Indie News Beat: Special Report

Is Amazon about to create a used e-book market?

If you enjoyed giving your books away on free days in KDP Select, then you’re going to love Amazon’s next idea: to allow copies of “used” e-books to be bought and sold second hand, as with physical books.

More buying options

Currently, if an author has an e-book for sale on Amazon at, for example, $2.99, a potential purchaser has to pay that amount. However, if Amazon implements its plan, the e-book’s product page will feature a new, used buying option, for example for $0.01, so the purchaser can get a “used” copy which, as it is no more than a stream of electronic data, will be in exactly the same condition as a “new” copy. Amazon will make sure this happens, because it will email previous purchasers of an e-book asking them if they’ve finished with their copy, and offering to take it off their hands.

It doesn’t take a genius to see where this will lead, and it doesn’t take a cynic to understand what this means for content creators.

More consumer choice

Amazon’s used e-book market is of course great news for consumers, as innumerable bargains will become available very quickly. Readers won’t have to wait for free days on KDP Select, since the used e-book market will make KDP Select irrelevant anyway. This will also go some way to resolving the DRM issue, because Amazon’s used e-book market will reduce the value of all digital versions of works of fiction to only a fraction above zero, thus obviating any need to protect against piracy.

Consumers in the digital age have already become used to getting stuff for free, and Amazon’s used e-book market provides an argument that KDP Select can now be seen as a testing ground, to find out how far authors were prepared to go to gain a readership. For content creators, the word “free” could be about to become an obligation rather than a choice.

When “used” becomes the new “new”

Used physical goods are not the same as digital content. If you decide to buy a used paperback, you accept that the spine will be broken, pages will be bent and creased, and cover colour may have faded; that’s the risk inherent in getting something cheaper. An e-book can’t be deemed “used” in any sense of the word, because its quality does not and cannot degrade in a similar manner. Thus, the value of a “used” e-book absolutely has to be the same as the value of an “unused” e-book. But if Amazon takes back copies of an author’s e-book from existing readers, it will then be free to decide exactly what that content is worth – not the author.

In effect, not only will this take pricing strategy out of the hands of content creators, it must force the prices for e-books close to zero because of saturation in the fiction market.

Current situation

Amazon received a patent to create its used e-book market in January. However, this story on reported a few days ago that Apple has also filed a similar patent to establish a “marketplace for used e-books” (it goes without saying that other e-book retailers will be obliged to match Amazon’s and Apple’s initiative at once). Also in the last few days, The New York Times reported the president of a tech consulting firm who confirmed that the technology to create a used e-book market is now in place. His quote included the rather sheepish admission that while this development will be great for consumers, “Over the long term, it could seriously reduce creators’ incentive to create.” No, really?

From the current news stories, it appears that all eyes are on the Capitol Records vs. case, which centres on ReDigi allowing consumers to re-sell their “pre-owned” digital content. Although the case relates to the re-selling of songs, the result will apply equally to e-books. Capitol Records is suing ReDigi by claiming that purchasing a licence for a digital song file only gives the purchaser the right to use it, not sell it on, while ReDigi is claiming that the first sale doctrine applies, and the purchaser is free sell what they then own.

If Capitol Records wins, it may give Amazon pause for thought, possibly to refine whatever used e-book market model it is currently planning. But if ReDigi wins, then there will certainly be no barrier to digital content being regarded as “owned” by the consumer, and thus treated as “used” in the meaning of a physical object.

What next?

While at this stage measured extrapolation would be more helpful than wild speculation, it is difficult to see how the used e-book market is not going to happen. With the deft marketing for which Amazon is renowned, it will be delighted to allow consumers to believe that a “used” e-book is somehow different from – and worth less than – a “new” e-book, and will work hard to belittle and dismiss claims to the contrary. The popular press, we can expect, will welcome the development as a victory for consumers, with scant regard to how pyrrhic the victory may turn out to be. Traditional publishers will be hit as badly as Independent Authors, but are unlikely to gain much popular sympathy given how they’ve overpriced the e-book versions of their own titles to date.

