“Lovers of print are simply confusing the plate for the food.”
― Douglas Adams
In light of this recent TIME Magazine article on Broadband as Public Utility I thought I would reshare a piece I wrote a year ago. ~ eP
The current business model of book retail is not designed for the digital world on the web. It is being stretched to the breaking point and the centuries old bookshop model does not look like it will hold. Social and community pressures are increasing exponentially and a great change is needed.
The very idea of intellectual property is being forced to evolve. It is generally a capitalist concept which content creators are granted the right to control and profit from their work for a specified period of time. This profit and control is based on a retail distribution model for physical goods - print books not digital content living in the cloud.
What if a society decided that for the greater good of the state free access to all ideas and stories should be an inalienable right of the people? What is to stop a country from nationalizing all digital books and making them available in a “People’s Library” to all it’s citizens? What do we do if another small, poor nation wants to provide better access to information, knowledge and education for all its people to allow it to better participate and compete with the world? Would we go to war to prevent someone from reading a book? As the very concept of content changes there is no question retail of that content will have to change as well.
A recent Digital Book World article explained “how business scholar C.K. Prahalad explored this topic from various perspectives over the past decade or so, with the culmination of his research being the book, The New Age of Innovation. This book proposes two basic tenets: “value is based on unique, personalized experiences of consumers” and “no firm is big enough in scope and scale to satisfy the experiences of one consumer at a time.” Prahalad then identifies three transformations happening in business today:
Before the printing press the young learned by listening, watching, doing. In medieval times it was impossible for students to have copies of the same book. Manuscripts and commentaries where dictated. Students memorized. Instruction was almost entirely oral, done in groups. With the invention of mass produced books it was possible for entire societies to have the exact same book. Yet though it was one of the first products of mass production it is an individualistic form - it isolated the reader and helped create the Western “I.”
Commercially the auditory was able to be commodified by technology allowing it it to be recorded in print and bound into books, exact copies of which could be sold. If we look at other content that originated as auditory performance - industries like music (records) and theater (film) we see a common path. Both were performance based industries where commerce was individuals “buying” a performance. New devices (TV and radio) made access to the content easier and to the consumer made the cost free. The producers maintained some semblance of control as the broadcast of this content was supported by allowing advertisers access to viewers. This was possible because the publishers had clear customers in the radio and TV stations to target. With the advent of “digital” however replication of individual performances are no longer fully in control of the producers. Individuals can copy and share nearly anything in digital form. Retailers no longer held enough power to control the physical retail of the product. The pricing spiraled down. Entire libraries of content devalued almost overnight.
With books the value of a publisher’s library of content is also greatly diminished due to the fact that there is not a clear dominant distribution customer like a network TV station that controls the consumer access to content. Publishers are struggling to maintain margins that cover the cost of overhead. The cost of creating a completely digital book is only improved marginally by eliminating print production costs and this savings is offset by the devalued acceptable retail of an e-book. Yes it costs less to make and e-book but publishers have to charge less too. The commodity business model publishers have relied on for centuries is rapidly breaking down. They are moving from selling 10,000 copies of a book to a chain buyer to selling 1 book to 10,000 individuals. Instead of relying on retailers to provide dedicated traffic and cover marketing expense, publishers are having to increase consumer marketing and allocate monies for ad campaigns. On top of this publishers used to be able to guarantee a minimum sale of a title based on just placing it on shelves of a bookstore whether it ever sold to a consumer or not. They relied on a certain amount of guaranteed cash flow even with 100% returnability. Now in a digital only world they have no transactions - no cash changing hands - until the actual consumer decides to buy the book. Sales that were made to chains to stock their stores that were paid within 90 days are now spread out over as far as 18 months or more as consumers discover and purchase books at their own pace. Millions of cash flow dollars that pay operational expenses of office buildings and editorial department salaries evaporate. The internet eliminates the middle man. The internet gives the consumer direct access to content. This is forcing publishers to become retailers for which they are neither equipped nor have experience.
