Ownership in the digital world
As we discussed earlier, both the law and ‘common sense’ informs our use of printed books so that once we’ve bought them, we can pretty much do what we like with them.
But when we buy an ebook, we only buy a licence to use it. We don’t actually own it.
That licence is the contract that spells out what the user can and can’t do with an ebook.
Example of an end user agreement
Let’s look at an example – an extract from the Kindle Licence Agreement and Terms of Use. This is the contract every purchaser of a Kindle ebook signs up to. (Emphasis is ours.)
The Content Provider may include additional terms for use within its Digital Content. Those terms will also apply, but this Agreement will govern in the event of a conflict. …
Unless specifically indicated otherwise, you may not sell, rent, lease, distribute, broadcast, sub-license or otherwise assign any rights to the Digital Content …
This agreement makes it clear that if you bought this ebook and tried to re-sell it, as a bookseller would, or to lend it out as a library would, or even to sell it ‘second hand’ as a consumer might want to, you would be in breach of the licence agreement.
Ownership in the digital world
So the printed book is different from the ebook, not just because of physical limitations but because of the legal principle called the First Sale Doctrine in the US or the ‘exhaustion rule‘ in many other countries.
The rule states that once a copyrighted item is sold, the copyright holder cannot control how it is used, other than through its right to prevent copying beyond modest limits (what’s called fair use or fair dealing).
Despite several legal challenges, this rule cannot be applied to digital goods, so contracts such as the Kindle Licence Agreement are legally enforceable.
Using end user terms to support pricing variations
These legal issues might seem arcane but there is one important practical consequence that an ebook publisher should keep in mind. It’s possible to sell exactly the same ebook to different customers at different prices by varying the contract terms.
This is common in other markets. For instance, the same piece of software will sell at a higher price with a licence that permits its use in business rather than the home, or that permits its use by five users instead of one.
When you sell to a major ebook retailer, such as Amazon or Kobo, you have only limited room to vary the licence terms as they must have a simple, consistent agreement to cover all or most purchases. But if you’re planning to sell from your own website, or through specialist channels, you might be able to take advantage of this to increase your sales and income.
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