Used Kindle eBooks?

Amazon has patented a means to sell used ebooks within the Kindle system.  A book will be branded within the system when it is bought, then when the buyer puts it up for resale at the Kindle store, it will be removed from his account and transferred to the buyer’s account.  Amazon will receive a small fee for each sale.  A limited number of sales of each book may or may not be included in the system.

According to copyright law, specifically “The Doctrine of First Sale,” this is illegal because digital goods aren’t physical things so they can’t be resold.  (See my article on “The First Sale Doctrine and eBooks” for more details.  http://mbyerly.blogspot.com/2009/04/first-sale-doctrine-and-ebooks.html  )

But a legal battle is currently being fought between ReDigi, a used digital music store, and the various groups in the music industry over a similar system.  If ReDigi is able to win this, Amazon will probably move forward with their own system of resale.  

At first glance, it appears Amazon would be cutting into its own Kindle profits with this system, but Amazon isn’t known for its poor business practices.    Here’s what it will gain from the system.  

Buyers go for the cheapest prices.  If a used Kindle ebook is cheaper than any other version of the book, buyers will start using the Kindle system and its hardware.  iTunes, Nook, and other sites won’t be able to match these lower prices unless they start selling new ebooks for next to nothing or they put into place their own reselling system.  Such a complex system would take some time, perhaps years, so Amazon would gain the advantage in the market for many years to come.  

Some in the industry believe that Amazon is intent on killing off publishers so authors will have to go the self-publishing route, and authors as individuals have no real bargaining power when it comes to the terms Amazon will set.  (See “Used eBooks: The Ridiculous Idea that Could Also Destroy Publishing”  http://motherboard.vice.com/blog/used-ebooks-is-a-ridiculous-idea-that-could-ruin-authors-publishers  )

What will all this mean if Amazon’s used ebook system becomes available?  Readers may be happy with this system, but authors and publishers will not.  Publishing has a very low profit margin, as is, and anything that will cut into that profit will hurt, sometimes to the point of putting authors and publishers out of business.  

Authors like me have been busy educating readers on “The First Sale Doctrine” so they will know that ebooks can’t be resold, loaned, or put online for free, but a system like this will make readers believe that, if Amazon can do this, so can they. Piracy will spread.

If Amazon gains total supremacy in the distribution market, then they will be able to dictate the terms in contracts with authors and publishers, and those terms will shift even more of the profit into Amazon’s pockets.

If the other distribution markets fail and Amazon is the only source of ebooks, it can close down the used market place, and readers will have to pay much more for the surviving content.  After all, Amazon is in it for Amazon as they have proven over and over again.  

This system may not be the eBook Zombie Apocalypse as a universal removal of “First Sale Doctrine” on digital goods would be, but it may very well be the beginning of the end of publishing as a profitable venture.  

UPDATE: On March 30, 2013, a federal court ruled in the Capitol Records versus ReDigi case that it is illegal to sell "used" digital files.  No word yet if ReDigi will continue to fight this battle.  

http://arstechnica.com/tech-policy/2013/04/can-i-resell-my-mp3s-redux-federal-judge-says-no/

Used eBooks: The eBook Zombie Apocalypse

Digital products like ebooks are licensed, not sold, to a buyer so they can’t be legally resold, shared, or loaned.  (See my article on “The First Sale Doctrine and eBooks” for more details.  http://mbyerly.blogspot.com/2009/04/first-sale-doctrine-and-ebooks.html  )

A group called the Owners‘ Rights Initiative ( http://ownersrightsinitiative.org/  ) wants to change that.  They believe that the owner of a digital book should be allowed to sell it used.  Members of this group include some library trade groups, used resellers of paper books, and eBay.  

Some readers consider this a good thing because they can get back cash on books they read in the same way as they do with paper books.

But is it a good idea?  

The answer is a resounding no.

The biggest problem with used ebooks is ebook piracy.  Some think that cheaper books mean less reason to pirate books and that’s true to a certain extent, but used ebooks mean that authors and publishers will no longer be able to prove that an online copy has been stolen.

