EU Court Rules E-Books Are Services, Not Goods
wsj.com
wsj.com
For all intents and purposes, eBooks are services. Between DRM, vendor lock-in and other consumer hostile "features" of ebooks, seeing them as services and consequently taxing them as services totally makes sense.
As an ebook publisher, you can't have it both ways. You can't ask for the lower VAT of the easily lendable and copyable books and at the same time rent out a product that has none of these "drawbacks".
What will come out of this long-term is much more user friendly ebooks.
I don't think you appreciate the degree to which definitions of categories in law (and thus rulings on the boundaries of such classifications) are specific to narrow domains or even particular enactments. This is about categories under European Value-Added Tax (VAT) rules, not the general philosophical category you are describing.
> The Court points out, first of all, that a reduced rate of VAT can apply only to supplies of goods and services covered by Annex III to the VAT Directive. That annex refers in particular to the ‘supply of books ... on all physical means of support’. The Court concludes that the reduced rate of VAT is applicable to a transaction consisting of the supply of a book found on a physical medium. While admittedly, in order to be able to read an electronic book, physical support (such as a computer) is required, such support is not included in the supply of electronic books, meaning that Annex III does not include the supply of such books within its scope. Moreover, the Court finds that the VAT Directive excludes any possibility of a reduced VAT rate being applied to ‘electronically supplied services’. The Court holds that the supply of electronic books is such a service. The Court rejects the argument that the supply of electronic books constitutes a supply of goods (and not a supply of services). Only the physical support enabling an electronic book to be read could qualify as ‘tangible property’ but such support is not part of the supply of electronic books.
The thing is that publishers who continue their user-hostile practices can now be disrupted by more user-friendly publishers whose offerings will only be taxed at 5% VAT instead of the 20 plus % the user-hostile variant is charged for.
We'll have to see whether publishers can keep this up or whether they have to fix their hostile attitude. I hope it's the latter, because if it's the former, then ebooks are dead.
A good can be "nonrivalrous" and still be a good: http://en.wikipedia.org/wiki/Rivalry_(economics)
Lemon mint might be another example. It has a pleasant taste and smell, so you might want it as an herb. It's also very, very aggressive. Once you have a little, you can--and will if not careful--have more than anyone would ever need in a very short amount of time.
Excludability is another interesting property of goods: http://en.wikipedia.org/wiki/Excludability
An incredibly deep water table provides a source of water that could be considered both nonrivalrous and nonexcludable. Your digging a well doesn't prevent anyone else from digging a well and drawing water. If you have the only well making technology, though, access to the water table is "excludable," ie, you can charge people for access to your well.
DRM is usually an attempt to take a nonrivalrous, nonexcludable good and turn it into a nonrivalrous, excludable good.
That's the best case for producers, since it means they can charge everyone for each new copy, but marginal cost is zero. That is, each new copy costs them nothing to make. So after the first few sales, every purchase is 100% profit.
Calling e-books services in this case affects their tax rate, but probably also affects a bundle of consumer rights that are highly specific to the EU and fairly complex.
We tend to thing of goods as tangible things, and services as when we make someone spend some time to produce some change (paint a house, fix our hair).
Nothing is inherently a good or service though, so that's really a bit of oversimplification. Hiring a painter? You're actually paying for the paint as well as the work. Buying from a restaurant? You're paying for waitstaff as well as food. A freelance journalist? Seems like providing a service when tasked to report on a certain story. A magazine at a drugstore? That seems really good-like. All of this blends together in messy ways, and it's easy to get wrapped up too much in the significance of a distinction that's mostly historical convention.
Well, except that it's not mere convention once you realize that legal systems around the world treat this as a very important distinction, and vary in how they treat each category in bizarre and unpredictable ways. VAT is one. Why should taxes on booksellers be high but taxes on bookbinders be low? Trade and immigration is another. Why can people pay for a rake from Tanzania but not a Swiss gardener? Warranties and remedies in contract disputes and commercial law are filled with nutty discrepancies.
Each one of these has some historical reason, I'm not saying we should just treat everything like a good, that probably wouldn't work. But it's important to realize that no one could guess all these rules in advance from first principles.
So if you're sitting down and thinking, "what's the best set of policies for e-books?" The answer you want is probably not as simple as, "We should just treat them like goods" or "We should just treat them like services."
Nor does it make sense to make up a whole body of law from scratch to deal with every funny new case. There's really no easy answer, that's why the law evolves really slowly to deal with new technology.
Yes. This is the reality of ebooks, downloaded music, and online games.
Anything with a TOS attached to it is a service. We are a society of renters - never able to actual own something, but yet we pay the dollars and delude ourselves that we "own" DRMed ebooks and music.
If I'd needed to refer back to it often, I'd buy a hard copy, and have a handful such hard copies of technical books. I rarely crack any of them open, the Internet provides all. The only hard copy I have that I've read in its entirety is Metaprogramming Ruby 2.
