The book industry wars continue: First-Sale, DRM, and publisher self-destruction

A recent New York Times article touches on the ‘first-sale doctrine’ and ebooks: Imagining a Swap Meet for E-Books and Music by David Streitfield.

The First-Sale Doctrine is the legal ruling in the US that says the legal buyer of a book has the right to loan, give, sell, or rent that book to someone else, without needing any permission from the copyright holder. Among other things, it’s essentially what makes lending libraries possible.

However, it does not apply to ebooks:

The retailer’s button might say “buy now,” but you are in effect only renting an e-book — or an iTunes song — and your rights are severely limited.

Among other things, this makes it virtually impossible for libraries to hold and lend ebooks. With a print book, a library can simply buy a copy anywhere they like (new or used), and lend it out. With ebooks, libraries need the permission of the publisher to lend books, and publishers can withhold permission or charge unaffordable feeds for this privilege, which is exactly what they’ve been doing.  From the nytimes article again, a quote from the director of ARL (that library associations are starting to take at least PR action on this issue is welcome):

“The vast majority of e-books are not available in your public library,” said Brandon Butler, director of public policy initiatives for the Association of Research Libraries. “That’s pathetic.”

He said that 60 percent of what the association’s 125 members buy was electronic, which meant sharp restrictions on use. Libraries cannot buy from Apple’s iTunes, he said. And so, for example, Pixar’s Oscar-winning soundtrack for the movie “Up” is not available in any public collection. An Apple spokesman confirmed this.

“If these things can’t be owned, who is going to make sure they exist going forward?” Mr. Butler asked. “Without substantial changes, we can’t do what libraries have always done, which is lend and preserve.”

Some publishers and authors, on the other hand, see the ability to sell used copies of an ebook as disastrous:

Scott Turow, the best-selling novelist and president of the Authors Guild, sees immediate peril in the prospect of a secondhand digital thrift shop. “The resale of e-books would send the price of new books crashing,” he said. “Who would want to be the sucker who buys the book at full price when a week later everyone else can buy it for a penny?” He acknowledged it would be good for consumers — “until there were no more authors anymore.”

It seems likely they think libraries are just as disastrous for the book market as used books (if being able to buy a used copy is catastrophe, then being able to borrow a book for free?), although I don’t think the Author’s Guild or Turow have gone on record with that: to state that they believe libraries (public or academic) are incompatible with a healthy ebook market would probably not be good for their public image, and also lead people to consider things they’d rather not have them considering.

The Times article suggests that lack of first-sale rights for ebooks is “under attack, both in the courts and the marketplace,” but mostly focuses on the ‘marketplace’ part.

Psuedo First-Sale rights in a walled garden, locked into the mega-e-tailer of your choice

Both Apple and Amazon have been granted patents for some sort of ‘digital marketplace’ allowing users to sell or give digital media to other users, in carefully controlled ways. (Perhaps Amazon and Apple will end up in the ‘courts’ part of the battle if  they want to set up such ‘marketplaces’ but the rightsholders don’t want them to. “The [Amazon] patent does not make clear if such a bazaar would need the publishers’ permission.”).

These ‘carefully controlled ways’ are neccesary to “permit only one user to have a copy at any one time.”  But they also likely, quite intentionally, will lock users into a certain vendors ‘walled garden’ eco-system. If you buy a book from (eg) Amazon, you can sell or give it to another person only using Amazon’s system, with Amazon presumably taking a cut or commission, and the book still only viewable on Amazon e-readers.  Says the chief executive of a startup aiming to allow resale of iTunes music (and currently in court for it):

“Amazon is pretty fearless, which bodes well for the consumers of digital goods.” And, he added, for Amazon itself. “What better value to give an Amazon customer than to say, ‘Buy your book here and then later you can resell it’? You can’t do that with Barnes & Noble’s Nook.”

Stripped of legal first-sale rights (which the publishers think is great), maybe we’ll end up with a simulacrum of such, as long as it’s good for Amazon’s business and only so long as we keep paying money to Amazon.  Which is good for neither the publishers nor the readers.

Battling against your own customers

Publishers and the Author’s Guild, acting in fear of their own customers, act in ways that shift the power balance even more in favor of — not even themselves — but the mega-e-tailers that the publishers are also (rightfully) scared of.

