The eBook Wars: Making Peace

I suspect that Macmillan’s upper management feel elated after getting Amazon to agree to an agency distribution and pricing model. But a few pin pricks to deflate that elation are probably warranted.

Macmillan showed some, but not much, gumption when it stood up to Amazon. Would Macmillan have taken the stand it did in the absence of Apple paving the way? I doubt it; Macmillan hasn’t shown any strategic or tactical brilliance in the ebook wars — this was its first bold stroke.

None of the publishers who are pushing the agency model have shown much initiative. All of the initiative has come from outside the publishing world, which is not a good sign. So I will again suggest a way for publishers to lead the way: an international repository.

Yes, I’m tooting that horn again. eBooker anger will not go away and ebookers will not suddenly be willing to live with restrictive DRM and high prices without knowing that they will be able to read the book they lease today on the device of today, tomorrow, and of 10 years from now. Publishers are rubbing salt into the wound by agitating for higher ebook prices yet not addressing the most pressing issues — that publishers want a high price for a leased book that has a relatively short useful life because of DRM. (I understand that for some people the most pressing issue is geographical restriction, followed by DRM. I am also aware that some ebookers can easily remove DRM, but the vast majority of ebookers cannot and do not remove DRM.)

When it took on Amazon, Macmillan was the public relations loser with its ultimate audience, the ebooker. If there was a winner in that debacle, it was Amazon, not that Amazon deserves any prize for caring about its customers. Contrary to public perception, I think Amazon caved to Macmillan’s demands so quickly because it gave Amazon an excuse to make a profit yet shift the blame for higher pricing. Had Amazon truly cared about its customers, it would have continued to deprive Macmillan of access to 20% of the book-buying marketplace (and up to 90% of the ebook-buying market). Macmillan could not have easily or quickly made up that loss elsewhere. 

But that sideshow just distracted ebookers and publishers from addressing the underlying problems with ebooks. Now Macmillan has an opportunity to regain stature among ebookers by taking the lead in establishing a single, uniform format and DRM scheme by leading the move to create an ebook repository (a scheme that I believe would ultimately lead to the end of geographical restrictions).

Consider the advantages to a single repository system. For publishers, it means creating a single electronic file that is properly formatted; no more introducing errors through the process of converting from one format to another. And a single DRM scheme means that they can take control of what scares them the most, setting ebooks free. (Yes, I know that any DRM will be cracked by pirates, but publishers aren’t ready or willing to set ebooks free or to accept that piracy cannot be defeated by DRM.) A single repository would also enable publishers to better track sales, get better demographic information, and even implement ebook-sharing schemes that they can live with. No ebooker I know believes that an ebook should be 100% unshareable and most understand publisher concerns about no DRM. I suspect that publishers don’t oppose sharing among family members, but that absent DRM they have no way to control the extent of sharing. A repository would enable publishers to make a leased book available to the ebooker for as long as the book is under copyright, regardless of what device the ebooker migrates from and to.

The importance to both publishers and ebookers of this ability to migrate to and from devices cannot be overemphasized. Right now Amazon controls a significant portion of the ebook market. As the market grows, Amazon will continue to exercise that control by locking ebookers into its Kindle machines. Similarly, if Apple’s iPad takes off as a reading device (of which I have my doubts), publishers will be ceding yet more control to another outsider because Apple will do what it can to lock ebookers into its sphere of influence. But if publishers created a single repository with a single format and DRM scheme, that Amazon-Apple control would be diminished if not eliminated.

For the ebooker, a single, properly setup repository that all ebook publishers used would insure access to leased ebooks today, tomorrow, and 50 years from now. It would also mean that if a publisher corrected a faulty ebook, regardless of the problem, the ebooker would have access to the corrected version and not be stuck with a faulty version. And it would permit ebookers to move from device to device without penalty. If publishers enacted a sharing scheme, which wouldn’t be that difficult to do, there would be additional value given to ebooks. eBookers would see ebooks as more like traditional pbooks and less like short-term leased, low-value products.

For publishers and ebookers alike, the repository adds value to an ebook.

