Ebooks, The Law, and Economics

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On the heels of the music and film industries, the world of publishing is diving into the brave new world of digital goods, and it’s uncharted territory.

A real, physical book is pretty easy to understand: if you loan me your copy, you don’t have it anymore.  It takes a little bit of time and material to print each additional copy.  To obtain the book, you have to give someone your money before they hand it over, or send it to you – unless you got it from the library, in which case the book was purchased with your tax dollars or with donors’ money.  But in any event, for each copy out there, money changes hands.  If you steal a physical book, you’re actually stealing it – walking away with someone else’s property and depriving them of it.  You can’t do that from the comfort of your own home, sitting in front of your computer, so by and large, most people don’t.

Digital goods are different in that, theoretically at least, you could make as many copies  as you wanted without taking anything away from anyone – they still have their copy too.   Naturally, though, ebooks are still legally protected by copyright, and physically protected by DRM (Digital Rights Management) systems; although apparently the Kindle DRM has been cracked. However, these are attempts to limit the natural state of digital goods, rather than inherent properties, as with “real” books.

This makes for a strange world in which we still haven’t found a good equilibrium.  If everyone copies everything and no one pays for anything, the profession of ‘author’ will disappear – the only people able to write will be those who have plenty of money from other sources and can thus pursue their writing as a hobby.  Even if only most people, rather than everyone, “pirates” rather than paying, it could make the difference between good authors writing as a hobby because they don’t make enough, and writing professionally because they are able to pay the bills from the proceeds of their writing, which would deprive the world of the work they could have otherwise produced had they been able to work on writing full time.

On the other hand, even some of the simple things we’re used to doing with ‘real’ books are a bit awkward with ebooks.  For instance, we only have one Kindle in our family, so if my wife wants to read a book on it, I can’t read any of the other books on it.  Even if we had a second one, were it registered to her, the sharing system on the Kindle is a little bit weird and does not really replicate how sharing a book in the real world works.  Also, with a book, I can always sell it once I’m done with it, used.  I probably won’t make much from it, but at least it’s a little bit, and it gives someone else the opportunity to own the book at a lower price, which is a good way for students or other people with a tight budget to get ahold of books.  Ebooks don’t have this option, and it would be difficult to do: a “used” ebook is just as good as they day you bought it.  It has no wear and tear, no faded cover, or any other blemishes, which would mean that a potential acquirer ought to be willing to pay anything less than the full price for it since he’s getting the exact same thing.  By removing the real world effects of wear and tear on books, a somewhat strange market might develop.  In any event, at least with the Kindle, it’s not likely to happen: Amazon’s agreement says that they are “licensing” the book to you and that you do not actually own the book that you “bought”.

Another point that some people find odd is that ebooks are, at times, priced higher than their paper equivalents.  People figure that since there’s no paper involved, the ebook ought to be a bit cheaper.  What they’re missing, however is that the actual price of a paperback book is minimal – the real cost of  most books is all the work that went into creating them, editing them, laying them out, and so on – creative work, in other words.  These are “sunk costs”, in the parlance of economists, rather than “marginal costs”, which are the price each new copy costs to print.  With paperbacks, the marginal costs are low, with ebooks they are essentially zero.  But things don’t necessarily sell at what they cost to produce, they sell at what the market will bear, and if people find ebooks more convenient (more valuable!) than physical books, then it’s perfectly natural that the price would be higher than for the paper book.  I can’t argue with the fact that it does “feel” a bit weird though, and it’s yet another thing that the industry is still grappling with.

As an author, how should you react to all this?  My advice is to not get too worried about it, because it’s not something you can do a great deal about.  Amazon’s KDP represents a great opportunity for self publishers.

And, as author Cory Doctorow says,

“The greatest threat to an artist is obscurity, not piracy.”

As a self-published author, your biggest problem is getting noticed at all, not whether a few cheapskates read your work without paying for it.

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