An e-book is of course a story, a narrative, a novel or whatever kind of prose it is intended to be. But an e-book is a book much in the way a television is a movie or an MP3 is a CD (a CD is a cassette, or a cassette is an LP). Cellphones have become the dominant type of phone and we have become used to having to pay according to level of use of a device we own, rather than a monthly fee for a device we rent. And we have always been used to having the device locked to one provider at a time.
MP3s with their ease of trading didn’t destroy the music biz, but you can get a number one now with less one fifth of the sales (including all formats) required in the nineties—the music biz did shrink as a direct result of the increased secondary market for music in digital form and a lot of mid-list musicians either went amateur or went elsewhere. This trend is only now starting to turn around as physicals devices like iPods allow retailers (and so primary producers) to recapture much of the market just as essentially giving away—just as cell-phones allowed capture of user services in affluent countries. Digital formats, physical devices, there are almost unlimited way to use them to build an economy that provides a good compromise between the needs of the producer and the consumer.
The word book to most ears currently implies an artifact made of paper just as much as it implies a long string or words conveying meaning. The medium is, to a greater or lesser extent, the message--and the message is that the way we produce, trade and consume prose is changing. With time e-books will either change into something that is not a book, or change what a book is. An e-book currently has a chimeric nature partway between paperback and digital file and it this is integrated into a new, settled medium we are being given considerable flexibility to decide just what we want e-books to be, how we want to handle and possess them, how we want to sell, trade and present them. And that includes how secondary (second hand) markets will be involved and how good or bad their influence will be on the industry.
There are a great many competing models for e-publishing available and they all have implications for the relation between primary and secondary markets. From a self-interested professional creator and publisher’s point of view we want the secondary markets (post-sale lending, trading and resale) to have a promotional effect. That is the primary producer making more sales with the secondary market active than they would if it was absent. However for many consumers their goal is to get desirable products for the lowest possible price, where possible for free. That can lead to secondary markets causing reduced primary market sales and so fewer people being published and reduced earnings for those who are. Many people take on faith that secondary markets are either good or bad for primary producers, when actually this depends very much on how they are courted (carrot) and regulated (stick).
There are four major models currently at least partially in existence, each with a very different view of what e-books are, whether they are books, and what as a consequent books are going to become as this industry develops. These would include the models of: primary monopoly, primary privileges, paper privilege and peer to peer.
Primary Monopoly: A primary monopoly is a situation where the product is non-transferable once bought from the primary producer and may not be sold, rented or gifted to anyone else. Examples would include a dog bought from some kinds of shelter that specify the animal may be kept or returned but not passed on to another person, and computer software such as MSWord. Publishers that operate mainly under primary monopoly almost always also use elements of the other models for example in providing free copies for promotion such as to reviewers and as contest prizes.
However, in most cases there is an effort to suppress secondary markets that are seen as exploitative such as file-sharing where a book is not just transferred like the paperback you give your neighbor, but also potentially duplicated and resold. I suspect a person photocopying and reselling copies of paper-published novels, even at cost, could expect some grief about that too, so I don’t see it as a format issue per se—although the e-book format is more vulnerable to exploitation because the books are potentially immortal, infinitely reproducible and distributable to every person in the primary readership (i.e. anyone with access to the internet). Thus this secondary market is far more prone to costing sales rather than creating them. Reference is often made to the music industry which was not destroyed by file sharing, it was however reduced in scope and volume. So: In primary privilege the ebook is treated legally as a digital file, you can own it but may not transfer that ownership.
Primary Privilege: Primary privilege is where secondary markets are placed at an economic disadvantage. With paperbacks the main disadvantage is that you first have to buy from the primary market at retail. Whereas the primary market and their distributors work on a cost level. Therefore it makes no sense to buy a paperback at Borders and try to turn around and sell it at a profit. So selling second hand books is legal, but for in print books it is rarely possible to make a profit unless you pick up an essentially discarded copy at reduced price. Even in this case you are trading an inferior product which is likely to be somewhat worn. With each resale the product become more worn and unattractive. So if new copies are on sale they have a price and quality advantage that kept the secondary market limited in scope except in non-competitive areas such as out of print books. In terms of ebooks of course condition is not an issue, the e-book may not go out of print for years if at all, and to make a profit the user need only duplicate the ebook and sell it multiple times. And if they do not want to make a profit they can simple share unlimited quantities with strangers. In primary privilege the book is treated as a paperback book in the way we are familiar with. For this to work similarly for ebook, ebooks would need to be more like paperback—very hard to duplicate and subject to degradation with use and the passage of time unless careful efforts are taken. If ebooks had these qualities the secondary market would be prevented from sucking the life out of the primary market by keeping it naturally smaller in scale.
Paper privilege: Many publishers have taken the line that e-books should be provided freely and without charge. However this is in fact not giving them the status of books, but denying it to them. If a publisher sells its paperbacks but gifts its e-books as open source it in in fact saying the e-book is purely promotional material. The idea is that if the reader looks at the e-book and likes it they will go out and buy the paperback. This is presumably because their average customer cannot read a screen and enjoy it (unbook-like reading experience) or wants to have full ownership of the paperback on their shelf (unbook-like ownership experience). The only exception being that if one book is made a free ebook but the others are not, thus the idea is to make money when readers move from the free paid, to the rest of the backlist still conventionally for sale in either format.
Peer-to-peer: A great many people who support digital sharing do so in the full knowledge that it undermines primary producers. Open source software is often use for the express reason that the consumer objects to the shenanigans of Microsoft, Apple and the like. And if the e-publishing providers handle consumers poorly they could end up in the same position. However it is worth considering whether we really want to de-professionalize the e-book industry by undermining its ability to make profits. As a book reviewer of self-published books I appreciate the freshness and diversity of pee-to-peer fiction. But I far prefer that it run in parallel to professional providers of well branded, well selected, and well edited and formatted fiction. The way to have true diversity in products is to support industries based on offset, POD, ebook formats, small large and self-publishing, primary and secondary markets, for=profit and for free material, all in a functional balance. (Cue soundtrack: the circle of life),
Some time ago I mused on a blog about how it would be nice to be able to legally transfer ownership of a single unduplicated copy of an ebook between two private individuals. But the DRM that prevents copying is currently not good enough to make ebooks like books and so able to sustain high levels of this kind of transfer without overly suppressing the primary market. And it is worth remember that in the case of ebooks primary sales are often only a few hundred or thousand per title. So the author who objects to file sharing is hardly posturing on the balcony like Marie Antoinette saying the peasants should eat cake, even a score of lost sales can be significant. Likewise I can see how if ebooks degraded with use we could even have a second hand store for them and allow them to be freely resold by the own for decreasing amount as they age, and as they became rare.
And if we do not want ebooks that cannot be duplicated, or wear out as we use them, perhaps we don’t want them to be entirely like book after all. And because they are in fact not entirely like books, they cannot be traded quite in the same way. Of course the answer is not to try and beat the life out of secondary users every chance we get. One user sending a copy of your book to their granny and deleting their own copy is probably not a huge deal even when it is technically illegal. But immense file-sharing sites were people get books free so they need never pay money for them are destructive to our industry on a scale far beyond that for paperback books.
And in fact with the advent of automatic page turning book scanning, and book like e-readers with materials in their memory, I see a future not with e-books treated and regulate more like paperbacks, but paperbacks treated and regulated more like digital files. And if we keep in mind what makes a promotional; secondary market and what makes and an exploitative and destructive one, format will increasing become quite beside the point.