February 17, 2018

Ebook Fair Play: It’s a License, or a Sale, but It Can’t Be Both | LJ Insider

When I was a kid, I used to play with the girl who lived across the street. But I never got to choose the game. When we were at her house, she would say “It’s my house, so I get to pick.” When we were at my house, she’d say, “I’m the guest, so I get to pick.” I would’ve been fine with either of these rules, but I was not fine with her choosing whichever was to her advantage at that moment.

Visiting BookExpo America (BEA) last week, it occurred to me that, on the question of whether an ebook is “sold” or “licensed,” many publishers are dead ringers for that little girl across the street.

I attended several of the panels on ebooks and libraries, including E-books From Libraries: Good For Authors?  and How The Douglas County Libraries Model Bypasses The Vendor System & Benefits Everyone. Overall they were positive, informative, progressing past many of the logjams of years past in search of data to drive decision making, and full of praise for OverDrive’s Big Library Read, the Big 6 pilots with NYPL and others, the Douglas County Model, and anything else that might provide that data.

But when it came to questions from librarians about things like interlibrary loan and/or resale of used ebooks, it was very clear from the responses that publishers consider this transaction a license—whether or not they used the word. They felt very comfortable saying that when libraries pay for an ebook, it doesn’t come with the right to do those things. But if it were a sale, libraries would have those rights, under the first sale doctrine. There might be, as per the ReDigi case, some hoops to jump through as to which technical mechanisms to accomplish them are permitted and which ones are not, but those would be matters for the courts to settle, not publishers. (For more on first sale, licensing, and ebooks, see “Licensed to Sell? IDPF Panel Tackles Tough Questions on Digital Content.”)

Yet when Paul Aiken, executive director of the Authors Guild, referred to the transaction as a license, not a sale, publishers demurred. And Aiken supplied the reason, which had not previously been clear to my library-centric viewpoint. I knew that publishers were afraid that libraries would only buy one copy and loan it to everyone in the world, and that the sale of used ebooks weeded from library collections would erode the sale of new ones. But what I did not know is that publishers, according to Aiken, have to pay authors 50 percent for a license, and only 25 percent for a sale.

While obviously the specifics may vary from contract to contract, if Aiken’s example is even close to representative, that provides a giant financial incentive for publishers to classify a transaction which sends ebooks to libraries in exchange for money to publishers as a “sale” when facing authors, and the exact same transaction as a “license” when facing libraries.

And that’s not okay in my book. I don’t really have a strong opinion on whether this transaction should be considered a sale or a license. But I strongly believe that it needs to be one or the other, not some kind of weird hybrid that offers publishers all the advantages and none of the costs of both, to the disadvantage of other parts of the publishing ecosystem.

I don’t want to derail this new, better détente we’ve got going lately. Publishers have finally decided to play with us, and that’s great. But they still need to play fair.

Meredith Schwartz About Meredith Schwartz

Meredith Schwartz (mschwartz@mediasourceinc.com) is Executive Editor of Library Journal.



  1. I cold not disagree more. For over a century, the U.S. Copyright Act has made it crystal clear that the “license or sale, but not both” is a totally false dichotomy. It is a mystery to me why lawyers and judges have simply ignored that at the drop of the word “digital”. We did not abandon the principle, developed in an era of ink on paper, when we moved to grooves in vinyl or magnetic impulses on analog tape.

    Section 202 of the Copyright Act declares the principle, set out in 1909, that ownership of the intangible copyright and ownership of the tangible object onto which a copyrighted work is reproduced are two totally different things, that ownership of one does not affect ownership of the other, and that transferring one does not involve transfer of the other.

    To put it simply, if I author a book, I have the exclusive right to reproduce the work into copies — they can be copies using ink on paper, or copies using bits on a digital storage medium such as a USB drive, library server, personal computer hard drive, or portable reader solid state memory.