All these changes are happening rapidly and at the same time. A new model is needed that marries the libraries mission to provide access and the publishers need to make consistent revenue. What if every household is charged a standard fee for content access. Would you pay $9 a month to have access to all the books in the world? The average American reads 6.5 books a year. The average price of an e-book on most retail sites is $9. That is around $50 a year per reader at retail. Of that, publishers will get around $28. By removing the retail from the book and making it free - instead charging $9 a month for access to all digital books the average money spent by consumers will go up. This revenue would be shared based on prorated percentage volume of the amount of “rentals” for each title. The additional revenue generated by converting to a monthly access fee replaces the loss of sales once relied on to fill retail shelf space and creates a stable, projectable revenue stream for publishers to continue to profitably foster the creation of commercial content.
Minimum free access levels could be set by individual communities using libraries as a model and funded by local taxes. People could pay for premium access from competing providers just like cable or phone companies. When the perceived cost is removed from a book and placed instead on the delivery vehicle like cable or mobile phone then the book itself is essentially free in the consumer eyes. This could likely result in an increase of reading on a national level. Ask yourself, would you DVR as many shows as you do now if you had to pay per recording? You already pay for the ability to DVR monthly in your cable bill but when you push record the perception is it is free.
Like it or not the concept of intellectual property as individual commodity is changing. The ubiquitous screen of a convergent web is our future. When we can ask the screen in our hand to access any text, image or sound and have it called up on our living room, car, or office we stop thinking of each piece of information as an individual unit of commerce and instead it becomes simply part of the universal content-soup behind the device in our hand, no different than the electricity that powers it.
I previously posted about how the way digital books are being experienced is changing them from artifacts to something more ubiquitous. The container, the package, the physical thing is disappearing distilled for the consumer down to just the content itself. This is new and exciting but still however we try and force ebooks back into a familiar shape.
A fixed-layout epub forces the digital content into the shape of the print book contain much like an ice cube retains the shape of what it was frozen in. But the content delivered to digital devices is fluid like water. It wants to take the shape of its container. User-centered fluid design is not a skill set most traditional book publishers are deep in. The years of experience that upper management has relied on suddenly doesn’t apply as clearly. Selling to a bookseller and wholesaler is not the same as selling to a consumer. Right now we are trying desperately to keep digital books frozen like an ice cube in the form of a print book. We zip web-pages into single units so that we can place them on digital bookshelves and sell them in web based replicas of bookstores. We desperately try to avoid selling to models Overdrive and the Kindle Lending Library that don’t mimic what we are used to with print. But like ice digital content wants to be fluid and like ice its will slowly melt to fit the container.
I have been working a lot from home lately and I like to listen to music while I work. I listen to the steaming music channels on my cable TV, my favorite radio station from when I lived in Seattle streaming from my desktop. My mp3 player and CDs are used less and less since they are not directly connected to my house. The act of plugging in an mp3 player to a usb port or placing a disc in the disc drive is embarrassingly now too much effort. My TV and computers are all part of the utilities I pay my cable company for monthly. As I think of it now I don’t think I have purchased an individual song or album in over a year. I have a screen in almost every room of my house that wirelessly fills my home with all the music I need.
The containers are changing shape. The separation of TV, radio and the internet is disappearing. With things like SmartGlass I will soon be able to sit down with my coffee, turn on Good Morning America to watch the news, if there is a story I want to know more about with an Xbox Kinect on my TV I can swipe my hand from the sofa and call up a newspaper article from today’s paper. While there check the latest Doonesbury. I move to my desk and check my email, opening Good Morning America in a window in the corner. They interview and author I like and I add his new book to my reading list by clicking a link on the bottom of the GMA window. I Skype the office for a meeting then make a sandwich, take my tablet out back, turn on some jazz over the outdoor speakers and read the book I saw the interview about that morning. All this brought to my be my broadband provider.
In the last year as publishers we spent a lot of time worrying about the influence of Amazon and Apple on our business. Before that we worried about Google scanning books. As our digital worlds converge it turns out the biggest influencer on the future of books and how they are delivered and consumed may be China Telecom. They are the world’s largest broadband service provider by a significant margin. http://bit.ly/NmJFAH