Awareness Grows over Digital First Sale February 19, 2013Posted by Bill Rosenblatt in Business models, Law, Publishing.
What would happen if the law were to definitively decide that users should get the same rights of ownership over digital downloads as they do with physical media products such as books, CDs, and DVDs? A growing crescendo of events over the last few weeks indicates a growing awareness of this fascinating topic.
Let’s start with late last month, when Amazon was granted a U.S. patent on a scheme for reselling digital objects. The patent describes a scheme for transferring “ownership” of digital content objects from one user to another, possibly with limits on the number of transfers, and handling the e-commerce behind each such transaction.
Digital resale is possible now. For example, the startup ReDigi is doing it for music downloads from iTunes and Amazon. The question is not whether it’s technically feasible to support digital resale with reasonable safeguards against abuse of the process (i.e., “reselling” your content while keeping your own copies). The question is whether doing so requires a license from content owners, or whether users have a legal right to resell their content without permission.
In the former case, any service (like ReDigi) that facilitates resale would have to pay royalties to copyright owners on every transaction. In the latter case, it need not pay anything. Since resold digital content is identical to “new” content, this would have highly disruptive implications for publishers and others in the value chain. The law is not clear on this point, but it may become clearer within the next couple of years through litigation, such as Capitol Records’ lawsuit against ReDigi, and the efforts of a lobbying group called the Owners’ Rights Initiative.
Amazon’s patent does not take a position on whether digital resale requires the copyright owner’s permission; it simply discloses a mechanism for doing digital resale. And of course just because Amazon has a patent does not mean it intends to implement such a system; Amazon was granted about 300 patents in 2012. Still, the issuance of the patent prompted Wired to run an article about digital first sale and its implications two weeks ago.
That brings us to last week, when the O’Reilly Tools of Change for Publishing (TOC) took place in NYC. TOC is the preeminent conference on technology and innovation in publishing. Just before the conference, the TOC folks held an invitation-only Executive Roundtable featuring John Ossenmacher, CEO of ReDigi. O’Reilly Media, a publisher of books and other information for IT professionals and a bellwether of technological innovation in publishing, confirmed that it is in talks with ReDigi to take the company into resale of e-books. The room was filled with traditional publishing executives who had a more skeptical view, though Ossenmacher survived the ordeal well.
The TOC organizers had asked me to give a talk on digital first sale at the conference; I did so later in the week (slides available on SlideShare). The room was packed with a broad mixture of editorial, business, and technology folks from the publishing industry. Publishers Weekly, the leading trade publication of the book publishing industry, decided that the topic was important enough to feature in an article summarizing my presentation. Most of the attendees were surprised at the highly disruptive implications for publishers, retailers, and libraries as well as users, though a few expressed the idea that digital resale is yet another inevitable type of change to legacy business models in the content industries.