Digital Directions: Rethinking the Monolith
Andrew Brenneman, founder of Finitiv.
The damage caused by the international grey-market, illustrated by Kirtsaeng, is dwarfed by the damage that results from the used textbook market. Like Kirtsaeng, resourceful students who completed courses and no longer needed the textbook saw an arbitrage opportunity to sell their copy to the next student — and the used book market was born. To combat the used book market, publishers adopted a planned obsolescence strategy by shortening revision cycles. Shorter revision cycles oblige publishers to increase book prices to recoup costs in a reduced revision cycle — which ironically made the used book problem even worse.
Challenges presented by grey-market reimportation and the used book market are the same problem: Legal book buyers use their rights under the first-sale doctrine to exploit arbitrage opportunities outside of the control of the publisher, and in doing so they negatively impact sales. Publishers have attempted to mitigate this risk with reduced revision cycles and litigation. But the results of these defensive strategies are decidedly mixed.
There may be a solution to this market challenge if publishers can expand their offerings beyond the physical creation and distribution of print copies and move toward the creation and delivery of online services on a subscription basis. By embracing the creation and delivery of media and information services, rather than solely the distribution of hard goods, the publisher can regain control of pricing and revenue dynamics. The subscription component of such an offering could include pedagogical resources such as interactive and multimedia assets, assessment resources, and other teaching and learning components that are most suitable for digital or online delivery.
Section 109 of the U.S. Copyright code prescribes that the first sale doctrine does not apply if the possession of the copy is "by rental, lease, loan or otherwise without acquiring ownership of it." The first sale doctrine does not apply to subscription services. With subscription services, publishers can price services for different markets without fear of reimportation. And the used book market is eliminated.