What’s the Idea Behind Re-Selling Used Digital Content?

Recently, articles appeared in Publisher’s Weekly, Gizmodo, and the Huffington Post on the idea that Amazon is pursuing the rights to re-sell used eBooks.

As usual, Amazon plays it close to the chest and does not state anywhere the purpose for its move to undertake this, which leaves only speculation as to its motives.

Most of the chatter seems pretty dismissive of the concept, many commenters laughing off the idea as absurd or ridiculous, others guessing it is merely Amazon moving to protect content over which it asserts ownership. Chris James pointed out Amazon’s interesting take on ownership over digital content in an Indie News Beat article:

“Although many of us already know this, it’s important that we all know this: when you buy an eBook from Amazon, you don’t really buy it in the commonly-understood meaning of the word.” (Read the whole article HERE).

I doubt that the move to assert the right to re-sell used digital content arises from a burning desire to keep Mary-Lou from improperly sharing her copy of 50 Shades with Mary-Kay. That would be pretty resource-intensive. I likewise doubt it has anything to do with erecting a new bulwark against concerted industrial-grade digital piracy. The digital empires seem to have made peace with the idea they will never stamp out digital piracy.

The problem is that pirates and file-sharers don’t likely take much money out of Amazon’s pockets. It would be wrong to conclude that pirates making a zillion bucks from selling stolen copies of The Hunger Game of Thrones actually cost Amazon a zillion bucks. The pirates are selling at a discount that Amazon won’t or can’t match. Nothing in the formula indicates with any reliability that the purchasers of pirated books would have bought from Amazon if only it hadn’t been for the pirates.

Likewise with improper file-sharing. Every indie author knows that people who wouldn’t even consider shelling out 99¢ for a book will scoop them up by the digital handful when they are free.

David Niall Wilson (CEO of Crossroad Press Audio & Digital Books) commented on the PW article, “The time to panic is not now. A patent for technology is a far-cry from the rights to make use of it. Amazon themselves claim that people are not actually buying the books, but only leasing them – thus their ability to wipe your account if you run afoul of their system. Also, there is no way for them to actually sell the digital file itself…it’s been downloaded. One copy – they don’t HAVE that copy, and it can’t be given back… If they sell another copy, then they are doing just that – a new copy”

I take issue with two parts of his statement. First, I am not among those who see Amazon as so forward-thinking that they will expend legal resources to lay claim to something that doesn’t exist yet, just so they can be ahead of the game in case someday it happens.

Second, I think the people who envision a used eBook as if it were the actual used file are looking at the issue all wrong.

Consider the royalty model of traditional publishing. An author gets a royalty from the original sale of each unit of the book—and that is all. The author does not get another check for each time the book is re-sold. If somebody buys the book and returns it and the local bookseller chucks the returned book in the discount bin and sells it at a marked-down price, you don’t see a cent of that, any more than you’d make a penny off someone selling their copy of your book at a garage sale.

To effect this model, Amazon would not have to prove they were selling the same file. The files are identical and therefore interchangeable. All they’d have to know is how many of your books were returned—and they already know that.

Let’s run through an example of how this might work. Let’s say you have a title that reliably sells 100 copies per month. The first month it goes on sale, 100 units are sold and ten of those are returned. Amazon now owns and can re-sell those ten. The next month, you sell 100 books, but the first ten copies sold were the ones Amazon claims the rights to, so you get no royalties on those. By the second month, you are getting 90% of the royalties to which you thought you were entitled. The same pattern holds for the next month, but somehow, your royalty check got even smaller. How did that happen? Well, some of the used books that belonged to Amazon were also returned and they sold those along with the books that were returned last month before they sold any that belonged to you. Obviously, that cycle gets worse and worse for the author, until there is no royalty check at all, and that happens when the total number of eBooks sold per month is equal to the amount of your books that Amazon owns. It might sell 100 units per moth for perpetuity without ever putting another cent in your pocket.

Right now, Amazon simply deducts returns from your royalty payments. That’s bad enough, but what if they decide to implement this model? Maybe I’m wrong. Maybe that’s not it at all. Still, I do not see how this move by Amazon to establish the rights to re-sell digital content can possibly be good for indie authors.

Author: Stephen Hise

Stephen Hise is the Evil Mastermind and founder of Indies Unlimited. Hise is an independent author and an avid supporter of the indie author movement. Learn more about Stephen at his website or his Amazon author page.

16 thoughts on “What’s the Idea Behind Re-Selling Used Digital Content?”

  1. It was just a matter of time until the COMPANY found a way to screw writers in the digital world; they’ve been doing it for centuries under the old system, haven’t they?

  2. This is not really a maybe, Stephen. Courts in the EU have already upheld the consumer’s right to resell digital products. Which means Amazon could potentially implement some sort of resale system there right away.

    Here in the US, it’s still illegal, but that is probably going to change. Lawsuits over inheritance of digital content have already begun. Consumers have won battles over social media EULAs which said descendants had no rights to digital content. Said EULAs were overruled by the courts, and the data handed over to descendants. Consumers are likewise demanding the rights to pass their digital books, music, film, etc., on when they die.

    They are very likely going to win. Either the courts will rule in their favor, declaring digital goods property which is purchased, not licensed – or failing that, this will become a hot button election issue, and lawmakers will be voted in who will change the law. And any law allowing inheritance of digital media would likely also allow resale.

    The good news is, Amazon would never be allowed to do the “return” thing Stephen mentioned above. Returns were never sold, therefore are not covered by first sale doctrine. What we probably will see is Amazon offering to buy back copies of popular ebooks, films, etc. for a fraction of the selling price, and then reselling those at a lower cost. Just like they do with the physical goods. Amazon is in a great place to handle that, because they can then just move the license from one Amazon account to another.

