Friday, September 30, 2005

Literary Authors and Amazon.com

First it was Google; now its Amazon.com that literary authors are kvetching about. An article in Thursday's (September 29) Wall Street Journal discusses complaints authors have about the fact that amazon.com offers books for sale at different prices: list price, new books at lower prices, and used books. Authors and literary agent are quoted as saying they think they are being deprived of royalties and they want their share! It is really no fun to write about copyright owners acting like Luddite pigs, and being in private practice it has a definite commercial downside; I would much rather praise Caesar. But, things are as they are, and I have always opted for honesty over craven brown-nosing and over self-imposed censorship. I hope my twins forgive me.

I buy around 150 books a year. This week I bought three brand new ones: a $160, 245 page book on copyright and printing privileges in Venice circa 1500; a $55 book about prints in the same era; and a $20 book accompanying the print exhibit I blogged about a few days ago. I also borrowed three books through Inter Library Loan. I may end up buying one; the other two (by historian Carl L. Becker) are out of print.

I buy the vast majority of my books through amazon.com and pay alot of attention to the choices they offer for the book I am interested in. Choice is bad, apparently. I should have to pay list price and I shouldn't be able to resell it (at least through amazon.com) without amazon.com sending a check to the publisher, who will pass 100% through to the author, at least that is what a literary agent is quoted in the article as advocating.

Sad, is the only polite word I can think of for literary authors' utter failure to embrace an extremely beneficial system. The first sale doctrine was judicially created by the Supreme Court pre-1909 Copyright Act in order to prevent misuse of copyright to maintain list price. Some things truly never change.

16 comments:

Anonymous said...

So Prof. Patry, how do you feel about droit de suite, the library lending royalties in Canada, England and elsewhere and the use of collective compulsory licensing for musical and audio-visual works that become re-purposed by subsequent commercial exploitations? When books ruled the earth, the first sale doctrine was a good idea to balance power between publishers and consumers. But maybe it should be revisited now. Maybe authors in the book idiom need a bit of a helping hand just like the ones extended by intellectual property laws to visual artists, music authors and sports franchises. One thing is for certain. It's certainly not Amazon's fault - - an application of the Internet that is quite obviously saving the ass of every book publisher and author not to mention preserving what little consumer interest remains for books as paper instead of bits.

Rob Hyndman said...

I think there is another point of view here, and a quite valid one at that. If books are to be resold, fewer new books will be sold. Publisher profits, costs and author royalties will have to be made up somehow - assuming, for the sake of argument, that the internet is not yet ready to reinvent publishing (and given the still slow penetration of e-books and e-reading, that's probably still a fair assumption).

It may be that new books will cost more - they are now easier to resell, so there is some logic to that - or it may be that publishers will take have to take a share of used book sales. No doubt this will take time to shake out - who knows precisely how the sales of used books will impact the market for new books?

But I don't think this needs to be any more complicated than that. The first sale doctrine, or any other principle of copyright law for that matter, are really beside the point for the time being. For now, the issue is how we are to adequately incent publishers and authors if resellers and the Amazons of the world take a bigger piece of the pie.

Anonymous said...

Books are different enough from each other I really doubt that used book sales substitute for new book sales.

If they do, and if it's appropriate to fix it with copyright law, then should book publishers be given special copyright powers to handle other forms of competittion and substitution? Perhaps to fend off video games, DVDs, movie theaters, or even hotels and fine dining?

Really, isn't there an argument that the more time and money I spend at a fine restaurant, the less time I have to read, and the less money I have to pay for books?

William Patry said...

I don't see the issue as whether fewer new books will be sold because I can go on amazon.com and get a book for less than list price. For every book I buy there will be an initial sale: if brand new straight from amazon.com, it will be too me: if I buy a resold book, the sale would have been to someone else then to me. Its true I may buy the resold book instead of buying a different new copy, but the author has been paid for the sale of the first copy and that is as far as we, as a society, have decided copyright rights should go; if we didn't draw that line, there would be no second hand bookstores. Some publishers price accordingly like the $160, 245 page book, I bought this week.
Droit de suite is I think on weak economic grounds, but it does stand different from books as applied to fine art since there one doesn't sell multiple copies and you are forced into the $160 a book mode for everything; tat is frontloading the price.

