Understanding Second Hand eBooks and Amazon's new Patent

Written By Chris Lynch

Amazon have been issued a wide ranging patent on the resale of digital goods.

Digital objects including e-books, audio, video, computer applications, etc., purchased from an original vendor by a user are stored in a user's personalized data store ... When the user no longer desires to retain the right to access the now-used digital content, the user may move the used digital content to another user's personalized data store when permissible and the used digital content is deleted from the originating user's personalized data store.

Whenever Amazon is issued a new patent, the traditional publishing industry traditionally gets out its pitchforks and burning torches and heads collectively towards the nearest castle to call for the head of Jeff Bezos. Taking time to consider this a bit though, are second hand eBooks really such a problem for anyone... least of all the people the publishers say that they want to protect - writers.

Understanding the pricing model of second hand anything

All goods, be they first or second hand, are priced using a single and invariable formula of how desirable the item is and how rare the item is.

A second hand book is no different. Rare and desirable second hand books command a high price. Rare and undesirable second hand books command a lower price. Then we have desirable but readily available second hand books (I'm looking at you, Dan Brown), and then undesirable and plentiful second hand books (most celebrity autobiographies ever).

People seem to be massively concerned because eBooks, in their opinion, cannot be rare. This is true. It is impossible to run out of a digital commodity in the "new" state. However, until someone decides to sell their copy of (or license to) an eBook, no second hand eBooks exist. At all. Not a single one.

When a new eBook is released, it will therefore have scarcity guaranteed. No more second hand eBooks can ever be sold than were originally sold and the likelihood is that there will be fewer. Yes, if your book sells in the millions then there could, potentially, be hundreds of thousands of second hand copies available. Would you worry about that if they were print copies?

Why are we afraid of second hand eBooks?

As a writer, I kind of like Amazon, and I like Kindle. I can publish there without a publisher, if I so choose, and my books are never out of print. The process is quick, the results can be immediate. The greatly reduced cost of logistics and production mean that there is more money available from an eBook sale to pay in royalties than on a print sale. When I self publish, I need a lot of sales just to break even on print. With digital, I am in profit from sale number 1 (Unless you count the time it takes to write books. If I took that into account I would shine shoes instead).

So, should I be any more afraid of people selling on my eBook than selling on a print eBook? Logically, I shouldn't be. When I sell a print copy of my book I relinquish all control of who looks at it, who they pass it on to, and what they do with it. The product belongs to them, not to me, at that point. It is a curious trick of our brains, I think, that makes us believe that we, in some way, retain some modicum of ownership over our digital products when we sell them. We have been so brain washed by the film and music industry that we believe that everyone out there wants to rip us off, pirate our material, and leave us penniless. Second hand eBooks don't make this any more or less likely. If people want to steal the content, they will. You will not, and cannot, stop them. The security will always be circumvented, the restrictions always evaded. In our paranoia to control digital products, we make them less palatable to consumers by stripping away one of the most fundamental rights there is - the right of ownership.

Ask the fundamental question - If I by an item, I own an item, why shouldn't I be able to a sell the item?

Those arguing against the ability to sell second hand digital goods argue that they are sold "as new" - they are immune to the ravages of time and of use. However, they are missing the fundamental point that this is a good thing. When we purchase second hand books today, the price of item also reflects the condition that it is in. Good condition = More desirable. Good condition and rare = Very much more desireable. Digital products are not immune to this equation, there is simply a constant in terms of the quality of the item. The digital book becomes no less desirable because it is second hand - the only factors affecting its value are therefore the fundamental desirability of the product (is this a good book or not?) and how many second hand copies there are available. Second hand eBooks should therefore retain greater value as compared to their physical equivalents, which suffer a precipitous drop in value the moment they become "second hand".

Second hand eBooks are fundamentally not cheap eBooks. They are just a secondary market of delayed release.

How to make second hand eBooks work

Taking into account everything above, I think there is one very simple way to make eBooks works.

When an eBook is sold second hand, ensure that the original publisher gets a royalty (acceptably a reduced one)

In that one move, you could move the whole industry.

Publishers have never had an income stream from second hand book sales. They have never had an income stream from books shared between friends or left on park benches. No publisher ever popped into a charity shop and started re-pricing the second hand books.

Second hand eBooks are not a threat to publishers. They are not a threat to creators. They are the digital world catching up to how things should work and they are a new revenue stream that only the most luddite of publishers would fail to recognise.

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