A failure of imagination – the problem with format neutrality

I often hear librarians promoting their ‘modern librarian’ credentials by saying “it’s about the information, not the container”.  By this they tend to mean that librarians in a world of instantly downloadable ebooks, subscription journal databases and multiple other formats for audio, visual and written works should be format-neutral.  That we should not be concerned about in which formats information is available, as long as it is available somehow. But what if it is about the container? Continue reading

Why everyone is probably wrong about the DoJ ebooks case

I didn’t mean to write a post about this, but I couldn’t help myself.  Some of you won’t like what I have to say.  I have been following the Department of Justice versus Apple and the Big Five case for a little while now.  Or rather, I have been following the commentary online.  Reading the posts and the comments, there seem to be two main themes – either what could be loosely summarised as “DoJ #FAIL” or “Amazon gives me cheap eBooks what’s the problem?”  Let’s take a moment to embrace the assumption that the legacy publishing industry will continue to exist and examine both arguments.


There appear to be many people who don’t actually understand what the US Department of Justice is alleging and what their job is.  The claim is that several major publishers and Apple colluded to fix eBook prices.  The Department of Justice is not empowered to pass judgement on Amazon’s business model, unless it breaches US law, and nobody appears to have any evidence that it does.  The Wall St Journal reports that Macmillan CEO John Sargent complained the decision will “have a very negative and long-term impact on those who sell books for a living” but this misses the point.  Jordan Weissman in the Atlantic also wanders into the irrelevant when he complains that “Amazon isn’t simply a garden variety retailer, or a helpless, well-meaning innovator.”  The Department of Justice is required to investigate when businesses appear to be colluding on price.  Whether their competitors are large and successful or not doesn’t matter.  Whether the people running the businesses believe colluding on price is the only way to maintain a profit is also of no import.  It is not the DoJ’s job to keep publishers’ and writers’ incomes high, but rather to keep the price consumers pay low.  The law states that you can’t collude to artificially hold up the price consumers pay.  Everything else is noise. If publishers can’t work out how to make money from $9.99 eBooks, then so be it.

Amazon gives me cheap eBooks what’s the problem?

The problem is that although it is not the Department of Justice’s job to make publishers’ lives easier, Amazon still currently holds what amounts to a virtual monopoly on the sale of eBooks.  Estimates I’ve seen range from 70% to 90% of the entire market which even at the lower end is still high enough to be overwhelming.  When you buy an Amazon ebook you will only ever be able to read it on a Kindle or within a Kindle app. When you buy a Kindle you will only ever be able to read books you bought from Amazon in AZK format or ebooks in PDF or ePub format that don’t have DRM restrictions.  So once Amazon has you it’s very difficult to escape, because your books can’t be transferred between devices.

The other issue is that, as Charles Stross has noted in his excellent overview of this issue, Amazon could be said to be engaging in predatory pricing.  By charging less than it costs publishers to produce an eBook, Amazon is ensuring that nobody else can charge less than them. Although Apple could in theory have spent some of its mountain of cash in a price war with Amazon, nobody else can afford to burn money like that.  Once the competition is gone, Amazon can increase prices again or simply use cheap ebooks as a way to sell something else, like expensive Kindle readers or simply other goods once they have hundreds of millions of customers.

A monopoly of the publishers’ own making

The complaint of many is that Amazon has a monopoly and it is therefore they who should be under investigation.  This argument may have a small amount of merit due to the factors above, but there are a few problems.  The main reason for Amazon’s stranglehold on ebook sales is the publishers’ own pig-headed insistence on a model that has already failed once before – Digital Rights Management.  By insisting on DRM, publishers have pushed out small independent online retailers and ensured Amazon maintains control over ebook sales through it’s domination of the ebook reader market.  Since Kindles don’t read non-DRM ebooks, publishers insisting on DRM cede their power to Amazon.  Basically, Amazon has a monopoly of the publishers’ own making.

If publishers want to survive, they need to end the use of DRM. One senior Hachette executive publicly stated that he thinks it is unnecessary just a few weeks ago – if Hachette’s board have any brains they’ll listen to him.  Removing DRM means suddenly Amazon loses some of the lock-in powers of the Kindle, whilst also making non-Amazon ebooks more valuable to customers because they are transferable to whichever device is most convenient.

Disaggregation and WordPress for eBooks

So far we haven’t covered anything not already commented upon.  But there has been something missing from most of the commentary I’ve seen.  In all the discussion around this case, there has been an implied assumption that an ebook market requires publishers to exist – in their current form if not the exact same companies.  I think this is profoundly flawed.

