Sarah, Where Are You? Capitalism in eBookville

Sarah (Palin, that is), where are you? America desperately needs you and Michelle (Bachmann) and Glenn (Beck) and Rush (Limbaugh) and all your Tea Party compadres to save it from creeping socialism.

I never thought I’d say it, but you may be America’s first defense against the Murdochian (Rupert, that is) subterfuge to convert America from out right Wild-West-type capitalism to socialism. And, if you don’t take a stand now, how much longer will it be before Rupert starts pushing America down the path to socialized medicine plans sold under the Murdoch brand? Your buddy, Rupert, has taken that first step down the path to destroy capitalism and you are silent. Now is the time to speak up loudly and tell Murdoch you won’t stand for this subterfuge!

We know it all began with talk radio that transformed into talk TV and that became branded as Fox “News.” Murdoch established his credentials as a right-wing conservative who abhors socialism and embraces capitalism. He then suckered you and your colleagues into believing you had found a bully pulpit to protect America from creeping socialism, a mount from which you could castigate the poor for being poor and for needing government assistance. (Interestingly, you never castigated the rich corporations for needing — nay demanding — government assistance, but then no one is perfect.)

But now eBookville desperately needs you to stand tall and protest the socialization of ebooks, a charge being led by Murdochian forces. As you know (and preach), the basis of capitalism is to let the market dictate success or failure, profit or loss, unfettered by either government or private manipulation. Under capitalism, it is the end consumer who is supposed to decide the fate of a business. In contrast, under socialism, the market is hamstrung so there is no truly free market and no market can dictate success or failure, profit or loss — to each according to his want.

And so it was in eBookville until the advent of the agency system, a system put into place with the help of Murdochian forces (HarperCollins ring a bell, Sarah?). The free market was telling Murdoch that his ebooks were overpriced and to cut the prices until the market found its equilibrium. Alas, the dark forces were not satisfied and the Murdochians decided that the free market in ebooks shouldn’t be so free, and the agency system was founded in collusion with other socialist forces.

Where are the protests from you and your conservative colleagues? Is it that you fear having your paycheck cut? Or is it that you believe in a free market only when it benefits you and strangles others? Or is it that stealth anticapitalism from a fellow conservative is OK?

We ebookers need your help to straighten out this stealth attack on what we value most — free market competition. We need you to stand up to the Murdochian forces and lead them back to the path of competition. We need you, Sarah, and your colleagues to demonstrate that you are much more than empty shills for capitalism; that you are not quitters when it is your paycheck on the line; that you really believe in capitalism, in the free market, and in competition; that you are not simply Murdochian puppets in disguise. We ebookers need for you to be that grizzly mom who defends our public libraries from Murdochian overreach.

Come, Sarah, prove America wrong — prove that you really believe in capitalism. Tell your Murdochian compadres to tear down the wall of socialism with which they have surrounded ebooks; to tear down the wall of anticompetition in ebook pricing; to tear down the wall that hems in eBookville’s free market.

Sarah, give those yearning masses of ebooks their freedom.

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Waiting for Common Sense — Not: The Agency 6

It used to be the Agency 5, now it’s the Agency 6 as Random House has caved and instituted agency pricing. This further changes my book-buying habits.

Let me start by saying that I am not outright opposed to the agency system. What I am opposed to — and appalled by — is the pricing. Granted that Agency 6 pricing clearly demonstrates lack of competition bordering on price collusion (Isn’t it amazing how similar the Agency 6 ebook pricing is across the board?), but that isn’t the primary problem I have: The primary problem is that the selected price points are extortionate considering the restrictions imposed in the license (and note that it is a changeable, revocable license). Compound this with Rupert Murdoch’s greedy ploy, through his HarperCollins subsidiary, aimed at libraries, the last bastion for education of the poor, and what you have is a devil’s cabal.

(In an interesting aside, Murdoch’s Fox News has been denied access to Canadian TV because of its lack of impartiality. See Regulators Reject Proposal That Would Bring Fox-Style News to Canada. Maybe that is why he feels he needs to bleed American libraries — to make up for lost revenues and bias outlets.)

In the past I have spent significant sums of money building both my hardcover library and my cache of ebooks. It wasn’t so long ago that I could be counted on to spend $5,000 or more in a year on such purchases. The Agency 5 put a big dent in that spending. I felt compelled — if not honor bound — not to buy books, p- or ebooks, published by the Agency 5 (except where necessary because I already had several volumes in an ongoing series). So I focused my purchases on self-published, indie presses, academic presses, and Random House books. The consequence was that my expenditures on new releases dropped by more than 50% last year.

