Matthew Wayne Selznick

Yes, that’s a deliberately inflammatory headline up there, designed to rile the folks over at Ninc and get their (and your) attention. It’s also not inaccurate.

Here’s the deal: Novelists Inc. is a networking / advocacy organization dedicated to the needs of “multi-published novelists.” They claim to be non-profit but I can’t confirm this because their site doesn’t include any information about their non-profit status (or a terms of use or privacy policy.)

Recently, an article in their Writer’s Resources section has been getting a little buzz. There’s no date on the article, but the buzz started around December 25, 2008. The article, “Used Book Sales,” is a position paper and proposition to amend U.S. copyright law to require used book retailers to pay a “secondary sale” fee to publishers any time the used book retailer sells a used book within two years of initial publication.

Read the “Used Book Sales” article yourself.

Now, I have no idea if Ninc has any lobbying power or if the article is simply wishful thinking on their part. It doesn’t really matter, because the idea is poorly considered and ultimately harmful to the book industry, publishing, authors and readers. I’m strongly against this proposal. If you’re an author, I hope you’ll have the foresight to recognize you should be against it, too.

What Ninc Wants

Ninc sites the United States Constitution’s Article I, Section 8, Clause 8 as the focus of their position. Here’s the clause in its entirety:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

The key phrase here is “exclusive Right to their respective Writings.” It’s my understanding that this allows an author to control how their works are used through agreements and licenses. For example, when an author signs a book contract, they’re permitting the publisher to use their work in a limited fashion for a limited time and in return, the author is compensated.

It’s a stretch to assume Article 1, Section 8, Clause 8 should also give the author the right to control what happens to their licensed work after it’s been lawfully sold — in other words, to control what you do with a book after you’ve purchased it — but that’s exactly the leap Ninc wants to take.

Title 17, Chapter One, Section 109 of the U.S. Code specifically limits copyright so that the copyright owner has no rights with regard to what the owner of, in this case, a book does once it’s purchased. This is called the First Sale Doctrine: “I bought it, I have the right to dispose of it, give it away, or re-sell it.” The Supreme Court recognized First Sale Doctrine in 1908. It was codified into copyright law in 1976, and it’s in part what allows used book stores, flea markets, swap meets, thrift stores and yard sales to exist.

Ninc wants to add this language to Title 17:

…neither the owner of a particular printed book nor any person in possession of a particular copy of that book, may, for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that printed book by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending, within two years of initial publication of that printed book, unless that owner or person pays to the publisher some fair percentage of the cover price of the printed book.

In other words, for the first two years after the book is published, Ninc wants to make it illegal for your to sell your tangible property to someone else unless you also give the publisher “some fair percentage” of the original price of the book. Ninc wants to overturn a century of legal precedence. Generously, they exclude libraries:

Nothing in the preceding sentence shall apply to the rental, lease, or lending for nonprofit purposes by a nonprofit library or nonprofit educational institution. The transfer of possession of a lawfully made copy of a printed book by a nonprofit educational institution to another nonprofit educational institution or to faculty, staff, and students does not constitute rental, lease, or lending for direct or indirect commercial purposes under this subsection.

Ninc Wants To Control What You Do With Books You Own

From Ninc’s position paper:

Today, the largest sellers of used books have a strong Internet presence, allow Internet-based sales transactions, and maintain records of their sales and inventories, at least in part, by using ISBN numbers, as do other booksellers. The use of ISBN numbers to track sales is the same process whether it is being used by a used-book seller or a seller of new releases, and makes the payment of a fee a simple matter when calculated and transacted electronically.

The above really spells out who Ninc has a problem with. Ninc doesn’t like the fact that the Internet has made it possible for used book dealers to extend their reach and quickly and easily sell their wares to anyone in the world. Ninc doesn’t like that you can look up a book on Amazon.com and be instantly presented, in many cases, with the option to purchase that book from a used book dealer.

When you buy a book from a used bookseller, whether it’s your local mom-and-pop used book store or an online retailer like Abebooks or Alibris, the author doesn’t make any money from that sale. There’s no denying a used book sale has no direct positive financial benefit to an author. We’ll get to the indirect positive financial benefits in a bit.

Ninc’s Position On The Burden To Booksellers Is Disingenuous

Ninc claims that their proposed “secondary sale” fee will not “unduly burden used-book sellers by increasing administrative tasks.” Their argument is it’s easy to track inventory with software systems and as you read above, “the largest sellers of used books have a strong Internet presence,” which requires inventory tracking.

Ninc also claims:

…Ninc does not support a ban, taxation, or any other restrictive measure applied generally to the sale of used books.

This is plainly disingenuous. Has anyone responsible for Ninc’s position paper on used books ever been in a used bookstore? I’ve been in dozens. From what I’ve seen, there is very little tracking of individual pieces — no scanning of barcodes, no recording of ISBNs. Those that do are the exception.

