Will You Soon Be Able To Buy Used Ebooks And Digital Music? Amazon Moves In That Direction

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Will Amazon be adding "used" prices to ebooks soon?

A showdown over the meaning of ownership in the digital world between online retailers and content creators is on the horizon. The US Patent and Trademark Office recently awarded Amazon a patent titled Secondary Market For Digital Objects, wherein the mega-retailer describes a marketplace for the transfer of used digital objects, whether ebooks, audio, images, video, and even apps. As stated in the patent, "transfers may include a sale, a rental, a gift, a loan, a trade, etc."

Amazon already has a thriving marketplace for used physical objects, but this signals the first time a major online retailer intends to introduce a means to resell digital objects.

The patent specifically addresses the architecture for the software that would support this secondary digital marketplace. But what remains unknown is how much users would receive for transferring their digital goods, what Amazon will charge for the service, and whether the originators of the content would receive any compensation.

Though this may seem like a natural progression in the transition from the physical to the digital world, a multitude of businesses and content creators are calling foul on Amazon's move. The issue at hand is rooted in how we think about physical objects. When we purchase something new, we expect that it has come directly from the manufacturer and is free of any kind of damage, aging, or wear-and-tear. If someone else has owned it, we typically place less value on it, even if it is in pristine state (unless its value has increased because it is rare).

Is this what a "used" ebook looks like?

So the question is, how does a digital file become "used"?

Amazon's answer to this question is best understood with the "preowned" label rather than "used". Specifically, Amazon wants a system to keep track of how many times a file has been transferred between users. The patent describes accomplishing this through a series of personalized data stores.

Consider User A and User B. Once User A has purchased the object from a vendor,  the digital object is stored in a "first data store" to indicate that it was the first time the object had been transferred away from a vendor. If User A wanted to sell or gift the digital object to User B, the file would be removed from User A's first data store and placed in User B's second data store. User B then has ownership of the file and can do whatever with it. By having a finite number of data stores, a cap would exist on the number of times a file could be transferred, as a way of controlling the secondary market.

One positive of this kind of system is that resale prices could be much more gradual than often happens with used items. For instance, looking at the used physical books that Amazon already sells, the difference in price between a new book and book in very good condition can be significant while the difference between books in very good and good condition may be marginal. But if an ebook was deemed eligible for four transfers, for example, the difference in prices between each transfer should be much more tiered.

In other words, a fair and quantitative depreciation can be established in the secondary digital marketplace.

So why would anyone stand opposed to this move? For one, it will only accelerate the end of your local neighborhood bookstore. But a bigger issue is that the creators of the content will likely not receive any compensation for the transfer. After all, they don't receive anying for selling used physical copies, though the difference is that a preowned ebook is identical to a new ebook in terms of quality. With a bunch of used copies floating around, the potential for a dropoff in the number of new digital objects sold is real. At the same time, lower prices could mean greater exposure as consumers on the fence might opt to buy at preowned prices.

Amazon, who has benefited enormously from the adoption of digital objects, would likely only launch such a service if it can charge enough on transfers to make up for what it loses on new sales. Currently, the closest thing it has is the ability to borrow an ebook on a Kindle device, though the ebook can only be borrowed once.

But as John Scalzi, best-selling author and president of the Science Fiction and Fantasy Writers of America, noted on his blog, this means that content creators will get paid less but Amazon will make more. Astutely, he added:

I would rather you pirate the eBook than buy it used. Because if you’re not going to pay me, the guy who wrote the book (or also the folks who edited it, did the cover art, marketed it and put it out there in the first place), why the hell should Jeff Bezos get paid? He doesn’t need the money; he’s a billionaire. Amazon doesn’t need the money either.

To be clear, what I would like for you to do is pay for the eBook new...but if you’ve determined you won’t, please don’t give Amazon (or whomever) money you won’t give me. That’s just mean.