Rob Hyndman said...

Well, it's an interesting debate, but I don't agree with you.

I doubt that society has decided that books should be priced as they are because of the first sale doctrine, and I doubt that historical patterns of used book sales have that much to do with how new books will be priced in the future.

I think it more likely that new books are priced the way they are because of what they cost to publish and the profit and royalties that publishers and authors expect. And copyright law has, I expect, evolved to fit the reality of that and other marketplaces (realizing the foolishness of debating a professor of copyright law on this point, I nevertheless forge ahead).

Used book sales have never been an issue before because the market for them was so undeveloped, limited as it was by information and geography. Using the extreme case as an example, if tomorrow the market for used books became so efficient that only 100 copies of anything ever needed to be published (those copies changing hands many times), I'll venture that the average price on Amazon.com would be quite a lot higher than $24.99 (or whatever it is) and/or the resellers and intermediaries would be giving up a share of what they earn to the publishers and authors, regardless of copyright law. People who read books, and people who write and publish them, would adjust their economic behaviour accordingly.

I see it as simply of question of what books cost and how willing buyers are to pay for them. First sale may be relevant to issues of ownership of copyright, but in this sense I doubt it has anything to do with the price of books.

And if the market decides that used books are enough of a substitute to truly jeopardize the market for new books, we may well be hearing more about this in the future.

Nick said...

If books are to be resold, fewer new books will be sold. Publisher profits, costs and author royalties will have to be made up somehow

The author's royalties were paid when the book was first sold, and I don't believe that the profits and costs must be made up. The publisher would certainly like to make more money, but they only own the copyright. Doesn't the person who sold me the used book now have more money to consume new books with?

Rob Hyndman said...

The reason they must be made up is because over the long run, if they are not, authors / publishers will publish less. If society doesn't care, they won't be made up. But society does care (there is no reason to believe that we want fewer printed books, this not being a case - yet - like digital music - a point I made in my first comment). We don't want authors and publishers publishing less. Simple economics / business.

Society, not wanting them to write / publish less, will either bid up the price of what they do, or cut them in on the resale market.

The author's royalties, and the publisher's profits per book, are determined based on expectations of sales (and then validated - or not - by actual sales), which are based on the current model of how well new books sell.

So if the model changes because of a long term shift in buyer behaviour - like an increase in used book selling (which at some point must affect new sales), pricing or how authors / publishers obtain revenue will have to change as well. That's all the publishers are saying.

I'm not trying to be flip, but this isn't about the sale/license of copyright. It's about the sale of books. The only issue here is the return that authoring and publishing earns.

So, in my opinion, debating this as a copyright issue misses the point. It's all well and good to point out that the first sale doctrine establishes that authors and publishers have no legal right to a slice of the resale pie for a book sold yesterday. But who cares? If the returns from writing and publishing diminish to the point where they decide that they must be compensated or else publish less, and society wants them to keep publishing, the economic terms of the business will change, leading to an increase in prices for new and / or a sharing of resale revenues.

William Patry said...

Literary authors haven't pointed to any evidence that there has been any diminishment in sales of the brand new books due to amazon.com's program, and it seems logically impossible since every resale is off of the sale of that brand new book. Indeed, amazon.com provides the most amazing publicity imaginable for literary authors: the ability to find and buy their books. I work in New York City which used to have great bookstroes. Now they are all Barnes & Noble and those stores are fast approaching blockbuster Video quality. (This isn't true for Barnes and Noble online, and its same day delivery service in Manhattan is awesome). It is, I submit, only online shoppoing that saves the rest of us and non-blockbuster type authors. But it is just like copyright owners to bit the hand that feeds them, and that is what led to my posting: frustration from someone who is an ideal customer.

While the used book issue is of much greater scope because of the lack of any geographic limitation, literary authors seem peeved about the sale of "new" books at less than list price. On that point too bad.

The overall economic thrust of Rob's comments remind me a bit of copyright owner's claims that every pirated copy overseas represents a lost sale: baloney; many represent copies that would never have been sales becasue the price is way too high. So too to some extent with new books: if the book is priced reasonably, more people might buy it; if it isn't any used copies are available then I will either not buy or buy a used copy.

