I bought it, own it! Once I purchase a product it is mine and it is my fundamental right to do whatever I want with it. If I want to lend it to a friend or sell it secondhand, I may. This is the way things have logically worked for a long time and is, frankly, common sense. Since the rise of the digital era however, this common sense is being challenged. We pay real money for products purchased online, so we feel that we have this fundamental right to later resell our used copies. Unfortunately for us consumers, it isn’t that easy. The laws around copyright licensing in the case of digital files are ambiguous at best. Back in 2013 Amazon received a patent allowing them to resell digital content. This news had many people excited to finally be able to exercise their rights to sell their used music, videos, apps, and ebooks, but it also had many people (for example, almost everyone who has ever created and sold digital content) up in arms. Since then, there has not been much news concerning what Amazon has been doing with this patent, and the answer of whether or not a marketplace of secondhand digital content is on the horizon remains up in the air. While such a marketplace seems like the answer to all our problems as consumers, as publishers we have plenty of reasons to be extremely wary. There are a number of issues that arise for creators of digital content when the concept of “secondhand” is added to the table. First of all, to transfer files, a copy of all those 1s and 0s is transferred from one computer to the next (keyword: “copy”) which is a little scary when it comes to selling copyrighted material. Secondly, digital files do not degrade in the same way that physical items do. And thirdly, if everyone can buy used digital content cheaply online, who is going to buy the more expensive “first copy” directly from the creator? These problems have no solutions yet, and until they do, publishers need to be cognizant of what is being done with their content.

In order to dive into the topic of “secondhand” ebooks we must first discuss the legal concepts surrounding “exhaustion.” While Canada itself does not yet have clearly-defined, legal documentation outlining this concept, the United States has the “First Sale Doctrine” that discusses exhaustion. The First Sale Doctrine revolves around this idea of “I bought it, I own it” and the owner of a legally-purchased product has the right to do whatever he or she wants with it. Put in another way, the rights to a product (or at least the enforceability of these rights) are “exhausted” after its first sale. In the case of intellectual property, this is a common and well-known exception to copyright and trademark laws as the notion allows for copyrighted and trademarked products to be used, as the owner sees fit, without a license from the copyright holder. It is this doctrine that allows us to sell our clothes, CDs, books, and other items to another person after we ourselves have used them.

The First Sale Doctrine and the concept of exhaustion have many grey areas, and as you may have guessed, they have a hard time fitting digital products under their umbrella. Because files can be reproduced ad infinitum, producers of electronic content license their products, protecting them from infinite copies. This is why, for example, a library can only lend an ebook a finite number of times, or you are only free to install software on a set number of devices, even though you legally purchased it.

Licensing also covers how ebooks are sold and bought. When I buy an ebook, the ebook seller does not transfer complete ownership to me. Instead, he licenses the ebook to me under certain terms and conditions (you know, those terms and conditions outlined in that huge document of legalese you always blow past in a hurry to tick the “I have read and agreed” box). In this way, I do not own the ebook in the same way that I would if I were to have purchased the physical copy of the book. Theoretically, if I were to “resell” this ebook, the ebook seller would therefore be transferring the license currently assigned to me to another person.

Now that we understand how ebooks might be able to fit into a used market, let’s discuss whether or not they should. As mentioned above, digital content is transferred by means of copies. This raises the issue of whether or not a sold file will actually be removed from the first owner’s device. It is one thing for Amazon to delete a file from a person’s Kindle, but there are other ways of storing files, for example, a person may have stored their digital files on an external drive, which is impossible for a third party to clear unless plugged in. A company may have to perform a full scan of the original file owner’s computer in order to be sure that the file has been removed completely: a task that is appealing to neither company (as this could prove to be extremely expensive) nor consumer (whose privacy would be compromised). If the original file has not been completely removed from a person’s computer after he has resold it, there is nothing stopping him from reselling that same file again and again.

The second issue with reselling digital content concerns degradation. Physical items wear down over time, which is why a used item can and should be sold for less than if it were new. This does not apply to digital files; they are always in perfect condition. With a secondhand ebook you can be sure that you will not come across notes in the margins or torn-out pages the way you might with a physical copy of a secondhand book. Deterioration is what keeps the secondhand economy intact. When you sell your secondhand items, you know they are of lower quality, so you are more comfortable asking a lower price. If all secondhand items were perfect (which is the case with digital files) the whole system would fall apart. This leads directly into the third problem of reselling used digital content: price.

“Because ebooks don’t deteriorate, there is no incentive for the buyer to seek out a new ebook, and especially not when they will likely be able get the secondhand ebook at a discount,” says Forbes contributor Suw Charman-Anderson. “This means that secondhand ebooks would be very likely to cannibalise sales of new ebooks, and probably to a greater extent than piracy because it will be legal, easy and entirely without emotional repercussion” (2013). If anyone is able to get a perfect copy of an ebook at a secondhand price, no one would choose to buy the “new” ebook directly from the publisher. Publishers would be forced to drop their ebook prices, which would in turn lower ebook resale prices, and the cycle would continue until all ebooks cost only a penny. This sounds great for consumers, but not so great for the content creators, and if the system rubs enough content creators the wrong way, soon the consumers will be left with nothing to consume. This “one-penny problem,” as The New York Times technology columnist David Pogue (2013) calls it, will eventually cause publishers and authors to withdraw their content from the ebook market altogether. For many authors and publishers, ebooks contribute a great deal to overall profit (in many self-publishers’ cases, ebooks make up their entire profit) so pulling away from this market will benefit no one. Judging by their past capabilities of domination, if Amazon decides to act on their 2013 patent, they will have a monopoly on the used ebook market. Since publishers depend heavily on sales through Amazon they will be between a rock and a hard place. Withdrawing from ebook resales will not be possible without withdrawing from Amazon. Ebooks will become a liability: prices will only go lower and lower at the same time as more and more sales will be lost to secondhand sellers.