In summary, Amazon will lead the way by doing what it’s always done: delivering the best value for its customers, which is how it became the largest online retailer in the first place. If it creates a used e-book market, then I believe the time will soon come when Independent Authors will look back at KDP Select with wistful reminiscence, when they used to enjoy the luxury of choosing whether to give their books away for free, before Amazon took that choice away.

Author: Chris James

Chris James is an English author who lives in Warsaw, Poland, with his wife and three children. He has published three full-length science fiction novels and is currently writing a series of short story volumes inspired by characters in songs from the rock band Genesis. For more information, please visit his website or Amazon author page.

45 thoughts on “Indie News Beat: Special Report”

  1. I really think this whole digital re-sale issue is non-issue. I can’t see it ever happening. There’s simply no logic to it. Amazon would not be making any real dosh on the deal and it would enrage enough of the KDP authors that there would be an exodus to parts unknown.

    The logistics of implementing any plan to enforce the necessary boundaries of such an endeavor are daunting and somewhat monstrous from civil liberty and privacy angles, and even then there would be absolutely NO way to ensure that any individual file is the only copy a particular individual has of that file … I know I personally have at least two back-ups of most of my personal files.

    The mere concept of borrowing or lending files between people is ludicrous. Selling them without a physical media involved is the same. This is just a way for a couple of unscrupulous companies to try and find a revenue stream for themselves without coming up with their own content. I sincerely hope companies like ReDigi are sent packing along the way of the weasel like they deserve.

    1. I would agree with you there, Rich, but that is the essence of the capitalist: to make money by moving things around. Amazon only need to muddy the waters a little and all of their customers will be thinking that their used e-book market is the best thing Amazon has done since… the last really cool thing it did.
      It would be extremely interesting to see how authors would be prepared to pull their content.

  2. I’ve been reading the various articles out there on this and the many theories as to what Amazon has in mind, but as in most things Amazon, they’re all guesses. We won’t know what they’re going to do until they do it and then we’ll be guessing how it fits in their overall strategy. However, I’ve got some less alarmist theories to consider. (Obviously, I don’t know, just to show there are other possibilities.)

    First, it needs to be said that a court in the EU has said that licensing of a digital good is the same as a sale and the logical extension of that is that right of first sale takes hold and someone who buys an ebook or MP3 could then sell it. Unless there is a way to overturn that ruling, the various vendors of digital goods, of which Amazon and Apple are two of the largest if not the largest in the world, need to find a way to deal with it in some fashion.

    One thought that is out there is that by patenting the technology to be able to do this, it puts Amazon in the driver’s seat. They could own the patent without implementing the technology and by owning it they would be in a position to stop others from using it.

    Another thought is that they implement the used market, but charge a transfer fee such that the economics of selling the used books doesn’t make sense to do.

    Amazon as a company almost always has their eye on the long term. While I’m not suggesting blind faith and think we need to keep an eye on developments here, I also think they’re able to see what the impact on creators would be if an unfettered used ebook market were to actually happen.

    1. Al, I have huge respect for your opinions, but I think you’re being a little too charitable with Amazon in this case. It’s a company whose sole objective is to get bigger and make more money, mainly by delivering the “best” for its customers.

      I see it like this: there are thousands of readers whose Kindles are full of millions of books downloaded for free via KDP Select. Those books are now for sale at, say, $2.99. Amazon emails the reader and says: “You know that book you got for free? Here’s a deal: we’ll sell it second hand for $1, then we’ll take $0.50 and you make $0.50.”

      Next day, on the book’s product page, you have two buying options: $2.99 for “new”, and $1 for a “used” copy.

      That’s how I see it starting, anyway. Readers won’t miss an opportunity like that, and neither will Amazon. I don’t really think prices will crash to $0.01 in the first week, but it has to happen eventually. Trading in used e-books is going to be done at the click of a mouse – no need for the pain of packaging and posting the goods. Amazon will make it very easy to keep its customers happy.

      Also, that EU judgement you reference works in Amazon’s favour, confirming that an e-book is a good that can be re-sold by the owner.

      In addition, it’s worth noting that now the fiction market is saturated with hundreds of thousands of e-books, I don’t see how Amazon would even consider the de-motivation of authors and other content creators as having any relevance on bringing their customers the best products at the cheapest prices.

