Ebooks and First Sale
By Paul Biba
Editor’s note: Marilynn Byerly gave us permission to print her blog post in full. You can find it at her Adventures in Writing blog. PB
The First Sale Doctrine and Ebooks
This is a very general overview for readers and authors, not an exhaustive legal discussion on the subject. If you want an exhaustive overview complete with all the legalese and laws, I suggest the articles I have links to at the bottom.
The First Sale Doctrine Defined:
“First Sale Doctrine refers to the right of a buyer of a material object in which a copyrighted work is embodied to resell or transfer the object itself. Ownership of copyright is distinct from ownership of the material object. Section 109 of the Copyright Act permits the owner of a particular copy or phonorecord lawfully made under the Copyright Law to sell or otherwise dispose of possession of that copy or phonorecord without the authority of the copyright owner.
Commonly referred to as the “first sale doctrine,” this provision permits such activities as the sale of used books. The first sale doctrine is subject to limitations that permit a copyright owner to prevent the unauthorized commercial rental of computer programs and sound recordings.” US Government Publication 04-8copyright. http://www.cendi.gov/publications/04-8copyright.html
One of the ongoing discussions about copyrighted ebooks is whether the “first sale doctrine” can be applied to a digital book. Can a person sell a used copyrighted ebook?
Right now, the US Government as well as most other governments say no. (see iTunes White Paper link below)
Look at the US Government definition above to see one of the reasons why. First sale doctrine only applies to a “material object” like a paper book. A copyrighted digital book isn’t an object, it’s content, and content can’t be copied and, therefore, can’t be resold.
Also, copyrighted digital content like music, computer software, and ebooks aren’t technically sold, they are leased according to the licensing terms a person agrees to when they put their money down for the song, etc.
At ebook distributor sites like Fictionwise.com, the terminology “sell” and “buy” are used, but in their FAQs, they say you are only leasing an ebook, not buying the content, so you can’t resell it, etc.
The difference between “lease” and “buy” is also used as a justification of why an ebook can’t be resold.
All those who say that “first sale doctrine” applies to copyrighted ebooks are wrong from a legal perspective.
Only lawsuits, the courts, or Congress can change this, but most of the money is on the side of the copyright leasers — the publishers, music and movie companies, etc., so I doubt “first sale doctrine” will ever apply to copyrighted ebooks.
RECOMMENDED RESOURCES
Amazon Kindle and Sony Reader Locked Up: Why Your Books Are No Longer Yours, Columbia Science and Technology Law Review.
http://www.stlr.org/2008/03/amazon-kindle-and-sony-reader-locked-up-why-your-books-are-no-longer-yours/
Explores the various issues of sale versus license, first sale doctrine, etc.
iTunes White Paper
http://cyber.law.harvard.edu/media/uploads/81/iTunesWhitePaper0604.pdf
The last sections explain various governments’ stances on first sale doctrine issues.
US Government Publication 04-8copyright.
http://www.cendi.gov/publications/04-8copyright.html
Copyright, as well as “first sale” and “fair use,” defined and explained.
{NOTE: A blog entry is copyrighted material, but for this blog entry, I give you my permission to copy it, pass it around, post it on your blog, or whatever. I’d appreciate a link back, but that isn’t necessary. You are also free to remove my name.
If you change any of the content, you must remove my name.}
May 1st, 2009 at 3:36 pm
I have no problem with the lease concept but then I want the price to reflect that it is only a lease — a price that is 25% to 50% lower than what I would pay to buy a pbook mass market paperback version, not a hardcover or trade paperback version. I would consider that a fair bargain.
May 1st, 2009 at 6:59 pm
Rich, the possibility of a much cheaper ebook vanished the day that Amazon wrote the publisher contract for the Kindle. They take a 66% cut. Even the small publishers can’t make a profit unless the price almost equals a massmarket paperback, and the big publishers have much higher overhead and costs.
The publishers aren’t legally allowed to undercut the big distributors’ prices so the book prices will be higher everywhere.
You ain’t seen nothing yet. With the big book distributors like Barnes & Noble and Amazon buying up all the ebook applications and ebook distributors, the price will only rise.
