Previously in this series:

This post continues a theme from the last couple, in which one side’s statement is for preserving/extending first sale, and the other is against it. Which is kind of stretching a point, given that the “pro” post really isn’t about digital resale and the con post isn’t against physical resale, but still, I take what I can get. This time we hear from a digital media executive and from a library copyright specialist.

Matthew B. Glotzer

The first document on the agenda is from Matthew B. Glotzer, a media executive with plenty of experience working in the film industry and digital media. According to his LinkedIn resume, he negotiated the earliest video licenses with iTunes, was involved in founding Hulu, and helped establish Fox Digital Studio. Glotzer offers a five-page PDF which lays out his objections to digital first sale clearly and cogently.

Glotzer holds that first sale was intended to apply to physical objects, not the content within those objects, and allowing digital first sale would harm the balance between giving creators incentive to create new works and letting consumers get those new works.

The shift of media to digital delivery, Glotzer says, “yielded tremendous efficiencies, and most conventional costs could be greatly reduced, or eliminated outright.” (Funny, then, that publishers would charge as much for e-books as for print books if they thought they could get away with it, isn’t it?) As others have noted, they don’t degrade with use or time.

First sale, Glotzer explains, was intended to remove some of the friction associated with obtaining copies of physical media, but digital media has so little friction already that no such measure is needed. The biggest problem he sees with digital resale is that it would remove so much of the friction from acquiring used copies of a work that creators couldn’t set an appropriate price for their new works.

Under this arrangement, one single instantiation of a content license could provide utility to potentially hundreds of users; as long as only one user wanted the content at any given time. If such a mechanism were in place, a rational content owner would anticipate this and price each individual content license based on its capability to serve many, rather than one. But it is highly implausible to expect that a marketplace where film or television content costs 10-100x its “customary” price would find many willing buyers to begin with. The result would be a market failure.

In the end, Glotzer says, allowing digital resale would irreparably harm the creation of new content and new business models for selling that content.

New York Public Library

The next document is a 15-page PDF by Greg Cram, Associate Director, Copyright and Information Policy, The New York Public Library. Cram states that he is the only copyright specialist working at a public library in the United States, and that his testimony is also endorsed by the Library Copyright Alliance. (One of the members of the LCA is the ALA, who is also part of the Owners’ Rights Initiative. The LCA has also issued a one-page statement (PDF), summarizing Cram’s testimony.)

Cram first discusses the importance of plain vanilla first sale of physical goods to libraries, given that it is the thing that permits libraries to lend titles without needing to seek licenses from their publishers. He goes on to discuss for several pages how American libraries have “promoted democratic values” for centuries (yay Mom and apple pie!) and throws in some statistics about how often Americans borrow from libraries (4.4 billion times a year altogether).

In the next section, he talks about Kirtsaeng vs. Wiley again (a common refrain for this hearing, it seems) and how important it is to libraries that the ruling remain undisturbed. If it were overridden, libraries could be thrown into doubt about whether they could legally lend many of the works on their shelves. Discussing the appeals court decision that SCOTUS reversed, Cram states:

By restricting the application of Section 109(a) to copies manufactured in the United States, the Second Circuit’s decision threatened the ability of libraries to continue to lend materials in their collections. Over 200 million books in U.S. libraries had foreign publishers. Moreover, many books published by U.S. publishers were actually manufactured by printers in other countries. Although some books indicated on their copyright page where they were printed, many did not. Libraries, therefore, had no way of knowing whether these books complied with the Second Circuit’s rule. Without the certainty of the protection of the first sale doctrine, librarians would have had to confront the difficult policy decision of whether to continue to circulate these materials in their collections in the face of potential copyright infringement liability. For future acquisitions, libraries would have been able to adjust to the Second Circuit’s narrowing of Section 109(a) only by bearing the significant cost of obtaining a “lending license” whenever they acquired a copy that was not clearly manufactured in the United States.

The Supreme Court, Cram concludes, got it right here.

As far as digital first sale goes, Cram doesn’t address the matter of reselling e-books or music. Instead, he focuses on the difficulties posed to libraries by the vagaries of digital content licensing. The lack of consistency between licensors, or even from renewal to renewal from the same licensor, can make it extremely hard for libraries to figure out how to allocate their budget ahead of time.

Moreover, if the publisher or content provider goes out of business, or decides to discontinue access to certain products because it is no longer profitable, the library might no longer be able to provide access to the content at all under the original terms of the license. This, of course, would have serious preservation consequences, leaving large holes in the cultural and scholarly record. Libraries preserve materials to prevent the loss of vital cultural, historical and scholarly resources so that generations of users to come are able to use them. If libraries are unable to access and preserve digital content, then libraries may not be able to fulfill their mission to protect the record of our cultural heritage for future readers and knowledge creators.

He adds that, since 2012, the New York Public Library has served as test lab for e-book distribution pilot programs, which help libraries and publishers better understand new business models and how patrons use e-books. He concludes by calling on Congress to “closely monitor the evolving digital marketplace to ensure that it is sufficiently competitive to provide widespread public access to works.”


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