Amazon itself now has a system for authors to publish directly through Kindle Direct.  This is a first step, but it is simply a horizontal expansion of a retailer into production.  The real revolution will come when enough authors realise that publishers are no longer necessary.  In his recent book Cognitive Surplus, Clay Shirky writes about the origins of the publishing model.  The whole basis of the system is seventeenth century economics, whereby the owners of expensive printing presses needed to find new content to print.  Because each print run was a risk, those printing the books needed to ensure that the books they printed were high quality, well advertised and widely distributed.  Hence the integrated publishing house which combines editorial, typesetting, printing, marketing, distribution and sales.  Although some of these functions have been outsourced in recent years (notably physical printing, the whole basis of the original system), the concept of an integrated ‘publishing company’ is still alive and well.  The problem these companies have is that it will not be too much longer before authors realise that ebook publishing does not require publishers at all.

The real threat to publishers is not Amazon or even piracy, but disaggregation. There is no good reason for all the things publishers do to be done together by the same organisation.  What is needed to produce high quality ebooks and make money for authors is good writing, careful editing, clever marketing and an efficient distribution platform.  They can all work separately from each other.

Independent authors would keep their copyright, and may even choose a variation on Creative Commons licensing for particular uses (eg for students).  Editing might be a service authors pay editing agencies to perform for them, either through a direct cash payment or through a percentage of profits.  Marketing is now possible with a small investment of time by the author through social media, but may also be done by generalist or specialist marketing companies, depending on the means of the author and estimated potential readership.  Alternatively don’t discount the emergence of some kind of authors guild acting as a member-funded marketer.  Finally, the opportunity is there for a WordPress-style open source distribution platform to hit Amazon where it hurts.

The main reason Amazon has such a monopoly is the same reason Facebook has a ‘monopoly’ on social sharing – breadth.  Authors wanting to self-publish ebooks are told they have to be on Amazon, because that’s where everyone is.  Readers often only look on Amazon, either because they are locked into the Amazon-Kindle system or simply because experience shows them it has a huge range at the cheapest price. Because ebooks are fungable goods, (or arguably, fungable services) being sold in a frictionless and almost entirely transparent marketplace, whomever sells at the cheapest price is likely to get the vast majority of sales. At the moment authors have few choices about where they sell.  They can hand over 30% of their income to Amazon, hand over 30% of their income to Apple and hope the censor doesn’t block them, or hand over 40% of their income to Smashwords. It shouldn’t be particularly difficult for appropriately keen coders to develop an open source system along the lines of WordPress whereby authors or small cooperatives can maintain autonomy in publication, but utilise the benefits of a common searchable database.  Once that happens and reaches a large enough size, suddenly Amazon and Apple look very vulnerable.  When you can get the benefits of a large unified database and only pay 2.5% to PayPal to handle payments, why would you cop a 30% Amazon tax?  When you are selling your ebook for a 20% discount compared to Amazon or iBooks, why would I buy from them?

The best way to predict the future is to invent it

This is not a prediction.  I don’t know what is going to happen with ebooks.  Some, like Eli Neiberger, argue that ‘bits have no value’ and soon ebooks are likely to be virtually impossible to monetise.  I don’t subscribe to this view, but I think it’s more likely than the current model continuing.  What I do know is that the future of books is not the present of books. I know that if you concentrate on the legacy container instead of the contents you will go out of business.  And I know that librarians need to understand all of these things, and work out what they’re going to do to ensure they are still able to provide their communities with the information and cultural works they need and want.

Blogs and the post-paper library

My title this week is a little provocative. I’m unconvinced of the imminent, or even eventual, complete death of all ‘dead tree’ publishing. Much, however, will move to electronic and just as we in wealthy nations say we live in a ‘post industrial’ economy even though there is plenty of industry happening in our countries, so too we will soon enough move to a ‘post paper’ publishing norm.

I find myself reading and talking a lot about ebooks lately. Librarians have been struggling to work out how to move from a system based on lending and storing physical information items (books, magazines, compact discs etc) to one based on lending electronic files (ebooks, audiobooks, music, video). The biggest problem we face is that treating an electronic file the same as a physical item is inherently nonsensical.

