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.

Are Professional Writers an Endangered Species?

Over the years, I’ve used the metaphor of unpublished writers being minnows in a sea of sharks or bunnies surrounded by wolves to describe the dangers of the predators of author dreams.  

I’ve talked about the vanity publishers who scam writers of cash by giving them the illusion of being published although the books are so high-priced that family members won’t buy them, let alone the average reader.  And bookstores won’t stock them because they recognize the vanity publisher’s name so they are leery of the quality. 

I’ve warned about “agents” who ask for reading fees or business fees but never sell any books, or agents who embezzle author funds.

Published authors have had their own dangers and problems to deal with.  

The larger publishers do no promotion for most of their authors but expect the author to do so at their own expense and time.  They ask, “Are you on Facebook and Twitter and post daily?  Do you maintain your blog and website?  Have you attended the major reader and writer conventions?  Have you given interviews?  And, by the way, did you finish those two books in your series in only six months?”

Publishers have cut the number of editors down so much that the editors no longer have  time to edit, and the books show it with glaring mistakes so the smart author must spend her own money on a freelance editor or appear to be an illiterate idiot.

In the last weeks, other news has leaked out about the publishing industry that makes me worried that being a professional writer who can support herself as a writer is fast becoming a dream or a nightmare for those who have been able to support themselves.

In my “Links of Interest” last week, I listed a blog article by Kristine Rusch about how her ebook sales numbers on her royalty statements were much lower than those she saw from her own sources for sales numbers.  

http://kriswrites.com/2011/04/13/the-business-rusch-royalty-statements/

In a followup to this, she has received numerous conformations of the same wide difference in royalty statement to reality comparisons from other professional writers who write for the Big Six publishing conglomerates.  

The authors also see wide variations in sales numbers on paper books.

http://kriswrites.com/2011/04/20/the-business-rusch-royalty-statements-update/

Discrepancies on such a huge scale where the publishers are padding their bottom line at the expense of their writers is completely disheartening for those struggling to build a career in this business.

Published authors are also being attacked by some readers and those who profit from pirates.  Ebook theft is rampant with numerous pirate download sites.  The owners of these sites make money through advertising because of their high traffic, and some sites go so far as to sell stolen ebooks.  The author doesn’t receive a penny of all this profit.

eBay sellers now offer collections of stolen ebooks on CD, and eBay does nothing to stop it while profiting from it.  Authors who are trying to stop this are ignored.

Often, the publisher will do nothing, and it’s up to the author to find the pirate sites and go through all the legal hoops in an attempt to get the books removed.  If they do so, the book will be uploaded again in a matter of hours so the author must start all over again.  

Is the professional author an endangered species?  

My disheartened answer is yes.

Joe Konrath and the Fallacy of Victimless Book Piracy

Mystery writer Joe Konrath has become another major writer who doesn't fear ebook piracy and who thinks pirates help more than hurt. .A Newbie's Guide to Publishing: Piracy... Again

I just adore very successful writers who come out in favor of piracy or make it a victimless crime because it hasn't hurt them. Of course, it's not hurt them enough to notice because they have so many other ways to sell their books, unlike most other authors.

Think of it this way. Someone steals $1000 from a wealthy person. It doesn't really hurt them. Someone steals $1000 from someone on welfare. The poor person will probably end up homeless.

Think of it this way. Very successful authors who publish through the large conglomerates (New York based publishers owned by conglomerates, i.e. most of the publishers of books you see in bookstores) have diversified risk. That means lots of book titles in many formats-- paper (hard cover, trade, and massmarket), ebook, audio, and possibly media rights (TV, movies, graphic novels, etc.). Those paper books are available in most brick and mortar stores. The new book title as well as the backlist is available in paper on those bookstore shelves.

Most other authors with the conglomerate publishers are very lucky to have one book on those shelves for a very short time, and with the possible exception of the ebook, there are no other media rights sold. Other authors have no paper books on those shelves and must rely on online sales for their paper books, if they have a paper version, and their ebook version.

Most newer authors with the conglomerate presses get a very small advance, unlike the $100,000+ for a three-book deal Konrath has talked about for his books. Depending on the genre, etc., the advance runs from under $3,000 to $10,000 with his agent taking a 15% chunk. It will probably be the only money the author will ever see on that book. The author will be expected to use at least 10 to 25% for promotion.

If the first book doesn't sell well enough, the publisher will not buy the next book of that author. End of career or a major restart with a new name for the author.

Those authors with indie press and ebook publishers get no advance. Their books are only available online, usually as ebooks or more expensive trade paperbacks. They must bear the promotion expenses as well as the incredible amount of time needed to get their names out to the reading public since they don't have the platform of a major publisher.

Some have done quite well because they produce numerous books a year, those books are high quality and similar in kind, and the book is a popular genre like erotica. Everyone else struggles to come out even after the expenses of the website, etc.

Few will make minimum wage for their time, not including the years it took to develop publishable craft and the months it took to write the book. They continue on with the hope that they will be able to make a good living eventually. Most never will.

Most authors cannot continue to write if there is no profit after a period of time. The only exception is the hobby writer who has a second income through a financially successful spouse or who is able to hold down a full-time job as well as writing two or three novels a year and spending many hours promoting them in their "spare" time.

With their diversified list of books, types of media, and sales sites, the average conglomerate publisher can take a loss, perceived or real, on ebook sales. The average small press or ebook publisher goes out of business because they aren't so diversified and ebook sales plummet.

It's hard to believe that piracy doesn't hurt when an epublishers' entire list is available for free all over the Internet, there's no income from any other source because the books are only available as ebooks, and the money isn't coming in.

It's hard to say piracy doesn't hurt when an ebook has thousands of pirated downloads all over the web, and the author can't take her family out to McD's with her quarterly royalty check, and the only thing the author gets from all that "free" promotion of pirated earlier books is that her next new book will hit the pirate lists even faster than the last did.

Some of the most successful indie ebook published authors of the last years are some of the biggest foes of pirates because they are watching their own profits dropping while the market is expanding.

I belong to lots of lists where some of these small publishers and authors hang out, and many are hemorrhaging to death. Authors are becoming dispirited that their "fans" show so little respect for them by stealing their work, and their income continues to fall. It's getting harder and harder to justify spending hundreds of hours of their lives in a profession they are losing money at. Publishers are watching the steady march toward bankruptcy and are fighting to stay in business.

What does this mean to the reader? Those authors who are making lots of money will continue to publish. You will continue to see the big names in the bookstores and online. The conglomerate publishers will continue to publish lots of books for much fewer authors. That means fewer choices of the types of paper books available.

The small presses and epublishers where future conglomerate stars are developing a following and the types of books that aren't mainstream are being published will disappear so you'd better develop a taste for the authors on the bestseller lists, and only those authors, because everyone else will disappear.

Ebook piracy a victimless crime? Maybe for a few authors like Konrath, but not for the rest of us.

For information on authors who are being hurt by piracy, I suggest the group Authors Without Yachts, http://www.goodreads.com/group/show/30255.Authors_Without_Yachts_AWaY_ .

For information on copyright and epublishing, I suggest my blog articles on the subject. Click on the "copyright" label to the left to find them.