      1. “I think you’re being a little too charitable with Amazon in this case”

        Like I said, Chris, no one knows for sure.was presenting some alternative thoughts that may or may not turn out to be true.

        Amazon, unlike virtually any other large company I can think of, is one I rarely complain about because my history with them is that they’re always going to do more to keep me as a customer happy. In other words, I may be biased in their favor and therefore more charitable in my assumptions. As many people point out in various discussions, Walmart, Amazon, and other large companies who sell cheaply to customers have a history of squeezing vendors in various ways and indie authors would fall into that category. That tends to support your case.

        Amazon could certainly make a ton of money on a reselling scheme. They make some now reselling paper books, Amazon is willing to buy back a lot of the merchandise it sells in exchange for an Amazon gift card. Digital products are one of the few that it doesn’t. But as everyone recognizes, used ebooks are a much different animal than paper.

        But what I see happening , if they did what is suggested by this piece, is it would kill new ebooks. Yes, they’d have millions of copies of existing ebooks that they could sell, buy back, and resell. They’d have some number of The Second Internet Cafe, Part 1 and Part 2 and I’d guess their inventory of used copies would quickly be enough to meet demand. But then what happens when about Part 3? (There is going to be a Part 3, right?) If they introduced a buy back program, would you release it as an ebook? If you were part way through and saw your income from Part 1 and 2 dropping quickly, would you consider not finishing it at all? Are readers going to be happy when their favorite authors stop writing new books.

        I can’t believe that Amazon can’t see the same things that are obvious to all of us. There are already enough ebooks in the world to keep every reader in books to read until the end of the world. But if the customer isn’t going to be happy, are they going to want to do this? I’m not going to be very happy when you abandon Part 3. I’ll be pissed that John Grisham decides to retire. Stephen King fans will invade Maine and force him to keep writing. Someone suggested this would cause a resurgence in paper books. I suspect they’re right. My Kindle would soon be gathering dust in the corner, too.

        1. I’m sure Amazon do see the risk, so my imagination throws up a further complication: The Big Five take Mr Bezos to a swanky NY joint for an agreeable lunch to negotiate a “delay” clause. As the trads sell most copies of a new title in the first 3 months after publication, they negotiate a delay on Amazon buying/selling used e-books for that period, as a compromise. As Kat Brooks wrote on these pages a few days ago, the big advantage with an Indie e-book is that it has no sell-by date. This would be a potential way for the trads to regain the upper hand: each Indie’s new title would only have 3 months in which to gain traction, before used e-book copies kicked in to drive the price down.

          I don’t think the used e-book market would kill new e-books altogether. There are plenty of Indies happy to give their books away, e.g. on Smashwords, who would not be affected at all by the used e-book market and would, presumably, keep writing and publishing. The authors affected the most are those of us who hope one day to see even the most pathetic remuneration for our work and creativity.

          Ultimately, for each author it would depend on how badly they need to write and much they want to be read, but used e-books represent a golden opportunity for the trads to reinstate the previous model: the only “legitimate” author is the author who has been published by them. I believe Amazon will go with it if it brings their customers even better value for money.

  3. I agree with Big Al. If Amazon were to allow what amounts to the “fleecing” of creators, then they would eventually lose. I don’t see that. I can see them implementing it as part of a subscription deal similar to the Prime member deal they now have. Or, maybe they’ll include it in the Prime membership as an option.

    1. Thanks for commenting, Jim. You make a good point I didn’t consider when writing the article: including “used” e-books as a Prime perk. That would certainly be a good way for Amazon to introduce it, let everyone get used to it, then after 6 months or a year, roll it out across the whole site. Will be interesting to see if Amazon does it like that.

  4. The whole concept boggles me as we know nothing of substance at this point. It bears watching, to be sure, but with so many unknowns I refuse to lose sleep over it at this point. If I do, I will be the only one to blame.

    1. Certainly don’t lose any sleep, Yvonne, but forewarned is forearmed. Amazon doesn’t tend to put proposed changes out to the world for prior discussion and debate – it’s a company, after all, but we all need to watch this.