To work, publishers would need to create an independent repository that would hold a copy of every ebook. Every ebook would have to conform to a single format standard and would have to be wrapped in exactly the same DRM scheme, which would have to be made available to all device makers. And accessibility would have to be guaranteed for the copyright life of the ebook. eBooks would be sold by traditional sellers such as Amazon and Barnes & Noble, not by the repository, but the actual ebook would be gotten by the ebooker only from the repository, not from the ebook seller. With the repository scheme, the agency model for pricing would be less important to publishers and could even give way to the heads-on competition of days past.

If publishers really want to survive in the Age of eBooks, this is the kind of thinking that they need to embrace. The shotgun approach they now adhere to only embitters ebookers and only makes each side of the debate more intransigent. Plus publishers are inviting at minimum a public relations disaster, perhaps a more titanic disaster, as ebookers discover they have to release ebooks because they changed devices. Additionally, the repository could help publishers in the value controversy.

Although perhaps not a perfect solution, the repository is a workable solution that addresses and satisfies many of the concerns of ebookers and publishers in the Age of eBooks and at least starts the Age of eBooks off on the right track.

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A Modest Proposal III: Dying Days of Giant Publishers (Part 2)

In yesterday’s post, I gave four reasons (five if you want to count returns separately) why the giant publishers are on their funeral march: they are too big to react quickly to market conditions; they haven’t learned the Dell lesson; they let others sit in the catbird’s seat of deciding industry policy; and they haven’t come to grips with who are their future customers. Essentially, the giant publishers are early 20th century behemoths who have yet to adapt to 21st century technology and consumers.

These are interrelated problems, all stemming from the same root, which is the giant publisher having ceded industry leadership to outsiders.

In a way, the Dell lesson — Tell the customer he can have it his way and then limit the options — was tackled in my end-the-paperback proposal. Publishers have to learn to create their markets, not be led by markets imposed on them. This is the difference between Amazon, Apple, Google, and the giant publishers.

Amazon led the market by creating the Kindle and Kindle editions, and Apple and Google are inventing their own book markets. The giant publishers are trying to catch up. But Amazon (soon to be joined by Apple and Google), by leading the market defined it and is setting the terms. Amazon is also applying the Dell lesson: You can have an ebook in any format you want as long as it is a Kindle format. The giant publishers, who should have led, instead fumbled so badly that they are in disarray over how to catch up. More importantly, perhaps, for the publishers is that Amazon is turning them into the bad guys in the public relations war for the consumer soul. It’s the problem of the giant publishers being a sumo wrestler when a ballerina is needed — and not recognizing the problem.

To survive the days ahead, the giant publishers need to lead the marketplace, not follow it. If it is true that ebooks are the wave of the future, then publishers need to grab hold of this market and lead it or prepare their funeral pyres.

Publishers need to gain the upper hand in the pricing, geographical, DRM (digital rights management), and format wars. They have started by slowly adopting ePub as the uniform format, but otherwise are in disarray.

My solution: Create an international book repository owned and operated by a consortium of publishers!

Publishers should unite and create a single international repository for every ebook published by member publishers and by self-publishers. Membership should be open to all ebooks with an ISBN. All books would be kept on the repository’s servers. Consumers would buy a book once from a bookseller such as Smashwords or Barnes & Noble, but then be able to read the book on any device they own, without the need to transfer the book from device to device.

Publishers would create a single software system so that if a buyer started reading a book on his dedicated device at home, he could continue reading from the place he bookmarked on his smartphone while commuting to work, on his computer during lunch, on the smartphone for the commute home, and on his dedicated device at home. The repository would also give consumers the option to download a copy of the purchased book to a single device, just as is done now.

This would benefit both consumers and publishers in multiple ways. Here are a few: Because the books would be held remotely, they would be device agnostic. Publishers could use a single uniform format with a single uniform DRM scheme that every device manufacturer could use royalty free. Publishers could enable consumer sharing on a book-by-book basis by allowing, for example, the book buyer to give some number of named individuals access to the book, giving buyers some reasonable ability to share ebooks; different books could have different sharing limits. Consumers could buy a book and access it anywhere at anytime on any device capable of displaying the text — today, tomorrow, and for 99 years into the future. 

The idea is not to replace booksellers. Rather, the bookselling world could continue as is but when an ebook is bought, access to the book would shift from the bookseller to the repository. It could be done as “smoothly and flawlessly” as done now, even with automatic wireless downloading.  With the repository, publishers will lead the ebook marketplace and enhance their survival prospects.