Home » Ebook Resale, Legal Stuff » Secondhand Downloads: Will Used E-Books and Digital Games Be for Sale?

Secondhand Downloads: Will Used E-Books and Digital Games Be for Sale?

11 February 2015

From Bloomberg:

Should consumers be allowed to resell digital songs, books, or video games once you’re done with your downloads? If it sounds unlikely, just remember that businesses trafficking in second-hand records and books were once considered controversial before society came to accept them as normal—at least up until the Internet undermined the logic of resale. The next several years should be key to whether a similar industry emerges for digital goods.

The issue came up recently while I was reporting a piece about the future of GameStop, a used video game chain that holds the dubious distinction of being the most-shorted stock in the Standard & Poor’s 500-stock index. One of the reasons for the pessimism is the widespread belief that GameStop will fade away once the industry completes its inevitable transition to digital downloads instead of discs.

Executives at GameStop believe they can change that by inventing a way to sell used version of digital games, and at least one startup is trying to do the same for digital music. But unlike the established economics of secondhand CDs, DVDs, and game discs, the mechanics of selling used digital media are murky at best and not clearly legal. The issue is working its way through the courts and might end up in front of Congress later this year.

The question centers on a part of copyright law known as the first-sale doctrine, an early 20th century provision that prevents rights holders from seeking to stop the sale, trade, or lending of legally acquired property. You can thank first sale for making it legal to run a used record store, found a public library, or lend a DVD to a friend.

. . . .

ReDigi makes the same argument for music that GameStop has made when publishers complained about the used video game trade: If people can resell their old media, they will spend the proceeds on new stuff, and everyone ends up better off. By this logic, the unplayed songs in someone’s iTunes library are an untapped hoard of cash waiting to flow into the coffers of record companies.

This is not an argument that has persuaded those who supposedly stand to benefit. A House Judiciary subcommittee held hearings last June on potential reforms to copyright law, and several media companies warned against expanding first-sale doctrine to cover purely digital goods. “Doing so is not only unnecessary, it would radically alter the nature and purpose of the doctrine,” Matthew Glotzer, then a senior vice president of Fox Entertainment Group, told the committee.

The big difference is that digital media items don’t get old. Used books or albums are worth less than new copies because they deteriorate with use, and it takes some effort to pass each copy from person to person. A “used” digital file, though, is exactly as valuable as the original and just as easy to distribute. The U.S. Copyright Office has already recognized that digital goods are fundamentally different from physical ones—first-sale doctrine, it has said, works only because of the specific nature of physical objects.

. . . .

A transaction that looks like the sale of digital books or movies is often, in legal terms, a licensing agreement between a copyright holder and an individual user. Sure, downloading a book on a Kindle feels just like buying a paperback in a bookstore. But the digital transaction deviates from an actual sale and often includes restrictions on how the file can be distributed. Public libraries, for one, have complained that the licensing agreements for digital books make it impossible to operate as they have always done with physical copies.

Sherwin Siy, the vice president of legal affairs for digital consumer advocacy group Public Knowledge, thinks that legislators should establish new rules making it clear that transactions that feel like sales—such as those that include clicking a “buy” button—legally result it the actual transfer of ownership. “The most prominent representation of the transaction should hold,” he told the House committee last June.

Link to the rest at Bloomberg

Ebook Resale, Legal Stuff

23 Comments to “Secondhand Downloads: Will Used E-Books and Digital Games Be for Sale?”

  1. Honestly, I think people should be able to sell them. I know why a lot of people don’t want that to happen, and I know the potential horrors that will burst forth of this unholy Pandora’s box in terms of piracy, etc, but… the problem with the argument that digital content is “licensed” and not “sold” is that the people selling the “license” do everything they can to make you feel like you’re buying something, because they know you prefer buying something over licensing it. Moving heaven and earth to impart a feeling of ownership on something while at the same time restricting use as much as they do has been one of the most egregiously dishonest practices of the computer industry (in my less-than-humble opinion), and it’s bled into every other industry that deals with digital goods.

    This is in part why I use a Creative Commons license on my ebooks and don’t use DRM–to at least give the purchaser some of the privileges they think they’re getting when they spend their money (because it is a license, I can only call them “privileges”).