  5. I suppose if Amazon did resell ebooks, authors could strike and not publish for the Kindle. If you are going to gain little, what’s to lose.

  6. Wow, what an eye opener. I’ve heard of this but paid little attention thus far. What does it mean in the end? We’re all wasting our time writing books? Seriously, Chris, how do you react to this development … continue on as if nothing is happening? or start making changes that will “beat” the system.

    You’re right about Amazon, they’ve gone after the biggest and the best and have won in nearly every industry. They basically invented the eBook industry (as an industry, I’m not saying they invented eBooks)

    Striking against Amazon would hardly be the answer, the portion of total revenue from Indie Author’s that eBooks represents for Amazon is a very small number.

    Here’s something to think about … when early authors were confronted with the introduction of libraries, did they scream the sky is falling? Now, before everyone jumps all over me because libraries don’t “sell” books I’m just trying to imagine what the reaction was like. The earliest libraries were collections of documents and later primarily poetry, I’m talking about when libraries became a collection of fiction as well.

    Who knows, maybe this will be the resurgence of printed books, guess we have to have more book signings!

    Oh, and I need to start collecting every free book I can get my hands on!

    1. Hey Jim. It was the same for a lot of us, I think. What caught my attention was Apple applying for a similar patent a few days ago. This must mean something is afoot.
      New technology is always abused, that’s a given. The thing is to try and work out how the abuser can convince enough people that their abuse is perfectly justified. And the best way to do that is to tell people that they’re getting a bargain.

  7. I don’t know what the courts will decide, but I see it in simple terms. There are two parts to a book: the physical paper and the intellectual property. Anyone can buy or sell the physical paper part. The law says I still own the intellectual property, no matter what happens to the paper. An ebook has no physical paper part. I license it to you to read, but I still own in. You can’t sell it on or sell it back to Amazon. There is no such thing as a “used” ebook.

    1. Thanks for commenting, airbornpress, and for making such a concise assessment. I totally agree with your definition, and we need to hope that courts and others agree with it also. Fingers crossed.

  8. Back when almost everyone got their information from newspapers, there was a saying that went: Never pick a fight with someone who buys ink by the gallon. I believe the same principle would hold true for the proposed “used ebooks” program once Amazon executives consider the consequences of infuriating hundreds of thousands of writers, most of whom have thousands of social network contacts in their platforms.

    What could be worse for Amazon than millions of well written posts urging family, friends, and loyal readers to stop doing business with an entity that would almost certainly be portrayed as the Evil Empire? I imagine that such a campaign would go on for months and have a significant impact on Amazon’s overall sales, the stock price, and the willingness of private equity firms to finance competitors.

    I believe Amazon achieved their current success by employing smart executives. I can’t imagine a scenario where someone at the top wouldn’t consider the consequences of picking a fight with a group that posts pixels by the gazillion.

    1. Thanks for commenting, RJ. You make a very valid point, and I do hope Amazon will think that way. But on the other hand, it would be easy for the mainstream media to portray Indies as a bunch of whining hacks who can’t stand a bit of “open competition”. The media already tar us all with the same brush by saying that we can’t write and our books are badly edited. If Amazon introduce the used e-book market and caused a backlash from us, I’m pretty sure I know whose side the press would be on, and it wouldn’t be ours.

  9. Wow…I agree…wouldn’t I still own the rights and wouldn’t Amazon be stealing those rights? It is too bad that the author always gets the short end of the stick and the CEO’s make kajillions of dollars in profit? Just doesn’t seem right. Thanks for the post. Very very informative!

    1. Thanks for dropping by, Patrick. Yep, “theft” is certainly a word I would use, but mainly I just want to run this issue up the agenda. Indies need to know what could happen, otherwise if/when it does, we’re going to feel like we’ve been hit by an express train.

  10. Chris, I’ve got a few reasons why we shouldn’t get our shorts in a wad (yet):

    1. You’re assuming the worst-case scenario on used e-book pricing. Sure, prices *might* fall to a penny. But I shop the Amazon Marketplace a lot, and there are plenty of used dead-tree books being sold there for very close to list price (or more, if the book is out of print and copies are in short supply). The ones listed for a penny are typically in bad shape — and as you and others have observed, a “used” e-book file is just as pristine as a new one. I can see Amazon selling a “used” e-book for *some* percentage off the cover price, but I can’t believe it would try to sell a “used” e-book for a cost approaching zero *unless* the seller paid something near zero for it new.

