Already a hot topic at the Tools of Change conference, the issue of digital First Sale rights, or the ability to resell “used” e-books and other digital content, received a thorough examination by Bill Rosenblatt, president of digital consulting firm Giant Steps Media, in a presentation called You Bought It, But do You Own It? The short answer to this query, Rosenblatt said, is no, you don’t own it, you license it; but there’s a chance that could change.
Rosenblatt’s discussion inevitably led to ReDigi, the new venture hoping to launch a secondary market in e-books and other digital goods, whose founder John Ossenmacher, ventured into the heart of the beast at the Tools of Change/Publishers Weekly CEO Roundtable on Monday. Rosenblatt jokingly hailed Ossenmacher for his courage in taking questions from a hostile audience of publishing interests—“he wasn’t even wearing a Kevlar vest” —interests concerned that plans by ReDigi (and other companies like Lexink and ReKiosk) to allow consumers to resell used e-books and other digital goods will undermine their businesses. Unlike the resale of physical used goods, ReDigi plans to deliver a percentage of each used e-book sale to both the artists and the publishers.
Coming on the heels of the news of Amazon’s patent on a process for creating a secondary market in “used digital objects,” Rosenblatt outlined the interests, issues and likely winners and losers if digital resale becomes a reality. While Rosenblatt acknowledged that “Amazon may or may not” ever put the patent to use, he surveyed an essentially dystopian future if and when digital resale is ever approved. He projected an e-book marketplace in serious disruption, plagued by ever cheaper e-books and the ability of Amazon to lure more authors to its own publishing program and away from traditional publishers.
If digital resale becomes a reality, Rosenblatt said, the big winners will likely be consumers, used content retailers and libraries—in fact, he said, unless the law allows digital resale, libraries will be “eliminated,” if they can’t lend e-books. Digital resale, he said, will allow libraries to “lend e-books freely, publishers can’t restrict or forbid [e-book lending]; e-books won’t wear out, and no more confusion,” with every publisher having a different policy on e-book lending. Losers, he said, will likely be conventional publishers and new retailers, discouraged by the new secondary market and its impact on the sale of new content. Authors, he said, will likely be stuck in the middle, and he acknowledged being unsure of whether they would benefit or not, even while receiving some recompense from secondary sales. “Perhaps the increased economic activity of digital resale will make up for any losses in new sales,” Rosenblatt said.
Indeed, Rosenblatt offered a dismal vision of the future of libraries without digital resale, so dismal, in fact, he said that libraries have launched the Owners Rights Initiative—“if you bought it, you own it” —a lobbying effort organized by American Library Association to get the law changed in favor of digital resale. Calling ORI supporters, “strange bedfellows,” he showed off a list that included the Association of Research Libraries in addition to eBay, Goodwill Industries and IT resale vendor OK Quality, physical resale vendors looking to get a foothold in a possible digital resale market. Other ORI supporters include Chegg, the textbook rental firm and Powell’s Books, an independent bookstore that has long had a strong e-book retail program.
But Rosenblatt also discussed a range of issues likely to block a used e-book market. E-books are licensed, of course, not owned and e-book terms of service, Amazon’s in particular, typically prohibit resale. Rosenblatt also emphasized that offering publishers a percentage of a used e-book sale may actually violate the First Sale doctrine of copyright law. And that’s not all. To make resale a reality, files must be transferred to the buyer and completely deleted from the seller’s computer. (Rosenblatt was dubious of ReDigi’s plan to also resell e-books with DRM, calling it a “scheme”). Rosenblatt discussed the technology involved, something called “Forward & Delete,” which is the process by which the relevant content files on a consumer’s computer are transferred to a new owner and then deleted. One problem with Forward & Delete, he said, is that the technical process creates new copies that are hidden away in the device infrastructure and courts will have to determine if these copies are “incidental” or actually infringe on copyright. Rosenblatt also offered a long list of companies that tried to implement digital resale and failed.
Indeed, Rosenblatt said that a 2001 Copyright office report on digital first sales concluded that “you can’t trust consumers to delete the files they resell,” and, at least at that time, the technical mechanism to transfer and delete files could not be trusted. The copyright office's conclusion was, “Let’s leave well enough alone,” Rosenblatt said, emphasizing that untangling these legal issues, “will take years to resolve.”