With Random House now part of the Agency cabal, my habits will shift yet again. If I want a new release in hardcover, I will wait to buy it on the remainder or the used book market, when I know that neither one of the Agency 6 nor their author will receive any compensation. But my ebook buying will (and has been) change even more dramatically.

A good example of the change occurred yesterday. Yesterday, the long-awaited second volume in Patrick Rothfuss’ Kingkiller Chronicles (the first volume was The Name of the Wind; the second volume is The Wise Man’s Fear) was released. My previous practice was to buy both the hardcover and the ebook versions; not this time, however. This time I bought just the hardcover because of the agency pricing (the ebook is virtually the same price as the hardcover and no ebookseller can sell it for a price lower than $14.99, which is exorbitant).

That is but one example. Increasingly, I am only “buying” free ebooks and ebooks that cost $2.99 or less, and those I am buying from Smashwords. The reason I buy from Smashwords is that most authors let you sample their work before you buy, some offering up to 75% of the ebook as a free sample. I admit that in the case of the free ebooks I don’t sample them, I simply download those that seem interesting, but for those that do cost some money, I generally read a portion of the sample before buying.

At Smashwords I discovered several self-publishing authors whose works are excellent. Granted they do not have the cachet of a Stephen King, J.D. Robb, or Robin Hobb, but they do know how to write a compelling story. A good example is Safina Desforges’ Sugar & Spice, a 99¢ mystery/thriller that compares well to any P.D. James novel.

The point is that the setting of exorbitant pricing by the Agency 6 has compelled me to look elsewhere for book purchases. Money that I previously spent supporting the traditional publishers is now going elsewhere — and it is costing me less yet giving me comparable enjoyment.

Yet there is one more thing that has to be said about the agency system. Currently, it is limited to ebooks. But that doesn’t make a lot of sense to me over the long run.

Under the more traditional wholesale system, the publisher sets a retail price for a book and the bookseller pays to the publisher approximately 50% of that wholesale price for each copy sold, regardless of the price that the consumer pays. (Yes, there are more wrinkles in the system, but I’m simplifying it for this discussion.) This is how it started with ebooks. The excuse for going to the agency system where the publisher sets the retail price below which no ebook can be sold and which pays the bookseller a fee for each sale was that low ebook pricing devalued the book and its content.

If that is a valid and sustainable argument, how does low pricing of the hardcover not devalue the book and its contents, too? Logically, there can be no difference. After all, a book is bought for its content, not for its package, and supposedly the content of the p- and ebooks are identical.

What this means to me is that we are the road to a major shakeup in the book industry. I think the agency system is only beginning with ebooks and will either have to be abandoned for ebooks or spread to pbooks. Although agency pricing has not been a big win so far, spreading it to pbooks could solve a major problem for publishers — the problem of returns, which would also solve the problem of excessive book print runs and remainders, and minimize the secondary market.

With the Agency 6 controlling more than half the publishing market overall and probably 75% or greater of the nonfiction market, the path they take could well become — and quickly — the path that smaller publishers take. The bulwark against the spread of agency pricing is the self-publishing market, but that market has to find ways of uniformly increasing its standards before it will supplant the traditional publishers.

In the end, it is clear that the Agency 6 lack common sense. At the same time that one or more of the Agency 6 publishers expects ebooks to grow to as much as 20% of all book sales in 2011, they try to thwart the one avenue of growth by imposing extortionate prices and limiting competition. Simultaneously, they allow the wholesale model to continue for pbooks, thereby devaluing their product and its content. Some day they will get it together; unfortunately, when that day comes, I expect it will not be to the consumer’s advantage.

In the meantime, I’ve changed my buying habits significantly and may well represent an unrecoverable customer loss for the Agency 6.

Judging Quality in the Internet Age

As a reader of An American Editor, you know that one of my concerns is what will happen if no one is willing to pay for news (see Is Rupert Right? Newspapers & the Paywall). Compounding my anxiety over this issue is a recent The Economist article, The Rise of Content Farms: Emperors and Beggars, which notes that “[n]ewspaper articles are expensive to produce but usually cost nothing to read online and do not command high advertising rates, since there is almost unlimited inventory.” The article goes on to discuss content farms like Demand Media and Associated Content, which use software to figure out what Internet users are interested in and how much advertising revenue a particular topic can support.

These content providers then send the results to freelance writers who are paid as little as $5 to write an article, which then is published on various websites, including that of USA Today. As The Economist notes, “[t]he problem with content farms is that they swamp the Internet with mediocre material. To earn a decent living, freelancers have to work at a breakneck pace, which has an obvious impact on quality.” One supporter of content farming is Ben Elowitz, CEO of Wetpaint.

