A benefit of e-books is the lack of returns, benefitting publishers who have often contended with the fluidity and impermanency of books shipped versus books sold. But the current technology of e-books is such that the reselling of books is also eliminated. With no physical product, customers have nothing to trade or sell secondhand. This isn't true of all digital media: iTunes Plus tracks have no digital rights management (DRM) and thus can be traded or sold (or copied) freely. But I suspect e-books will be bound to the device to which they are sold, leaving them forever locked to their original buyer.

This must be a bookseller's dream, as it means every copy read is another copy sold. No more will used bookstores or library donations cut into the potential to sell directly to new readers. In some industries, such as electronic entertainment, the used market is seen as the bane of publishers, and even some retailers aren't fond of it. As long as four years ago, Jeff Bezos, the founder and CEO of Amazon.com, wrote to some affiliate publishers: "If your aggressive promotion of used book sales becomes popular among Amazon's customers, this service will cut significantly into sales of new titles, directly harming authors and publishers."

But is that an informed opinion? A 2005 academic paper entitled "Internet Exchanges for Used Books: An Empirical Analysis of Product Cannibalization and Welfare Impact" suggests that used books are valuable to the sales of new books:

Our analysis suggests that used books are poor substitutes for new books for most of Amazon's customers. … Only 16% of used book sales at Amazon cannibalize new book purchases. The remaining 84% of used book sales apparently would not have occurred at Amazon's new book prices. … This increase in book readership from Amazon's used book marketplace increases consumer surplus by approximately $67.21 million annually. This increase in consumer surplus, together with an estimated $45.05 million loss in publisher welfare and a $65.76 million increase in Amazon's profits, leads to an increase in total welfare to society of approximately $87.92 million annually from the introduction of used book markets at Amazon.com.

E-books are often cheaper than physical books, though, and they don't deteriorate like printed goods. So is the used books model even applicable to digital media? Either way, are publishers and retailers truly doing themselves a favor by eliminating the secondhand life of e-books?

(Hat tip to TechDirt)