Do We Own the E-books We Buy?

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In today’s digital world, just because you buy something doesn’t mean it’s yours. If you have ever downloaded a song on iTunes or installed a piece of software on your computer, you may be surprised to learn that you don’t actually own these products. You’re just licensing them.

When Apple (Stock Quote: AAPL) launched iTunes early last decade, it was a seen as a legal and respectable alternative to buying CDs in a store. But while CDs come with very few conditions for use, iTunes imposes strict requirements on what you can and can’t do with your purchase. According to the terms of agreement, “You shall be authorized to use the Products on five Apple-authorized devices at any time.” If you try to copy the song onto a sixth computer or portable player, or use it on a device that isn’t made by Apple, you suddenly are prohibited from listening to that track, even though you paid for it.

Despite these restrictions, users continue to spend good money downloading songs from iTunes and other online services. The same is true of e-books, except that the restrictions are even more severe, and consumers seem less aware of them.

Digital books have quickly moved from a novelty item for hardcore readers and techies to a widespread phenomenon. In the beginning, the Kindle stood alone in the field, and now there’s the Sony Reader, Barnes & Noble’s Nook, Apple’s iPad and even Google recently announced it will enter the market. Much of this is due to the rising demand.

Last year, when Dan Brown released The Lost Symbol, his follow-up to the hugely popular Da Vinci Code, it actually sold more digital copies than hardcover editions. Similarly, this past Christmas, shoppers bought more copies of e-books than regular books.  In 2009, $313 million worth of e-books were sold, which was a nearly 200% increase from the previous year. In fact, digital books are becoming popular so fast that some have estimated they may generate $9 billion in sales by 2013.

We are at the point where many readers are considering whether they should build up their digital book collections either to complement the books they already have or to replace their collection all together. But would consumers be so eager to jump onto this new platform if they knew they couldn’t actually own those books?

Ownership may be a bit of an abstract concept, but usually when we claim to own something, it assumes we have a few specific rights to that product, which we wouldn’t have if we were just renting or leasing. When you own a physical book, for example, you have the right to alter it by taking notes or to destroy it when the plot takes a bad turn; you have the right to lend it to your friends and family, to resell it when you’re done or to keep it forever in case you want to read it again and again. It’s easy to take all this for granted, but as of now, no e-book reader offers you guarantees to all of these rights.

“For the most part there is no real distinction between an e-book and a piece of software. When you buy either, what you are really paying for is a license to use the product, not to own it,” said Frederic Haber, the Vice President and General Counsel at the Copyright Clearance Center. “The seller is giving you access to this product, but at some point in the future they are entitled to take it back.”

Of course, the likelihood of a seller deciding to take back the book that you’ve purchased is very slim, but that doesn’t mean it can’t happen. Last year, Amazon (Stock Quote: AMZN) remotely deleted copies of George Orwell’s 1984 from hundreds of customers’ Kindles because the books had been purchased from a “third party who did not have the rights to the books.”

Not surprisingly, there was a strong public backlash over this move, which Amazon tried to ease by claiming this episode would never happen again. However, after one customer sued the company, Amazon was forced to admit as part of the settlement that it will continue to reserve the right to delete books in the future if certain conditions are met.

Then there’s the issue of being allowed to lend the book out to friends. Barnes & Noble made a splash in the market at the end of last year when they announced that the Nook would have a lending feature, something that neither the Kindle nor Sony Reader offered. But as Jeff Bezos, founder of Amazon, pointed out and other critics echoed, users are only allowed to lend out each book once on this device and only for a limited amount of time.

This issue is something that George Burke has struggled with more than most. Burke is the founder of Bookswim, a company that lets users rent regular books much in the same way that Netflix lets people rent movies. Now, Burke is looking to expand his business to include e-books. “The policy makes it an extremely difficult thing for us to transfer our business model of renting physical books in the mail to renting e-books. It requires an extreme level of permissions and contracts in place, which is tough for us,” he said.

Others have complained that these devices essentially trap the book after you’re done reading it. “[W]hat does bother me about the Kindle… is the fact that once you download a book, it is permanently bound to your Kindle account,” Stephen Wildstrom wrote in BusinessWeek. “[W]hat you cannot do is sell, trade, or give away the book when you are done with it.”

All of these restrictions are a result of Digital Rights Management software, which allows companies to regulate how many times a book is given out to a friend or regulate which devices the book works on. Publishers rely heavily on this technology to maintain control over digital books in an attempt to fight the big threat: piracy.

After watching the music industry suffer billions in loses from digital piracy, publishers were weary the same would happen with digital books, and the only way to prevent it was to maintain tight control. Unfortunately this attempt hasn’t been able to stop the rise of e-book piracy. Though there aren’t any exact numbers available yet, industry insiders claim e-book piracy is “exploding.”

DRM technology is used on all of the major e-book readers except the iPad. However, earlier this year, Amazon took a big step and allowed publishers to decide whether they wanted a particular book to use DRM. While this is definitely a step toward allowing consumers more control over the books they buy, Nieman Lab points out that most publishers will likely choose DRM for fear of piracy.

So, as it stands now, we are at an unusual moment when the devices that read e-books are attractive enough to lure customers even as the rights surrounding the books themselves remain blurry. Still, there is some indication this might change in the not-too-distant future.

Google announced earlier this week that it will launch its own e-book marketplace called Google Editions in late June or July. According to The Wall Street Journal, “The company is hoping to distinguish Google Editions in the marketplace by allowing users to access books from a broad range of websites using an array of devices, unlike rivals that are focused on proprietary devices and software.” Some hope that Editions will focus more on user rights rather than just publisher’s rights, especially considering their ongoing project to scan and digitize all the world’s books. But even then, would we actually own the books?

Haber, the VP of Copyright Clearance Center, speculates that we may one day. Instead of paying $9.99 as a flat price for an e-book, publishers may allow for different pricing models where customers pay less to have the book for a couple months, or to buy just a few chapters, and pay more to actually purchase the whole book and keep it forever. But this could be years away. In the meantime, consumers will have to ask themselves whether ownership is all it’s cracked up to be. Maybe it’s enough to just be able to enjoy reading a book once through and forfeit the rest.

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