Scott's Brain Meat: Music industry

Thursday, January 28, 2010

MacMillan and Whine: The Futility of a Crusade Against Digital Book Piracy

At the Digital Book World publishers conference being held this week in New York City, Macmillan president Brian Napack took the stage as guest speaker to call for his fellow publishers to take up an aggressive fight against digital book piracy, encouraging them to coordinate in a series of lawsuits and anti-piracy legislation. His goal, clearly stated, is to stop the spread of sharing copyrighted intellectual materials over the internet.

Image by LA100RRA 3logs via Flickr

Where have we heard this battle cry before?

For those of you who answered the music industry, award yourselves ten points for paying attention over the last decade.

Since you were paying attention, we can assume that you also remember what a complete failure their Commerce Crusade turned out to be. Not only did they come nowhere near ending online file sharing, it is still managing to gain negative press by gleefully slapping million dollar fines on young girls and single mothers. All of their legal posturing and attacks have failed to make anything resembling a dent in online piracy, or file sharing, or watever you want to call it. Oh sure, they took down Napster, but just look at the difference that made.

Now, they have handed the torch over to the publishing industry, and some of the major players within seem
to be more than eager to follow suit and go after what they perceive to be a drain on their profit margins.

But is it really? It is a fact that book sales have been dropping drastically in recent years, and while it hasn't been as crippling as the drop seen in newspaper and magazine sales, it is still a healthy chunk. Considering the predominance of computer use, the growing market for eBooks, and recent studies that (very loosely) estimate losses in the millions from illegally downloaded books, it doesn't seem like a far-fetched premise.

Then again, it does avoid missing the bigger picture. The country is in what can easily be described as economic turmoil, and this is having an effect on commerce across the board. A major key to successfully selling any kind of luxury merchandise is offering an affordable product that people can afford. With unemployment rising and pay-scales dropping, many people can no longer afford to buy books casually. And with the list price of most hardcover books being more expensive (and eBook list prices are inexplicably as expensive) than the latest Blu-Ray release or a dinner for two at Applebees, many people are taking a pass.

There's also the question of how big the problem could actually be. Unlike the music industry, which releases all of its products in easily copyable formats, publishers don't normally count on technology for the bulk of their sales. Nook and Kindle sales might be on the rise (and modestly so) along with other eReading formats, but they still make up a vary small percentage of the commercial reading population. The majority of readers still prefer good old fashioned paper and ink. And even when considering that percentage of electronic reading, there is no iconic Napster to publicly slam for making the last Harry Potter available to the masses. And let's be honest; no matter how many copies of the Twilight series were downloaded illegally, the book still made lots of money for all involved.

Can you get books cheaper through online markets and major bookstore chains? Sure, but you can also get them for much cheaper at flea markets and used book stores. You can even get them free through legal channels, such as book trading sites like PaperBackSwap and BookMooch. And let's not forget public libraries; who knows how many sales publishers have lost from libraries simply giving them away for free. I'm not even counting the thousands of free copies that publishers themselves give out to promote their books.

So considering all of these equally tangible and logical reasons for the recent drop in book sales, why pick the impossible goal of battling digital piracy? Maybe because it is the only symptom that the publishing industry can even pretend to do anything about, and while spending millions on lawyers and court fees just to prove some kind of point might not make any real difference in the scheme of things, it probably feels more productive than just watching with a shrug and a sigh while your company spirals into the red.

Am I defending eBook piracy? Of course not. But it isn't the major cause for the declining sales the industry is facing, and if they make this their own multi-headed Hydra to battle instead of tackling the tougher issues at hand, they aren't going to end up as victorious as Heracles.

Sunday, December 13, 2009

Publishers Scramble to Horde e-Book Profits

Sony <span class= Librie eBook Reader" style="border:none;display:block" width="180" height="240">Image by Josh Bancroft via Flickr

The old-school publishing companies have been waging an ongoing battle on multiple fronts these days, all of them with different aspects of the same mortal enemy: the dreaded e-Book.

