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Why a used ebook ecosystem makes sense

Authentication and revenue are two reasons why the ReDigi model will work

In an earlier post I mentioned my plans to speak with ReDigi, the company making waves by helping consumers resell their digital music. One day consumers will also be able to resell their ebooks via ReDigi and that has some publishers concerned. What’s a “used ebook” anyway and should consumers be allowed to resell them? I felt the answer to the last part of that question was “yes” before I spoke with ReDigi founder John Ossenmacher but our conversation convinced me even more that reselling ebooks will be a good thing for everyone.

I should first mention that at O’Reilly we already allow you to resell the ebooks you buy directly from us. Here’s a link to the terms on our website.

If you’re not a fan of consumers reselling their ebooks I ask you to consider two key points John made in our conversation: authentication and revenue. One of the first steps you take after joining ReDigi is to let the service scan your music collection so they can determine what’s legit and what’s not. That’s right, ReDigi is able to analyze your music collection to determine which songs you bought from services like iTunes vs. the songs you illegally downloaded from a torrent site. RedDigi only lets you resell songs they’ve identified as legitimate purchases. John tells me their ebook service will have the same forensic capabilities. That means pirated books cannot be resold through ReDigi. Better yet, the ReDigi service also puts a little “make me legal” reminder next to every illegal file it finds in a customer’s collection. Click on that reminder and you’ll be able to pay for each of those pirated files to make them legit. How cool is that?

Still not convinced it’s a viable service? What if I told you the IP owner also gets a cut of the resale transaction? It’s true. When ReDigi launches their ebook reselling platform publishers (and therefore authors) will get part of the resulting revenue stream. Good luck making that happen at a used print book shop!

Seeing what ReDigi is up to makes me even more excited about the future of reselling digital content. I also wonder if consumers will tolerate higher ebook prices if they know they can resell them just like they can resell a print book.

What do you think? Is ReDigi on to something here? Could a service like this help the industry avoid the race to zero pricing?

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  • Alasdair Allan

    As an author this seems like a good (great!?) deal. The downside? While the authors might get a cut of the revenue stream from publishers like O’Reilly, but somehow I doubt that most other publishers will follow through and pass that resale revenue on to their authors.

    Looking at my own contracts with O’Reilly they’d be doing it because it was the right thing to do, not because they had to, and I don’t think I’d trust most other publishers that far..?

    • jwikert

      I’d like to think that most publishing agreements state that the publisher will share the incoming revenue stream with the author but you’re right. There could be some publishers who don’t have that language and/or make the poor decision to keep the revenue to themselves. That seems very shortsighted though as the publisher might save a few dollars but create all sorts of ill will with their authors.

      On a related note, I figure this is another example of how a solution like ReDigi could be applied. You can’t take all that digital content with you, so why not resell it (or let your estate do so)?

      http://www.marketwatch.com/story/who-inherits-your-itunes-library-2012-08-23

      • John Ossenmacher

        I really appreciate the dialogue that is happening about
        ReDigi.  It is great to see the outpouring
        of support for the resale market and I welcome the opportunity to respond to
        concerns and issues that people have.

         

        WHY A RESALE MARKET IS FAIR AND LEGAL

         

        Music has gone from albums to 8 tracks to cassettes to CD’s
        and now MP3’s.  Books are now traveling
        on the same journey; hardcover to paperback and now eBooks.  It is the same product; same author, same
        story – just a different format!  More
        importantly, the consumers are paying the same price for the book as if it were
        at the local bookstore.  Just because the
        book is in a different format does not mean consumer’s rights to resell should
        be suspended.  Why are all of the other
        formats allowed to be resold but people want to challenge the resale of digital
        formats and take away consumer rights?   Downloading
        a movie as a rental to watch on Comcast would not qualify as a re-sellable
        digital good.  It is a rental not a
        purchase – and they paid a smaller fee for the rental period rather than the
        full fee to own the product and have it permanently.  Very different circumstances that all
        consumers understand!

         

        REDIGI TECHNOLOGY

         

         ReDigi allows for the
        resale of music, books, games and yes we could decide to resell movies, all of
        which have been legally purchased.  Our
        company has invested a significant amount of resources and money in building a
        technical system and portfolio of intellectual property that will protect
        several of the key aspects that facilitate these transactions in a lawful
        manner.  Our technology verifies that the
        product was legally purchased before it is allowed to be resold on our site.  The ReDigi process verifies the user’s file
        as “eligible” for resale, we also verify the content and many other aspects of
        the file to be sure it is original and intact. 
        Technology is paramount to this marketplace and we believe it will be near
        impossible for other retailers to open a marketplace like ours without
        infringing on ours.    We will enforce
        our rights in this area, which we believe to be significant, thereby keeping
        structure in the secondary marketplace. 
        So publishers have the opportunity to take advantage of all of the
        significant benefits that the secondary market has to offer, revenue, data,
        loyalty, etc. by helping developing an environment that works for the consumer,
        the author and themselves.

