Licensed to Sell? IDPF Panel Tackles Tough Questions on Digital Content | LJ Insider

“When is a Sale Not a Sale? Selling vs. Licensing Digital Content” the International Digital Publishing Forum's Digital Book 2013 conference asked. The panel, which took place on May 30 during the co-located BookExpo America last week in New York, featured Bill Rosenblatt, founder of GiantSteps Media Technology Strategies, who gave a point-by-point overview of the current state of digital copyright law.
IDPF International Digital Publishing Forum“When is a Sale Not a Sale? Selling vs. Licensing Digital Content” the International Digital Publishing Forum's Digital Book 2013 conference asked. The panel, which took place on May 30 during the co-located BookExpo America last week in New York, featured Bill Rosenblatt, founder of GiantSteps Media Technology Strategies, who gave a point-by-point overview of the current state of digital copyright law. In a brief aside, he said “under the current law, libraries are pretty much doomed in the ebook case.” Rosenblatt’s argument was essentially that, unless libraries gain some sort of legal leverage with publishers—specifically, a 21st century overhaul of First Sale Doctrine—the field’s long-term prospects with ebooks and other popular digital media don’t look promising. In light of recent developments, “doomed” is probably too strong an adjective. With Simon & Schuster’s pilot program announcement in April, all of the big six publishers are now either selling ebooks to libraries or are exploring the possibility. Hachette recently resumed licensing frontlist ebook titles to libraries. Califa this month launched its proprietary ebook platform Enki, which will allow hundreds of libraries in California, and soon Kansas, to host and manage ebooks on their own servers. (Itself the topic of a BEA panel on the Douglas County Model, which featured, among others, a representative of Impelsys, which is building a solution to allow smaller libraries to more easily do so.) And there are plenty of small presses and authors willing to license/sell ebooks to libraries on far more generous terms than those currently offered by any of the big six. But despite a bit of semantic overreach, Rosenblatt has a point. With licensing models, publishers retain control over content even after a library has paid for it. Terms can be changed, subscription prices can be raised, and in many cases libraries can’t do much about it, other than comply if they want to continue to provide access to a resource. “Libraries lend ebooks by the good graces of publishers,” Rosenblatt said.

Publisher-controlled resale

Rosenblatt was joined on the panel by Paul Aiken, executive director of the Authors Guild; John Ossenmacher, founder of ReDigi, an online marketplace for pre-owned digital content; and moderator Joe Wikert, former chair of the recently disbanded Tools of Change conference. Their presentations and discussion focused primarily on the consumer market, and never explicitly circled back to how the current state of digital copyright law impacts libraries. But their discussion nonetheless had some discouraging bearing on libraries’ situation: Aiken and Rosenblatt both argued that a first sale doctrine for digital content would enable a resale market that would inevitably destroy the value of that digital content. Ossenmacher did gently chide the publishers in attendance over dense licensing agreements that few consumers read, but then went on to argue that most consumers are fine with licensing arrangements, and would just prefer more honesty from content providers. ReDigi logo“When someone goes to get an ebook that they want to buy and read, and they click through that [licensing agreement] and say ‘I Agree’ without reading it, they don’t really know what they’re agreeing to, one. And two, they feel like they’re being tricked,” Ossenmacher said. “If I don’t own it, do a Netflix deal, do some other kind of deal and let me know I’m renting it, tell me I’m streaming it, and that’s fine with me, too.” One might expect Ossenmacher to be a staunch advocate of a new, modernized version of First Sale for digital content, considering that ReDigi is a platform that allows consumers to buy and resell digital files originally purchased from iTunes. The company recently lost a copyright infringement case brought by Capitol Records. Yet he argued that publishers had an opportunity to beat the government to the punch on this issue. By creating their own resale markets, publishers could ensure that they get a cut every time a file changes hands. “Capture the secondary market,” he said. “Capture it. It’s yours, it’s your authors’. The ReDigi model, and the model that we believe in… is that everybody should share in the secondary market. The publisher should get a huge percentage of that sale; the author should get a percentage of that sale.” Ossenmacher does believe there should be a model for digital content ownership, albeit one in which content producers still control how and where that content can be resold, and in ReDigi’s case what, specifically, that content can be exchanged for.