Right now, publishers and authors license their books to specific resellers/distributors like Amazon Kindle, B&N’s Nook, and Smashwords.  If a book is available at any other site, the publisher and author know instantly that that book is pirated, and they help the police take these sites down.  These sites are fairly common, and some look like legitimate bookselling sites so the consumer is no wiser that they are buying stolen books.  Some of these sites actually sell the books, others are scams which steal credit card information and install viruses on the victim’s computer.  

If ebooks are sold used, the scam site will be able to fly under the legal radar.

Pirate sites will claim that their books are being given away for free by legal owners so they can continue their dispersal of illegal copies.  

If ebooks are sold used and a site or individual can sell thousands of copies of the same ebook by saying that they are selling one used, there will be no way for the author/publisher to prove this.  This will essentially make book theft a crime that can’t be punished.

Even readers who want to do the right things by buying legally won’t be able to tell who is a legitimate reseller and who isn’t.  

Readers looking for bargains will buy illegal books instead of legal ones, the profit margin for authors and publishers which is small now will plummet to the point that publishing will no longer be profitable for anyone, and those who make the money will have done nothing to create books.  

Publishing will be dead, and the ebook zombie apocalypse will be here.

Ironically, the ORI library trade association members who are angry that some publishers are making it harder for them to buy and loan ebooks will be just as devastated by these events.  With ebooks available for next to nothing or for free online, libraries will have even less value for users and tax payers so they disappear or lose major funding.  These library groups may find their members  lurching around with the rest of us in publishing in the ebook zombie apocalypse.  

MORE INFORMATION ON THIS SUBJECT:

“THE RIGHT TO RESELL, A TICKING TIME BOMB OVER DIGITAL GOODS:”

http://paidcontent.org/2012/12/15/the-right-to-resell-a-ticking-time-bomb-over-digital-goods/

TOMORROW:  Amazon’s scheme to sell used ebooks within the Kindle system.

Ebook Prices, PUBLISHING

In an interview, (link below), nonfiction author Seth Godin talks about ebooks and publishing. He's a proponent of free ebooks to sell paper books, but in this interview he suggests that ebooks be priced between one and two dollars each.

As someone who's watched the ebook industry for a number of years, here's my reply to his impractical suggestion.

Cheap ebooks are a lovely thought, but if a publisher wants to sell their books through the major book venues like Fictionwise and Amazon/Kindle, they must price the book with that in mind.

The vast majority of buyers only buy through the big venues instead of through the publisher website so most publishers can't break even if they don't have their books at places like Fictionwise.

I know that for every book I sell through one of my publishers' sites, I sell 50 or more at the big venues.

Here's why books have to be priced more expensively if they are to be sold through the big venues.

Fictionwise makes 50% on each ebook sold so even if the publisher prices the book near cost, he would have to increase the price by 50% just to break even. Amazon/Kindle takes 66% of the cover price. The same problem.

What's left is usually divided evenly between the publisher and the writer if it's an epublisher, 15% for the author for major publishers.

And if the publisher doesn't put the book's price high enough, the middleman venues where a majority of ebooks are sold aren't interested in the product because they can't come out even after they do their usual price markdown.

If the publisher wishes to keep his books at the big venues, he can't undersell the books at his own site so he can't lower the price there, either.

In the best of all possible worlds, the reader would pay a few bucks, but readers want the simplicity of buying at one site, not many, so the prices go up. Sad, but true.

LINK TO GOLDIN'S INTERVIEW:
http://www.26thstory.com/blog/2008/11/1-we-have-a-fresh-slate-at-harperstudio-whats-your-advice---the-huge-opportunity-for-book-publishers-is-to-get-unstuck-yo.html

EDITOR INTERVIEWED: On November 6th, Novelists, Inc., interviewed Peter Senftleben, an editorial assistant at Kensington. He talks about what he's looking for.

http://www.ninc.com/blog/

NETWORKING SITES PROMOTIONAL VALUE: Author Courtney Summers discusses the value of various networking sites for book promotion.

http://theswivet.blogspot.com/2008/11/guest-blogger-courtney-summers-on.html