    • Had a similar thought, I think. It’s not really a sale; it’s a license transfer.

      I think the problem is in the idea of the transfer, because one ebook is basically an infinite good. Easy enough to infinitely copy.

      But if the process could be made like buying a used book, i.e., that access to info actually changes, that seems like it could be viable — but I can’t figure out how that would be accomplished without DRM.

      I can’t help wondering if the article is overstating the game situation, too. As consoles get more advanced, games get necessarily bigger. I feel like that would limit the ability to download/store games on-console. I know there’s potential for “streaming” games, but given current load times and bandwidth I wouldn’t be sure how possible that would be. Add to that new developments like Oculus Rift, and it just all gets more complicated.

      • Yes.

      • The way they can do it on streaming games is that your system has to be online to use it (most use an ID/password or a ‘cookie’ of some type to identify the system the game was registered to.)

        So I could ‘sell’ you my game, but then I need to either give you the ID/password or ‘cookie’ so you could use it. The game companies though don’t want you selling things of course, so that same ID/password or ‘cookie’ is normally tied to ‘all’ the games you have from them, making it harder to sell/give away just one game …

        As for getting ‘too big’? That’s why all the kids need high speed internet! 3.3Kbs was about a meg of data every three minutes or a twenty meg file in an hour. My cable modem (and I’m not paying for their higher speeds) does that twenty meg file in a few seconds (and downloading CD/DVD images is common if you’re playing in alternate operating systems) so, there is no ‘too big’ anymore …

      • Uh, do you play computer games? The PC gaming market still exists today because Valve’s Steam streaming system. No game is too big to stream.

        • I do. But a few points:

          1) Is that how Steam works? I have Steam on both the Mac I work on and the PC I game on, but my gameplay on both systems hasn’t been streaming. When I sign in to Steam I have my library, and download games into it, then play the download.

          2) It’s worth noting that though I game (mostly casually), I don’t play MMOs. My wife plays WoW, though, and I know her experience depends a lot on both her system and the connection she has access to. When she can’t get online, she can’t play.

          3) Same with our consoles. We have a 360 and a One, and as I’ve seen the games, they mostly download to the console’s drive and play from there. In my experience, the lone exception to that was DCU Online — which all the while made me wish it had a single player mode and a linear narrative in an open world (like, eg, Skyrim), because the compromises the game made in graphics and gameplay to enable the MMO experience weren’t worth it. To me. Again, tastes; like I said, I’m not into MMOs, or any multiplayer gaming, for that matter.

          4) From what I’ve seen, most of the games that require an internet connection to play have been studies in tragedy. EA’s recent releases — was it a Civilization game? There’ve been a few there. Servers crashing and being unavailable for days because of launch traffic and all.

          • You need to be online to play a steam game, there may be a way around that, but general rule is you need to be online.

            When you purchase a game through Steam you download the data to your hard drive. Then you play it locally. Steam puts a layer of validation over the top so you can’t play without being connected to steam.

            GoG does it differently. You can play the files offline.

          • Not sure how it works today, but when I moved to Canada, I was playing my Steam games quite happily for a few weeks with no Internet connection. If I remember correctly, you can’t play them if you have an Internet connection but your computer can’t connect to Steam, but you can play them in ‘offline mode’ if you have no connection at all.

            Then there are all the Steam games that are actually DRM-free; mostly they’re the older ones.

  2. “The U.S. Copyright Office has already recognized that digital goods are fundamentally different from physical ones”

    P.G.

    Pity that difference isn’t recognized in price structures then.

    Or perhaps quality of post sale service.

    Soft goods creators and sellers have ALL the advantages in this matter and they still want to bleed the consumer.

    If a book were $10/15 and the Ebook to it were $3, I could see that they can have different legal identities.

    When the creators want the same dough for the Book and the Digital then they should be the same thing legally. Able to be sold afterwards, quite legally.

    brendan

    brendan

    • If a book were $10/15 and the Ebook to it were $3, I could see that they can have different legal identities.

      That really depends mostly on publishers, though. Because I think you see that pricing strategy on a lot of indie books; a $12 paperback and a $3 ebook, or thereabouts on each. It’s when larger publisher who incur more overhead start demanding similar pricing between paperbacks and ebooks that it becomes a problem. I’ve long held that ebooks work best and are most attractive when priced at or below what used to be the price of mass market paperbacks — when I was growing up, they cost about $6.99 or so.