May 1st, 2009 at 9:04 pm
Amazon’s cut is too large. For ebook publishers and authors, there are viable alternatives.
Smashwords is an innovative online bookstore. Smashwords takes 15% of each sale (not including the PayPal fees). Smashwords will also convert your ebook to different formats.
Lulu.com is another good way to sell digital content. Lulu’s cut is 20%, and they accept PayPal and all major credit cards.
E-junkie takes zero percent of each sale; they charge a flat fee per month. You can host 10 products for 5 dollars per month. Like Lulu and Smashwords, E-junkie provides storage and delivery of digital content.
Kiqlo is a new option for selling ebooks. They take zero percent. (But you’ll need to pay your PayPal or Google Checkout cut, which is still relatively small.)
A number of publishers and authors are taking advantage of these opportunities. With “middleman” costs lower, ebook prices can be lower.
Many books on Smashwords — full-length fiction and non-fiction works of 50,000 words or more — are $ 5 or less. Joanna Penn is selling her two excellent ebooks about writing for $ 1 each. My 21-chapter ebook about ebooks is priced at $ 1.
Even the big-name publishers are starting to test the low-price waters. Faber, in the United Kingdom, has just offered an ebook (What Price Liberty?) for “you pay whatever you want to pay.” And you can choose to pay nothing at all. The offer runs from now until around June 4, when the paperback edition arrives.
One of the many joys of independent publishing is that it allows us almost complete control of every facet of the publishing process. That includes setting our own prices. We can price higher and make a bigger profit per book. Or we can price lower, and hope to win the good will of our readers — and sell more ebooks at the lower price.
Michael Pastore
50 Benefits of Ebooks
May 1st, 2009 at 10:56 pm
It would be great if it was that simple, Michael, but it’s not.
I’ve been in epublishing since 1998 which makes me ancient in ebook years. One of the great hopes many of us had in those days was that ebooks would open up the distribution from the publisher to the reader. It didn’t happen. The readers bought our books, but they bought them from the early distributors, even though the books were much more expensive.
For over ten years, I’ve watched my own royalty statements, and I’ve talked to hundreds of authors, and almost of none of us make sales from our publisher and the small sites. It’s all Fictionwise, Ingram, Palm, etc., and now Amazon Kindle.
We did everything we could to lure readers, but they liked the familiarity of name sites and the one-stop shopping.
I don’t see that this will change.
Sure, there are a lot of great small sites, but, if the readers aren’t there, and they haven’t been, it’s a losing cause.
May 2nd, 2009 at 12:03 am
Michael Pastore says:
“Amazon’s cut is too large. For ebook publishers and authors, there are viable alternatives.”
Walmart is well known to squeeze every last penny from every one of their suppliers. Their suppliers go along with that cost pressure because they know that Walmart has the traffic that will increase their sales.
While Amazon may squeeze you a little harder an author is likely to have the same experience as Walmart suppliers - more traffic, more sales.
May 2nd, 2009 at 8:34 am
TeleRead readers are well aware that many intelligent people are questioning Amazon’s proprietary format, as well as their required DRM. How might that be changed? … It starts by people speaking out against it. On this subject, I’m sure that you have read the insightful posts by David Rothman and Chris Meadows, talks by Tim O’Reilly, and videos and essays by Cory Doctorow. These protests show clearly how these DRM practices are against the interest of the publishers and the ebook buyers. As more people understand this issue, more people will protest.
One result of this discussion might be this: Amazon will change these policies. Tim O’Reilly says that if Amazon does not change, they may fail. Another result of these protests might be: other booksellers will sell ebooks without DRM, and using open formats.
Now let’s look at the issue of ebook sales. Nobody can deny that Amazon has the numbers. Some people would say that Amazon has a near-monopoly. Publishers and authors tremble like aspen leaves at the mere thought of rebelling against this savvy emperor.
As an author and publisher, are you satisfied with this situation? … Do you want things to remain the same, or would you like to receive a fairer share for your creative work?
Less than 9% of authors in America are able to make a living from writing and selling their books. America’s remaining authors, the 91%, have other professions (such as teaching at a University); or have an independent income; or are supported by a spouse or another family member. If you are one of the small percentage of authors who are making a living from your books via Amazon, then I would be the last person in the world to tell you to abandon them. Stick with Amazon, if they are right for you.