In his article at paidContent.org, “Traditional Ways Of Judging ‘Quality’ In Published Content Are Now Useless”, Elowitz identifies 4 criteria of “old media” quality — credential (i.e., reputation of the media), correctness (i.e., fact verification), objectivity (i.e., not pushing a particular agenda), and craftsmanship (i.e., in-depth reporting) — and then relates how they are irrelevant in the Internet Age because:

The audience doesn’t care where the content comes from as long as it meets their needs. Decisions of what content is trustworthy are made by referral endorsements from our friends and colleagues on the social networks, and by the algorithms of search that help weigh authority vs. relevance. In the abundant world of content, consumers know to apply their own sniff tests — and with myriad sources, they develop their own loyalties and reputations. The brand’s stamp isn’t the point anymore — the consumer’s nose is.

He has it right that the audience doesn’t care about the source of the content so long as the content meets the audience’s need, but that is nothing to boast about. That the audience determines whether something is trustworthy is not something to praise but something to worry about, and to worry about greatly.

Essentially, content farmers and supporters leave the question of truth/fact to each reader — either the reader believes or the reader doesn’t. If a favored website repeatedly writes that the Earth is flat and 10 million people visit that website and agree, then, according to Elowitz’s standard, it must be true or that website wouldn’t have 10 million visitors. The reasoning isn’t sound — either the Earth is flat or it is round, regardless of what 10 million persons believe. Fact by definition is not belief, it is actual being or what we used to call truth.

There is a lot of distance between ease of access, which the Internet provides, and truth/fact, which neither the Internet nor mass belief can provide. This is and has been my problem with the current view of some in the Internet Age that news sources that want to go behind paywalls can be ignored because information is so readily available free. There is rarely a discussion of the credibility of the free information or how high factual standards will be maintained in the age of free.

How many Photoshopped images have you seen; if a photograph is so easily faked, why should we assume that a news story isn’t also faked? How many times have you read a press release from a repressive government that complaints of police brutality are untrue, that no one is starving in Darfur, that the Iranian elections weren’t rigged, that North Korea is paradise on Earth? And have we so quickly forgotten the few instances when “old media” found reporters faking news and the outrage it caused because of the “old media’s” credibility? Have we forgotten how quickly sound bites that were factually false (e.g., “death panels”) became believed by millions because of the viral reporting of the “new media”?

Elowitz goes on to say:

Without a staff of old-school journalists, Gawker has managed to rack up over 10 million visitors a month who come because the rumors and snark meet their definition of quality — without any of the institutional qualities of old media.

The flaw is the equating of numbers of readers with quality. The rumor that Ben Elowitz is a robot may make interesting reading but doesn’t equate with quality (or necessarily reality), and because a million people read that rumor doesn’t make the source trustworthy, the rumor true, or do away with the need for “old media” quality.

Somewhere, somehow, we all need a fact baseline against which to judge the quality of website — and government — pronouncements. In past generations, that fact baseline was provided by “old media”; in the Internet Age, if the content farmers are correct, there is no provider of that baseline — there are simply websites that agree with me and websites that disagree with me, no matter how far-fetched or absurd my beliefs are.

Elowitz and the content farmers tackle the problem from the economic perspective — “old media” qualities are bad because they are unprofitable, and therefore irrelevant, in the Internet Age. But that skirts the fundamental question of whether the only thing that matters in any decision-making process is profitability. It also ignores how businesses that are profitable make their daily business decisions; don’t they rely on truths rather than mass opinion? Additionally, if it is OK for the masses to be self-delusional, can we expect anything different from those who govern us?

We went to war in Iraq because “old media” qualities were ignored and the “new media” relevancy prevailed (remember the rumors of weapons of mass destruction?). Instead of applying the “old media” qualities of objectivity and correctness and being sure that the source of the rumor met “old media” credential standards, the “new media” qualities were used. How many more Iraqs must we suffer before we recognize that “old media” standards should be applied to the “new media” as well?

“Old media” standards aren’t irrelevant in the “new media”; rather, they are expensive and difficult to implement and thus the “new media” prefers to take the easy way out. The “new media” also tends to be more concerned with dollars than with accuracy or truth, and happily sacrifices accuracy and truth on the altar of greed — not caring about the subsequent consequences.

The danger of content farmers and of their supporters, like Elowitz, is that they believe there is wisdom in sheer numbers and that everything boils down to a popularity contest. Such thinking and believing doesn’t bode well for the future of civilization. With such reasoning, it won’t be long before we truly do revert back to the standards of the Dark Ages. In this regard, Rupert Murdoch is right and the Elowitzes of the world are wrong.