A cup of ocean

As I have noted previously, the physics of electronic files and modern computing means that every time you move a file you make a copy, and every copy is a perfect copy. If you can make hundreds, thousands or millions of perfect copies for a marginal cost of zero, then lending someone a copy doesn’t make any sense. It’s rather like sitting in a boat in the middle of the Pacific Ocean and offering to lend someone a cup of sea water.

This is an ‘inconvenient truth’ for authors, the publishing industry and particularly copyright lawyers. When making a copy is as easy as clicking a mouse, and distributing something electronically without making a copy is physically impossible, any system for encouraging creativity and the dissemination of ideas which is based on restricting copying is ….well, let’s be polite and say it’s unsustainable.

What does this mean for libraries? At the moment, it means a big fight with publishers. Publishers recognise that treating electronic files as if they are physical items is ridiculous, but they also recognise that it is the only way they can maintain the status quo in publishing and, for many of them, it may be the only way they can stay in business at all. The biggest fear for publishers is that because ebooks are so easy to copy and distribute, essentially for no cost, if they allow anyone except key partners like Amazon and Apple to distribute their books then they will soon find themselves bankrupt. As Fast Company reported recently, even using Amazon itself is enough of a problem. Publishers have been extremely reluctant to allow libraries to do anything with ebooks other than treat them just like physical books, with virtually none of the advantages of ebooks being allowed. The demands of publishers are ridiculous. The problem is that they are also highly rational.

Red herrings

Is this all just a distraction from our real mission? I’m beginning to think so. Confused by the past necessity to store and organise physical paper objects, and fearful of being ‘left behind’, librarians have allowed ourselves to become distracted. We should forget about storage and lending for a few moments, and think about what it means to freed from their grasp.

When people talk about what they love about libraries or why they value them, they are almost never talking about the ability to search and retrieve information. The slippery slope we are now upon began when librarians misconceived their role as search and retrieval experts and then freaked out when Google arrived. We were never particularly good at search and retrieval. I recall going to the State Library of Victoria a few years ago and requesting a particular government report from several decades earlier. The State Library of Victoria is a closed stack reference library, so I didn’t question whether the report would be where the catalogue said it would be. Alas, the staff couldn’t find either of their two copies. If the SLV can’t perfect it, what chance does your library have?

What libraries really excel at, and what has always excited people about them, is their browse and discovery service. This is what librarians should be concentrating on in new, exciting and uncertain times. It is the ability to discover and make connections between information and ideas that lies at the heart of public libraries. This is where the value really lies – and it doesn’t require you to even necessarily have a collection. What it does require is more than just a computer and a search engine. Google might be able to organise the world’s information, but we still need librarians to help us make connections between the various things we are reading, watching, noticing and saying.

Missing the blogs for the ebooks

A good illustration of how past practice is blinkering librarians is the way we consider blogs as part of the library’s collection of resources. Generally speaking, we don’t. But why? Why are we so obsessed with post-paper idea packages in the form of ‘ebooks’, yet we ignore post-paper idea packages in the form of ‘blogs’? Whilst we wrestle with magazine subscription agencies and journal database vendors to work out ways to make their content available to our patrons, we ignore what’s under our noses and available for free. A blog is often no different to a journal – you can even search the ‘back issues’.

In 2010 Pew research released a paper, widely reported, that claimed the rise of Facebook means blogging is over. Far from ending, however, the Age of the Blog may well just be starting. Just last month The Economist ran an article about how Economics blogs have influenced the actions and discussions of central bankers, professors and economists, and will continue to do so. Economics blogs are taking on the role formerly played by journals – but with a wider range of views available, and much faster publication time.

What we’re really seeing here is not the beginning of the end for blogs, but rather a slow change in focus. Whilst ‘personal’ blogs were originally prevalent, the serious, considered (and longer) posts are now becoming more popular. As these resources grow, librarians need to be alert to opportunities to make their patrons aware of the riches available. Simply Googling some keywords won’t necessarily find you the blog, or the collection of blogs, that you are looking for. More importantly, you might be looking for a journal or book, not realising that what you want is actually located in a series of blogs.

The paperless book, the paperless journal

The genius of the blog as an invention, and its likely longevity, is borne out by the fact that some people are currently trying to re-invent it.

Todd Sattersten is busily experimenting with Every book is a startup. This project is supposed to be an attempt to find a new publishing model in the electronic age. Sattersen explains in a post at World Media Trend.

The project is meant to poke at the boundaries of traditional publishing. The book was created around the idea that new material will be released over time, culminating in a finished work early in 2012. Readers are encouraged to constantly give feedback about the material.