For most publishers and authors, the online booksellers work against us, because we have absolutely no say in their policies and practices. Their way, or the highway.
Some years ago, authors rebelled against big-name publishers: authors asked: Why have you designed a Catch-22 system that makes it impossible to get an agent without first having been published, and impossible to get published without first getting an agent? … These dissatisfied authors started the Independent (”Indie”) publishing movement, which is now flourishing.
Just as publishing with big-name publishers was not right for everyone, selling on Amazon is not the right solution for everyone.
Dissatisfaction is the seed of change. Now we are seeing publishers and authors asking an honest question: Why is the bookselling facet of publishing entitled to 55% or 65% of the selling price, when all the other persons who work diligently in the book industry — authors, publishers, editors, designers, marketers — need to share the much smaller portion of the sales?
Those of us who feel strongly about this issue are seeking alternatives. A few years ago, a man named David (not Rothman) defeated the monster Goliath. And not only because David had better technology :). David was inspired with a new vision. He wanted to end his time of exploitation.
Life is change; some parts of human history show signs of intelligent life and progress. Slavery has been abolished; women now have the right to vote; children are protected by law from long working hours in sweatshops. One day in the future, authors and publishers will receive a fair share for their creative work. Vision, passion, and integrity have rarely failed to make a change.
Yes, Marilynn, I am a Utopian. Join us, will you?
Michael Pastore
50 Benefits of Ebooks
May 2nd, 2009 at 10:08 am
HeavyG, it has to be a lot more books to make the Amazon deal worthwhile, if even then..
Publishing runs over a very narrow margin of profit–around 3 percent according to some experts I’ve read. Book prices have never been inflated like most manufactured products. For example, the furniture you buy often is a 500% to 1000% mark up from cost which allows lots of price cutting and lost sales.
Publishers can’t cut their costs by much since all the work in creating the product–the author, the editor, the copy editor, etc.,– can’t be done by China so they are getting much less profit for each book sold through Kindle.
Amazon’s 66% is cutting so close to the bone of profitability for each book that small publishers and authors will have to struggle to make any profit from Kindle sales, not matter how many books are sold.
If the Kindle wins the hardware war, the smaller publishers will die, and only those publishers and authors making their money through paper sales will survive.
So much for ebooks saving publishing and giving readers a more varied reading experience from the NY conglomerates’ version of what the majority wants to read.
May 2nd, 2009 at 12:30 pm
Michael, on DRM. If readers want DRM, they need to stop treating the copyright pirates like heroes and start shutting them down.
Publishing is like the rest of the world. Money is the gas that keeps the engine running. If you siphon off enough gas, the engine stops. The pirates are now siphoning off enough of the gas that the ebook engine is coughing from loss of fuel.
As I mentioned in another post, the profit margin in publishing is very small so that gas tank is very small. A vast majority of authors make very little money for a great deal of work, and their tank is even smaller. Too much siphoning of their tank, and they stop writing.
If readers want DRM free books, they need to pay for the gas to keep the engine running.
As to your Utopia. Ten years ago, at the birth of serious epublishing, I submitted my manuscript to a great epublisher. At that time, I knew how the publishing industry works as well as the risk to my career I took. I also knew that, if the authors like myself with a professional level of craft didn’t take a leap of faith by entering the market, the market would fail.
I have so many firsts in epublishing I deserve an historical marker on the Internet superhighway. When people were saying that all ebooks were garbage, I had the first ebook to win major awards against big name authors in NY conglomerate publishing. I was in the forefront of introducing public libraries to ebooks. My book was the first epublished book to be part of a number of university and public libraries ebook collections.
I opened up a major promotion venue for ebooks by buying a large ad so a major romance review magazine would have to review my book. They did, discovered that ebooks weren’t dreck, and they have since become a major promotion venue and supporter of ebooks.
I have a back full of arrows from other authors who treated ebook authors as the enemy and from professional author groups who should have protected my back.
Many other authors and I spent years building the reputation of ebooks while the big publishers were too afraid of the market, and we built an audience.
