The New York Public Library has 87 branches, but recently some patrons have decided to forego all of them, and visit the stacks in their living rooms instead.
As the popularity of e-books has increased, libraries across the country have installed virtual stacks. At the New York Public Library’s website, patrons can check out audiobooks and e-books, temporarily downloading items directly to their computers or mobile devices, without ever stepping inside a physical library. “As our readership goes online, our materials dollars are going online,” Christopher Platt, the director of collections and circulating operations for the New York Public Library told The New York Times. The American Library Association estimates that two out of every three libraries now offer e-books.
But a recent decision by HarperCollins may slow the growth of libraries’ digital collections. The publisher announced this month that it will set a lending limit for new e-books it sells to libraries. Under the new policy, after a HarperCollins e-book is checked out 26 times, it will self-destruct. The limit is intended to provide a digital equivalent of the ordinary wear and tear that, over time, causes paper books to expire.
The restriction raises interesting copyright issues. In the U.S., libraries are able to lend books as a result of what is known as the “right of first sale.” This legal principle allows the purchaser of a particular iteration of a copyrighted work to resell or lend it without permission from the copyright holder, so long as no additional copies are made. Once I have bought a copy of a book, CD or DVD, it is mine to do with as I wish.
This principle, fairly straightforward when applied to physical objects, becomes more complex for “objects” such as MP3 files or e-books that exist only as bits of digital information. In response to file-sharing sites, which attempted to apply the doctrine of first sale to digital content, copyright holders began to assert that content transmitted digitally was licensed rather than sold. Since there was never any actual sale, they claimed, the right of first sale did not apply and they could, as a result, exercise greater control over how the content was used. End User License Agreements were created, requiring customers to agree that, though they seemed to be paying money to acquire a product, they were, in fact, not buying anything. By asserting a right to limit libraries’ use of e-books, HarperCollins is essentially claiming that its e-books are, like software programs, licensed rather than sold.
The principle of “fair use” provides further information on how copyrighted works can be used. It is less directly applicable to library e-books, since it applies primarily to the replication of portions of copyrighted works rather than to the use of individual copies of whole works. But it offers some useful general guidelines for considering what constitutes copyright infringement. According to the laws on “fair use,” individuals and courts examining whether a particular use is fair or not are instructed to consider “the effect of the use upon the potential market for, or value of, the copyrighted work.”
Publishers argue that unlimited library access to e-books would undercut their sales. If e-books are readily available to “check out” for free at any time, they worry, customers would have little reason to click “buy” rather than “borrow.” HarperCollins said in a statement about its new policy, “We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book ecosystem, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors.”
While the existing case law is murky, I am inclined to believe that, regardless of the possible consequences for publishers, the “right of first sale” applies.
But I doubt libraries will sue to win the point. While the “right of first sale” protects purchasers of copyrighted material, there is no “right to first sale.” If selling e-books to libraries hurts their profits, publishers are free to simply refuse to do business with libraries. In fact, Simon & Schuster and Macmillan, two of the largest trade publishers in the U.S., currently do precisely that.
Just as libraries depend on publishers, publishers depend on libraries for a large portion of their sales. Sales to libraries can account for 7 to 9 percent of a publisher’s overall revenue, two major publishers told The New York Times. Like it or not, publishers and libraries are locked in a relationship of mutual interdependence.
My guess is that publishers and libraries ultimately will find a solution that both can accept. Publishers might, for example, delay release of popular new e-books to libraries, forcing those who want to read the book right away to buy it. This is not much different from the way films are released first to theaters, then for pay-tv, and finally for sale and rental on digital media. Alternatively, or additionally, publishers might charge a per-checkout premium after a certain free lending limit, rather than requiring libraries to purchase new copies once theirs “expire.” This would make it possible for libraries to keep books on their virtual shelves even when they are not sure if there will be enough future interest to justify buying a new copy.
The question of how to handle library e-books is just one of many that have resulted from the digitalization of literature. I have written previously about Macmillan’s fight with Amazon last year over e-book prices, Google’s usurpation of rights to out-of-print works and newspapers’ fights to retain control of, and profit from, the content they produce. As we move into new legal territory, the specific provisions of existing copyright laws are increasingly proving inadequate to address new issues.
But the basic principles that govern our attitudes toward intellectual property are solid. Going forward, we should not alter our principles to fit changes in technology, but should instead develop innovative ways of using technology to honor our long-standing principles. Libraries and publishers should be able to find a new way to respect the old principle that expressions of ideas, once purchased, can be sold or lent for the benefit of everyone, even when those ideas are recorded in computer code rather than on paper.
Posted by Larry M. Elkin, CPA, CFP®
The New York Public Library has 87 branches, but recently some patrons have decided to forego all of them, and visit the stacks in their living rooms instead.