    2. Selling a book “used” presupposes that it was bought new. There’s going to be a finite supply of used e-books — and it’s not ever going to approach the number of sales because not everybody sells their books back, whether they’ve read them or not.

    3. Amazon seems to pride itself, by and large, on treating its customers very well, and *we* are customers, too. I know indies love to complain about the Zon, but I can’t believe it would bite its content providers in the butt at this point.

    Granted, I could be wrong about all of this. But as always with this kind of stuff, time will tell. 🙂

    1. Thank you for your comments, Lynne. While I agree that at the beginning things might not be as bad as I suggest in the article, if a used e-book market were introduced, it could be the start of a very slippery slope for all Indies. Truthfully, I only hope it doesn’t happen at all.

  11. As long as there is only one potential ‘used’ copy per sold e-book, what is the difference between used digital books and used hard-copy books? Millions of those change hands every year at yard sales, flea markets, and yes, on Amazon, and the market for new books has not collapsed. I think there is little reason for panic here. I think, instead, that this may well serve to enlarge many author’s potential fan bases as more copies get into the hands of those who might not otherwise have taken a chance on spending on an author unfamiliar to them. Think of it as tantamount to building a thousand new libraries overnight.
    Avid fans waiting for the next work by their favorite author are not going to wait around for some ‘used’ copy any more than they do now. Truefans want their next Harry Dresden novel NOW, not a few weeks after its release. The ones who pick up a cheap ‘used’ e-book may well be the next release’s avid truefan who wants it NOW.

    1. Thanks for commenting, John. You do make a fair point, but this is something that is going to be okay for name authors with followings and guaranteed audiences, but it’s going to be a another problem for unknown authors trying to establish themselves.

  12. PART A. Like Big Al, I eat books by the dozen so I’m prepared to give Amazon the benefit of the doubt – for a number of reasons :

    1. I don’t think this used ebook initiative is aimed at us at all. Being indies, and reading a lot of $2.99 indie books, it’s easy to forget that we are still only a small part of the ebook market. Ebook versions by ‘famous’ authors cost upwards of $10 and I believe /this/ is the market Amazon wishes to tap. Not us.

    2. We Indies may end up being collateral damage… but only if we continue to give our books away for free. The buy-back arrangement is a one-for-one, i.e. someone has to get a copy of my book before they can sell it back to Amazon. If I give that book away for free then I’m getting zero dollars for it, twice. However if I only make that book available at $2.99 then someone has to pay $2.99 before they can sell it back. If I sell 100 books at the normal price, Amazon can only resell 100 used e-files.

  13. PART B. Sorry. Couldn’t fit it in one comment.
    3. In terms of marketing, the only thing we are losing is the ability to give books away for free. But this is not such a bad thing as re-sales CAN act as a form of promotion in the same way that buying used paperbacks is a form of promotion. I know I’ve discovered lots of new authors by haunting second hand book shops in the past.

    I know I’m not a marketing guru and still wet behind the ears, but I honestly think this used e-book thing only requires a change of perspective on our part.

    1. Excellent comments, acflory, thanks. We have to keep a close eye on how this develops, and have a good working solution how to respond. It would be very good to consider that Amazon is more interested in the over-priced trad e-books than in ours.

      1. Apple and the Big 5 lost the Agency model battle with the Department of Justice but 2 of the cabal have refused to settle so it could be a while before consumers see a return to more reasonably priced Trad. ebooks.

        This way, Amazon can legitimately buy them back and resell them at a ‘decent’ price. Plus Amazon will then be less exposed to those publishers in the future. At least that is my reading of the situation.

        1. I agree that the used ebook market will affect the overpriced publishers’ books more than the $2.99 indies.
          Which is as it should be. A $2.99 indie is more in the range of a $1..29 tune on iTunes, which everyone agrees still ‘belongs’ to the writer.
          A $14.95 ebook, which costs the same as a paperback, will seem to the customer to be sold with the same rights and privileges, including the right to resell it used.