Rob Hyndman said...

"Literary authors haven't pointed to any evidence that there has been any diminishment in sales of the brand new books due to amazon.com's program, and it seems logically impossible since every resale is off of the sale of that brand new book"

Well, I didn't say they had, but they've expressed a concern that there might be. Your post dimissed their concern, pointing to the first sale doctrine and asserting that they had no right to the resale market. My original comment merely argued that that was not the point.

And the fact that a resale is off a book that was originally new is, it seems to me, irrelevant. If every new book is resold once, the market is (at worst, from the publisher's standpoint) now half the size it would be without the resale. Larger, if resales don't cannibalize the new market, smaller if books are resold multiple times.

I don't think Amazon's existence as an advertising or marketing medium is the issue. It may or may not help to promote books more than the old neighbourhood bookstore model. (But to the extent it's relevant I doubt very much Amazon is promoting reading generally - at most, I suspect it shifts the audience and helps people to find what they want faster.)

"The overall economic thrust of Rob's comments remind me a bit of copyright owner's claims that every pirated copy overseas represents a lost sale: baloney"

Well, I've reread my comments and indeed I didn't say that at all. hence the "reminds me a bit". What I said was:

"If books are to be resold, fewer new books will be sold. Publisher profits, costs and author royalties will have to be made up somehow ... No doubt this will take time to shake out - who knows precisely how the sales of used books will impact the market for new books?"

which I think is still a fair statement. My point from the beginning was that this was not about first sale, but rather about the price of books.

Cheers,
Rob

WJM said...

Why should only "artists" get droite de suite?

Why not house builders? Or mohels?

WJM said...

I think there is another point of view here, and a quite valid one at that. If books are to be resold, fewer new books will be sold.

Crap.

The used book industry is about, oh, two hours younger than the first-run publishing industry.

The used book industry hasn't killed first-run yet. How can it?

Publisher profits, costs and author royalties will have to be made up somehow

Why? Publishers take their first-run market into account when publishing a book. Authors don't get, and shouldn't get, royalties for the same copy, over and over and over and over and over and over and over again.

How much copyright will be enough for these cultural parasites?

It may be that new books will cost more

Or they'll cost less.

One very popular recent book here in Canada is already discounted 30%, and is likely to be remaindered right after Christmas. The publisher knew they had a hit on their hands, but they've already sold so many they've flooded the market and are competing against themselves with their own cut-rate price.

I don't see how a cut of secondary sales will help morons who don't know how to publish or sell books; nor do I see why they should be so helped.

No doubt this will take time to shake out - who knows precisely how the sales of used books will impact the market for new books?

What do you mean, "will"?

The used book market is almost exactly as old as the new book market. Obviously, there had to be new books in order for there to be used books, but that's the only difference in age.

For now, the issue is how we are to adequately incent publishers and authors if resellers and the Amazons of the world take a bigger piece of the pie.

Why should they be "incented" more than they already are?

William Patry said...

Rob:

This was the sentence I meant to respond to (and I spologize if I mischaracterized you): "If books are to be resold, fewer new books will be sold." That's still not empirically clear to me since, as I said before, every resold book was a new book once. I do agree price is the big issue, even more than copyright. After all, the price of a book (as contrasted with music scores) has little if anything to do with whether the book is under copyright. And my belief is that the price doesn't even reflect costs, but rather a judgment by the publisher of what the market will bear. For example, the last four books I bought, I bought all new. One was $22, Justice Breyer's small and short book on interpretation. His costs and the cost of producing that were tiny, and to me the book is overpriced. The $160 book on 16th century Venetian printing is a much more substantial book and reflects tremendous research. The production costs were more, but the prints are all black and white and not on glossy paper.I have no idea why the book cost $160. The next book was $55, on Durer and Raimondi. It is as substantial as the $160 book, much higher production values, a very fair value, and just as much research as the $160. the last book was $20, for a catalgoue book for an art exhibit. It too is substantial with good production values, and is, I think underpriced. Certainly as compared to the Breyer book, which was $2.00 more it is a real bargain, or Breyer's is a rip-off (and it is, I think).
Why, I ask, should Breyer's publisher kvetch if someone tries tog et the book at a decent price (I would estimate $7.50)? And what has he lost if he sells one copy and then the next is used?