During this time, I discovered that readers are such creatures of habit that they would usually pick a name author over an unknown, they wanted to buy their ebooks like they bought their paper books, and they preferred one stop shopping over saving money.
Meanwhile, the big publishers and the distributors used the readers’ habits to build such a power base in the market that the great dream for change and escape from the old ways, as well as the hope that authors could take a bigger piece of the pie, have all but disappeared.
Unless you define Utopia as making a pittance for a great deal of work as well as many hours promoting your book to get a few readers at sites where few buy their books, it doesn’t exist.
May 2nd, 2009 at 1:01 pm
I note that the restriction on first sale that applies to music recordings mentions rental, not sale. Thus CDs can be resold, and are.
So should it ever come about that ebooks are tied to some physical media, we could see a market for used ebooks. Say you could buy the ebook on an SD flash-memory card, something that might appeal to publishers if they felt that on-card encryption would be more secure than the currently-available DRM on downloaded files. If this ever did come about, then readers would be able to resell their SD-card ebooks, wouldn’t they?
Another possibility would be an ebook-device that is sold with books on board, the way some special-edition iPods are sold with a musician’s back catalog. Buy the ‘Steven King Kindle’ and get all the King novels (or a bunch of them, anyway) included! You should be able to resell that Kindle with the original content of the pre-installed King texts, right?
Taking this a step farther, it seems as though school districts in the ebook future might be able to purchase reading devices with the whole reading curricula (for a single grade, or for a range of grades like 1-6 or high-school) pre-installed. The packager of these devices would be able to trade lower per-text prices for a guaranteed district-wide or state-wide exclusive monopoly deal.
It does seem to me that you’re right though, on the whole. Most ebooks will be downloaded, and never sold as part of a physical object.
May 2nd, 2009 at 1:15 pm
Marylynn, we stand at opposite ends of the epublishing spectrum on these issues: DRM, copyright, and ebook pricing.
I oppose DRM with a passion; I support changes to current copyright laws (along the lines of Lawrence Lessig in his new book, Remix); and I believe ebooks should be priced as low as possible.
Our differences are useful, because everyone who reads these posts can consider our views and differences, and then make up their own minds.
We also disagree completely about creativity. You said in your last post that creativity would, in effect, dry up and vanish if copyright were eliminated. It seems as if you believe that nobody would write, or paint or sing or make open source software — or do anything at all creative — unless they were financially rewarded.
I see creativity as an essential element in human nature. We are born to be creative, and we must be creative if we are going to be healthy and joyful and fulfilled.
Some of the best and most creative works ever made were made not for money only, but for the joy of the work. And for the desire to share a vision with others. John Keats, for example, wrote:
“I should write for the mere yearning and fondness I have for the beautiful, even if my night’s labors should be burnt every morning, and no eye shine upon them.”
Certainly, Tolstoy did not write for money (he didn’t need it), he wanted to improve the conditions of his countrymen. Henry David Thoreau had no illusions about getting rich from his books. Nor did Walt Whitman, who continued to revise “Leaves of Grass” despite its lack of financial success.
Lastly — am I wrong about this? — you seem to be completely pessimistic about the possibility that publishing can change. (I am not sure if you believe that publishing should change: if you think that the corporate publishing world is “healthy” or if it is “broken”.)
I am hopeful for change in publishing. I see change as necessary. And I see signs of change emerging everywhere.
Fortunately, our modern world is pluralistic, and can tolerate our conflicting positions, and a myriad of nuances in between.
Michael Pastore
50 Benefits of Ebooks
May 2nd, 2009 at 2:10 pm
::Lastly — am I wrong about this? — you seem to be completely pessimistic about the possibility that publishing can change. (I am not sure if you believe that publishing should change: if you think that the corporate publishing world is “healthy” or if it is “broken”.)::
The above is quoted from Michael’s comments.
I’m a realist. I’ve been there and done that on the change bit, and it never happened despite blood, sweat, and tears from a lot of authors and small publishers who were eager to make things better in publishing.
During a very short window of time, ebooks had a chance of changing the rules of publishing, but the change didn’t happen because too many readers failed to change with us.
The conglomerates and the distributors now have a firm hold on ebook distribution. They control most of the selling venues, the prices, the hardware, and the content.