    Or they could start an auction house or digital version of the current Amazon Marketplace, where consumers can post items from their accounts for sale, and Amazon gets a cut of those sales.

    This isn’t the end of the world. There are some pros and cons. On the down side, unlike a physical book, and ebook doesn’t degrade. A used print copy might be pretty torn up. A “used” ebook is as good as a new one. On the plus side, this actually increases the value of the ebook formats, by allowing users to sell their books. Most users won’t resell them; but the fact that they *can* resell them increases their perceived value, which allows publishers to charge more for the same goods.

    1. Kevin, you may be on to something. I’ve been noticing suggestions on Amazon product pages that I consider selling back various physical things — books as well as other stuff. This patent might be tied in with some grand Zon scheme to set up a massive resale shop/flea market.

    2. I think Kevin nailed it. I saw the same flaw in Stephen’s return idea. But if they allowed purchasers to sell back their books, that would work. I’ve got a couple other thoughts to throw in the mix.

      First, consider the Kindle Lending Library. Some books in KDP Select (and therefore in the library) are priced low enough (99 cent books, for sure) that a borrow actually nets more than a sell does for the author. For those books and others where Amazon’s numbers lead them to believe the demand for borrowing would make it worthwhile to do, why not just buy X copies of a book. (I think they are or at least were doing this in the beginning on some bestsellers where the publisher hadn’t opted into the KLL although I think to stay within what they were sure was legal they were buying a copy for every borrow, possibly adjusted if the book was lendable.) Then when demand goes down for the book in the KLL they could sell one or more of their multiple copies, substituting it for a new sale as in Stephen’s return scenario. If they can establish right of first sale applies to electronic items, even if “licensed” rather than actually sold, as Kevin discusses, they could easily do this. The author would get credit for the initial sale(s) of the book for them to put in the KLL, then they could loan as many times as they wanted as long as they never had more active borrows than copies of the book.

      The idea of a customer buying a digital book and then selling it back might be effected by DRM. If you don’t have DRM on your book then Amazon wouldn’t be able to assume they knew where every (usable) copy was. Possibly their patent application has a solution for this, but it seems that non-DRMed books would present issues for them to buy back and resell, even if right of first sale was established.

  3. I really can’t wrap my head around this. One thing I do know; if there is a way for a large corporation to use the little gut they’ll do it. I’m going back to writing. That’s something I know a little bit about.

  4. It won’t be different from what now exists for paperback books.

    You’ll end up competing with cheaper versions of your book that doesn’t pay you anything on a sale.

    This has always been, of course. But it used to me that there were two kinds of bookstores, new and used. You wouldn’t see a used copy of your paperback on the shelf next to the new copy.
    Amazon has already changed that.
    What’s kind of pathetic about this is that most ebook authors are already making fairly small amounts per sale… and amazon will end up making pennies on it. You lose a two dollar sale, and they gain a nickle for it.

    1. Doubtful. If the author makes $2 on a sale, Amazon makes $1. They’re not going to lose dollar sales to earn a nickel. 😉

      They might buy back a $2.99 ebook for a quarter and resell it for $2, though.

      Interesting thing though – they already do this with print books. I can order a hardcover for a big chunk off the “new” price if I grab one of the old ones. Usually even shipped via Amazon prime, so shipping is free. “Used” ebooks are more problematic, but… we’re creative people, guys. We can figure this out.

      1. Sure they would. They’re doing it. You have a CreateSpace book up for $11.99, making a buck or so on it. And right beside it is a used copy for a nickle. WIth $6 shipping. You get nothing, shipper makes something, seller makes “handling”, amazon gets a few nickels.
        That’s what I was saying, they already do it. Steal sales from their own authors for peanuts.

        1. Amazon doesn’t sell things for a nickel. Almost all of the used books on Amazon are secondhand bookstores selling on Amazon via the Marketplace.

          Notice those nickel books are never Prime shipping? The retailer is distributing their used books via Amazon’s website, shipping cheaply, and making money on the shipping.

  5. I think where this is heading, since they are talking about reselling things that were never owned, is that there’d be a used market, but only they could sell to it.

    1. According to the EU, they *are* owned; the EULA can say whatever it wants, but digital media are still property owned by the consumer.

      In the US, where laws tend to favor big business more, digital media generally remain property of the big business, and consumers only have limited licenses to use that property. However, there is a lot of push in the US to change that. Generally, I think that is a good thing. The danger lies in the whole resale thing, which is a side effect of ownership.

  6. Like Yvonne, I’m having trouble getting my head around this as well. In your example, Stephen, everything seems to be based completely on trust. If a trad publisher didn’t give you a cheque this quarter because all the shops returned the print copies, you could at least go to the warehouse and verify this. If the Zon says, as per your example, that ten copies were returned, you’ve got to take them on trust. This whole issue sounds like it’s going to get a lot more hideous before it gets understandable.

  7. I also can’t help but think there is a huge opportunity for scammers to buy a book legally and sell the used book over and over again. There is no way to verify the digital copy was removed from all devices. With a physical book you can only resell it at a garage sale once.

    1. The point of the article is Amazon working to secure a patent on a secure resale system, which would prevent that sort of thing.

      As it stands right now, there are already no barriers to selling illegal copies, except the law. Lots of ebook collections for sale on eBay, for instance. Most of them are illegal, I suspect. I don’t think legalizing ebook resale will result in more people breaking the law than already are.

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