Libraries, eBooks and the First Sale Doctrine

In case you haven’t heard, Random House announced last week that it was raising prices on the ebooks they make available to libraries. They didn’t just bump the prices a bit, however. They tripled them across the board. Now, don’t get me wrong, I understand publishers, particularly of the Big 6 legacy variety, are lurching toward total annihilation having problems. But this is simply an unconscionable act in my mind.

Libraries are an important public service. They do more to promote literacy than every publisher in this country combined. To soak them so unrepentently, and try to leech a large portion of their limited budgets in this fashion, quite frankly, disgusts me. Read the article I linked to above. Random House spokesperson Stuart Applebaum actually sounds as though libraries should be thanking them for these usury-level price hikes. After all, they’re still selling to libraries in a relatively unrestricted manner, unlike any of the other Big 6 gang of thugs publishers. He also makes a threat in the guise of a polite suggestion that prices could change yet again if libraries don’t share patron borrowing data with publishers. So not only are they extorting crucial monies from hard-hit library budgets, they also want those same libraries to perform and turn over what amounts to unpaid market research they hope to profit from. It just makes me feel all warm and fuzzy inside with the level of altruism coming from Random House on this.

Realistically, publishers are a business and are behaving thusly, albeit in my mind, in a short sighted and profiteering manner. Nothing requires them to make their products available to libraries. Well, except for that pesky little thing called the first sale doctrine that allows libraries to buy print books, often from wholesalers, then do whatever the hell they want with them. But the first sale doctrine doesn’t apply to digital works, which is why some publishers can withhold their works altogether, severely restrict the ways in which libraries can use them even after paying up, or charge prices 10 times or more what those files are actually worth. And don’t give me the argument that they’re worth more because of the agency model. The Justice Department is about to come down hard and nasty on that little slice of illegal collusion. What Random House is doing here is price gouging what they perceive as a captive audience, plain and simple.

A while ago, I wrote a bit about how I believe we need to develop an aftermarket for digital wares. Part of my reasoning is that the loss of the first sale doctrine is a serious loss of value on the consumer side. Without the possibility of resale or full freedom of use, digital goods should be significantly cheaper than their physical counterparts simply because consumers are getting a product of significantly lesser value than they were. And that says nothing about the fact that reproduction and distribution costs linger in the neighborhood of zero, another quite fine justification for much cheaper prices. A legit aftermarket and a reinstitution of the first sale doctrine would benefit everyone in the long run, from authors to publishers (although don’t expect them to realize this) to readers, and especially libraries. What it doesn’t benefit are publishers like Random House who want to severely overcharge libraries just because they can.

In order for an aftermarket to happen, we need some manner of reining in the potential for unlimited copying on the consumer end. I don’t think that’s an insurmountable technical obstacle, some current DRM already does that. It can be done. The only problem is that big media doesn’t want it to happen. They’re perfectly content to try and reap the whirlwind restablish a monopolistic control over distribution through the various perversions of copyright law they’ve pushed through over the years. And make no mistake, if they could get rid of the first sale doctrine on physical goods, they’d do it in a heartbeat.

Meanwhile, we all suffer for their obsolete delusions. Access to books is cut off or seriously limited by playing hardball with libraries, agency pricing adds 50% or more to the cost of ebooks to consumers, authors suffer from decreased exposure, and the industry on the whole is hampered at a time when a new golden age of reading could possibly be dawning by powerful legacy businesses too short-sighted to get out of their own way.

If I were a cynical man, I’d say publishers’ poor treatment of libraries on ebooks is simply another tool they’re using to prop up their fading print business and slow the adoption of ebooks. Wait, I am cynical, and I’m pretty sure that’s exactly what’s ultimately behind this. But, for now, libraries really have no choice. They’re going to have to have ebooks available in some fashion sooner than later. For my money, however, barring some kind of miracle lessening of copyright law, I’d like to see them tell Random House exactly what they can do with their price hikes. After all, I’m pretty sure there’s a large and growing contingent of independent publishers who would be thrilled to have access to the library system for their works. Hell, they might even be so happy, they won’t charge for their books at all. That certainly would be something to think about. And to me, it seems much more reasonable than paying $100+ for a limited digital copy of a book that should cost $5 or $10, at the most.

The Big Problem With ebooks, DRM and Intellectual Property Rights

Here’s a rather interesting piece I read the other day about the difficulties of buying an ebook for someone other than yourself.  This has long been one of my primary concerns over the digital transition we all are neck deep in at the moment.  When we bought a vinyl album or a VHS tape or a CD or a DVD or a video game or a printed book, we owned a real tangible thing.  Certainly, we were really purchasing the content contained within that medium, but we could hold it in our hands, give it to a friend, donate it to the library or even resell it, if we so chose.  When we buy the digital equivalent of these products, what exactly are we paying for and do we really own anything at all?

The media companies tell us that we’re paying for the right to access their intellectual property per whatever terms they strictly dictate.  But to me, this is an unsatisfactory answer and clearly represents an enormous step backwards for consumers in both the value of what we purchase and the ability to put it to use.

