Ebook Leasing – Throwing Out The Book With The Binding

by Nancy Humphreys on May 4, 2011

Recently I heard reference the idea that ebooks are leased, not sold. What did that mean? I wondered.

It’s clear that the kind of leasing meant was not that of an author leasing their copyright to a publisher (See the discussion about book leasing for his Rich Dad Poor Dad book series in Robert Kiyosaki’s Conspiracy of the Rich).

This kind of leasing was different. This kind is where a publisher leases the right to read a book to the reader. Yes, I said “leasing the rights to read a book”. Now that surely raises a good question:

The right to read can be sold?

When did that happen? What part of law covers the right to read?

What leasing by publishers to readers means is that readers would not be allowed to pass on a copy of their ebook to anyone else. In other words, the “first sale” doctrine in Section 109 of the US Copyright Act is being circumvented.

First sale rights allow purchasers of copyrighted products to use the the things they buy any way they want. According to  the Electronic Frontier Foundation, “First sale stops copyright owners from restricting how you use a copyrighted work after you buy it.”

First sale is what allows us to buy and sell used books, CDs, DVDs, etc. In January the 9th circuit court ruled that even if you give out a free copy of your work, it isn’t yours to control anymore. Someone else can sell that copy. Claims that there’s a “license agreement” can’t be used either to try to control what happens to copyrighted works that are given away as promotional copies.

Now, however, there’s a publisher who wants control what happens to their ebooks even after they have been paid for those ebooks. This publisher thinks it can do what the music industry and movie studios failed to do in their attempts to restrict how the purchaser uses their products.

When I first heard about leasing of books, I thought it just wouldn’t work. How could a publisher hunt down what happened to every copy of an ebook they sold? Well, they can’t. What they can do, however, is to make an ebook self-destruct after a certain number of uses.

Why would a publisher detonate its ebooks?

Because there is one huge group of buyers who can be blocked from passing on a copy of the books they buy and forced to pay more money to ebook publishers. That’s libraries. Libraries buy tens of billions of dollars of books each year, and they are now buying more ebooks than ever.

The typical cost of a library copy of an ebook from a publisher is $25 to $30, about the same as a print book. Just imagine the profits publishers could make on additional sales by limiting the right to read library ebooks!

This is why librarians at Marin County, California have  joined a nationwide protest over ebook leasing. The protest is targeted against HarperCollins. HarperCollins is the imprint created by a merger between two publishers: American Harper and British Collins. HarperCollins is now owned by Rupert Murdoch’s News Corporation.

The protest began when HarperCollins unilaterally decided to limit libraries to loaning out just 26 copies of each of its ebooks before the ebook self-destructs.

As you can imagine, librarians (including myself) are talking about that – loudly!

Marin County Library Director Gail Harr, commented to the Marin Independent Journal, “Where did they come up with 26? It just seems arbitrary.”

The logic behind ebook leasing

Actually there doesn’t seem to be much logic involved here! Just pure greed.

HarperCollins says that ebooks last forever. This means publishers will not receive revenues for replacing worn out copies.

My response to this is “Hogwash!”

The truth is that public and university libraries often buy multiple copies of new print books from publishers. Libaries rarely need to replace an old print book. If an old book does deteriorate, librarians usually repair them. No, it isn’t old books that will cost publishers money; it’s revenues from multiple copies of new ebooks that publishers are losing! But are they really losing anything? How much does it take to produce a new ebook as compared with a print book?

Once a downloadable ebook is formatted, there’s very little expense involved in making additional copies. One could argue in these times of declining public school and library budgets, that the savings from new digital technologies should be passed along to colleges and public libraries and to the readers who use them, and not put into the pockets of the six richest corporations in the world.

A New York City writers collective called Mischief + Mayhem told the Financial Times (“Readers of the world unite“), that the global media corporations that have taken over American print book publishing have turned to a business model that “make[s] money by selling the greatest number of copies of the fewest amount of titles.” They want to do the same with ebooks.

But this business model doesn’t translate to ebook publishing. The way to make money on popular ebooks would be to charge more for an ebook that a publisher knows will be in more demand than for other ebooks. Instead, downloadable ebook publishers and distributors are pricing ebooks as if they were all identical commodities, like canned peas or corn. And in their price wars with each other they are driving down the price of ebooks to mere pennies.

As a result, HarperCollins is not the only publisher worried about recouping costs on ebooks. Other major ePublishers, such as Simon & Schuster and Macmillan do not even allow libraries to lend copies of their ebooks. Some publishers insist that libraries buy an additional copy of the print book to hold on the shelves if they want to check out a digital version of the book to a patron.

Asking libraries to pay for two books in order to loan one out is a ridiculous financial burden on already-overburdened institutions that are battling closures here and abroad. (See “It is the fate of libraries to die” by Christopher Caldwell in The Financial Times April 16-17, 2011.) Nor is it legal. Under US law, the first sale doctrine means libraries have the right to do what they wish with the copies of the ebooks they buy.

As I see it, by turning to the “it’s-volume-only-that-counts” mentality of marketing ebooks, conglomerate publishers are “throwing out the book with the binding”. That just isn’t right!

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