New material released over time, with readers encouraged to give constant feedback. Sound familiar?

Elsewhere, the focus has been not on books, but rather on scientific journals. The great discussion in scholarly publishing at the moment is around ‘open access’ publishing and how science can be rescued from the Bizarro-World of commercial scientific journals, where scientists pay the journal to be published, then provide their services for free to review other articles, before paying a hefty fee to access the articles after publication.

Once you start to question the model, however, inevitable questions arise, like why some journals are still published in physical form only, why it all takes so long, and even whether articles need to be published together with others in a regular journal edition when they could be posted online as they become ready for publication/sharing.

Some have provided long explanations of what is wrong and what scientists are looking for, some have explained why scholarly publishing doesn’t work any more and how Google doesn’t really help, and some have suggested new tools like Twitter may be the solution. There are even academic papers written about it. All complain about how long it takes for articles to be published, retracted and amended. I would suggest that what these authors are looking for is simply a robust online publication environment, and a bunch of good librarians to help them make connections and find new information. What they’re really wanting is peer-reviewed blog posts, but they’re trying to complicate matters.

These are simple examples of what librarians could do in a post-paper word – there are plenty more. In ignoring the rich information world of blogging, librarians miss an opportunity to provide guidance, connections and new ways of seeing.

Interactive curation

The future for public libraries is not collection but curation of information sources – not in the simplistic manner of a Scoop.it account, but in a robust and personalised way. When our members ask for recommendations or assistance we should be able and willing to direct them to a range of publications from physical books and traditional journals to whole blogs, individual posts and even perhaps Twitter accounts and the like. Just because ‘its all online’ doesn’t mean people won’t need help to find it or know about it. The need to organise information in a meaningful way doesn’t diminish in a post-paper environment, and neither does the desire to discover new ideas. Curation and assisted discovery will take new forms as we bring together speakers, hands-on learning, online information and interactive storytelling. Librarians who ignore these opportunities are unlikely to have a future. Those who embrace them now should expect an exciting one.

Why I don’t read ebooks

It may seem strange to regular readers of It’s not about the books to read that I don’t own an eReader.  It’s not that I’m not open to the idea (although working in a library means I’ve got easy access to a wide range of books every day).  The problem is that I’m not willing to invest in something that is currently so restrictive – simply put, ebook reading devices are currently a bad deal for readers.

Closed shops

Consider the most widely known device – the Kindle.  Kindles are produced by Amazon and operate as an enclosed ebook ecosystem.  Kindles are the only mainstream eBook reading device that does not support the ePub format – meaning any ebook you own that is in the ePub format cannot be read on a Kindle.  At the same time, the .azw format used by Kindles is not understood by any other eReader, with the apparent exception of the obscure ‘Cruz Tablet T301’.

Any commercially sold ebook, regardless of format, is restricted from legal copying by DRM (“Digital rights management”) systems.  This means that you can’t convert your legally purchased ebooks from ePub to .azw, or vice-versa.  Don’t think this is some Amazon-specific evil, either – Apple and Borders use DRM for their ePub books as well, but naturally they use different DRM, so just because it’s ePub doesn’t mean you can read your iPad books on a Kobo.  Of course, it’s entirely possible to remove the DRM restrictions from your ebooks, but this contravenes the licence agreement with your ebook retailer and is, thus, unlawful.

License and registration, please

At this point you are no doubt thinking ‘but that’s absurd, I own the book so I should be able to do what I want with it.”  That’s where you’d be wrong – you don’t own the ebook – you own a license to use the ebook.  This may seem like a small difference, but in fact it is a fundamentally different concept both practically and legally.

Imagine a hardcopy book.  Imagine you go to a shop and pay $9.95 for this book, but at the counter you are asked to sign the Terms and Conditions.  You just want to read your book, so you sign.  After you have read the book your friend asks to borrow it, so you lend it to her.  Then the bookshop calls you and says you’ve violated the terms and conditions – you didn’t actually buy the book, you licensed it, and under the license if you’re not reading it the book has to stay on your bookshelf.  By the way, you’re a test case and they’re suing you in court.  Sound absurd?  It is absurd, but this is exactly how ebooks work.

Free trade & copyright*

(*contents may differ from those shown)

In 2005 the Australia-USA free trade agreement came into force.  One of the changes this brought was in the area of copyright law.  The Australian Copyright Act 1968 was amended to lengthen the terms of copyright for many types of material, and some other changes were also made.  The one that concerns us here is that for the first time it became legal for Australians to format-shift and time-shift.  Aussies had, of course, been doing so for years, taping their favourite TV shows to watch later, and making mix-tapes of their favourite LP and CD tracks.  It’s just that now you can’t be arrested for doing it.

