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04/09/08

Open Seas; High Waves – The Perfect Storm?

It’s an exciting day – the release of the Sony Reader sees the first concerted, anticipated, co-ordinated foray into selling electronic books in the UK. Publishers have been rushing to negotiate deals with agents (and retailers) and prepare launch lists of titles. Digitisation has been advancing at pace. Great news!

However, I am concerned that two of the most sensitive aspects of the digitisation discussion – DRM for ebooks and pricing of ebook editions – could conspire to create the perfect storm for piracy, and an early hurdle for the industry to cross successfully.

1. Price

Alarmingly, the current policy among publishers seems to be that an electronic edition of a book should be priced at just about the same price as the prevailing edition – despite publishers having conditioned users to the idea of books being heavily discounted. So if your hardback RRPs at £20, the eBook won’t be far off:

Several publishers told The Bookseller [7/8/2008] that the reason behind this was they wanted to avoid heavy discounting of e-books. “We don’t want to start from a weak position and then negotiate downwards,” said one.

Hachette, which plans to have 750 titles available from next month aims to increase this figure to 1,000 e-books by the end of the year, was the most bullish on price. Group commercial director Richard Kitson said that e-book r.r.p.s would be “no more than 10% off the physical price”. But added: “We want to see how pricing develops.”

So, if we take this as fact, your £20 book will be £18-£16 in eBook format, but maybe £10.99 (more or less) in hardback in some shops.

Consumers assume (even if it is wrong) that without a physical product and supply chain, the production costs of getting the book electronically should be lower – and that this cost should be passed onto the consumer in the form of a lower price. So an apparently “cheaper” edition that is priced significantly higher than the “expensive” physical edition may immediately suggest that something is wrong or suspect with eBooks pricing.

So, the first factor is to note is that ebooks will be expensive. Certainly at the outset, more so than physical ones.

2. DRM

I don’t know nearly enough about DRM, but I do know that (1) it’s complex and (2) most sane, sensible people with any technological experience loathe it, and for very good reasons.

If one looks “at the music industry” for insight, it has – perhaps not entirely of its own volition – come full circle to distributing content without DRM, acknowledging that DRM is damaging to everyone, but primarily to consumers.

Certainly a major barrier to those publishers who want to distribute in a DRM free, inter-operable format, is the lack of understanding from authors and agents about the complexities of the issues at hand. I’ll leave the percentages to someone who knows a lot more than me, but my feeling is that most publishers are currently distributing the vast majority of electronic books in locked / protected (single-device) formats.

Interestingly, and to my mind surprisingly, that may be changing. The emerging consensus from the smart end of publishing seems to be that – for unexpected reasons – DRM could be dead in the water before eBooks really take off. In other words, we’ll either see distribution of unprotected content in a variety of formats, or that the open “ePub” standard may become the format of choice.

This, on one hand is great – open standards are to be embraced, they allow interoperability, and reinforce the idea that consumers have bought rather than borrowed a piece of (expensive) content. [For more on DRM, ePub, and much more besides, I heartily recommend the excellent (if militant) Teleread blog.]

However, on the other hand, it is also quite risky for a couple of reasons.

The first concern is that ePub is a very clever format, but it’s basically a “wrapper” format for other types of file. On the whole these files are (X)HTML – the very building blocks of the web – along with some navigational, indexing and “media” files such as images. In other words, it is trivial to convert a DRM-free book from an ePub format into a website. (And, of course, back again.)

If one makes a comparison to the early days of Napster, you at least needed to have a special player to listen to mp3 files; whilst such players were available to download, they weren’t “native” to the operating system. You had to be mildly geeky to use them; the same can’t be said for HTML pages.

Secondly, finding pirated music and film content requires mildly geeky skills: file-sharing networks can be invitation only, require a complex combination of forces (find a tracker site, find a torrent, find enough people seeding content) to get what you want.

But if books were to be “ripped” into HTML pages, the most powerful (and popular) search/find method on the web – Google – would find, index and rank book content very quickly, and probably very highly for the relevant search terms (e.g. Harry Potter Book). And if enough people link to the content, its page ranking could be unassailable. I don’t just mean a search for “Pirated Harry Potter Book”, but a search for “Harry Potter book” could rank the actual content top (assuming non-intervention by Google). Copyright owners could find it very hard to compete against this, other than hurling DMCA Takedown orders at offending sites; and even if one such site is taken down, it is trivial to relaunch another.

So the second factor is that (as well as artificially high pricing) we have a piracy/distribution-friendly format potentially becoming the dominant distribution type, and that this same format is optimised for being found and consumed on the web itself.

So to me, high pricing, and an openly rippable format would appear to be the perfect breeding conditions for piracy. It’s great that publishers could be moving away from DRM, and this is an important battle to win. But surely the price battle is an equally important one in the front to drive adoption and resist loss of revenue through piracy?

One quote from The Bookseller article was that, “the market will eventually set its own price”. Indeed it will – but whether that price is controlled by pro-active or reactive pricing by publishers remains to be seen.

What I’m not assuming is that people want to pirate content – quite the opposite. But if a consumer feels that they are being given a choice of an excessively-priced, perhaps hard-to-find version, against a freely priced, easy-to-find version, there will be a point where they will go for the latter.

Afterword: Is Piracy Such A Bad Thing?

I have been reading The Pirate’s Dilemma, a very interesting book by Matt Mason that (amongst other things) describes piracy as “just another business model”.

Piracy, as we can learn from businesses such as Nike, KissFM and even Hollywood, may not actually be such a scary thing.

Looked at one way, piracy helped consumers get used to the idea of consuming music digitally, and the appeal of the iPod was an added incentive.

The problem was that the music industry was slow to see digital distribution as an opportunity rather than a threat; this allowed piracy to become the easiest method for consuming digital music. Even when iPod and electronic music was mainstream, the music industry still wasn’t acting as one – pirated content was easier to get than legal content – and this inertia opened the door for Apple to take 80% of the market.

The music industry, however, wasn’t dying when electronic music came along. In many ways, I remember it as being in its hay day. Publishing (and reading) on the other hand is struggling to engage readers, and reading / literacy trends are not looking healthy.

So despite what I’ve said above, perhaps this wouldn’t be a bad thing at all. Unpopular as this may be, is it not possible to see the benefits of a short-term boom in new readers, guided to books by freely available (pirated) content? Readers who could be then persuaded to cross over to buying legitimate copies of books when they’ve got back into reading? Is there not an argument that piracy could, in fact, both grow the market and train people to use, and enjoy, books in a new format?

Posted by Peter Collingridge in Copyright, Future of the book, Publishing, free.

The Sony / Waterstones digital book future (from a retailer’s perspective) // Apt’s links for November 30th through September 3rd

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