  14. Folks, this isn’t an Amazon thing. Apple has also filed a patent about used ebook resale. It’s not even something those retailers necessarily WANT to see.

    They’re covering their bases because it might be a legal *requirement* for them to allow users to resell ebooks soon, at least in come countries.

    If you’re not tracking what’s going on in the EU with regards to digital product resale, start. The central EU court has already decided that digital products CAN be resold. STEAM (a computer gaming platform) is being sued in Germany for not letting users resell their games.

    If STEAM loses that suit, every other retailer of any sort of digital goods will have to either stop selling to the EU, or set up programs allowing people in the EU to resell those goods.

    So yeah, Amazon and Apple might be forced to allow ebook resale. And they’re taking steps to ensure they’re ready. Similar legal changes are likely farther away here in the US, because the major media conglomerates spend billions a year collectively ensuring that US laws favor content owners over content users. Nowhere else in the world are content owners like Disney as well protected as they are in the US – and Disney has spent enormous sums of money making sure it stays that way. So used ebooks might never happen here at all, because campaigns to fight used digital are being waged right now by all major media corporations.

    If it does happen in the US, it’ll happen because:
    1) It is required by law. None of the major content owners will ALLOW Apple and Amazon to sell used ebooks/music/digital films unless the law requires it.

    2) The companies are made to do it. Used digital products mean lower profits for Amazon and Apple. They really don’t want that, and will only do so if forced.

    3) Consumers in the US will have to see EU consumers able to resell their digital goods, like what they see, and then force their lawmakers to make those changes despite the enormous lobbies telling those lawmakers that it’s a bad idea for business.

    4) Even if it does happen, anywhere it does, retailers will fight tooth and nail to ensure that digital content still remains profitable. Nobody wants ebooks to cost a penny – LEAST of all Amazon!

    Like everything else going on, if it happens, things will change. We’ll adapt, and learn some new ways to do things (hi, seen my serial novel? ever wonder why serials are suddenly interesting to major publishers? serials are among the sorts of fiction most immune to the “used ebook” issue…).

    The sky is not falling. 😉

    1. Kevin, really good comments there, thanks for sharing. I’m really annoyed that the EU came down on the side of ownership because it is a blow to content creators. You’re right: it’s very important this subject goes up the agenda for all of us.

  15. Really enjoyed reading your post, Chris, and the comments it has generated. Obviously something to which authors, writers who want to be authors, and readers should be paying attention.

    Good to see some diverse points of view. Well done, Mr. James.

  16. Very well done, Chris, and what a great discussion. In all of this, I’m wondering about B&N. Totally out of the game at this point, waiting for the dust to settle, or with the attention diverted, making their own plans? I’m not losing any sleep yet about the issue as a whole, but I will be watching carefully.

  17. It would seem to me this concept, if adopted as the doom-sayers suggest, would cause most authors to de-publish their e-books and not publish any new books as e-books. What would be the point? Only a few “new” copies of an e-book would be sold, and then everyone would buy “used.” Why would authors buy into this, except those who don’t mind giving away their work permanently. I think Amazon will realize this and build into whatever program they devise a percentage for the author, as well as themselves––just enough to keep authors publishing e-books, say $.50 for the author, $.50 for Amazon and charge the consumer $1.50. Another possibility is that Amazon won’t do it at all because they would lose the market where most of the money is, i.e., traditional publishers, who will not go along without receiving most of the $, as they do now. In short, we don’t know what will happen. We’ll just have to wait, but Like K.S., I wouldn’t lose any sleep for it. It has to work out to have some incentive for the author to publish e-books.

    1. Thanks for dropping by, boyd1940. I think they will realize it too, and I hope they will build in some kind of incentive for content creators. We shall see!

  18. If my books dropped below the price for which I mark them to some ridiculous “give away” price, I’d certainly be deleting them from the vendor in no time flat. It’s not worth putting them on Amazon if you can’t make a royalty out of them. I could see a day when we’re all on Smashwords with no retailers selected. Amazon and the rest would soon go the way of the TPs. Remember them and what happened to them when THEY didn’t value us?

Comments are closed.