The provisions of the Copyright Act 1968 allow owners of material under copyright to make one copy for personal use in a second format  – eg you can scan a book into PDF, or copy a CD onto your laptop.  This entirely sensible provision recognises that if you have bought a copy of something, you shouldn’t be restricted to enjoying it in the original format.  In fact, you are even allowed to lend a copy to a friend or family member – as long as you don’t permanently transfer the copy or the original.  So there should be nothing that stops ebook owners from legally converting Kindle ebooks to ePub format.  There is, however, an exception – if you are licensed to use the material, rather than the owner of a copy, these provisions do not apply.

So we find ourselves in the ridiculous situation where an ebook is deliberately bound to a proprietary, patented, device and licensed for use only on that device.  It cannot be on-sold, loaned (except under certain, onerous, conditions under particular licenses) or otherwise transfered.  The rights enshrined by an Act of Parliament to make copies for personal use do not apply.  This is something, but it’s not a book.

Unfair use

Whilst copyright owners have previously relied upon powerful lobbying to keep extending the length of copyright from the original 14 years plus another 14 on application, to life of the author plus 70 years, eBook vendors have used a sneakier strategy.  Essentially contract law and patents have been used to circumvent the fair use provisions in copyright laws around the world.  Fair use provisions are what allows students to photocopy or, increasingly, scan a few pages or a chapter from a book they are using as part of their studies.  It is the bedrock of higher education and the transfer of knowledge.  Current practices by ebook vendors threaten this legal right, however, by binding texts to licenses and device patents which explicitly over-ride readers’ fair use rights.  Because the ebooks are licensed, readers are not allowed to make a copy of a few pages for a fellow student.

So this is why I don’t buy ebooks – it’s actually impossible.  Until such time as I can buy ebooks for a reasonable price (something I haven’t touched on here, but suffice to say they are invariably grossly overpriced), and actually own the book with all attendant rights under Australian law, I’m not interested.  What we’re seeing at the moment is not just a struggle for market supremacy between Apple, Amazon and the rest – it’s an attempted coup using the weapons of contract law and fancy apps.  Governments, and indeed reading citizens, don’t seem to have realised what is happening.  It is up to those who understand and value our current rights over reading and educational material – librarians, educators and (small d) democrats – to speak out.

The trouble with eBooks: publishers defying the laws of physics

It is difficult to get a man to understand something, when his salary depends upon his not understanding it – Upton Sinclair

How do you lend an ebook?  This is the problem that confronted public libraries as eBooks first started to emerge.  A realistic solution still hasn’t surfaced.  What we currently have is a mishmash of ‘solutions’ from publishers, distributors and library management system vendors, all of which seek to emulate the way physical books circulate.

A license to read

The basic problem is that lending ebooks is absurd.  An ebook is simply an electronic file.  It doesn’t need to be loaned – it can simply be copied, perfectly, without damaging the original.  The publishers’ dirty little secret is that they are terrified of ebooks.

For libraries, ebooks are attractive because they don’t wear out, can’t be dropped in the bath or chewed by the dog, don’t require people to physically visit the library building in order to borrow them, don’t have to be checked in and out by hand, don’t need to be stored on a shelf and can be made available to multiple people simultaneously.  Unfortunately, publishers have focussed a great deal of their creativity on working out ways to ensure that most of these advantages are rendered impossible, ensuring that ebook lending defies physics and nature.

Fantasy wear and tear

Earlier this year outrage swept the biblioblogosphere when HarperCollins announced a new policy for the ebooks they make available to libraries via the e-lending platform Overdrive.  The policy?  Each ebook ‘copy’ would now only be able to be loaned 26 times – ever.  Libraries wanting to enable further loans would have to pay full price again for another 26 loans.  Librarians were outraged, but this is only one of multiple absurdities when it comes to ebooks and libraries.

Download from wherever you are – as long as you’re in the library

In October 2010 the UK Publisher’s Association announced an agreed position on ebook lending that forces UK libraries to restrict the downloading of ebooks to devices that are physically located within the library building.  The justification was that one library had allowed people to join up from China and download ‘massive’ amounts of ebooks.  This is like Apple insisting that customers be located in an Apple Store to download songs from iTunes.

