Assumptions
1) Everything that can be distributed digitally will be (for the majority of cases)
2) All forms of middle-men will eventually be replaced by discovery services that run on affiliate type fees, with the majority of revenue going directly to the creator(s) of the digital work
3) File-sharing is impossible to stop
4) A second-hand digital file is identical to a ‘brand new one’. Obviously.
5) DRM dies

What does a second-hand market in digital goods look like under such assumptions?

I contend that any remaining inconvenience of obtaining something for free ends up priced into the second-hand market.

Thus you have the choice to buy direct from the artist, find a way to get it for free, or effectively pay somebody else a negligible amount to do so.

Does that seem like a good situation to end up in? If not, is there any way it could be avoided?

If we’re to navigate any kind of prudent path through the ongoing digital revolution, I think it’s more useful to think through this kind of argument than any kind of appeal to the “good old days”. The good old days are gone and will not come back. You can’t stop progress.

Cory, this is your problem right here. I know you are an urbanite and love local community, so how can you put local businesses out of business by doing half of your shopping with Amazon?

This goes for books too. Amazon et al. are centralizing the publishing business, and the rise of ebooks furthers this process. When you bought from Pages not only where you contributing to your community but you were also “owning” something.

You are not hurting for money, so what’s with giving your money to this large multinational for things like “box-files”?

Next step: boycotting toll roads.

Vernor v Autodesk established that buyers have the right to resell software, regardless of the EULA; sellers can’t contract terms like “you can’t transfer ownership of this purchase.”

Amazon now relies too heavily on third party merchants of incredibly varying quality and reliability. Their shipping times are often wildly inaccurate because they leave a “gotcha” in the form of a packaging time that does not count against shipping.

I would say that Amazon are very vulnerable. An e-retailer with enough clout who duplicated the Zappos’ model could rapidly hurt Amazon particularly in their core book business. If Borders or B&N offered free overnight shipping (even at a slightly inflated book price) they could skim off the cream of Amazon’s customers.

We don’t have those in Scotland.

The paradigm is completely different, and obviously companies are having a hard time dealing with what to do about these differences. Trying to say they are the same animal and making silly comparisons between the two isn’t productive. It’s pretentious and annoying.

No, pirating will go up because people don’t want to pay for books. Just as pirating went up because people didn’t want to pay for music. There were some who were reacting to the RIAA and money not going to artists (like many BBers), but mostly people just don’t want to pay for stuff they can get free. (Music was expensive and mostly crappy in the 90s, too. What changed during the last decade? You could get it for free.)

The amazon kindle interface is a joy for convenience, though- and the pricepoint is in the range that torrenting doesn’t seem such an obvious tradeoff. If one found the price point acceptable, and the convenience nice- and one had no issues with violating the EULA- then one might be glad to know that the kindle drm can be easily stripped off with a couple of python scripts easily found via google.

You don’t need to surrender to this.
There are lots of other places to buy physical products.
And unless you’re a slave to appetites, you can
as a last resort do without them.

I don’t mind them renting you books or music as long as they are clear about what’s going on. For me to participate, however, the price needs to be in line with the trade-offs you get in a closed DRM format. The have no real shipping costs (a few cents to Sprint for the bandwidth), no printing costs, the books don’t compete with new sales (resale or lending), they can stay “in print” forever without any warehousing, there’s a chance you’ll buy it again in print, etc etc etc… All these tradeoffs and you can usually buy the paperback for $1 more (it’s often cheaper than the eBook version).

That sad truth is that I don’t boycott them here. I just think I should.

It’s really frustrating being a customer who WANTS to buy things legally, only to have the stores make it so twisted and difficult that torrent sites become a good option. Of course many books on those sites are scanned and OCR translated to text, so errors occur.
Spotify (and such services) and iTunes have made it easier to buy music than to torrent it. That’s what we mostly use nowadays. We know the quality will be good, we know we can find most of what we want there and we know that people get paid for their work.

