In Which We Present Another Viewpoint

July 31st, 2005 · 1 Comment
by Booksquare

There must be something in the Kool-Aid this week — all sorts of talk about used book sales and related issues are floating through the Internets. While we remain perfectly content with our proposal and our belief system, we feel it’s important to present another point of view. We believe you can never have too much information.

A recent study conducted by Anindya Ghose of New York University and Michael D. Smith and Rahul Telang of Carnegie-Mellon suggests that used book sales benefit the publishing industry. The group studied sales of bestsellers on, and, on the surface, it appears that there are economic benefits for the various parties involved. But there are also drawbacks, particularly to authors.

First, of course, is the acknowledgement that online booksellers, including Amazon, command an increasing share of the used book market. Bricks-and-mortar businesses are staying alive by moving part of their business online (Powell’s is a great example of this) because the borderless sales arena increases their potential customer base. This is a really good thing, especially when it comes to hard-to-find or out-of-print titles.

Thus, while the increased availability of used books through electronic markets is having a small negative impact on publishers and possibly authors, the overall impact of used book sales on society as a whole is overwhelmingly positive. Moreover, online used book markets provide access and ownership of books to a segment of society which otherwise would not have been able to own them. [BS Note: this is a powerful argument and clear advantage of new technology]

Second is the fact that, for Amazon, used book sales cannibalized approximately 15% of new book sales. The study didn’t offer projections of where this number will be in five years, but it’s probably not unreasonable to presume it will grow. Which leads us back to an earlier question: what is an acceptable percentage of these “cannibalized” sales for authors and publishers? This roughly translates to about $2.5 million in lost author royalties, just from Amazon alone (assuming an 8% royalty across the board). The study’s authors believe this is not a signficant loss because:

Our findings also contain some good news for authors. While authors also lose royalty payments from lost sales of new titles, like publishers the net impact of the Internet on total sales is likely to be strongly positive. However, authors may experience an additional, indirect, gain through used book sales from increased readership. As noted above, 85% of used book sales on’s site apparently would not have occurred at the new book price. Authors may accrue some added income from these additional readers through speaking fees, licensing deals, or advances on future books — even if they don’t benefit directly through royalty payments.

We’re not sure this is a reasonable assumption. Speaking fees, okay, sure. We can buy into that. Sort of. Licensing deals? With notable exceptions (see: Harry Potter), there isn’t a lot of licensing in the fiction market, compared to other entertainment industries. Licensed characters tend to be owned by corporate copyright holders, not authors. And advances? Well, if your book does 15% worse in a retail situation, it doesn’t seem likely that your publisher will reward you with more money the next time. However, if this does turn out to be true, we are very excited and want the name of your agent. For sainthood purposes.

A final point that disturbed us was the assumption that increasing prices will allow publishers to offset the losses from used book sales. The study’s authors used the textbook market as an example of this practice, but there is no evidence that this would translate to the commercial market. Textbooks have a captive audience, in a manner of speaking, and already there is a lot of rumbling about prices, especially as other college-related costs increase.

We’ve made a business argument for adding a small levy to the price of used books and we’ve made a moral argument for buying new when possible. The latter comes from our personal belief system; the former attempts to find a way address the changes technology is forcing upon the publishing industry (and, again, we’re including music and motion pictures in this slot). The used market serves the reading and writing community well, and we don’t believe it should be destroyed. Copyright law has recently shown a great tendency toward flexibility, in part because of technological advances — why shouldn’t we take another look at the first sale doctrine (17 U.S.C. §109) ?

File Under: Square Pegs

1 response so far ↓

  • Helene // Aug 2, 2005 at 11:47 am

    Let’s nickle-and-dime into extinction department.
    After reading a used book, I have often been impressed enough to buy the same author’s latest, glossy, hot-off release.