OK, this isn’t directly related to AdSense but it’s of interest to Internet marketers in general. I should really be posting this on GeekAffiliate, but I may change my mind about consolidating my blogs. Today’s topic is resale rights and how a ruling this week by the US Supreme Court may give the creators of resale rights products more teeth to control the prices at which resellers can sell those products.
What Are Resale Rights?
If you’re not familiar with resale rights, this is how I defined them in Resale
rights are the curries of Internet marketing:
Broadly defined, “resale rights” are the rights to sell a product that someone else created. Resale selling is different from affiliate selling because resellers interact directly with the customers — in other words, the reseller is the vendor. In affiliate selling, the affiliate is not the vendor and is merely acting as a sales agent for the vendor.
The term “resale rights” refers to a whole slew of rights, though:
There are different kinds of resale rights. Private label rights, for example, allow a reseller to pass a product off as their own creation. PLR articles, for example, can be used to create content-based sites that make money via AdSense and other advertising programs. Master resale rights let you sell not only the product, but also the rights to resell the product. And there are umpteen variations that we can all lump under the general category of “resale rights”.
If the concept is new to you, please take the time to read the entire article, the point of which is how product creators can use resale rights to generate further (“back-end”) sales and to change the meta-market they’re targeting.
Pricing Restrictions
I’ve purchased several products with resale rights, How to Quickly and Easily Get “.edu” Backlinks being the most recent example. That report is an exception for me: mostly I just use the products myself and don’t try to resell them — the resale rights typically just get thrown in and weren’t the primary reason I bought the product in the first place.
One thing I’ve noticed over the years is how quickly the average selling price of a resale rights product plummets. I discuss this in some detail in The Fundamental Flaw in Selling Resale Rights:
Products sold in this manner suffer from a fundamental flaw that eventually works to the detriment of the purchasers and sometimes (but not always) the original seller: the inability to legally set a minimum price for the resold products.
In other words, once you bought the resale rights to a product you were able to sell it for whatever price you wanted. Yes, most products come with a set of restrictions on what you can and can’t do with the product, but most of those restrictions have no legal teeth to back them up. The vendor of the product could stop selling new products to you, of course, in retaliation, but if they were selling master resale rights (MRR) you could get around that by finding someone else who was selling the products and buying it (with resale rights conveyed) from them.
But all of a sudden things are different, at least in the United States.
Supreme Court Removes Antitrust Rule
On June 28, the US Supreme Court struck down a long-standing rule preventing manufacturers and distributors from setting minimum retail prices:
The court struck down the 96-year-old ruling that resale price maintenance agreements were an automatic, or per se, violation of the 1890 Sherman Antitrust Act. In its place, the court instructed judges considering such agreements for possible antitrust violations to apply a case-by-case approach, known as a “rule of reason,” to assess their impact on competition. The new rule is considerably more favorable to defendants.
I’m not a lawyer, but it sounds like this ruling affects the sale of infoproducts with resale rights. It’s plausible to argue now that someone who creates a product and conveys resale rights to the product to purchasers can now insist upon minimum retail pricing of that product and not worry about antitrust regulations. (Note that this only applies in the US; antitrust regulations vary greatly from country to country.)
Will this have a measurable effect on product prices? I don’t know. I guess vendors who discover that their distributors are selling an infoproduct at very low prices can perhaps threaten legal action with more ferocity now. Then again, I can’t see many such actions landing in court in general, even with this newly added ammunition.
Still, it’s something to think about if you’re thinking about selling a resale rights product you’ve acquired at a significantly lower price than what the vendor recommends.
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Eric Giguere is the author of Uncommon AdSense and the award-nominated (that just means it lost!) blog Make Easy Money with Google and AdSense.