The coming battle over used e-books (Updated)

On Thursday, Google announced during the Frankfurt Book Fair that its long-planned e-commerce platform for digital books will launch by June 2010. Christened Google Editions, represents a major departure from most current e-book offerings in that it won’t be confined to any particular reading device or desktop viewing application. Instead, Google will cache users’ purchases in a “cloud library,” which can be accessed from anywhere using any device with a Web browser

“It will be a browser-based access,” Google Books’  Tom Turvey said.  “The way the e-book market will evolve is by accessing the book from anywhere, from an access point of view and also from a geographical point of view.”

home-bookstoreUsers will be able to search for e-books on Google Editions (and presumably be served ads) and then buy them from Google, directly from the publisher or from one of dozens of partner retailers. Turvey said he expects the majority of Google Editions customers will go to retail partners, not to Google, to make purchases. “We are a wholesaler. A book distributor,” he said.

Given Google’s general bent toward moving content and applications off the desktop (or device) and into the cloud, turning e-books into Web apps is a logical strategy (GigaOm Pro subscribers can read my take on Google’s overall e-book strategy here). But it’s one that represents more than simply competition for Amazon’s Kindle. Google Editions is going to raise a host of new questions about the nature of an e-book.

For instance: How long before Google or one of its partner retailers sets up a used e-book exchange on the platform?

Up to now, used e-books have not really been an issue. Kindle books, for instance, remain locked to device they were acquired on. If you want to give a copy of a Kindle book to a friend, you have to hand over the whole Kindle. Other services let you transfer your e-books to a limited number of devices but unless you had the foresight to register your friend’s computer as an authorized device you’re out of luck. Selling the e-book to a stranger would be even more problematic.

The issue is not limited to e-books, of course. Any piece of DRM-protected content faces the same limitation. And it has long been a source of some controversy. Under the so-called first sale doctrine (Section 109 of the Copyright Act), the owner of a physical book is entitled to do whatever she wants with that particular copy — short of making another copy — including giving it as a gift, loaning it to a friend or re-selling it to a stranger. Ditto a CD, or a DVD. In principle, the same is true of any “lawfully made copy,” including digital copies. As a practical technical matter, however, sending a digital copy to a friend involves making another copy of the file, something the first sale doctrine does not permit.

For years now, we’ve simply lived with the inherent tension between the first sale doctrine and the practical realities of digital reproduction, in part because its main commercial implications were largely limited to business–online resellers like iTunes, Amazon or CinemaNow–which could be manage-ably licensed by content owners. Individual consumers bent on sharing their digital files had plenty of unauthorized file-sharing networks to turn to.

Google Editions works on a very different principle from Kindle or iTunes, however. Instead of transferring a copy of a file at the time of purchase, Google Editions will cache the  copy on a server, which is then accessed remotely. “Giving” a copy to friend, therefore, or even selling it to a stranger, does not need to involve a subsequent file transfer and its concomitant reproduction. All that would need to happen is for the seller’s access to the cached copy be disabled and the buyer’s accessed enabled at the time of the transaction.

I can see the issue arising first within a licensed context such as a “gift exchange.” Some Google Editions retailer will create a system allowing users to purchase e-books as a gift for someone else. The buyer (gift-giver) would be able to use her account to give a friend access to an e-book via the recipient’s account.

Publishers will love the idea at first because it will increase sales of e-books. But at some point, someone will hit on the idea of an independent re-sale exchange. Users who have purchased and finished with an e-book would be able to make it available to other buyers based on the same simultaneous disable/enable mechanism as the gift exchange.

used-bookstorePublishers will like that a lot less because prices on the exchange will be lower than the prices set by publishers for the same title (it wouldn’t work otherwise). Readers will be drawn to lower prices on the exchange because digital files don’t degrade from wear and tear the way physical copies do: “used” copies are just as good and fresh as “new” copies. Sellers will see it as a way to recapture a portion of the original purchase price, having first extracted value from the e-book by reading it.

Publishers, of course, will respond that your original e-book “purchase” was not in fact an actual purchase of a copy; it was the purchase of a license to use the e-book in certain ways and not others. The terms of service you agreed to by clicking “I agree” will preclude any sort of unauthorized re-sale.

We’ll then have a neatly framed question, suitable for litigation: If a transaction walks like a purchase and quacks like a purchase, is it a purchase even if the vendor insists otherwise? It won’t be the first time the issue has come up (see Vernor v. Autodesk, among others). But a case involving e-books is likely to capture the imagination of the public more than cases involving computer software (where most of the previous  litigation has occurred) because of our deep cultural history with trade in used, rare and antiquarian books.

I give it six to 12 after the launch of Google Editions.

Update: Looks like 6-12 months may be too long a timetable. According to the NYTimes, the new Barnes & Noble Nook, “will permit readers to lend their digital books to friends and download books wirelessly.”

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