And they thought self-publishing was becoming a pain in the ass.

There has been a lot of news regarding powerful brick-and-mortar publishers and their constant struggle to catch up with and wrestle into submission the ever-increasing market for electronically formatted books. What didn't seem like a serious threat to them in the past has suddenly become a serious threat to the status quo (much like self-publishing), and the race is now on to head this new threat to the kingdom off at the pass.

Much of the news regarding these recent attempts has covered what appear to be different aspects of the battling formats. You have major publishers like Simon & Schuster announcing a set time delay between hardcover releases and their e-Book versions. Then there are the publishing companies that are desperately attempting to convince authors (and the families of deceased authors) that older publishing rights contracts imply their ownership of electronic versions of books even though they were written before e-Books existed. Beyond these major issues, smaller individual battles rage on with specific agents and authors. And let us not forget the constant wrangling with Amazon's Kindle and Barnes & Nobles' Nook over content and accessibility.

As disparate as these fights might seem, however, they all boil down to one solitary bottom line; the bottom line. You know, money.

It has been a harsh time for publishers. Revenues have dropped drastically for all forms of publishing, from magazines and newspapers to textbooks and literature. The global economic recession has seriously reduced disposable incomes, making printed materials more of a luxury item these days. The rising costs of published materials hasn't made this any easier. When a thirty-two page comic book costs as much as most of us remember paying for a two-hundred page paperback novel, casual reading just doesn't seem so casual anymore.

Then there's the new technology. We're in the Information Age, after all, when information of all kinds is readily obtainable in multiple electronic formats, only a mouse-click away. Reading for research or recreation can be done from wherever you are sitting right now. We've reached a moment in time where people can browse vast collections of documents and written works on

their phone while on a bus. Even going through a tunnel. Now that's impressive.

But this isn't about free information, no matter what some publishers might say. Some might take up the music industry's torch by claiming that sharing of materials online hurts the industry, but that argument never holds water when they still manage to bring in billions of dollars in revenue. Besides, you don't hear any complaints about used bookstores stealing food from the mouths of publishing industry families. And libraries have been giving it away for free for years.

So what's the argument then? For the most part, it comes down to the publishing industry's unwillingness to change their pay model to represent the new technology. We saw the same thing with the massive writer's and actor's strikes a few years back. Now it is time for book publishers to step up and take the heat.

When publishing and selling a book, most of the major costs involve the physical creation and transportation of the actual book. You have to print vast quantities (that's a lot of ink and paper and glue), store them (prime real estate), and ship them (books are heavy). What is left, administrative costs and creative artist compensation, is purely negotiable.

The problem is that when it comes to the new e-Books, even though elimination of the physical costs have left the purely negotiable part of the equation as the bulk of the cost, publishers still aren't negotiating. Many out-of-print books are now being made available in e-Book form, but at prices close or equal to original print-book cover prices. New releases might be offered at more respectable $9.99 price ranges, but after that the costs can almost double for older and not-in-demand (see: non-celebrity authors) titles. Any used bookstore owner will tell you that this pricing model is ass-backwards.

This adherence to the old rules also has authors and agents bothered as well. Author's royalties are remaining at roughly the same percentage for e-Books, despite the considerable lack of publishing overhead. For the e-Books selling at the old prices, this equals a massive increase in profits for the publisher, and the author left with same amount of scraps. Now take that new release selling for $9.99 instead of the $27 (!!!) hardcover price. The author's percentage is down to nearly a third of what it would have been, while the publisher's reduced overhead still has their profit margin comfortably close to what it was before.

As publishers desperately try to rewrite old contracts and keep new releases off of Kindle and Nook eReaders, it can be easy to assume that these are the actions of an industry struggling to survive in a new age. But this one book you definitely can't judge by its cover, as the truth is far simpler. They are greedy. Like the music industry and film industry before them, they are trying to reap the benefits and rewards of a new age of digital entertainment without giving the artists involved with these creative properties their fair share.

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