Even though an Amazon Ebook Resale Extravaganza has not yet occurred, there are a number of other websites aiming to achieve this goal. Netherlands-based Tom Kabinet is an emarketplace that allows its users to sell their ebooks for credits with which they can buy more ebooks from the site. The site does recompense authors for every ebook sold, but the remuneration is only €0.50. Furthermore, it is unclear exactly what is to be done with the original copy after selling, as Tom Kabinet’s FAQ reads “…wis je jouw eigen kopie van het e-book van je devices zoals een laptop, een tablet of een e-reader” (…you erase your own copy of the e-book from your devices such as a laptop, a tablet or an e-reader). Leaving it up to the user to delete their own copies seems like an incredibly rose-tinted attitude and it seems unlikely that it will have the desired effect. All in all, Tom Kabinet seems like a publisher’s nightmare, and yet they have been legally allowed to continue operating. When several publishers filed a lawsuit against Tom Kabinet and requested a preliminary injunction, they were denied, and “the Amsterdam Court concluded that selling used eBooks is a legal grey area and not by definition illegal in Europe” (Van der Sar 2014). Tom Kabinet was allowed to continue operations and, because of this publicity, it has even seen an upsurge in its visitor count.

A new market for digital content is imminent. Everyone would love to believe that this market will be a boon to society, but without acknowledgement of the issues involved and a comprehensive game plan in place a secondhand ebook marketplace will hurt publishers in ways that will end up hurting consumers in the long run as well. By all means, embrace emerging opportunities, but until existing problems are resolved, tread carefully in the ebook world.

Works CIted:

Charman-Anderson, Suw. “Amazon Eyes Secondhand Ebook Market.” Forbes. February 8, 2013. Accessed November 26, 2017. https://www.forbes.com/sites/suwcharmananderson/2013/02/08/amazon-eyes-secondhand-ebook-market/#7ef2ed27712c.

Court of Justice of the European Union. “An author of software cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet.” press release no. 94/12. July 2, 2012. https://curia.europa.eu/jcms/upload/docs/application/pdf/2012-07/cp120094en.pdf.

Crowne, Emir. “Anything but tired: the doctrine of exhaustion in Canada” Journal of Intellectual Property Law & Practice, Volume 10, Issue 11, 1 November 2015, Pages 801–802. OUP Academic. October 20, 2015. https://academic.oup.com/jiplp/article/10/11/801/2384832.

“First-sale doctrine.” Wikipedia. November 25, 2017. Accessed November 26, 2017. https://en.wikipedia.org/wiki/First-sale_doctrine.

Hoffelder, Nate. “Used eBooks 101: How Amazon Can Legally Resell eBooks.” The Digital Reader. February 21, 2013. Accessed November 26, 2017. http://the-digital-reader.com/2013/02/21/used-ebooks-101/.

Kozlowski, Michael. “Amazon is Secretly Developing a Used e-Book Marketplace.” Good E-Reader. February 24, 2016. Accessed November 26, 2017. https://goodereader.com/blog/e-book-news/amazon-is-secretly-developing-a-used-e-book-marketplace.

Pogue, David. “Reselling E-Books and the One-Penny Problem.” The New York Times. March 14, 2013. Accessed November 26, 2017. https://pogue.blogs.nytimes.com/2013/03/14/reselling-e-books-and-the-one-penny-problem/?_r=0.

“Reselling eBooks.” BookScouter. June 15, 2016. Accessed November 26, 2017. https://bookscouter.com/blog/2016/06/reselling-ebooks.

Ringewald, Erich. Secondary market for digital objects. US Patent 8,364,595, filed May 5, 2009, and issued January 29, 2013. Accessed November 26, 2017. http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=8364595.PN.&OS=PN%2F8364595&RS=PN%2F8364595.

Streitfeld, David. “Revolution in Resale of Digital Books and Music.” The New York Times. March 07, 2013. Accessed November 26, 2017. http://www.nytimes.com/2013/03/08/technology/revolution-in-the-resale-of-digital-books-and-music.html.

Tarantino, Bob. “First Sale Doctrine and Canadian Law.” Entertainment & Media Law Signal. April 14, 2010. Accessed November 26, 2017. http://www.entertainmentmedialawsignal.com/first-sale-doctrine-and-canadian-law.

Tom Kabinet. Accessed November 26, 2017. https://www.tomkabinet.nl/.

Van der Sar, Ernesto. “Online Store Can Sell ‘Used’ Ebooks, Court Rules” TorrentFreak. July 23, 2014. Accessed November 26, 2017. https://torrentfreak.com/online-store-can-sell-used-ebooks-court-rules-140723/.

Van der Sar, Ernesto. “Record Labels: Used MP3s Too Good and Convenient to Resell.” TorrentFreak. April 22, 2014. Accessed November 26, 2017. https://torrentfreak.com/record-labels-used-mp3s-too-good-and-convenient-to-resell-140422/.