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Wednesday, March 13, 2013

A Legal Used Ebook Market? Who Would This Screw the Most?

Used ebooks may
be a coming
Who do you think would get screwed over the most if the powers that be navigated the legal maze, ironed out the fine points and actually established a used ebook market?

Make no mistake about it, selling used digital books commercially is not legal now.

Contracts, copyrights, digital rights, royalty splits, etc. have not been worked out yet --- Hell, these documents and agreements are barely in place for new digital content.

Readers (consumers), publishers, authors, retailers, etc. would all be affected --- but, who would probably take it on the chin the most?

You might be surprised. Maybe no one if they get the right negotiated clauses established.

Let's get into some scenarios and numbers with Jeremy Greenfield of Forbes:

What Happens to Publishers and Authors If a Used Ebook Market Becomes Legal?

Amazon has a patent to develop a market for used digital content. Apple has filed for a similar patent and ReDigi, a self-styled marketplace for used digital content, is currently embroiled in a legal battle with Capitol Records over the resale of digital music files.

Basically, it looks like a used ebook marketplace might become a reality.

For consumers, this could be very good news indeed. Imagine seeing on an ebook’s Kindle page a link that will take you to a sell page for the exact same product for half the price. Same ebook, same user experience, even lower cost.

For publishers, this would undoubtedly be very bad news.

Put simply, “This will wreak havoc with the business model,” said New York-based copyright lawyer Lloyd Jassin, adding, “this shows just how creaky the publishing business model is.”

The publishing business model is predicated in part on copyright law, which gives publishers the ability to control the scarcity of a piece of content, according to Jassin. Basically, by buying the right to produce and distribute a work, a publisher can control the number of copies out in the marketplace and monetize them accordingly. Under the doctrine of first sale, once a publisher sells that copy, it is relinquishing its rights to sell that copy again and whoever bought it can do so. That’s how it’s possible (and legal) to sell used copies of physical books.

In this scenario, the publisher (and author) get no compensation. If the same were true for the resale of digital goods, it could be devastating for publishers.

However, Apple‘s ebook patent and ReDigi’s business model, for instance, factor in these fears. Under their systems, publishers (and, perhaps, by extension authors) would get a piece of the resale.

“If the publisher can’t control the resale of a book but they get compensated, perhaps that’s good enough,” said Jassin.

But what about the authors?

There are often provisions in publishing agreements which provide for a split of proceeds resulting in fees from licensing or from any other profits associated with the work, a lawyer who specializes in ebook contracts who did not want to be named, told me.

“There are potentially catchall licensing agreements in publishing contracts that might apply to a resale,” the lawyer said, adding that if not, “authors may now want to negotiate a provision for that purpose.”

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