Is Amazon About to Break the Law?
February 19, 2013 | 10:04 am
Amazon has patented a means to sell used e-books within the Kindle system. A book will be branded within the system when it is bought, and when the buyer puts it up for resale at the Kindle store, it will be removed from his account and transferred to the buyer’s account. Amazon will receive a small fee for each sale. A limited number of sales of each book may or may not be included in the system.
According to copyright law, specifically the first sale doctrine, this is illegal because digital goods aren’t physical things so they can’t be resold. (See my article, “The First Sale Doctrine and eBooks,” for more details.)
But a legal battle is currently being fought between a used digital music, ReDigi, and the various groups in the music industry, over a similar system. If ReDigi is able to win this, Amazon will probably move forward with their own system of resale.
At first glance, it appears Amazon would be cutting into its own Kindle profits with this system, but Amazon isn’t known for its poor business practices. Here’s what it will gain from the system:
Buyers go for the cheapest prices. If a used Kindle e-book is cheaper than any other version of the book, buyers will start using the Kindle system and its hardware. iTunes, Nook, and other e-book retailers won’t be able to match these lower prices unless they start selling new e-books for next to nothing, or they put into place their own reselling system. Such a complex system would take some time, perhaps years, so Amazon would gain the advantage in the market for many years to come.
Some in the industry believe that Amazon is intent on killing off publishers so that authors will have to go the self-publishing route, and authors as individuals have no real bargaining power when it comes to the terms Amazon will set. (See “Used eBooks: The Ridiculous Idea that Could Also Destroy Publishing”)
What will all this mean if Amazon’s used e-book system becomes available? Readers may be happy with the system, but authors and publishers will not. Publishing has a very low profit margin as is, and anything that will cut into that profit will hurt, sometimes to the point of putting authors and publishers out of business.
Authors like myself have been busy educating readers on the first sale doctrine, so they’ll know that e-books can’t be resold, loaned, or put online for free. But a system like this will make readers believe that if Amazon can do it, so can they. Piracy will spread.
If Amazon gains total supremacy in the distribution market, then they’ll be able to dictate the terms in contracts with authors and publishers, and those terms will shift even more of the profit into Amazon’s pockets.
If the other distribution markets fail and Amazon is the only source of e-books, it can close down the used marketplace, and readers will have to pay much more for the surviving content. After all, Amazon is in it for Amazon—as they have proven over and over again.
This system may not be the E-Book Zombie Apocalypse, as a universal removal of first sale doctrine on digital goods would be. But it may very well be the beginning of the end of publishing as a profitable venture.
• This article originally appeared on Marilynn Byerly’s blog, Adventures in Writing.