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Comment by skywhopper | Hacker News Reader

This is encouraging news. A huge blow to fair use and access to media is being struck as we move to electronic formats for music, movies, and books. Libraries, rental services, used bookstores, and more depend on this concept to allow greater and fairer access to media. How we transition this concept into the world of digital media will greatly effect the extent to which we can fulfill the promise of computers and the Internet to make life better.

The First Sale Doctrine may be difficult to apply in a world of digital media, but it is not more difficult to apply than Copyright itself. Establishing a legal right to resell digital goods is a necessary counterbalance to the evergrowing power of Copyright owners over how we use our computers.

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I don't disagree, but it seems weird to treat physical media and digital media of a similar type exactly the same when they are simply aren't the same. The truth is you can make infinite copies of an e-book.

You can also make near 0-cost copies of physical books. Only thing stopping you is copyright law.

Ok, i'll bite. How do yo do that? Let's say I have an 800 page Neal Stephenson hardback. I don't want to destroy the book, but I want to copy it. How do I copy that at 0-cost?

Even with a borrowed laser printer/copier with free toner and paper I imagine I have to open the book 400 times and push it onto the copier glass and make a copy. That will take me 5 sec per spread, so say 10 spreads per minute. If I am done just under an hour, then I will have lost $100 of invoicable time. So, that wasn't 0-cost. You must have another way?

The marginal cost is 0. Since, once you have made your digital copy, you can make infinite copies, your amortized cost per copy approaches 0.

And what would the marginal cost be if paper and ink were not free? Not the full price of a new book, but I'm guessing a significant portion.

The marginal cost of a physical copy does not approach 0, true.

That's just because your opportunity cost is high. Compare it to a person who makes $100 in a month (there are countries where $100 is close to the median income) and you will understand why there are people who do actually copy or scan books instead of buying them.

Yeah, I am quite familiar with people who make less than we do. But, I just think it is a bit much to say that copying books is nearly free. It isn't.

You can make infinite copies of a physical book. It just costs more to do so - both in terms of currency and time to copy. But that's where copyright law steps in. You can sell your copy, but you cannot duplicate the content (bar some caveats).

How do you re-sell an e-book without duplicating it, unless you sell your e-reader device with the e-book on it?

When you read it your also copying it into cache. We could argue the technicalities but really it's about copyright law not the colour of bits. Or if you prefer we can just say it's legal to copy the ebook to a new owner if you remove your own copies (which is one process the above poster refereed to by writing "bar some caveats").

Well, e-book vendors ought to either use a shared format or provide a mechanism for transferring ownership. They are unlikely to do so unless a right to resell is established. I am pessimistic about the likelihood, but it would be a very good thing for the world.

Would artificial scarcity via fingerprinting (e.g. a unique hash to establish authenticity of ownership) per electronic copy help or hinder digital good resales?

I would support a token/watermark that proves authenticity of ownership, but can see where other more militant may say that this feels like a form of DRM (albeit without actual encryption or restrictions beyond the inclusion of the nonce to generate a unique signature).

In practice and within today's environment the idea of fingerprinting would be silly because it would be relatively easy to produce an unmarked copy, as is already the case with DRM protected .MOBI or .EPUB formats anyway.

Unless the fingerprint could be updated upon resale (how?) it wouldn't prove much. Fingerprinting also doesn't seem to deter reselling multiple copies unless all the buyers cooperate.

Cryptoprotocol could allow for this.

"Why the fuck do you get to resell something that I made? It's mine, I should get the money for it. Why do you get the money for it? Fuck you, I want my money!" is pretty much how I feel when I hear about people re-selling digital goods. It doesn't make any sense to me. Please explain how the original content creator profits off of this, if he/she doesn't then I believe this ruling is not only immoral, it's also completely stupid.

If you could clarify why your argument applies to digital media but not physical media, it would help.

Or, alternately, do you believe that resale of a thing you made should benefit only you? Is that in perpetuity, or how long should this last?

I'm not a fan of the way that argument was phrased, but the obvious difference is the physical difference between how a physical object is "stolen" and how a digital work is "stolen." It just comes down to property rights, which are subjective and change over time. Under my own subjective impression of property rights, someone breaking into my house and taking a sculpture I made is a violation of my rights, but if I sell a CD to someone and they give away a copy of it, I don't feel like there was a violation.

When it comes to unauthorized copies that do not fall within the parameters of fair use, the theft - for lack of a better word - is not of the copy in question. The bone of contention is actually the money that you would have paid to the author in the case of a legal transaction, and which you "save" in the case of an illegal duplication.

It's kind of like "saving" money on milk by walking out of the store without paying for it. Whether you're taking possession of a finite physical good, or increasing the legally regulated supply an intangible one, you're doing something that - by law - triggers an obligation to pay another person money.

Disregarding the obligation by making a copy and retaining possession of the money which, by right, you now owe another, is where specific and definable deprivation enters the picture.

When people who understand what they're talking about refer to "theft" in relation to the unauthorized duplication of intangible goods, this is what they mean.

> The bone of contention is actually the money that you would have paid to the author in the case of a legal transaction, and which you "save" in the case of an illegal duplication.

The problem with that analysis is that the amount of money you didn't give to the artist is the same regardless of whether you downloaded a copy. In fact, the vast majority of people in the world didn't pay the creator of the media.

And even for physical items, compensation to the initial holder is not what's relevant. If you take a gallon of milk and sneak out of the grocery store, but leave enough cash on the shelf in its stead, I think you will still be found of shoplifting, and I personally agree with that assessment. Likewise, if someone breaks into my house and takes my sculpture and leaves a million dollars of cash, that's still theft. What constitutes theft of a physical object is precisely that the item was taken not on the terms of the property holder.