Reminds me a lot of DRMin general. Publishers and rightsholders, scared of their own customers and trying to prevent their customers from doing what they could traditionally do with physical media (lend or give it a friend, sell it to a used bookshop) — actually end up empowering the mega-e-tailers like Amazon or Apple, and it’s those mega-e-tailers that should really be the focus of the publishers fear.

DRM, meant to prevent customers from sharing books, actually prevents customers from viewing the ebooks they’ve bought from (eg) Amazon on anything but Amazon hardware, so the customer needs to keep their Amazon hardware and will want to buy subsequent books only from Amazon — giving the publishers no negotiating power whatsoever in their own negotiations with Amazon.

The Big 6 publishers are certainly also scared of Amazon,  although they don’t seem to have figured out that any company in this position, such as Apple, would be just as much of a threat to them, it’s not some personal thing with Amazon. But in fear of Amazon’s outsized control of the ebook retail market, the big 6 publishers tried  (according to the Justice Department illegally) price-fixing in concert with Apple in an attempt to keep Amazon from selling books cheap.   And Scott Turow’s Author’s Guild supported the Big 6 publishers there, also scared of Amazon.

But neither seems to have realized that their insistence on battling against their own customers with DRM –is seriously disempowering them in their their position against Amazon. Some in the publishing industry have realized this, as in this case of this self-identified publishing executive only willing to speak anonymously. 

Similarly, the publishers and rightsholders are scared of the first-sale doctrine for e-books,  because they think if readers have the same freedoms with ebooks they had with print books, the market will crash. They want to make sure readers do not have first-sale doctrine rights.  But what they might end up with is a situation where consumers only have effective/practical first-sale doctrine on monopolized ‘walled garden’ systems  from the mega-e-tailers.

By acting as if the biggest threat to their business is from their customers, rather than from the monopolization of media retailing, publishers (and the Author’s Guild) are facilitating a situation where both they and their customers (not to mention libraries) all lose.

I think we are quickly approaching a dystopic world where the only way to acquire a (e-)book is to have enough money to buy it from the 2-3 mega-e-tailers, at which point you can only view that ebook on a devide from that same etailer. You can’t get loan a book to a friend, or get a book from the library, you can’t get sell or buy a used book.  (See Richard Stallman’s dystopic SF short from way back in 1997)

This is bad for readers (you can call them ‘consumers’ or ‘end users’ if you like), it’s bad for democracy, it’s bad for libraries, it’s bad for independent bookstores, and it’s even bad for authors and publishers  (At least the ones who aren’t “veritically integrated” behemoths like Amazon).  The only people who it’s good for is the mega-e-tailers.

The enemy of the enemy of my enemy…. is… where were we?

Ironically, the physical bookstores realize the threat of DRM. Three of them just filed suit alleging that contracts insisting on DRM are actually an illegal restraint on trade driving bookstores out of business. From Leslie Kaufman in the New York Times:

Three independent, brick-and-mortar bookstores have filed a lawsuit against Amazon and the big six publishers, claiming that they are violating antitrust laws by collaborating to keep small sellers out of the e-book market….

…At the heart of the lawsuit is the idea that the top publishers signed secret contracts with Amazon that allowed them to code their e-books in such a way that the books could only be read on an Amazon Kindle device or a device with a Kindle app. The booksellers are pushing for open-source coding that would allow readers to buy e-books from any source and download them on any device.

Yep, that “such a way” is DRM.  The bookstores realize that DRM leads to the book trade being controlled by just one or possibly a few mega-e-tailers.  And the publishers are worried about the book trade being controlled by a mega-e-tailer and how that’s no good for them.

Yet the big six publishers continue to play into the hands of Amazon by insisting on DRM, and believing they can only survive by making sure their own customers have as few rights as possible.  It’s ridiculous, they know exactly who is destroying them,  and yet they continue to act to strengthen those who are destroying them!

In fact, libraries, readers, publishers, authors, and independent bookstores all have an interest in a diverse book retailing market — along with citizens and society as a whole. Yeah, ebooks are market disruption no matter what, and there are some tough things to figure out about how it should all work in a way that respects reader’s rights, maintains a diverse retailing market, maintains income for publishers, etc.  But it’s time for publishers and authors (or at least the Author’s Guild, their organized representative) to give up fighting against their own customer’s rights in a way that only empowers the mega-e-tailers, and align themselves with everyone else who actually has an interest in figuring it out.


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