Cory Hojka said...

Looking at book values from a economic viewpoint, I don't see how the secondary resale market generally harms new book sales. First, used and new products are not entirely interchangeable. People buy new cars, new textbooks, etc. even when used substitutes are available. The reason being that there is a difference in quality between these new and used goods. Thus, so long as that perception exists we will have a bifurcated market of new and used buyers.

Second, these buyers of new products are not unaware of the used market. A significant portion of them will be willing to pay more for new products, as once they are finished with them they can recoupe the resale value. The more certain consumers are of obtaining that resale value, the more willing consumers will be to include the resale value as a factor in what they are willing to pay. As a result, this resale value allows the retailer to raise prices while keeping the same level of demand compared to a market without resale value.

In the end, one question to ask someone who thinks resale markets hurt new sales is, if what they believe is true, then why do so many manufacturer offer leasing? From the perspective of the new buyer, leasing essentially creates a stable resale market where one otherwise may not exist. Due to that certain resale value, they are likely to pay more for the product. Yet if resale markets are bad, then why on earth would manufacturers want to lease? Instead, we'd assume that they would resist leasing, so as to further destabilize future expectations of resale values and thereby encourage only new sales.

pilgrim said...

A couple of points. Regarding Rob Hyndman's point that "if books are to be resold" fewer new books will be sold. While this makes some sense, it's a tough one to prove. The fact is that books *are* being resold, and have been for a very long time. There has been a vibrant market for used books for decades at least. So, given that books are in fact being resold, it is difficult to set up an experiment to see whether, in a world where resale of books is not allowed, there are more sales of new books. Given that the used book market is a tiny percentage of the market for new books though, even if we had such a hypothetical world to experiemnt on, the effects would be difficult to measure.

It seems to me that the used book market (or rather, the relatively recent, Internet-based growth in the used market thanks to Amazon, Alibris, etc.) is a fairly good illustration of what other purveyors of copyrighted material (movie studios, record labels, etc.) are trying to do in other areas, which is tiered pricing, i.e. charging more for a product to those who are willing to pay more (for convenience, or speed, or in pristine copies), but still making sales at lower prices to those whose willingness to pay is less. At least in the context of books that are widely available in new versions, the buyers of used books would seem to be those who want the book, but aren't willing to pay even an Amazon or BN.com-dscounted price for the new version. We already have the first tier of full-retail or perhaps small discounts for popular books at the big chains, the second tier deep-discounted online prices for those willing to wait a couple days (or a few hours, for those lucky BN customers in NYC). The used market is a just another tier. The question isn't whether such a market will exist, but rather, who should own the right to sell a used book? Currently (and going back at least a century in the US), it's the owner of the book, not the owner of the copyright.

rjnagle said...

This discussion about first use is fine and good. And perhaps it is true that publishers continue making money on the deal (if we believe the recent economic analysis). It's another question whether it benefits the author.

Let me talk from the point of view of POD and ebooks. Both POD and ebooks are attempts to make aftermarket unwieldy or unlikely. It's a way to keep something eternally in print. In fact, many authors are self-publishing and relying on voluntary donations to overcome the aftermarket problem. My own strategy is to offer ebooks for free under Creative Commons Attribution licenses and then solicit donations (as part of audience building). So far, this strategy hasn't worked well for me (or for anybody for that matter), but that way of monetizing creative works is going to be more the norm rather than the exception.

What is my point here? The debate over first sale may turn out to be irrelevant to individual authors and relevant only to how we deal with legacy content. It's quite possible that people will buy old copies of CD's (instead of DRM-locked mp3s) in order to assert their fair use rights without breaking DMCA.

I make some of these points in an article I wrote recently on the book business .

Anonymous said...

"it seems logically impossible since every resale is off of the sale of that brand new book"

A sizeable number of books come from people requesting review copies, who may or may not be reviewers. Or those who attend promotional signings at the big trade shows who just want to finance their trip from selling free books.