Amazon is not the first to think of profiting in a secondary market of used digital files. Launched in 2011, ReDigi is a preowned digital service that lets users upload iTunes files that can then be purchased by others. Users are compensated with credit, not cash, so it isn't a way to make money. In response to the patent, ReDigi issued a statement saying it "takes no position on the legality" of Amazon's service described in the patent, but noted that the copy-and-delete method "has been central to the music and publishing industries' skepticism and opposition to a 'used' digital marketplace." Since it's launch, the stratup has fought its case in court against a number of record companies

Interestingly, rumors are circulating that the next generation of gaming consoles from Microsoft and Sony will prevent playing secondhand copies of physical games. If this is the case, then a means for selling used digital copies would be in great demand, something Amazon may very well have foreseen back in 2009 when the patent was filed (watch out, Gamestop).

Clearly, a secondhand marketplace for digital objects is coming. How extensive it is, what limitations will be built into it, and who will be the major and minor players are still unknown. Regardless, it is just one more way that the digital world is trumping the physical and changing the consumer landscape.

[images: brewbooksgabrielsaldana/Flickr]

David J. Hill

Managing Director, Digital Media at Singularity University
I've been writing for Singularity Hub since 2011 and have been Editor-in-Chief since 2014. My interests cover digital education, publishing, and media, but I'll always be a chemist at heart.

Discussion — 7 Responses

  • Singularity Utopia February 16, 2013 on 10:48 am

    This is utterly insane, you can’t have second-hand digital information. Data does not degrade in the way a traditional book degrades, data is as fresh as the day you acquired it, to artificially degrade data is perverse, it is anti-progress. This idea is contrary to the idea of technology, what’s next? Maybe when cancer can be cured a crazy-lunatic medical business will make the extra effort to create a corrupted cure at a cheaper price that only partially cures people. It is sad that businesses resist the new world we are are approaching.

    • digi_owl Singularity Utopia February 16, 2013 on 11:34 am

      There is a claim that it is better for business to continually treat people than cure them…

      • Singularity Utopia digi_owl February 16, 2013 on 1:48 pm

        Yes it is obviously NOT profitable to provide quick cures. The best medical business model is one where the patient does not die but does not get better thus they need to pay for treatment for many years.

  • Singularity Utopia February 16, 2013 on 10:52 am

    Data can be copied very easily so there is no logical reason to lose the data you share or pass on data to others. Deleting the original data, to deprive yourself of the data if you want others to have the data, it is anti-technology.

  • Richard Cook February 16, 2013 on 1:11 pm

    This is just “artificial scarcity” dressed up in new clothes. The fair value of a product is reflected by the need to compensate a worker for their labor and the value of the product. The value of a product is related to its usefulness and its scarcity. If something is useless or ubiquitous, its cost will be zero. Digitizing a printed work essentially makes it ubiquitous. So schemes are cooked up to limit the ability to redistribute it. This is a fallacy. We need a new model that does not require centralized authority to set prices and regulate availability. I’m not sure what that model is, but it will evolve naturally after every effort from the establishment is exhausted to maintain their control and wealth.

    • Singularity Utopia Richard Cook February 16, 2013 on 1:53 pm

      I see your point but I disagree regarding “artificial-scarcity” I think it is more precise to state “enhanced scarcity” instead of “artificial-scarcity.” My point is that Post-Scarcity cannot be restricted in any shape or form; we do not currently have Post-Scarcity in any shape or form, we simply don’t have the technology for Post-Scarcity to be possible. Scarcity cannot be created artificially, you can only enhance already extant scarcity.

      Enhanced scarcity is bad and it should be avoided, businesses do always try to decrease scarcity not enhance it.

  • aurizon February 16, 2013 on 6:33 pm

    All this is rooted in the first price of a paper based book. Of that first price, the author gets a royalty % of list price. ($3.00 to $0.80 etc) http://en.wikipedia.org/wiki/Royalties#Book_publishing_royalties
    As you can see, there are large amounts of money wasted, if you realize that the $$ to the author is the only one the author thinks about.
    Too much effort has been wasted to try to set the retail price of a digital book at the same as the paper based books. These efforts are usually by the publisher, who seems to have no altruistic desire to pay the author more, instead the publisher wants to hog all the $$, less the royalty. The authors would be better off with no publishers at all, and they then sold their books for – say $1.50 and kept it all. The author would then give the buyer a receipt with a unique digital signature that could be looked up to show who bought it. Anyone other than the buyer is in possession of stolen property. This can also be verified.