In my lifetime, there has always been a thriving aftermarket for these products.  I, myself, have sold vast numbers of CDs, DVDs and books at various points over the years when I needed quick cash.  It was always part of the value I was purchasing to begin with.  Now, however, with intellectual property laws and wholely digital products, that aftermarket not only has ceased to exist, it has even been criminalized.  I believe this development is not only intended by media companies (the music industry fought used CD stores for years to no avail) it’s also greedy, shortsighted and potentially destructive to artists and creators.  And that doesn’t even address the fact that it represents a de facto price increase for consumers because we really have no legal right to resell the products we just purchased.

The article referenced above doesn’t address the lack of an aftermarket, but to me, it does raise some interesting and disturbing questions about what it is exactly that we’re paying for.  The author describes the nightmare of trying to purchase as ebook as a gift for someone else.  He lists off several retailers who have no options for doing so at all, and the difficulties of even dealing with the few who do.  He also makes what I believe is a very cogent point about the one retailer he dealt with where this wasn’t a problem:

“It’s worth noting that (they) may have been helped in setting this up by the fact that they sell DRM-free ebooks…”

Of course they were helped by it because DRM is the mechanism by which our rights as consumers have been taken away.  I used to buy a lot of CDs.  But then, all of a sudden, I’d buy a new disc and be forced to install some kind of ill-defined spying software on my computer just to listen to it.  Even then, I couldn’t rip a copy of a tune from the disc and make a mix tape for my car.  Shortly thereafter, I stopped buying CDs.  I had lost a significant enough amount of the value of purchasing a CD that it no longer made sense to plop down $15 for a product that no longer suited my needs.  I didn’t make a snap, sudden choice.  I just found, months later, that I had stopped even shopping for CDs.  DRM took away my abilities as a music consumer, and they lost me as a customer for that medium because of it.  If publishers don’t tread lightly here, the same thing could happen with ebooks.

I’ve published two ebooks, readily for sale at major online retailers (yes, that was a shameless plug) and I’ve eschewed DRM.  I’m fully aware that it makes my work more susceptible to piracy, I just don’t care.  Unless and until someone comes up with some DRM that makes some damned sense and isn’t just blatantly limiting consumers’ rights and their ability to use my work, I’ll never be a party to its use.

My question is why can’t I just walk into Barnes and Noble with a memory stick, buy up some ebooks, load up that stick, wrap it up and give it to my friend who has a Nook for Christmas?  Why can’t I go to Amazon,download some ebooks on my computer at home, load em up on a memory device and give it to my other friend with a Kindle for Christmas?  Why can’t I take the ebooks I’ve bought over the years, load em up on a device and donate them to my local library?  Why can’t I take the Raymond Chandler ebook series I have bought, load em up and sell it on Craigslist?

There are two reasons (well, three if you count the fact that most of that activity is either illegal or against terms of service): one is DRM that controls what we can do with products we’ve lawfully purchased.  Two is that without DRM, the files can be constantly replicated over and over and over again, and nothing could stop me from repeating this process to infinity, or by another term, engaging in blatant piracy.

So here’s what I suggest: a new form of encoding for these files that allow two simple yet profound changes.  First, each file allows the purchaser to make one copy for backup purposes, the copy encoded so as to be non-replicatable, and once that copy is made, the original also becomes impossible to copy.  It can be done.  I had DVD backup software 10 years ago that did this, made a copy of a movie but the copy itself could not be copied. 

The second suggestion, and major league game changer, is to make all files readily transferable, but not copied.  I can move an ebook from my computer to my smartphone but the process wipes out the file from the computer.  These files could be infinitely shifted from device to device but always leaving nothing behind.  I can do this right now simply by cutting and pasting.  There’s no reason we can’t have the same process built into the file itself.

Do this and we return the rights to consumers because I’m not duplicating the file every time I move it.  I’m effectively shifting the same file.  I can loan books to my friends again, just like I always could with printed copies, and if I want to read it again, they have to give it back.  I can donate them to the library again, and they can check out the book just like they have always done with printed copies.  Library patrons would still have to actually return the books, as well, so others can check them out.  I can readily and easily buy ebooks for friends as gifts every bit as simply as I can today with printed books.  And best of all, I could resell ebooks I’ve bought, creating an aftermarket for digital books that benefits both consumers and publishers just like the used book market always has.

Create DRM that allows these activities, and I’ll be totally behind it.  Technology is pretty amazing and we’ve progressed far beyond things I ever thought possible.  But we can’t head into a bright new future by taking value away from consumers, we won’t benefit nearly as much as we could by limiting the abilities of customers to do things they always have, things that bring value to their experience, and to the artist and publisher side, as well.

Why hasn’t this already happened?  Media companies don’t want it to happen.  They’re under the mistaken impression that they profit by limiting their customers rights and exerting unprecedented controls on products we lawfully purchase.  They want to destroy the aftermarket, and they want to get paid every time someone opens a book.  These changes will never come from the old guard. 

If they do happen, and I believe they should, it’ll be a startup or an industry outsider who brings it about.  It’ll be someone who sees value in expanding their customers’ abilities and experience instead of limiting them.  It’ll be someone who sees the value in a thriving aftermarket and the indirect transactions between friends, relatives and others that provide essential exposure and word of mouth that lockdown controls prohibit.

The path to the future needs to include protecting and improving value to the customer, not taking away what they already have. With these kinds of simple changes, DRM will become a driving force to real profit instead of a hindrance to it.

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