Enforcing the laws of physics, even when they don’t apply

In the world of paper books, when A song of ice and fire is turned into a television series libraries have to wait for the reprint, then purchase five new copies of each book in the series to ensure that patrons don’t have to wait absurdly long to read it.  An ebook version should solve this problem by allowing as  many people as want to read it to download a copy whenever they like: all at the same time if necessary.

The problem for libraries is that this sort of sensible, logical arrangement is not available.  Publishers make ebooks available in exactly the same way they make paperback books available – one at a time, for $20-$30 each, and only able to be read on one device at a time.

There is no good reason for this to be the way libraries and their patrons get access to ebooks.  Journals, magazines and newspapers have long been available on a ‘unlimited concurrent users’ subscription model, and in the USA even movies are available on the same model straight to the home via Netflix.  But book publishers, long used to calling the shots and controlling their product via complex ‘territory’ distribution licenses, ’30 day rules’ and import restrictions are hardly going to let a little thing like the laws of physics get between them and an unearned pot of money.

Deja vu all over again

This sort of stupidity has only one logical endpoint – mass piracy.  We know this because the same tactics being tried by publishers have already been tried, and failed, in the music recording industry and the film industry.  The problem for book publishers is even more profound than the example of the record companies, however.  At least recording studios full of expensive equipment are still needed to produce high quality recordings.  When it comes to ebooks, publishers are largely irrelevant.  Why would any author hand over their lifetime copyrights to a  publisher for a dollar a copy when they can make more money by paying an editor a couple of thousand to edit the manuscript and selling it for $3 a copy on Amazon or the iBook store?

While everyone was carrying on about the demise of bookshops and the takeover of Book Depository by Amazon, Pearson quietly bought up REDGroup’s online assets.  Pearson, at least, sees that from now on the money will be made in online sales, and that as a publisher they need to diversify their income streams.

Segment and gouge

What of the actual producers in the book supply chain – the authors? Under the historic publishing model, they get screwed. A book that sells for $30 returns somewhere between $1 and $3 to the author. The rest is chewed up by editing, printing & typesetting, distribution, warehousing, retailing and, if they’re lucky, marketing. If they have an agent, typically the agent takes half of the royalties before they hit the author’s bank account. This is no way to make a living – for every Dan Brown there are thousands of authors struggling to make rent, and tens of thousands struggling to be published at all.

The byzantine rules in publishing regarding who can sell what where and, just as importantly, when, are not restricted to books.  Ever wondered about ‘regions’ for DVDs?  They are an invention of the film industry to enable them to segment the world market, charging high prices where the market will bear them (eg Australia) and low prices where it will not (eg Vietnam).  There is no other reason for them to exist.  The equivalent in the publishing world is ‘territorial publishing rights’, where agents – or more usually publishers – restrict the sale of particular print runs to particular countries.


This may have had its uses in previous decades.  Publishing in the UK in June and in the USA in December has obvious benefits in an analogue world – an author can tour the UK for book signings and talks before travelling to the US to do the same, the jacket for the US edition can include reviews from the UK press and so on.  In the instantly connected online world of 2011, however, the benefits need to be weighed against new disadvantages.  When blogs and websites are suddenly filled with gushing praise about a new book, and you’re told you have to wait six months for it to be released in your country but it is freely available in another, what are you going to do?  Get it airfreighted in?  What if you hear it’s available online as an ebook, but only in particular countries?  The answer is obvious – if you can’t get it legally, you’ll get it illegally.  A casual look at all the Australians raving about HBO’s Game of thrones on Twitter in April exemplifies the point – it has only been available to watch on Australian cable TV this month.  Just as the record industry learned from Napster’s success, if you make it hard for people to pay you for the cultural product you produce, they won’t.  By the time the book is officially launched the caravan has moved on.

Anti-book publishing

I don’t much care whether publishers in their current form go to the wall, but I do care that authors are properly compensated when they produce quality work.  The publishing industry is heading towards a cliff, and authors are currently strapped in with them.  There are other models (which we’ll consider in a future post) for compensating authors other than selling copyright to publishers.  Authors have a future, and whilst the era of large, generalist bookstores is probably over, small specialist and secondhand stores still have a long future ahead of them.  It is publishers that are the weak link.  Despite protestations that they are the only thing holding back a tsunami of badly written and tedious autobiographies and bridge club histories, it is publishers who are guilty of commissioning the mountains of vacuous ‘stockingfillers’, celebrity cookbooks  and other products Sherman Young calls ‘anti books’.