      I don’t know how much they cost now. I don’t buy print anymore. And the vast majority of ebooks I purchase are less than five bucks.

  3. I’m still waiting for the music/movie/game/ebook companies to say that they are ‘leasing’ you the rights to use what you’re paying for and not claiming that they are ‘selling’ you the bits in question.

    Selling suggests I ‘bought’ something of value — that if I desire I can pass on or sell.

    Leasing says I don’t own it — and therefore can’t sell/give away …

    But ‘leasing’ warns the would be purchaser that they ‘don’t’ own it — as Amazon proved when they were told they couldn’t sell ‘1984’ and they pulled it off the kindles of those that thought they’d ‘bought’ it … (they credited the costs back I understand, but it shows you don’t have as much control of your devices/programs/ebooks as you might think …)

  4. Used ebooks?

    Do you have to wash the electrons to get the old owner smell out?

    Frankly, I think there would be much less talk about any of this if some publishers weren’t selling $10+ ebooks.

    When something costs a few bucks, most people just buy new vs used.

    The only used books I bought on a frequent basis in my life were hideously overpriced textbooks and non-fiction. I’d grab a few used paperbacks here and there, but if I was looking for something specific or by an author I liked, $7 for a paperback wasn’t the end of the world.

    $30 for hardcover is another animal…

  5. I am big proponent of authors, artists, creators (however we elect to call them) having control over their digital works-of-art in a manner of their choosing. They should be calling the shots on how they want their works to be sold, resold (or not), licensed, etc.

    As a lover of books and music, the issue for me is transparency regarding the rights I have or don’t have in the works I’ve acquired. Without getting into all the issues of copyrights, DRM, and DMCA in our ever expanding, digital world; it’s a simple “truth in advertising” issue for me. The “BUY” button for digital works-of-art is false in most cases. “License” or “Lease” buttons should be mandated by law for such transactions. And consumers should have access to clearly explained terms and conditions for the digital works they are “licensing” BEFORE they press those buttons.

    • @Robert

      Why should you have control over someone reselling digital goods?

      If I write a program and it’s made part of a car, the only way I can control reselling of my program is to control reselling of the car.

      Or if you don’t think programs count, how about Music. If your digital music performance is stored on a CD, you can only control the resale of that digital copy if you control the resale of the CD.

      This is exactly the sort of thing that the Supreme Court soundly rejected last year.

      Once you sell something, you have sold it and all your rights end. The new owner is free to do whatever they want with the thing they purchased, including selling it. The only thing that is limited is making copies of it.

      Companies are abusing this exception to make the claim that making normal use of the digital item requires their ongoing permission because it gets copied from storage to ram to the cpu to more ram to the display and all those copies require their permission.

      At some point there is going to be a smart lawsuit over this and I hope it gets decided that this sort of copying that’s required to use the digital item is not controllable by copyright. That then just leaves the issue of making backups (which already is granted an exception to copyright) and the sticky issue of selling it to someone without you keeping a copy.

      • @David

        Sorry, but you’re discussing apples vs oranges with the car and the CD analogies in comparing both with reselling rights for digital works-of-art. The first sales doctrine provides the right to resell physical items even when those items contain digital works-of-art. ie. iPods, iPhones, cars, etc.

        The DMCA helped clarify and confuse the copying issues within computing devices, so I won’t go into it here.

        What I am pointing out is the rights of digital creators to exercise their, already granted, copyrights. If they want to “sell” their digital works-of-art, they have that right. They also have the right to “license” their works-of-art.

        What I would like, as a consumer, is clarity regarding what is expected of me when I acquire such digital works-of-art. In essence, have I purchased the work and is it mine to do as I please, or have I licensed it, and if so, what are my rights and responsibilities?

        I deeply respect the contributions of authors and musicians. So, I want to make sure I also respect how they want to distribute their works-of-art.

        Please remember, an author’s or musician’s copyrights do NOT end once they have sold “it.” Your comment to the contrary is misinformed.

        • “I deeply respect the contributions of authors and musicians.”

          Robert,

          Yup, me too. To be fair I’ve hung around more with musos than writers.

