TechDirt blogger Leigh Beadon wrote a brilliant analysis of the basic problem with intellectual property law titled, The Copyright Lobotomy: How Intellectual Property Makes Us Pretend to be Stupid. I’m not going to attempt to summarize the excellent article, because I couldn’t do the insightful reporting justice.

The opening paragraph reads:  “Here are two words that have no business hanging out together: “used MP3s.” If you know anything about how computers work, that concept is intellectually offensive. Same goes for “ebook lending”, “digital rental” and a host of other terms that have emerged from the content industries’ desperate scramble to do the impossible: adapt without changing.”

That’s right, of course. It was just a few weeks ago that U.S. District Court Judge Richard Sullivan ruled that reselling MP3 files without the express written consent of the copyright holder was a violation of U.S. copyright law. The ruling came in the case of a start-up called ReDigi, Inc. that bills itself as a site for “technology enabled commerce.”

Basically, ReDigi argued that by moving an MP3 file from one user’s computer to another user’s computer — and deleting the original — they were doing nothing more than allowing the “owner” of the file to be compensated for a file that they would otherwise delete.  ReDigi said that this was the same as allowing the resale of books or vinyl LPs or used DVDs.

Capitol Records, which said in its filing that it was suing on behalf of the copyright holders for “such classic vinyls as Frank Sinatra’s Come Fly With Me and The Beatles’ Yellow Submarine”, argued that anyone who understands how computers works knows that once an MP3 file has been produced (via ripping) or downloaded (via license from an authorized seller like iTunes), it’s unlikely that there is just one copy floating around, and that any resale violated both the terms of the license under which the file was purchased and the copyright law.

Certainly, once an MP3 or other digital music or movie file makes its way onto my hard drive, there is sure to be more than one copy of it. I back up my hard drive nightly to an external drive, and weekly to a cloud device — and, of course, I also sync other devices (iPad, iPod, cell phone) with my entertainment library. If those other devices aren’t connected to my computer when ReDigi “removes” the file from the hard drive of the person selling the “used” files, just how is it going to ensure that other copies aren’t kept?

The Digital Difference

In his ruling in the case against ReDigi, Judge Sullivan wrote that the case was a fundamental clash over culture, policy, and copyright law. He’s right, but he overlooked one thing. Many artists already view technology as a very real threat to their livelihoods, and have seen their earnings decline precipitously as consumers have shifted from “real” media to “virtual” media.

Consider the viewpoint of the author of an eBook. On one hand, publishing an eBook is less expensive than publishing a printed book, and at first glance the royalties paid to authors who self-publish an eBook on Amazon.com seem higher than the royalties paid by a publisher for a printed copy of the same book. However, there is a “shelf life” for printed books — especially library books. Over time, the wear and tear of being handled by library patrons means that the book will need to be replaced if it’s popular.

Not so for an eBook. One purchased copy of an eBook can be lent (or resold) indefinitely. Once it gets into “circulation”, it’s there forever.  It doesn’t degrade over time, and there is no “wear and tear”.

As John Palfrey’s excellent article in Library Journal pointed out last month, U.S. courts ruled back in 1908 that the “first sale doctrine” authorized the purchaser of a work protected by copyright to resell that work without the permission of the copyright holder. The idea was that if you bought it, you owned it, and you could sell a used book or photograph or painting just the same way you could sell a used pair of boots.

What sets digital media apart is that digital media isn’t usually sold.  It’s licensed. Purchases from iTunes, for example, are licensed, and paying iTunes for an app, music file, movie, or audio book does not qualify under the “first sale” doctrine. Although there have been hints that Apple wants to change its policy, and has even filed a patent application on a complicated scheme to allow the resale of files purchased from iTunes, it’s not clear that the current copyright law allows Apple (or anyone else) to make such a change without the consent of the original copyright holder.

The Artist’s Viewpoint

Whenever the subject of eBook lending or resale comes up among writers, musicians, photographers and other copyright holders, one thing is clear: artist’s see it as a way for the resellers (Amazon, iTunes) and publishers to profit without paying the artists a fair share. As author C.J. Cherryh put it on Facebook, “It’s money out of my pocket. Money that I’d have spent at the grocery store or Home Depot.”

Author John Scalzi went further on his blog post about eBook resale, saying, “I’d rather you pirate the book outright than buy it used.”  His argument is simple: he doesn’t get paid either way, but at least no one gets paid on pirated copies.

My Facebook friend David Pogue wrote in the New York Times that as the author of more than 50 books, he was excited about the opportunity to buy used digital books. But when he tweeted about his feeling that he didn’t mind having the “first sale” doctrine applied to digital books because the world didn’t end when he didn’t get paid when used copies of his printed books are resold, he found that his followers weren’t nearly as happy about the possibility that Amazon.com and iTunes might soon be selling used digital media.

David’s article quotes Scott Turow, president of the Authors Guild, “Who would want to be the sucker who buys the book at full price when a week later everyone else can buy it for a penny?” It also quotes Twitter user @toddheberlein saying, “Unlike physical goods like books, used digital products are just as pristine as new ones. Why would someone pay for a new copy?”

According to Pogue’s article, the fact that used copies are indistinguishable from new files is the heart of the problem. He calls it the one-penny problem. Once a pristine digital copy of an artist’s work is legally available for a penny — and make no mistake, it won’t take long before the price of a “used” digital file is a penny if the schemes put forward by Amazon and iTunes come to pass — who’d pay more for an identical “new” copy?

I sometimes buy used books at my local Half-Price Bookstore. When I’m done with them, I donate them to a resale shop or library, give them away, or take them back to Half-Price to trade in for something else. But I buy brand new first edition copies of books by my favorite authors — and I get them signed whenever I can. It’s one reason I didn’t bother downloading the Kindle eReader app for my computer or iPad until a few weeks ago.

But when several friends published books available only for eReaders, notably one of my favorite photographers Desmond Downs who has two new photography books out for Kindle and urban fantasy writer P.N. Elrod who has several titles that are available only for Kindle and Nook, I bought their books (at full price), and installed the app so I could read them.

Those who are pushing the resale schemes keep focusing on the “rights” of consumers. But it isn’t the consumers who win under the Amazon and Apple schemes — or with ReDigi’s service, either. It’s billionaires like Amazon founder Jeff Bezos and Apple CEO Tim Cook who stand to make huge profits while hard-working, talented people like Desmond and Pat may find themselves financially devastated by the “one penny problem”. The resellers already earn many times what the creators earn on every copy — especially on used books sold under the “first sale” doctrine.

I don’t know the answer, but creating a new system that creates profit for the “middlemen” while driving down prices to the point that artists can’t afford to create new materials.