    If I license the reproduction using ink on paper, whoever owns the paper owns the copy. It need not involve a “sale”. For example, if I author a 4-line poem, I can reproduce it onto one sheet of paper and sell that paper. Whoever I sell it to owns the paper, and can sell it, lend it or give it away, but does not have the right to reproduce it. On the other hand, I can license the reproduction by, for example, reciting it to you over the telephone, with permission for you to write it down on your piece of paper. Then, though no “sale” occurred, you still own the paper, and are free to sell it, lend it or give it away. Moreover, for over 150 years, it has been clear that the transaction can involve both a license and a sale. In a case from about the 1850s, the Supreme Court explained that the author of a work could sell the original printing plates to someone else, who could own the plates and sell them or display them, but not use them to make more copies unless licensed to do so.

    In the eBook scenario, reproducing the work from a server onto my portable eBook reader involves a license to reproduce the work. That’s it. But if I own the eBook reader onto which it is reproduced, I have a right to sell my device, lend it, or give it away without the consent of the copyright owner.

    Confusion comes in when people suggest that the first sale doctrine (codified in Sections 109 and 202 of the Copyright Act) should or should not apply to the “sale” of an eBook when, what they are referring t is not the sale of the “copy” (i.e., as defined in Section 101, sale of the tangible object onto which the work was reproduced) but, instead, they mean whether I can allow someone else to reproduce it onto another tangible medium and delete my copy.

    The “copy and delete” concept does have a beautiful philosophical parallel to the first sale doctrine, but the analysis should look to whether a “copy” takes place. The ReDigi case faltered because that court saw the case as involving a reproduction (step one), which infringed the reproduction right even before getting to step 2 (delete the original). A Canadian court case was a bit more realistic in examining a similar fact pattern more in the context of “moving” the work from one medium to another. It defined “reproduction” as necessarily requiring a “multiplication” of copies. For the Canadian court, if, at the end of the process, there was no additional copy, then the reproduction right was not infringed, even if the work was now embodied in a tangible medium other than the one onto which it was originally reproduced. Personally, I think that is an approach more consistent with the public policy behing the Copyright Act, because technology allows us to reproduce thousands of works onto a single tangible medium. making it impractical to, in effect, have to lend our entire library just so a friend can read one book. It makes a lot more sense to permit the virtual lending by looking no further than whether my friend and I can both read the work from two different tangible media (two copies) or just one (one copy, even though it was on my tangible medium when I read it, and on my friend’s tangible medium – but no longer on mine – when my friend read it).

    But back to the “license or sale” notion, I maintain that it is a completely false dichotomy. Every work of authorship can be licensed (as in license to reproduce the work into copies, license to perform the work publicly, license to make a derivative work) AND sold (as in selling the copyright itself or selling tangible copies of the work).

  2. Jeffrey S. says:

    Interesting article (and the one comment so far); thanks for sharing! I see both points, but I’m inclined to agree with the OP on this one, and also speculate that an eBook transaction constitutes licensing the content. The problem, as I see it, is twofold –

    1) The sale of a book, music CD, movie, etc. has always involved the sale of the medium (the paper, the disc, etc.) and the license to the intellectual property contained on it. Furthermore, it’s always been the case that you could transfer the license by selling the media. (Thus, when you sell your book, CD, etc., you relinquish the license to it, and whoever buys it gets it.) When you buy digital media, you’re effectively only buying the license and supplying your own media to contain it, so there ends up being no way to transfer the license without being in breach of it. (The terms generally specify that you can’t sell or give away your license.) Which brings me to my next issue…

    2) There are years of legal precedent on “fair use” of intellectual property (such as making copies for your personal use, or lending or selling your original copy). It’s, as I understand it, illegal for the copyright owners to prohibit such uses in the terms of the license agreement, but they do so anyway, and the music and film industry even successfully lobbied for legislation – the Digital Millennium Copyright Act (1998) – that contradicts fair use precedent.

    In short, I would argue that an eBook purchase is licensed (not sold) because, unlike the purchase of a paper book or a movie on a disc, the transaction is only for the license, not the medium. But the customer should still retain the fair use rights to that license that existed for the purchase of intellectual property on hard media. There’s no technical reason a customer isn’t able to sell his rights to a piece of music, movie, eBook, etc., and delete his copy (relinquishing his rights to the license) after the transfer is complete, (or for a library to purchase licenses for eBook lending and only lend out as many copies at a time as it has licenses), but for it to work, the music and film (and now publishing) industries have to stop treating their entire customer base as criminals and imposing draconian restrictions on the licenses.