I would like to think that as the Australian Booksellers Association met at their conference today they discussed these issues, but somehow I suspect they spent more time considering how to beat Amazon by holding ‘Bookshop Day’ and other meaningless events, instead of dealing with the emptiness at the heart of the book industry today.

Pearson gets smart and cuts out the middleman

This week came some news that got the Australian Twitterverse buzzing – Pearson has bought the online assets of REDGroup – that is, the angusrobertson.com.au and Borders.com.au sales portals and associated backend warehouse operations.

This was interesting news for three reasons.  Firstly, it showed that whilst there are no buyers for physical bookstore chains, their online portals are still considered valuable, even though they will still be competing against overseas online book retailers.  The second reason is that the agreement includes continuing service and sales for Kobo ebook readers, meaning all those people getting a free Kobo with every insurance contract or magazine subscription might actually be able to use it for something.  The third and most interesting reason is that Pearson isn’t a retailer – they’re a publisher.

Online retail is the only retail

The traditional bookshop is fast becoming an endangered species, as we’ve discussed earlier.  Whilst the reduction in online competition now that Amazon has bought Book Depository may mean the super bargains (including free shipping) may be reduced somewhat in the short term, there is little doubt that readers are very willing to buy online.  It’s not that everyone is going to stop reading, or even reading on paper, it’s just that they don’t see a need to buy from an actual shop when they can get it faster and more reliably online.  One factor that doesn’t seem to have been considered (unless, as is highly likely, it’s simply not been drawn to my attention) is why book buyers are so much more comfortable buying online.  Of course, there is the nature of the book itself – a book is not a dress, after all – but I suspect it also has something to do with the sort of people who buy books.  To put it bluntly and stereotypically, book buyers are, on the whole, wealthier and more highly educated than the average.  These characteristics are also a major predictor of computer ownership and internet connectedness – and thus, being online and book reading are connected.

Kobo lives on

Before this news I was reading ads for products and services that included an offer of ‘a free Kobo’ with wry amusement – would people taking up the offer realise it was like an offer of a free Betamax player?  However, now I’m back in my box as Kobo has been saved at the last.  It will be interesting to see whether Pearson uses their ownership of the Kobo brand and infrastructure to offer device-specific titles in future, as well as how and whether through their the online retail arms they move more robustly towards publishing ebooks.

Vertical Integration

You might know Pearson from their text books, but they are way bigger than you might think: Pearson Group also owns the Prentice Hall and Longman imprints, as well as the entire Penguin Group (including Penguin, Hamish Hamilton, Viking, Doring Kindersley, Puffin and Ladybird imprints) and also the Financial Times Group, which publishes the Financial Times (obviously) as well as FT.com and has a 50% stake in The Economist.

Why would Pearson want to buy the online business of REDGroup?  It’s called vertical integration, and it’s bad news for bookstores.  I’m actually surprised it has taken this long for a major publisher to realise that they can bypass the middle-man and offer their books direct to readers.  Traditionally bookstores take around 40% of the jacket price of a book, so that’s either a very nice increase in publisher profit, or a sudden ability to offer locally published and retailed books at a competitive rate.

Yes, it’s been a big week in Australian book retailing.  I’ll be watching Pearson’s next move with interest.

Why a book is not a dress

Sherry Redux

Since I posted on Nick Sherry’s prediction that physical book shops will largely close within 5 years, a few others have weighed in on the conversation.

Bruce Guthrie used the Age commentary pages he formerly controlled to engage in a moment of reminiscence about growing up with a milk bar and a book shop in every suburb.  Nothing particularly enlightening was written, however – his argument was simply ‘gee I like book shops and I wish they weren’t all going to disappear’.

Following this was a rather more complicated piece from Blanche Clark.  Clark holds the rather anachronistic title of Herald Sun Books Editor.  Like many people who have weighed in to declare their outrage at Sherry’s comments, she didn’t address what he actually said, but rather what she thought she’d heard.  Sherry stated that he didn’t think there would be much of a market for bookshops “outside of a few specialty stores in capital cities,” and that book retailers needed to get online fast.  Clark attacked Sherry, stating that

Small Business Minister Nick Sherry’s prediction that bookshops in capital cities will be gone in five years, thanks to the internet, is ludicrous.

Now, perhaps when reviewing the latest Masterchef book or Underbelly #257 you don’t come across many large words, but attacking someone for saying the opposite of what they actually said is pretty inept for someone whose job, presumably, is to read and understand the written word.

