Used Ebooks: The Sky is NOT Falling

 

There’s been some growing discussion over the fact that Amazon and Apple have both applied for patents to resell “pre-owned” ebooks. Lots of folks have decried this effort for a variety of reasons (like authors not getting paid). Most importantly, it’s been suggested that discounting pre-owned ebook prices would drop the bottom out of the market for all ebooks.

 

The market crashes through a race to the bottom, assuming that price is the key factor in book purchases which, if one looks at the history of publishing, it’s never been before.  Used books become preferred because of the price savings and the return of money to the owner. New books have to lower their prices to compete on price; a glut of used books kills sales on new books, and the discount price means that as new books sell for less, used books will sell for even less. Pretty soon, in that scenario, prices spiral down to nothing, which hammers the profit margin for ebook retailers. Pretty soon we’re all out on the street wearing signs saying, “Will write for food.”

 

Which got me thinking: Why on earth would Apple or Amazon discount pre-owned ebooks?

 

Allowing customers to resell ebooks is nothing but a customer loyalty program for either company. It’s not like they’re going to be writing anyone checks. You’ll have to spend your credit (likely 10% of the price) in their stores. Your used book goes in on the bottom of the pile, and you get a credit when someone buys it off the top of the pile. It’s all very neatly done.

 

If they were to discount, they’d crash the market as feared. Moreover, publishers and author groups would sue them, with injunctions meaning that plans would get spiked for a couple of years anyway. By charging full retail, they support their profit margins, keep creatives happy, and reward colonies of loyalists. They keep you home and happy in their walled garden. (What will quickly follow, by the way, is renewed incentives for exclusive content from creatives, which makes each walled garden that much more enticing.)

 

I know that there’s a flaw in my reasoning. I expect, on general principles, for corporations to act in their own enlightened self-interest. I grant that not all corporations are that enlightened, and their self-interest might be different than my interpretation of it. It is entirely possible that a marginal discount (5-10%) might be offered initially just to make a publicity splash when programs are put in place. Price stability, however, is in the best interest of both companies; and once they’ve established their marketplaces, they’ll be happy to crush upstarts that aren’t willing to play by their rules. (Amicus brief, anyone?)

 

What if I’m wrong? In a previous draft of this post I came up with a handful of strategies authors (and publishers) could use to combat pre-owned ebook sales. None are difficult, many are variations of things being done here and there now; and most are actually useful business strategies to make money anyway. The point being that even if things were to crater because an ebook retailer got hit with a bad case of the stupids, indie writers could survive. (Mind you, a ton of writers would get out of the game, since minimum wage jobs would be more lucrative for them, but some of us would be able to hang in there.)

And if stupidity happens, I’ll trot those strategies out for all of us to play with.

 

I’m not convinced, at this stage of the game anyway, that the sky is falling. Doesn’t mean I won’t be watching the sky. I will, but I won’t be wringing my hands, wailing and gnashing my teeth while I do. I’ll spend the time writing and figuring out what else to do if disaster strikes. That’s a better way to spend my time, I think, and I heartily recommend it to all other authors who want to continue making a living doing what they love.

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8 Responses to “Used Ebooks: The Sky is NOT Falling”

  1. I’m having a hard time getting my mind around the concept — USED E-books?

    It’s a file, doesn’t matter if its used or not. It’s not like a physical book — it’s not going to fall apart, or get dog-eared. Five minutes or five decades from now, barring something major, it’s going to be the same file.

    I need to think about this some more….

    Craig

  2. “By charging full retail…”

    If the companies are selling the used ebooks at full retail price, what is the difference to me as a customer between buying a new or used ebook? Is there any incentive for me to buy a used ebook?

    I guess I need to think about this some more also.

  3. Russell Davis 14. Mar, 2013 at 2:33 am

    Thank you for linking the Forbes article with your post.

    It’s important to note on all of this they are not just talking about “used” Ebooks, it is “Digital objects including e-books, audio, video, computer applications, etc., “.

    Issues I see for Ebook seller include day 1 “used” Copies. Also from your other posts I know you use your own digital sales as a barometer for what your sales should be on amazon etc. If you are not able to offer the same resale options they do it will effect your direct sales and make it harder to discover mistakes or fraud from your other vendors.

    Currently in the video game industry there is an argument that Used game sales hurt developers. (Google it because I don’t want to do link back to other sites uninvited.) In that industry retailers have a huge incentive to sell used versions of games as soon as possible because of the larger profit.

    With the models discussed in the article it looks like at least some of the cut does make it back to the author/publisher. Also in the system proposed it would still be very easy to track sales numbers so it should actually add some visibility to an authors popularity.

    Finally and what I find most interesting for me in regards tot he ReDigi lawsuit is that if ReDigi Wins doesn’t that mean that “I” have a right to resell my used digital purchases.

    I’m not a lawyer, american or european, but if “first sale” doctrine is extended to digital goods then it’s going to effect the business models of alot more than book and music sellers. Am I allowed to resell the free digital copy of movies I get when I buy the DVD? How about my Microsoft office software when I upgrade? Games on Steam? Accounts on online games? Currently in the US I am restricted from doing this because it’s listed as a limitation of the license because “first sale” doesn’t apply, but if that changes that means I actually Own all that content and am not just renting it.

  4. Even if they were offering a discount, I wouldn’t care about saving 20 cents and making the author forgo their take and allow the fat cats to take a larger piece of the pie.

  5. The biggest advantage for Amazon and Apple in selling used ebooks within their closed system is that they will destroy their competition who don’t have the means to do this.

    I would imagine that creating such a complex piece of software wouldn’t be easy, fast, or inexpensive so they would have the upper hand and new loyal customers.

    Right now, Amazon and Apple have this software as a form of nuclear deterrent against each other so neither has the upper hand.

    Until the ReDigi court case has a final decision, we won’t know if the way will be open for this kind of system. If ReDigi does win, I imagine either of the two giants or another company will buy them.

  6. I find the whole thing somewhat confusing – in theory I would like to be able to sell or give away a digital item I have just as I could sell or give away a physical item – but unlike with physical used books, an ebook (or digital copy of a game etc) has no wear and tear.

    I see no reason to even bother selling “used” books if they cost exactly the same as new, but I’m not very comfortable with selling the exact same item (though presumably at a limited quantity) for less given that the quality hasn’t dropped even though it’s preowned. In that case I’d say everyone should still get their cut of the sale, but then why would the retailer bother doing it? Unless the store credit angle really did help increase sales even if their profit for the individual item went down?

    I don’t feel like I know enough about this to really think on it much more deeply… it’s interesting but it’s hard to think about how used digital items would actually work for everyone involved.

  7. I can see you understand the fears most people have, but not your argument as to why it won’t happen. Are you saying Amazon won’t do it because they’ll get sued?

    I still think the companies are just trying to keep the technology out of the hands of others.

  8. I thought I was clear: they won’t do it because it costs them money. Why lower their profit margin with a discount when there is no reason to discount?