Movies and books need to follow. Heck, books should be simple. Low bandwidth and all that. Just need a good, big library of books with a non-crazy EULA, world wide coverage and reasonable prices (less than $10 per new book). That HAS to be possible. Right?

Tethering licenses to a user account such as a Steam account are an improvement IMHO over more annoying DRM measures such as CD-key verification and the like; in addition, I find that retaining the right to download a copy from the publisher’s servers is preferable to storing/backing-up your own discs which could be physically damaged (granted that the publisher stays in business). That’s one of the conveniences I enjoy about iTunes and the Kindle store, although each service has its drawbacks.

The main drawback with Kindle books is that they lack the ability to transfer license, so you can’t give it away the way you would with a paper book. And like paper books, an e-book is still a ‘durable good’ (even more so) in that you can extract information and value from it indefinitely. Since you can’t limit the number of copies that are made the way you do with physical media, the easiest way seems to be with associating licenses to user accounts.

@ arikol You mentioned iTunes making it easier to buy music than to torrent it and I’d have to disagree, iTunes is the scam of the century, mainly because people have bought into it. Effectively you pay more (at least in he UK) for an intangible, lower quality and highly restricted music format compared to a CD which you can do whatever you want with (say put it on your iPod and leave the CD in the car, or living room stereo) and is of a far higher quality. Why on earth Apple doesn’t offer their entire music catalogue in a lossless format is baffling considering storage is practically free these days. On top of this you don’t get anything like the deals you can get in a shop such as buy 3 for £10 etc.

I really like the idea of eBooks, the advantages are huge in terms of reduced space and less wasted resources but why would anyone pay MORE for something which costs the distributer practically nothing to sell. Then on top of that be unable to lend it to a friend or ultimately sell it on?

These companies need to realise that we aren’t going to go backwards in terms of our rights; these new formats need to improve the standing of the customer, not try and take them for everything they can. Especially considering how easy it is to get these files at a higher quality and without restrictions through torrents.

One last thought, I think Apple can get this right, the App store is a good example. Many of the Apps are priced so low that the cost is almost an irrelevancy, however I’m sure this results in far higher sales and so greater profit than if they priced them higher.

-RTM

Convenience wins for many people, most of the time. Even if reading a book on my iPhone isn’t as “nice” as reading a paper copy, I have it with me all the time — not the paper copy. Convenience wins.

All that said, I’m with you on the ebook format. Not buying until it’s portable, transferable and far less restricted. I’d settle for the current iTunes app-sharing model of 5 computers/any number of synced devices so I can share it around my house, though I’m not paying the same price as a paper copy.

Publishers still want their cake and to be able to eat it. Their major problem is that they can’t get shelf space in bookshops for anything that isn’t a hit, especially after the first year. Suddenly, they have this opportunity with ebooks to keep every book forever available, “in print” and they should be *jumping* at the chance, though they think it’s going to be a small thing. I think/hope they’re underestimating the coming digital reader storm.

Assuming Apple gets it not too wrong (nobody else has the clout), I’d be happy to never buy a physical book ever again.

Both book publishers and game publishers hate the second-hand market far more than the pirate market (as it’s real–not just potential–cash flow they get nothing from), and that’s what these restrictions are primarily aimed at.

Is this the way all digital distribution will trend? How can we do something about this?

My rule of thumb is, would Ray Bradbury have spent his money on one? If not, then neither should you. I’ll be buying ink on paper for, I guess, at least another decade.

Contrast this to the situation when Apple introduced the iTunes Music Store. The iPod had already been out for a few years, and people were used to getting content (probably mostly from file-sharing). Apple was in a very good bargaining position to demand that all publishers follow a consistent set of licensing conditions (5 devices/computers, unlimited burning, etc.) Basically, the music industry was desperate to see some income from digital content, and Apple was able to provide a huge market. Even if they didn’t sign on, the iPod would not suffer in value (too much).

The Kindle, however, is fairly worthless without the store. If all versions had native PDF support, USB ports and SD memory slots (for transferring data and extra storage), it would have value beyond a portal to the digital bookstore.