Used Ebooks: The Sky is NOT Falling
13. Mar, 2013 
8 Comments
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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