         

        WHY REDIGI HELPS THE INDUSTRY

         

        In the ReDigi system the proceeds from the Seller/Consumer
        are kept in the system!  This is a key
        point for publishers!  It means the money
        that is generated from the resale of an eBook can only be used to buy other
        items in the digital marketplace.

        It encourages readers to look for their next “read”.  It encourages readers to try that new author,
        to not worry so much about the high prices of new eBooks because their product
        has trade in value, they can recycle and keep their money working for them by
        purchasing more books.  Credits in an
        account are hard for most consumers to sit on.   They burn a hole in your pocket – so to
        speak.   It is like free money – the gift card
        effect!   Would you be more or less likely to buy a new
        release ebook at $12.99 if you had the $100.00 credit in your account?  What about if you had to charge it to your
        charge card?   How about 2 ebooks?  3 ebooks? 
        I think you can see where this is going, a viable used ebook market,
        properly structured, adds ongoing wealth and value to the new ebook
        market.  In all of our studies 100% of
        those involved would spend at least three times more on books if they knew the
        books they were buying had a residual or resale value, THREE TIMES MORE, that
        is significant, that is expansion, that is good for EVERYONE in the ecosystem.

         

        PUBLISHERS REVENUE

         

         Which leads right
        into your concern about impacting a publisher’s revenue.  Do you know how small a percent of book
        readers are ebook readers compared to the total?  Very small.   Avid
        readers are stuggling to convert to Readers/eBooks due to the high prices of
        the device and the cost of the eBooks.   The
        beautiful thing about consumers is they find a way to get what they want and
        they are getting the books they want to read now – they just get them used book
        stores, ebay, libraries, amazon used marketplace, from friends, swap meets and
        flea markets, etc.  What about the
        publishers profits in these circumstances? 
        They get NOTHING and this is happening all day long!!!  What a massive loss of revenue to publishers
        and authors!  WOW, think of the
        opportunity!

         

        As more and more people convert to Readers/eBooks, ReDigi
        will help tremendously in this area, the publishers finally have an opportunity
        to capture all consumers and a piece of every transaction!   Finally. 
        Why wouldn’t they want to embrace this new fantastic technology?

         

        AUTHORS AND ADVANCES

         

        Your point about Authors and advances, they finally get a
        cut, a chance to participate in the used marketplace that is thriving today,
        but they currently receive NOTHING.   Wouldn’t
        it be great to stimulate the industry and creativity with on going payments to
        Authors and Publishers similar to how Actors and Actresses get ongoing syndication
        payments, we think so!

         

        I could go on about the data and other benefits to
        publishers but maybe another time.  Again,
        thank you for your positive comments and allowing me a chance to clarify some
        key areas. –   John Ossenmacher, Founder
        & CEO, ReDigi Inc.

        • Ehjohnson78

          John, I love what your company is doing.  Thanks for the insight and public dialogue, and for building a new and sustainable model for digital items.  Once this new model is in place, I might  actually participate in the digital market…
          – From an open-minded purist

  • http://profiles.google.com/rob.e.dunbar Robert Dunbar

    For publishers, this ought to be a no-brainer. Publishers & authors get nothing if I re-sell a physical book (part of the reason for the higher cost of a physical book in the first place). With protections for the author, as Alasdair pointed out, this ought to spur publishers to put more books into an electronic format.

  • E.M.

    I have worked in the publishing industry for many years and
    I find the secondary market model presented here to be quite genius.  In addition to what the other commenters have pointed out, I feel it is worth noting that this model would ensure that
    all parties, from the author to publisher to reader, are satisfied as our world
    becomes increasingly digital. 

     

    I realize that O’Reilly already does this (applause), but
    universally giving readers the choice to sell back an eBook once they are through
    reading it would (a) encourage more new purchases (b) curb the desire to pirate eBooks and (c) increase profits to authors and publishers since they will receive a cut
    from all transactions, new and used. 

     

    Although some in the industry might require some prodding (sure, change can be scary), I think most realize that this ecosystem does make sense and that it is inevitable for the health and longevity of the industry.