E-book sharing: Amazon and book publishers' stupid attempts to curtail lending sites.

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March 22 2011 5:41 PM

No Sharing Allowed

Amazon and book publishers' stupid attempts to curtail e-book lending.

Illustration by Robert Neubecker. Click image to expand.

As convenient as they are, I've long worried about the many ways in which e-book purveyors restrict readers' rights. You can't resell the books you purchase for the Amazon Kindle, and you can't read them on most other e-readers. We also don't really own e-books in the same way we own paperbacks—Amazon has gone as far as remotely deleting titles from users' devices.

Lendle, a web clearinghouse for people who want to loan out and borrow Kindle books, tries to make lemonade out of this sour situation. Many Kindle titles can be loaned out once for a 14-day period. When you sign up for Lendle, you tell the site which books you have in your Kindle library. The more books you put up to lend to other people, the more books you're allowed to borrow. Everybody wins, right?

Not according to Amazon. On Monday, Lendle's co-founder Jeff Croft got a surprising letter: Amazon said it was cutting off Lendle's access to the company's e-book database. Since Lendle can't run without access to Amazon's listings, this move effectively shutters the site. Amazon didn't do much to explain its reasoning—in its letter, the company said Lendle did not "serve the principal purpose of driving sales of products and services on the Amazon site." While Amazon has not responded to my inquiries as of press time, two other book-lending sites told me they still have access to the database. "The news for Lendle looks troubling," said Anna De Souza, a spokeswoman for eBookFling, "but everything is looking OK for us for now." And Catherine MacDonald, the founder of BookLending.com, e-mailed to say her site "has had and continues to have Amazon API access and everything is business as usual for us." This suggests that Amazon might have shut down Lendle for narrow technical reasons. So far, though, the company hasn't told Croft what those reasons are or what Lendle should do to restore access to the database. [Update, March 23: Lendle is now back up and running. Indeed, as I suggested earlier, it seems Amazon restricted Lendle's access to its database for narrow technical reasons  that have now been resolved.]

Croft suspects there's something else behind Amazon's decision—that book publishers are pushing Amazon to limit e-book lending. That seems plausible. Publishers have long been wary of letting people share digital content. Indeed, they demanded the right to disable sharing for any book in the Kindle or Barnes & Noble Nook stores. Publishers haven't been shy to take advantage of that right. By my count, just three of the top 10 books in Amazon's Kindle store (as of Tuesday morning) are lendable. Things get worse when you move to the more expensive books on the New York Times bestseller list. Not a single one of the top 10 books on the  Times' hardcover fiction list is lendable, and just one of the top 10 books on the nonfiction list can be loaned out—Pope Bendedict's biography of Jesus (and perhaps that's only because he was known to have strong feelings about charity).

These restrictions are misguided. They're bad for readers, they're bad for authors, they're bad for e-book stores, and they may even be bad for publishers. Of course, the ways in which our rights get chipped away as we move away from analog content is a constant worry in the digital age. I'm not the first pundit to note how terrible it is that we can no longer share, resell, or modify the books, movies, and video games that we get over the Internet. But the sharing restrictions that publishers have placed on e-books strike me as particularly stringent, a rule that underlines how we'll mourn physical media when it goes away. Under Amazon's and Barnes & Noble's sharing model, you're allowed to loan out a book just once, for two weeks, and while it's loaned out, you don't have access to it. The fact that publishers can't stomach even this milquetoast model should have us scared for a future in which physical media loses its primacy.

Perhaps publishers will relent when they realize that lending and borrowing could increase sales. A raft of economic studies shows that secondary markets improve the market for new goods. This makes intuitive sense: You'll be more likely to buy a new car if you know you're allowed to resell it later; indeed, you might even pay more for a car with higher resale value. This model has been shown to apply to print books, too. In a 2005 paper, researchers Judith Chevalier and Austan Goolsbee (now the chairman of Barack Obama's council of economic advisers) showed that when buying textbooks, students take into account the resale value and the likelihood of new editions. Another study showed that Amazon's introduction of used books increased the online store's overall book sales. Why? Because, as economist Hal Varian once explained, there seem to be two different markets for books—some people like to buy new books and others like to buy used books.

Of course, "used" e-books are essentially identical to "new" e-books, so publishers can reasonably argue that e-book reselling will completely destroy both markets. I'm sympathetic to that argument; indeed, I've made peace with letting go of my right to resell e-books, especially since e-books tend to be cheaper than print books in the first place. (If I pay $15 for a hardcover and resell it for $5, it's the same as paying $10 for an e-book and never reselling it.)

But I'd argue that letting people loan out e-books will produce some of the same advantages that used-book sales provide in the print world. Making e-books loanable will persuade a whole lot of people to read things they wouldn't have bothered with otherwise. It will also ease the public's transition to e-books. Wouldn't you be more likely to buy an e-book reader—and, as a result, buy more e-books—if you knew you could borrow books from your friends? Finally, making e-books loanable will reduce incentives for piracy. The market for e-books would be completely ruined by the sort of large-scale, Napster-like file-trading operations we once saw in the music business. If publishers continue to play hardball, that kind of development isn't out of the question.

Can I prove any of these assertions? No—there have been no studies that I'm aware of showing that letting people lend e-books will increase book sales. (Then again, there also aren't any studies showing the opposite.) I'll admit, too, that the publishing industry's nightmare scenario is possible. Under that theory, every person who borrows a book represents a lost sale. If I can get David Brooks' The Social Animalfrom Lendle, why would I buy it? And if everyone with an e-book reader could borrow whatever they want whenever they want, why would anyone buy anything?

Yet that scenario seems terrifically unlikely. For one thing, e-book loans are now limited to 14 days. Sure, that's enough time to read most books, but it's not all the time in the world; there's a good chance it will be too short a time for you to finish at a leisurely pace—and if your time's up and you like the book, you might even buy it. What's more, because every book can be loaned out just once, there's no way sales will be completely cannibalized. If everyone stopped buying The Social Animal, the number of borrowable copies would quickly decline—and eventually people would have to start buying them again.

Lendle's Jeff Croft says he's collected a great deal of anecdotal evidence—email and Twitter testimonials—that lending drives sales. People tell him that they borrow a book by an author they've never heard of, for example, and then buy all of her titles. That sort of statement rings true to me. Every theory about how people discover content in the digital age—from Chris Anderson's long tail, to the stunning success of Netflix and Amazon's recommendation engines, to the power of aggregators like Reddit—suggests that the links between ordinary people are very important. You're more likely to read new books that your friends or peers recommend than you are to listen to critics. Lending—not just for books but for all kinds of new media—enables the sort of social recommendations that publishers depend on. It's a shame they don't see this. And a tragedy, for all of us, that as we move to digital books, movies, and games, we're going to lose our right to share the stuff we like best.

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