I'm starting to think of consuming information as applying an 'insight delta' to your brain. Trying to actually hold facts and stuff is foolish, the Internet does that sort of thing much better than your brain does. So concrete information gets shuffled out after awhile, which is fine for my purposes. The stuff I'm dealing with every day, like how to refactor what kinds of code, that stays with me.
How many tech books make it to the NYTimes best seller list? Zero. Or any best seller list? Zero.
Most books sold are not "knowledge books" - they are fiction, cookbooks, self-help, etc. I have fiction books from years ago that I still re-read on occasion. Which is not possible with DRMed ebooks.
Goods are a thing you own, can use for whatever purpose you want and can sell on after you've bought it.
This way of looking at things present new questions: Should phones on a contract be regarded as services too?
Legally, you own your phone, even when on contract.
Philosophically, the manufacturer and/or OS developer own most phones, even those not on contract.
If everything is a service, then you own nothing, and pretty much have no historic property rights. Ever changing EULAs rule. How that's a good thing is beyond me. We should be attacking this ruling not praising it.
I bought a book. Its my property. Hopefully, this stupidity won't come to the states.
Lastly, if you think books sold in the EU without any DRM mechanisms will be seen as property.. well I've got a bridge to sell you. To EU bureaucrats, those are services too.
It's not just EU bureaucrats, sadly. I can't immediately find it, but one of the most depressing things I ever read was some proceedings from a government review of copyright here in the UK prior to the recent legislation that finally added various new statutory exceptions.
It consisted of a bunch of unelected people with power to legislate (members of the House of Lords), many of whom declared an interest as people with ties to Big Media one way or another, cross-examining IIRC a senior civil servant whose department were making formal recommendations about the new rules, who stated bluntly that his primary interest was "UK PLC".
The general tone of the entire hearing was that obviously any changes to copyright law should make sure big business still gets its money one way or another, and the only interesting question was how.
The idea that copyright might simply no longer be a reasonable model for the digital age and some other economic model might be more effective didn't seem to occur to anyone.
The idea that copyright might inherently cause harm in terms of the public being able to enjoy works they had already paid for, and that any such harm should therefore be outweighed by some greater benefit for the existence of copyright in law to be ethical and justified at all, was mentioned briefly by I think one or two speakers right at the end of the discussion. They received the parliamentary version of a five-year-old being patted on the head and told how adorable they are. And this was in a debate specifically about new rules to allow people who had obtained lawful copies of a work to enjoy them in perfectly reasonable ways -- indeed, ways millions of UK citizens enjoy every day already, often blissfully unaware that they are even breaking the law, because the idea that what they are doing might not be completely reasonable and could possibly be against the law doesn't even occur to them.
I have seen plenty of evidence of governments pandering to special interests. I have seen plenty of evidence of governments being completely disconnected from reality. I have seen plenty of evidence of government "debates" that were nothing of the kind. Few of these made me as nauseous as seeing that particular example of "democracy in action".
The countries as well as companies like Amazon will push to allow the lower VAT to be applied to ebooks.
Lower than 5% tax rates seem to be pretty common: http://en.wikipedia.org/wiki/European_Union_value_added_tax#...
Click on the first link that leads to wsj.
Is it because I'm in Germany and they have the .com --> .de redirect?
Doesn't make sense if you are provided an .epub file to download.
We've lost more property rights again. I think the left leaning aspects of the EU are great for welfare benefits and social services, but the way its applied to business practices always seems more than a bit off. I fear this is the slipperly slope here where I own nothing and everything is a "service" somehow. The sad part is this was done, ostensibly, to avoid a VAT discount that paper books enjoy. EU corruption knows no bounds.
You got it right. You happen to be "serviced" with a knowledge that is owned by someone. For a while already you had to agree on all kinds of EULAs all the time, in which it was required for you to redefine (read "to limit") what you might thought is owned by you. Now you have it in more clear terms. The non-EU space will catch-up soon, don't worry.
https://twitter.com/evmcl/status/261661956681908225/photo/1
http://www.bekkelund.net/2012/10/22/outlawed-by-amazon-drm/
http://the-digital-reader.com/2012/10/23/kobo-says-youre-no-...
https://twitter.com/librarythingtim/status/14262859728958259...
Does anyone have the complete reasoning behind the service designation?
It would be cool if ebooks sold without DRM would get the real book tax treatment.
http://curia.europa.eu/jcms/upload/docs/application/pdf/2015...
But seriously (and colloquially) "piracy" is still not specific enough if you're asking a legal question.
Do you mean only plain copyright infringement?
Unlicensed use of spectrum with "pirate radio"?
Secretly re-selling portions of you phone's data plan via tethering?
Bypassing electricity-meters and wiring your house up to the grid directly?
...Abusing a promotional offer that says "one massage per person"?
Yesterday's XKCD immediately comes to mind.