author.

      Used ebooks… at this time, seem to have more of a chance to cannibalize the market for that author. Would you ever pay “new” prices if you had a friend who you knew would grab the book, read it, and sell it to you for cheaper? Right. Now scale that up, so everyone has a convenient friend like that. (And that friend’s name is Amazon (or Apple)…)

      If the author doesn’t get a cut of the “used” ebook — which is as fresh and new as the day it was uploaded — I can see a scenario where the author’s income goes down substantially.

      With a cut to the author, I would be cautiously optimistic about the idea. Without… I see his point. The scalability of the concept looks like it could have a distressing impact on the author’s ability to profit from their work. (And, as I am currently paying for someone else’s mortgage with my royalties, I would very much like to profit to the fullest extent possible.)

  9. Suppose Stephen King wrote a new book and limited new sales to one thousand eBooks, and no paper. What kind of price action would we see in the used market? With only one thousand available, and many more fans, I’d expect prices to be bid up.

    If King got a cut of each used sale, then there would be some optimal level for the initial run. Maybe it’s one thousand, maybe it’s ten thousand.

    With such a system, initial runs would be announced, and new bidders would also bid up the book. There are more possibilities than we might think.

  10. My assumption would be that it would operate like the existing ‘Lending Kindle books’ mechanism, but with a permanent rather than temporary transfer. That sort of mechanism would also tidy up the whole “who inherits my digital items when I die” issue.

    I’d expect the same “it is up to the publisher or rights holder to determine which titles are eligible for lending” criteria to apply too.

    http://www.amazon.com/gp/help/customer/display.html?nodeId=200549320

  11. If authors will not be compensated for the resale of their e-books, then we will have legalized piracy. The resellers will make all the profits, and the authors nothing. I commented in a previous blog, that it could be a bad as the author selling only one book, and be paid for one book, after which countless of readers could read the book, while the middle man will make all the profits.
    If the resale of the e-books will become reality, authors will make money only on the initial sale when the books are released, after which their e-books will be recycled through resale. Just as with paper books in the past. If the authors won’t sell big in the initial release, they won’t make a full time living at it. Practically most authors will become hobbyists writing at night and keeping a full time job during the day. How many potential good writers will give up before they could bloom?

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