Ironically, Clark’s piece actually goes on to predict exactly what Nick Sherry was saying.  That is, there is likely to be two separate markets for ebooks and print books in the near future:

What we are facing is a parallel market and those publishers and booksellers who adapt will survive.

Clark suggests that genre fiction will thrive in eBook format, but that ‘tactile puritans’ like herself will keep bookstores alive.  Well, the first may be true but I’m unconvinced on the second point.

Ross Gittins explained why in his excellent piece on 1 June, about price discrimination.  Gittins pointed out that Australian retail across the board has higher prices than overseas markets – even for exactly the same item.  Price is not just determined by the production and distribution costs, but also the price that the market is willing to bear.  Unfortunately for Australian retailers, so used to gouging consumers, the rise of internet sales is reducing the price Australians are willing to pay in a physical store.  When you can get it for 20%, 40% or even 50% cheaper online, why would you go out to the shopping mall?

A book is not a dress

Clark makes the argument that others before her made in relation to Sherry’s comments – why is he singling out books?  It’s not as if whole CBDs worth of retailers are closing down.  I have a few suggestions for Clark and friends.  You see, a book is not a dress.  Whilst it is true that some people are willing to buy dresses and other clothes online, generally speaking for things like clothes people like to be able to try the item on and see how it looks on them.  You can’t really get that online (yet).  The same rule does not apply for books.  If I want a physical copy of a new book there is (unless its an out of copyright title) only one publisher, generally producing only one or two versions.  I know what I’m getting and if I’m really hanging out for the next book in the series I’m probably not going to care too much what binding it uses or the picture on the cover.  That’s the reason for book sales being so easily poached by overseas retailers.  No-one thinks too much about the poor little newsagent going out of business when they fill in their subscription for home delivery of the local newspaper or their favourite magazine, but the principle is the same: why pay more to collect the product yourself when you can pay less for someone to deliver it to your door?

That is, of course, assuming that you’re willing to wait for a physical dead-tree book when you could have it instantly downloaded cheaper.

The death of publishing

Robert McCrum discusses this in a recent piece in the Guardian.  He predicts a dual market, much like Clark did, but I think McCrum is more on the money.  He suggests that the entire paperback market will be taken over by eBooks, leaving a high-priced hardback market for the collectors.  Ironically, this may mean that bookshops will go back to the way traditionalists will like, with leather lounges and wooden shelves, no longer filled with novelty paperbacks and cheap stationery.

The interesting thing about Clark, Guthrie and even McCrum is that they all assume that current publishers will still be in business in the future market.  I’m not at all convinced about this, and J K Rowlilng’s announcement that she will be selling Harry Potter eBooks through her own website (sans publisher) highlights one aspect of the problem for publishers.

There are at least two problems for publishers.  The first is that going to a traditional publisher is no longer the only way to get a book published without a large capital outlay.  If you’re already famous, like J K Rowling, you can simply use the book text that your publisher helped to produce, keep your electronic rights for several years, and then self-publish.

Secondly, if you’re an unknown, you can register with an online publisher like Lulu, or Amazon’s Kindle Direct, who simply take a percentage of each eBook sale.  Unlike the traditional paper book model, these ‘publishers’ don’t edit the work or pay advances.  Since it costs a fraction of a cent to sell each copy, they can distribute and sell as many books as authors wish them to.  These online publishers aren’t really publishers in the traditional sense.  They are more akin to distributors and retailers – for electronic publishing, the roles traditionally played by publishers can be unpacked – editing can be outsourced and paid for by the author, marketing can be taken on by a separate company, either taking a percentage or charging a fee, and the physical publishing and printing is no longer needed.

The distribution is of course online, and there is absolutely no reason that traditional publishers or booksellers will have anything to do with online distribution of electronic entertainment.  The winners here will be companies that have existing relationships with customers, and easy to use distribution networks.  It’s likely that companies like Apple, Amazon, Google and Microsoft will end up at the forefront of book distribution globally, but the other possibility is the continuing growth of large communications companies like Telstra.  Last week’s announcement that NBN Co and Telstra have agreed on a price for Telstra to move its fibre network to NBN Co and shut down the rest, as Alan Kohler explains, will produce a huge windfall for Telstra, which will move further towards being simply a huge communications retailer and media company.  There’s no reason to think Telstra won’t seriously look at eBooks in the near future – as a distributor providing service for authors to sell straight to readers.

So stay tuned for Telstra Books, coming to an eReader near you…