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Originally Posted by lumpynose
There was (is?) also something to do with paperback books that had their covers torn off. My guess is that the bookseller or wholesaler could get a refund (partial or whatever) for unsold books and rather than returning the whole book they could return the covers. My grandfather was a voracious reader of westerns and many of them had the covers torn off. Sometimes in older books you'll see something in the first few pages about if the cover is torn off you shouldn't have bought it or something.
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That's an also. You are correct that book sellers would tear off the cover and toss the rest in the trash. Some people (and some dishonest book sellers) would then get the rest of the book out of the trash. That's more fraud than piracy. In third world countries, printers would simply print a bunch of copies without giving the author a dime. I'm not sure of the precise mechanics of it, I just remember Pournelle putting it in one of his columns.