You cannot impose a fee that requires an imposition on the used bookseller (purchasing and installing an inventory tracking system, payroll hours spent training employees and maintaining the system, accounting hours, labor and other expenses necessary to pay potentially hundreds of publishers) and claim you don’t support “restrictive measures.” Ignoring the actual fee on each used book that isn’t older than two years, the investment in time, resources and capital required would cripple most small businesses.

The Ninc Used Book Proposal Is Misdirected And Bad For Authors

Ninc cites a 2005 study from the Book Industry Study Group, Inc. to support their argument that used book sales are cutting into authors’ income. You can read the BISG Used-Book Sales study if you’re a member of BISG and have a hundred bucks; if you’re not a member it will cost you almost seven hundred dollars.

Another study released in 2005, from the Social Science Research Network and conducted by New York University and Carnegie-Mellon, presents good evidence to ease Ninc’s concerns, but Novelists Inc. appears to have ignored it. The abstract for “Internet Exchanges for Used Books: An Empirical Analysis of Product Cannibalization and Welfare Impact” is here, and there’s also a New York Times article that covers it.

The study focused on Amazon.com’s practice of providing a used book option for customers on most books. Recall that the Internet-driven used book market is one of Ninc’s main villains.

The bottom line? From the abstract:

Our analysis suggests that used books are poor substitutes for new books for most of Amazon’s customers. The cross-price elasticity of new book demand with respect to used book prices is only 0.088. As a result only 16% of used book sales at Amazon cannibalize new book purchases. The remaining 84% of used book sales apparently would not have occurred at Amazon’s new book prices. Further, our estimates suggest that this increase in book readership from Amazon’s used book marketplace increases consumer surplus by approximately $67.21 million annually. This increase in consumer surplus, together with an estimated $45.05 million loss in publisher welfare and a $65.76 million increase in Amazon’s profits, leads to an increase in total welfare to society of approximately $87.92 million annually from the introduction of used book markets at Amazon.com.

In other words: Used book sales on Amazon lead to more new books being sold, which leads to more money for publishers and authors. Also, most people who purchase used books don’t buy new books in the first place — these people would not purchase a new book even if there was no used alternative.

Ninc’s proposal is poorly considered and, according to research, misdirected.

Ninc’s position on used books would be highly detrimental to a growing segment of small business owners in the United States. As I write this, unemployment in the United States is pushing 7% — that’s up 2% from this time last year. Ninc’s proposal could push many small businesses to close, which means more employees out of work.

The end result for the very authors Ninc wants to protect? Fewer sales of used books, which means no net gain from the proposed secondary sale fee. More people out of work, which means less disposable income to purchase new books. When authors don’t sell books, publishers drop them. Ultimately, Ninc’s proposal could result in less money for authors, not more.

After a year that saw huge cuts and layoffs in the publishing industry, why would Ninc want to support anything that could make things worse?

Ninc’s proposal is bad for the economy, bad for the United States and especially bad for the economic welfare of authors.

Authors Should Love Used Book Sales

Of course I appreciate it when readers purchase a new copy of “Brave Men Run — A Novel of the Sovereign Era” — that means I get a dollar and some change, and I need that money, to be sure.

I also have no problem with the reader purchasing a less-expensive used copy. If you click that link and buy a book, I’ll get a tiny (a few cents) affiliate bonus from Amazon.com, but I won’t earn anything in royalties.

Here’s the thing: if buying a used copy is the only way you’re gonna buy my book, read it and recommend it to your friends, I want you to go for it. To paraphrase Tim O’Reilly for the nine millionth time, an author’s biggest fear isn’t lost revenue, it’s obscurity.

All authors should embrace this point of view.

Yes, authors deserve to be compensated and should be able to support themselves through their work. I want everyone who reads my books to compensate me, ideally with money, so I can have the financial security and peace of mind to make more stuff.

The Social Science Research Network study spells it out: Used book sales drive new book sales.

If, as an author, you’re still squeamish about not earning anything off of used book sales, think of it as a marketing expense. With no out-of-pocket expense, you’ve reached a new reader — a new consumer.

As authors, we should do everything we can to embrace our readers. This means reaching out and connecting with them in real and virtual spaces. It means making our content available to them in whatever form is most convenient for them to consume. It means building an audience for the long term.

Certainly it does not mean forcing one of our marketing and distribution channels out of business through short-sighted, selfish and misplaced legislation.

Who Is Responsible For Ninc’s Ill-Advised Position On Used Books?

Here is Ninc’s board of directors. In the interest of introducing them to new readers, their names are linked to where you can buy used copies of their latest books:

• President: Laura Resnick
• President-Elect: Kasey Michaels
• Treasurer: Ruth Glick (a.k.a. Rebecca York)
• Secretary: Charlotte Hubbard (aka Melissa MacNeal)
• Nink Editor: Cindi Myers
• Advisory Council Representative: Patricia Rice