As the popularity of e-books has increased, libraries across the country have installed virtual stacks. At the New York Public Library’s website, patrons can check out audiobooks and e-books, temporarily downloading items directly to their computers or mobile devices, without ever stepping inside a physical library. “As our readership goes online, our materials dollars are going online,” Christopher Platt, the director of collections and circulating operations for the New York Public Library told The New York Times. The American Library Association estimates that two out of every three libraries now offer e-books.
But a recent decision by HarperCollins may slow the growth of libraries’ digital collections. The publisher announced this month that it will set a lending limit for new e-books it sells to libraries. Under the new policy, after a HarperCollins e-book is checked out 26 times, it will self-destruct. The limit is intended to provide a digital equivalent of the ordinary wear and tear that, over time, causes paper books to expire.
The restriction raises interesting copyright issues. In the U.S., libraries are able to lend books as a result of what is known as the “right of first sale.” This legal principle allows the purchaser of a particular iteration of a copyrighted work to resell or lend it without permission from the copyright holder, so long as no additional copies are made. Once I have bought a copy of a book, CD or DVD, it is mine to do with as I wish.
This principle, fairly straightforward when applied to physical objects, becomes more complex for “objects” such as MP3 files or e-books that exist only as bits of digital information. In response to file-sharing sites, which attempted to apply the doctrine of first sale to digital content, copyright holders began to assert that content transmitted digitally was licensed rather than sold. Since there was never any actual sale, they claimed, the right of first sale did not apply and they could, as a result, exercise greater control over how the content was used. End User License Agreements were created, requiring customers to agree that, though they seemed to be paying money to acquire a product, they were, in fact, not buying anything. By asserting a right to limit libraries’ use of e-books, HarperCollins is essentially claiming that its e-books are, like software programs, licensed rather than sold.
The principle of “fair use” provides further information on how copyrighted works can be used. It is less directly applicable to library e-books, since it applies primarily to the replication of portions of copyrighted works rather than to the use of individual copies of whole works. But it offers some useful general guidelines for considering what constitutes copyright infringement. According to the laws on “fair use,” individuals and courts examining whether a particular use is fair or not are instructed to consider “the effect of the use upon the potential market for, or value of, the copyrighted work.”
Publishers argue that unlimited library access to e-books would undercut their sales. If e-books are readily available to “check out” for free at any time, they worry, customers would have little reason to click “buy” rather than “borrow.” HarperCollins said in a statement about its new policy, “We have serious concerns that our previous e-book policy, selling e-books to libraries in perpetuity, if left unchanged, would undermine the emerging e-book ecosystem, hurt the growing e-book channel, place additional pressure on physical bookstores, and in the end lead to a decrease in book sales and royalties paid to authors.”
While the existing case law is murky, I am inclined to believe that, regardless of the possible consequences for publishers, the “right of first sale” applies.
But I doubt libraries will sue to win the point. While the “right of first sale” protects purchasers of copyrighted material, there is no “right to first sale.” If selling e-books to libraries hurts their profits, publishers are free to simply refuse to do business with libraries. In fact, Simon & Schuster and Macmillan, two of the largest trade publishers in the U.S., currently do precisely that.
Just as libraries depend on publishers, publishers depend on libraries for a large portion of their sales. Sales to libraries can account for 7 to 9 percent of a publisher’s overall revenue, two major publishers told The New York Times. Like it or not, publishers and libraries are locked in a relationship of mutual interdependence.
My guess is that publishers and libraries ultimately will find a solution that both can accept. Publishers might, for example, delay release of popular new e-books to libraries, forcing those who want to read the book right away to buy it. This is not much different from the way films are released first to theaters, then for pay-tv, and finally for sale and rental on digital media. Alternatively, or additionally, publishers might charge a per-checkout premium after a certain free lending limit, rather than requiring libraries to purchase new copies once theirs “expire.” This would make it possible for libraries to keep books on their virtual shelves even when they are not sure if there will be enough future interest to justify buying a new copy.
The question of how to handle library e-books is just one of many that have resulted from the digitalization of literature. I have written previously about Macmillan’s fight with Amazon last year over e-book prices, Google’s usurpation of rights to out-of-print works and newspapers’ fights to retain control of, and profit from, the content they produce. As we move into new legal territory, the specific provisions of existing copyright laws are increasingly proving inadequate to address new issues.
But the basic principles that govern our attitudes toward intellectual property are solid. Going forward, we should not alter our principles to fit changes in technology, but should instead develop innovative ways of using technology to honor our long-standing principles. Libraries and publishers should be able to find a new way to respect the old principle that expressions of ideas, once purchased, can be sold or lent for the benefit of everyone, even when those ideas are recorded in computer code rather than on paper.
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