The readers are still buying their ebooks from these locations, and I’ve not spoken to any author who sees much profit from other venues.
So, yes, without a sudden sea change in attitude by readers, I think the fight is lost. Publishing won’t change.
May 2nd, 2009 at 10:17 pm
Can someone please explain to President Obama that his giving pirated music to the Queen of England was wrong, and make him apologise?
From what I’ve read the situation is not as clear as you make out. The various posts discussing the legality of the above gift suggest that there are legal complexities that apply not just to Obama’s gift but to everyday copyright use.
“If readers want DRM, they need to stop treating the copyright pirates like heroes and start shutting them down”
I know you’re a professional writer and I should assume that you know how to convey your thoughts accurately, but surely you mean “if readers DO NOT want DRM”? I haven’t seen any readers clamouring for even more restrictions than they currently endure.
Rather than blaming customers for the existence of non-customers, wouldn’t it make sense to try to sell to the non-customers who want to read your books?
Even with the sense reversed as I suggest, that comment is presumably intended to offend readers because it’s not only untrue it’s patently unfair. ebook readers by and large support authors and oppose pirates. Try looking for pirated ebooks online and you’ll have a very hard time. What you will find in large quantities are scanned books and copies of CDs and pdfs that come with technical books. In both cases the origin is paper books. Mistaking that for pirated ebooks suggests that you’re not operating in a reality-based framework.
There’s also unfairness in your main point - ebook purchasers are paying the same prices (or in many cases higher prices) for a lessor product. We buy a book at a discount off the new release hardcover price but have no right to lend it, let alone resell it. So right there you’ve killed the social aspect of reading and created ill will amongst your customers. Rather than gloating about it shouldn’t you be trying to fix it?
May 3rd, 2009 at 3:44 pm
::“If readers want DRM, they need to stop treating the copyright pirates like heroes and start shutting them down”
I know you’re a professional writer and I should assume that you know how to convey your thoughts accurately, but surely you mean “if readers DO NOT want DRM”? I haven’t seen any readers clamouring for even more restrictions than they currently endure.:: Quote from Moz
Yes, that was a typo. Even professional writers are prone to them when they are tired and rushed. I was both.
::Rather than blaming customers for the existence of non-customers, wouldn’t it make sense to try to sell to the non-customers who want to read your books?::
Where did I say that? What I said was that massive theft makes it more likely that DRM will be used in the same way that an increase in burglaries in a neighborhood will make people buy deadbolts and burglar alarms. If you turn that thief into a Robin Hood figure and turn your back on his theft, you have yourself to blame when burglar alarms wake you up every night.
::Even with the sense reversed as I suggest, that comment is presumably intended to offend readers because it’s not only untrue it’s patently unfair. ebook readers by and large support authors and oppose pirates. Try looking for pirated ebooks online and you’ll have a very hard time. What you will find in large quantities are scanned books and copies of CDs and pdfs that come with technical books. In both cases the origin is paper books. Mistaking that for pirated ebooks suggests that you’re not operating in a reality-based framework.::
I was talking about readers who treat copyright pirates like heroes, not all readers. I agree that most readers, particularly those who understand copyright, support authors. Most the the illegal sites I’ve helped bring down were found by readers.
::There’s also unfairness in your main point - ebook purchasers are paying the same prices (or in many cases higher prices) for a lessor product. We buy a book at a discount off the new release hardcover price but have no right to lend it, let alone resell it. So right there you’ve killed the social aspect of reading and created ill will amongst your customers. Rather than gloating about it shouldn’t you be trying to fix it?::
The article is about current copyright law, not my opinions about it. According to copyright law, you can’t sell a “used” ebook. Talk to your congressman if you aren’t happy about it, and maybe he will change the law.
My “opinion” is that the law won’t be changed, and I’m glad for it because it makes sense. Think of an ebook as a movie you see in the theater. You have the experience, but you don’t have a physical thing you can sell.
Ebooks are a better value than a movie because you can reread it as many times as you want for free, and you usually pay far less for it than you do for a movie ticket.
If you think an ebook’s price is too high, don’t buy it. Supply and demand does wonders for prices.