          I’ve often asked the creators just, “how,” they’d prefer me to buy their work. (Talking music here.)

          I’m not at all sure they know. They’re aware that selling it from their own site gets ’em the biggest wallop for that one sale-but in the bigger scheme, them fans out everywhere, not a muso junkie like me-it’s less important and more related to scale. Just like artists selling their own records at shows. It’s a nice bunce, and a bit of green folding, but in the big scheme-not there tomorrow.

          It is, as I think P.G. might say…being disrupted and we ain’t got no clear idea where it’s going to end up yet.

          I do note that the price of Alvarez-Yairi guitars continues to escalate, along with all the other hardware used to create music. The luthier who made my hand-made 15 years ago now charges around $60K for what cost me 27K. You gotta sell a few records to make that back.

          brendan

          • All good, Brendan… …and thanks for being one of those creators of the arts many of us enjoy… A world without music, books, etc. wouldn’t be worth living in, IMHO.

  6. In some ebooks they are embedding Javascript code that springs to life when the book is copied to another storage medium. The code installs a false dedication in the front of the book that ends “With all my love,” and inserts margin notes that randomly say, “NB!” and “This will definitely be on the test,” and “mention this at Bible study,” and on and on. Then the recipient of the used book will be getting the “real” item and the truth in advertising it for sale as used will be substantially proven by the notations.

  7. This is a classic ceretris paribus problem. Economists are always saying things like, “Ceteris paribus, if 100,000 bottles of wine are sold in the city, then imposing a tax of $5/bottle will raise $500,000.”

    Ceteris paribus means that nothing else changes. There is no response to the $5 increase in taxes.

    It is a useful tool for analyzing problems.

    But, the economists are smart enough to then remove the ceretis paribus limitation and ask how many fewer bottles of wine will be sold with the new tax.

    Lots of other folks aren’t that smart. Think they are?

    This is exactly what happened when Wash DC actually increased cigarette taxes. They expected more revenue, but actually saw total revenue fall. The commuters from the suburbs stopped buying cigarettes in Washington, and instead bought them in Virginia and Maryland.

    So, while people are talking about the rights, feelings, and expectations of consumers, they might then ask what the response will be from the producers and retailers. And then think of the cascading responses as the pressure moves through the market. Think ceteris paribus will prevail, and nothing will change?

    • Great point Terrance. It’s especially true with things like books that have a lot of substitutes that price changes will change consumption.

      If gas gets expensive recreational driving might decrease, but people will still buy a great quantity of it because there are few substitutes – buses and subways are great but not everyone has access. (at least in the USA).

      Books on the other hand, are entertainment and the substitutes are almost endless. Charge too much (for whatever reason) and people will choose music, movies, video games or whatever for their entertainment.

      Both gas and books are affected by price changes, but the latter will be far more drastic.

  8. “If it sounds unlikely, just remember that businesses trafficking in second-hand records and books were once considered controversial before society came to accept them as normal…”

    Um… no. Used books were the norm from the moment books came into being (long before the printing press). They were expensive and rare, and like jewelry and art, were considered a kind of capital investment — something you’d hock when times were hard.

    There may have been times when some greedy publisher fantasized about forcing consumers to only buy new, but it was never “controversial.” Buying and selling used books was always the norm.

    It only became controversial with digital content; it was never legal before to sell copies of a work, and ebooks have no physicality — they’re all copies.

    • Well, in the early 20th century, trafficking in used books was controversial when a publisher slapped a license agreement on a book saying it couldn’t be resold for less than a certain price. SCOTUS said, “Nuh-uh,” and that’s why we have First Sale to begin with.

  9. Piracy does not care if the media is tangible or intangible.

    There was a time when copier machines were used to illegally copy textbooks, boombox stereos recorded radio music and CD, floppy disks copied software programs.

    However, consumers were allowed to resell their LEGAL hardcopy/tangible media – why is it any different to resell legal digital media?

    Due to technology, media companies have better options now to attack piracy than they had 10-20 years ago.

    Many of you have made great points – if an ebook costs the same as a paperback book – it is, essentially, same value, same price. We should, therefore, have the right to do what we like with our property. This is not a Communist country…yet.

Sorry, the comment form is closed at this time.