Testing limits

The panel, and the negative view that seemed to prevail regarding First Sale in the digital era, got me thinking about a story I covered in February, regarding a successful Roku lending program at the Ephrata Public Library (EPL) in Pennsylvania. EPL purchased two of the streaming devices, along with monthly consumer subscriptions to Hulu Plus and other content for each Roku, to lend to patrons. EPL Executive Director Penny Talbert described the program as fulfilling a component of the library’s mission by educating patrons about new technology. The devices and their associated subscriptions also enabled patrons to access streaming-only content, and thousands of shows and movies that weren’t available via EPL’s DVD collection. RokuAt best, lending a Roku outfitted with a few paid subscriptions falls into a licensing gray area similar to the one occupied by pre-loaded Kindles. At worst, the lending program could potentially violate the licensing agreements of Roku, the subscription providers, and the content creators who had licensed a show or movie to those subscription providers. That’s quite a thicket of contract law to wade through over a lending program involving one gadget. Yet as new technologies emerge, as streaming displaces the use of DVDs, and as the popularity of ebooks continues to grow, does anyone really expect content licenses to become less complex, or for publishers and manufacturers to consider libraries when they compose their legalese? What risks are libraries taking when they assume that the 100 year-old doctrine applies to any digital content when the terms are unclear? Until there is a legislative decision on First Sale “everything is just getting murkier and murkier…. Even when we have court decisions, they don’t apply to the entire country, and courts in different areas often contradict each other. So it doesn’t always help clarify things to get a decision in court,” Gretchen McCord, former President of the Texas Library Association and attorney practicing privacy and copyright law, said in a conversation about the Roku program a few weeks after the story published. In many cases, libraries are in a relatively safe position, she said. Goliath v. David court cases don’t come across well from a public relations standpoint, so a corporation would have to feel sufficiently threatened by a library program to risk public backlash, court costs, and the real possibility that the court might rule against them, setting a legal precedent that negatively affects their licensing agreements. A program loaning out pre-loaded Kindles or Rokus at an individual library probably won’t meet that standard. “The question is at what point, if any, does the owner think that the stakes are high enough to make it worthwhile?” McCord said.

Future of First Sale

In March, the Supreme Court resolved the Kirtsaeng v. Wiley case, ruling that First Sale doctrine “applies to copies of a copyrighted work lawfully made abroad. Many librarians viewed the ruling as a victory. After that result, some members of the Owners’ Rights Initiative argued that the time may be right to press the digital First Sale issue, noted Carrie Russell Director of the Program on Public Access to Information at the American Library Association’s Office for Information Technology Policy. They were a minority. “Most of the members of that coalition—ALA is a member—were not interested in digital First Sale,” Russell said. “They really didn’t think that it was doable in a legislative fashion.” Prevailing opinion was “more along the lines of let’s wait and see what the rights-holders do to try and fix their concerns with Kirtsaeng. We want first sale as we have it to stay the same.” Pushing for new legislation in this area presents risks. If new laws are created regarding the ownership and licensing of digital content, there’s always the potential that those new laws could put libraries in an even worse position. “It’s always very risky to consider copyright legislation, unless you have members of the committees that really understand copyright law and are not party to the Motion Picture Association [of America] or whatever. Because it’s very, very political,” Russell said. The current Copyright Act took over 20 years to write, she added. “There’s absolutely no way that [legislators] would say ‘Digital First Sale, great!’ and not give something to the rights holders.” Russell said that most ALA members seem more interested in having access to a publisher’s entire catalog, and being able to transfer a licensed ebook title to a different vendor’s platform when they need to. Rather than a new, concrete definition of digital ownership, many are content with licensing models, as long as they can perform these types of basic functions that would be a matter of course under first sale. “We’re probably going to get there in terms of getting everything we want with regard to maintaining the file, but it might not be full-blown digital first sale,” she said. Any additional clarity with digital rights for libraries would certainly help. For example, a library in Oregon recently sought Russell’s help after lawyers from ASCAP, the music performance royalties organization, contacted the library and said that they would need to purchase a license for the music they were playing during story time. “You don’t need to sign a license,” she told them. “Clearly this was fair use, and kind of ridiculous. But here’s the rub. Say someone’s playing music for story time that they got from iTunes… There’s a license agreement that says that the music can only be played for personal use… Technically, it’s a contract violation.” To Rosenblatt’s original point, libraries aren’t doomed by this transition, but the field will likely remain in contract law limbo for quite some time.
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Bill Rosenblatt

We didn't have time to get into this level of detail during the panel at IDPF Digital Book 2013, but I think it's important to point out that libraries could possibly get some breathing room in the law without pushing for full-blown digital first sale. I've suggested a couple of ways for them to get narrower exceptions that would help libraries be able to lend e-books without rights holder permission. See, but the gist is that libraries could push for additional e-lending rights under Section 108 of the copyright law. The e-lending rights in Section 108 now are virtually worthless to libraries. As you point out, there are signs of market-based solutions that would make changes in the law unnecessary. But I suspect that we are heading (at least in the short to medium term) towards a two-tier system in which small publishers allow unrestricted e-lending while the majors don't. At the end of the day, the little guys benefit most from exposure while the big guys already have exposure and prioritize revenue. With the majors, there's going to have to be a real discussion about the effect of library lending on sales. I think you underestimate the distaste with which some in the library community view any such discussion.

Posted : Jun 04, 2013 10:36

Matt Enis

Thanks for the comments and the link, Bill. I will include in the story. Enjoyed the panel and your presentation!

Posted : Jun 04, 2013 10:36


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