"The problem with that analysis is that the amount of money you didn't give to the artist is the same regardless of whether you downloaded a copy."

And yet, demand for that media was nevertheless satisfied. So all the costs in creating it were invested with no hope of return. That may have been stupid move on the part of the author, but if the money dries up, how long do you think these people are going to go on investing their own time and resources for free?

"What constitutes theft of a physical object is precisely that the item was taken not on the terms of the property holder."

Exactly. And the same goes for intangible property. Indeed, that's the whole point of IP law: to create a situation where it's impossible to avoid a formal negotiation with the property holder without breaking the law.

> And yet, demand for that media was nevertheless satisfied.

A quantity of one was satisfied at a price of zero. That's a pretty trivial spot on the demand curve. It tells you nothing about the demand for that same good at nonzero prices.

What's the name of the rhetorical tactic where you avoid an argument instead of addressing it by reframing the terms to create an obviously absurd and / or non-representative case?

There's a word for it, and it does not reflect well on the intellectual integrity of the people who use it. That's fair warning.

Back to the topic: I was speaking in generalities, but if I were to get as specific as you just did (by assigning a specific quantity of one), I wouldn't draw any sweeping conclusions before doing the intellectually honest thing by asking what happens when the quantity = n?

If, say, n = 1,000,000, then the effect is not so trivial. Moreover, the producer typically cares about the price point at which the number of sales and the value of each sale combine to produce the greatest possible revenue. While this point is not only non-obvious, it is likely to vary over time. So setting the price can be tricky. But one thing you can be sure of is that it's not zero. Moreover, all demand satisfied at the zero point is removed from the pool in which the ideal price / volume relation can be found, given that volume is a function of demand.

In other words, the optimal price in a leaky will pool will invariably be lower than one in a pool that doesn't leak. And that's how demand destruction lowers the commercial potential of a property with near-zero marginal cost.

Actually, the quantity could be one or it could be a trillion. When the price is zero, the demand schedule is pretty meaningless. I just used one as the quantity in my example because I was assuming that a single person would only download a single copy of a given good.

I didn't say that the effect of zero-price downloads is trivial. I said that you cannot conclude anything about the quantity of a good that would be demanded at, say $10, by observing that there is some quantity demanded at a price of zero. This was a direct response to your sentence "And yet, demand for that media was nevertheless satisfied."

> Moreover, the producer typically cares about the price point at which the number of sales and the value of each sale combine to produce the greatest possible revenue.

Greatest profit, actually, but you're pretty close. But I don't see your point. I'm not suggesting that all media creators should price their content at zero (although that certainly is a valid strategy that can and has worked).

> Moreover, all demand satisfied at the zero point is removed from the pool in which the ideal price / volume relation can be found, given that volume is a function of demand.

Not exactly. I have purchased media legally after having downloaded the very same media illegally, and it wasn't because I lost my downloaded copy. But anyway, this claim still ignores my point, which is that the fact that there is nonzero quantity demanded at zero price tells you very little about how much is being removed from the pool at non-zero prices. To use an obvious example, a person with zero disposable income can download an album for free despite it being impossible for him to purchase it at any non-zero price. Or to use another obvious example, I can download music at least 50 times faster than I can listen to it, and certainly faster than I could afford to pay for it. If I were to download a terabyte of music this week, that tells you essentially nothing about how much music I would be capable or willing to buy legally if I were unable to pirate music.

"this claim still ignores my point, which is that the fact that there is nonzero quantity demanded at zero price tells you very little about how much is being removed from the pool at non-zero prices"

But again, that's not the point. Indeed, asking about the amount of dilution assumes the dilution is taking place, and moreover, when it comes to artists and/or formats with established track records, demand prediction isn't a game of wild guesses. The ability to estimate, if not predict, demand is essential to the budgeting and capitalization of programs. So if you're aware that dilution is taking place at scale, you can approximate what you would have taken in w/o having to deal with the skim.

Really? What type of terms would you need/agree to to allow for the resale of a digital or physical item? If you want more than the original sale price of the item then you are charging way too little for the original sale.

People are more willing to spend money on something that they know they can resell, which is an indirect benefit to the original seller.

It works that way with cars, houses, and even physical books.

Do you think a ban on selling used cars would result in more new cars being sold? I don't. For one, not everybody can afford a new car. For another, people generally use the money (or trade-in value) they get from the old car to buy a new one.

Why should digital goods be any different?

> Why the fuck do you get to resell something that I made? It's mine, I should get the money for it

Because I paid you for it. I bought it off you, just the same as if someone later re-sells a desk I made for them I can't demand further payment.

Your argument could apply to a book too; why should an author NOT be able to veto whenever a copy of his work changes hands, or gets lent to a library or ends up in a second-hand bookshop?

But the law of copyright is clear when it comes to physical goods. The consumer has rights too, and one of those rights is to treat physical copies of copyrighted works the same way as normal everyday physical items. It's one of the limitations that society has seen fit to impose on the rights of copyright holders; in exchange for their monopoly on the right to make copies of their works, the customers get the right to borrow, lend, resell or otherwise alienate themselves of the product. You'll find the doctrine called 'exhaustion of rights' or 'first sale', and in US Law, it's to be found in 17 USC 109.

What's happening here is that with the internet switched on and the mass trade in digital goods, the copyright holders have been spending years making the analogies with physical goods that require capital and cost money to reproduce ('You wouldn't download a car') and now the physical items analogy is being applied to the rights that everyone else has too.

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