Are Publishers Liable For Lost eBooks If Borders Dissolves?

I am not a lawyer, but it seems to me those of the Big 6 publishers who have been playing the price-fixing Agency Model racket have left themselves wide open for class-action lawsuits if their “agents” go out of business and lose the eBooks of their customers.

Traditionally, this has been the sales chain in print publishing:

It was also that way with eBooks until recently. This traditional model insulated publishers from the customer relationship. Once they sold their product to the middlemen, the customer had this relationship to deal with if any problems developed:

And this was the case with eBooks too. If an eBook retailer went under, the only recourse a customer had was against the retailer itself in whatever manner that was possible (such as bankruptcy court).

Until Apple entered the picture and proposed the Agency Model, which allowed publishers to set their prices. The Agency Model changed the entire chain of liability. Publishers are saying, in effect, “These books belong to us — not to any middleman or retailer — and you sell them at the price we set and simply get a sales commission.”

That new sales chain now looks like this:

Now what happens when the “Agent” disappears? When, basically, the agent of the publisher goes into dissolution — as giant bookseller Borders might? The relationship is revealed to actually be this:

It seems to me that if Borders goes under and people no longer have access to their eBook purchases via their Borders online Library, that the publishers are now legally liable for replacing those eBooks in perpetuity.

Attorneys, starting reviewing your case law and precedents!

And the Big 6 of publishing had better start consulting their own attorneys too.

reposted with permission from Mike Cane’s Xblog


  1. Nate the great1 February, 2011

    Are they liable? Almost certainly.

    But the more important question is: can it be enforced? Not without a lawsuit, and I’m looking forward to it.

  2. gous1 February, 2011

    When Borders goes won’t Kobo just take over the ebookstore? I am still cofused as to the actual details but in my understanding Kobo essentially set up the Borders ebookstore.

  3. Jack W Perry1 February, 2011

    Mike – thanks for this post. I’ve no answers but love the thoughts. Interesting to see what develops. Fun times in publishing.

    Chaos = Opportunity.

  4. Dragon1 February, 2011

    Very insightful and thought provoking.
    1) Say yes and become liable for replacing all e-books. Which would be the most cost efficient yet to them morally repugnant.
    2) Say no, fight it, win and then whine because of the increase of ebook pirating.

    I say they choose door number 2.

  5. Janice in GA1 February, 2011

    AFAIK, you can download books and store them on your own computer/devices. So they’re only “lost” if you don’t do that.

    1. Logan Kennelly1 February, 2011

      Kobo utilizes the “classic” Adobe DRM, and customers would lose access to already-downloaded books if they should the authentication servers down. However, I don’t know whether Adobe would shut those servers down if the retailer stopped making payments.

      Kobo also has their own eBook format, but I am not sure how their authentication system functions.

  6. Michael1 February, 2011

    I would say that the Agency 5 should shift some of their additional profits back into servicing the customers, right? Oh, wait, their making LESS money now…. Smart move, now deal with it.

  7. Doug1 February, 2011

    As far as I can tell, Borders never said that they’d guarantee that you could re-download your e-book purchases in perpetuity. I’m pretty sure that the publishers never said that, either.

    That’s pretty much the general state of e-book selling. No seller can, and thus no seller will, guarantee that you can re-download at a later date. A lot of people lost access to their Fictionwise and eReader e-books last year because they’d relied on being able to re-download. Other than the expected foot-stomping, nothing came of that.

  8. Ellen1 February, 2011

    When Gemstar went defunk around 2003, the ebooks that I had bought (from BN) stayed on the server for at least a year. I can’t remember all the details, but I do know that plenty of notice was given. As well as instructions on how to back up purchases.


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