Another wrinkle in sale-vs-license

[Elfwreck]

In a case related to music, not ebooks, the 9th Circuit Court of Appeals recently ruled

that rapper Eminem’s production company was entitled to 50% of his record label’s revenue from digital sales.

The issue in F.B.T. Productions v. Aftermath Records was whether a digital download was a “sale” or a “license.” Like the music industry, publishers have taken the position that digital downloads should be accounted for as sales not licenses.
...
The ruling is important for the recording industry, because recording artists (like book authors) receive 50% of the record company’s net receipts from rights licensed to third parties -- as opposed to 12% to 20% of the retail price.

(Emphasis added) In this case, the seller's ability to reclaim/turn off the file was key to the decision that these were licenses, not sales.

This puts an interesting twist on ebook seller's claims (or rather, implications; they're pretty careful not to spell out the legal terms of the purchase) that they're selling licenses, not books... authors shouldn't be getting the 15-30% royalties for book sales, but the 50% rate for licensed material.

[Shaggy]

Originally Posted by Elfwreck

(Emphasis added) In this case, the seller's ability to reclaim/turn off the file was key to the decision that these were licenses, not sales.

That's been a main factor in testing license vs sale for a while. I'm not sure if any eBook retailers state that they will reclaim/turn off access to the content though. Other than Amazon, I don't think any of them even can do that (and Amazon has stated publicly that they won't).

[Elfwreck]

Originally Posted by Shaggy

That's been a main factor in testing license vs sale for a while. I'm not sure if any eBook retailers state that they will reclaim/turn off access to the content though. Other than Amazon, I don't think any of them even can do that (and Amazon has stated publicly that they won't).

Most of them don't claim the right to remove your access/reclaim the books. (Libraries do; that makes it very clear that library ebooks are not sales or gifts.)

The point is, if they want tell end users that they're not buying the book and can't resell it or give it away when they're done, they can't *also* tell the authors that those are sales, not licenses, for the purpose of royalties.

[SensualPoet]

Originally Posted by Elfwreck

The point is, if they want tell end users that they're not buying the book and can't resell it or give it away when they're done, they can't *also* tell the authors that those are sales, not licenses, for the purpose of royalties.

That depends on the contract re: royalties. The argument seems a bit of a stretch. But, that's why God created lawyers.

[Elfwreck]

Originally Posted by SensualPoet

That depends on the contract re: royalties. The argument seems a bit of a stretch. But, that's why God created lawyers.

The authors may have the same percentage for sales royalties and licensed uses; that part is established by contract. But whether the transaction is a "sale" or a "license" is established by the terms of the transaction--and it can't be one for the customer and another for the supplier.

[RoboRay]

Yep, the courts need to force the publishers to pick one side or the other of the coin... If they're going to screw the customers over by calling ebooks "licensed", they can't simultaneously screw the authors over by calling ebooks "sales."

[Lady Fitzgerald]

Originally Posted by SensualPoet

...But, that's why God created lawyers.

I thought lawyers were offspring of the devil.

[starrigger]

In most book contracts, "license" means farming certain rights out to another publisher or distributor for them to exploit, such as audiobooks. Any interpretation that this would apply to a single retail transaction would be an extreme stretch.

[Elfwreck]

Originally Posted by starrigger

In most book contracts, "license" means farming certain rights out to another publisher or distributor for them to exploit, such as audiobooks. Any interpretation that this would apply to a single retail transaction would be an extreme stretch.

Except that they're trying to claim that the retail transactions are limited-use licenses, not sales. They're allowing the end user to read the book, but not resell it or give it away... just like a license to perform a play.

[starrigger]

Originally Posted by Elfwreck

Except that they're trying to claim that the retail transactions are limited-use licenses, not sales. They're allowing the end user to read the book, but not resell it or give it away... just like a license to perform a play.

I think the basic problem is that it's a new kind of product. I, like you, want to feel that I own an ebook when I buy it. At the same time, I can understand their feeling that if someone gives away or sells an ebook (especially sells), there's a good chance that they're not going to delete their own copy. And so a single sale multiplies without payment. This isn't generally an issue with p-books.

[Elfwreck]

Originally Posted by starrigger

I think the basic problem is that it's a new kind of product. I, like you, want to feel that I own an ebook when I buy it. At the same time, I can understand their feeling that if someone gives away or sells an ebook (especially sells), there's a good chance that they're not going to delete their own copy. And so a single sale multiplies without payment. This isn't generally an issue with p-books.

They are welcome to consider it a "license for use" instead of a sale--if they describe it that way before purchase, set the terms of the license in accord with the laws that define licenses, and pay authors for licensed content instead of sales.

"It's a new product" doesn't allow for "customers can only use it the way we think they ought to, because that's most profitable for us."

[starrigger]

Originally Posted by Elfwreck

They are welcome to consider it a "license for use" instead of a sale--if they describe it that way before purchase, set the terms of the license in accord with the laws that define licenses, and pay authors for licensed content instead of sales.

Let me guess how people here would react if they tried that.

I suspect this will all follow the music model eventually. But I don't think you'll ever see them explicitly allowing resale when resale effectively means "selling a clone." Do you see the music industry saying, "Sure, you can resell these MP3s when you're done with them"?

[Shaggy]

Originally Posted by starrigger

I think the basic problem is that it's a new kind of product.

The RIAA was fighting about this exact same issue with CDs, many years ago.

[Shaggy]

Originally Posted by starrigger

I suspect this will all follow the music model eventually. But I don't think you'll ever see them explicitly allowing resale when resale effectively means "selling a clone." Do you see the music industry saying, "Sure, you can resell these MP3s when you're done with them"?

The industry doesn't have a say in it. Copyright law and first sale say whether or not resale is allowed.

By conning people into believing that they have a say, the industry has already won half the battle.

[Elfwreck]

Originally Posted by starrigger

Let me guess how people here would react if they tried that.

I suspect this will all follow the music model eventually. But I don't think you'll ever see them explicitly allowing resale when resale effectively means "selling a clone." Do you see the music industry saying, "Sure, you can resell these MP3s when you're done with them"?

The most obvious, legal resale is "I'm selling my laptop loaded with books, music & games; I don't have another copy of all that content." People ask all the time if they can resell their Kindle or Sony with ebooks on it, and the "official" answer is "no," even though those ebooks may not exist in other places.

Sometimes, they exist in the store library--in which case, Amazon or Sony should be willing to transfer or remove access to them on request.

The fact that it's *easy* to make copies of digital content doesn't change the way the laws work. It's been possible for quite a while to buy a book & photocopy it and then sell the original, or buy an album, tape it, and sell the vinyl, or buy a CD, copy it, and return the original for store credit. (Many stores don't allow returns for this reason.)

It's possible that the laws should change--but that doesn't mean "content sellers should start acting like those laws already exist." If they want digital content to be treated differently from the way other sales are treated, they need to lobby to change those laws.