Is Rupert Right? Newspapers & the Paywall

There have been lots of articles and comments regarding Rupert Murdoch’s views on making online news pay. Many commentators have suggested that putting the news behind a pay wall is bound to fail. I’m not so sure that Rupert is wrong. If we want original news reporting (i.e., news origination) and in-depth reporting rather than just the 10-second blurb TV gives us, we need to pay for it. Newsgathering is not free and costs need to be covered.

I subscribe to the New York Times. Daily delivery runs me about $50 per month. I am willing to pay for the subscription because I want to first know what is actually happening in my world before I start listening to the pundits tell me what those facts mean. I can’t imagine relying on Glenn Beck, Rush Limbaugh, Stephen Colbert, Ariana Huffington, or Al Franken for the facts of what is happening in my world.

I rely on the New York Times, The Economist, the Wall Street Journal, and similar papers because of the reputation for original reporting that they have built over the decades. Because I cannot do the original investigation myself, I do not know with absolute certainty that what they report as fact is truly fact — no more so than I can know any fact that I have learned from any source outside my own original investigation; instead, I rely on the reputations they have built as fact-gatherers. Similarly, I rely on the opinion shapers — the Becks, Limbaughs, Wills, Pitts’, Harrops, and other op-ed folk — to add interpretation from a philosophical or biased perspective to those facts the NYT, WSJ, and The Economist and the like have reported.

Sources like the Drudge Report are aggregators not originators; that is, they take from already published sources their “news.” Consequently, relying on an aggregator for one’s news does not address the problem of paying the originator of the news. News aggregators don’t have paid investigative, professional reporters in Des Moines, Iowa, let alone in Tajikistan — they are not news originators.

How can we rely on the veracity of the reported “facts” if the news originators are forced to give their content away free online? Ultimately, something has to give in a free economy; in the case of news, it is credibility and accuracy that ultimately gives. We are beginning to see the effect that free has on veracity and accuracy of reported “facts” online if a recent study of online magazines is to be believed.

The Columbia Journalism Review, as reported by the New York Times, recently surveyed the editing and fact-checking practices of magazine websites. Of the 665 magazines surveyed, 59% copyedit less rigorously or not at all the online content and 43% do less rigorous to no fact checking of the online content. The likelihood of these numbers decreasing with free content probably is nil; it is more likely that the numbers will increase.

Yet our discussions about our surrounding world have to start from some base. Granted they can start from one’s imagination in which we simply declare certain things as truth, but that seems to me to be a poor base from which to decide anything. News aggregators won’t have anything to aggregate and political and social commentators anything to comment on in the absence of news originators.

Not all newspapers either can be or should be behind paywalls. For example, my hometown newspaper is generally bereft of any real news origination and at best is worth $10 a year (although it costs closer to $200 a year by subscription), but that is because it lacks any real credibility and because most of its efforts are as a news aggregator, not originator. But there are certain newspapers, those that are true news originators, whose efforts should be behind a paywall. Their credibility, earned over decades of origination efforts, not only deserves financial support but warrants such financial support.

It has been reported that Internet and TV news (local and national/cable) are the leading sources for news today. Newspapers run distantly behind. On the surface, this indicates that paywall support is undeserved by newspapers. But the reality is different. TV news operations are scaling back on reporting; ABC News, for example, recently announced it was cutting its news gathering staff by one-third. Many of the covered stories originate in newspaper exposés, not in original TV reporting, and there is a significant difference in the depth of analysis provided in a 10-second TV blurb compared with a multipage newspaper article. Besides, TV news is behind a paywall; just an indirect one. Most of us get our TV via cable/satellite for which we pay a monthly fee. The cable/satellite operators pay the TV channels a per subscriber fee. And we also pay those same cable/satellite providers for Internet access. So why not also pay news originators for their work? Why should it be free just because it is on the Internet?

Many Internet news sites are nothing more than aggregators, not original news reporters. Without the originators, there would be no aggregation possible. More important, perhaps, are the findings of the Columbia Journalism Review. Its survey (see the New York Times article linked earlier) found that 16% of the respondents didn’t fact check online-only content at all and that of those that did fact check online content, 27% used a less-stringent process than they used for their print offering. How reliable can those sources be? Would you want your lawmakers or your doctors to make decisions based on unverified information?

Consequently, I’m inclined to think that Rupert is right. I’m not sure that the New York Post is worthy of being behind a paywall, but I have no doubt about the worthiness of, for example, the Wall Street Journal, the Financial Times, The Economist, and the New York Times — that is newspapers with high credibility and well-deserved reputations as news originators. Keeping news originators alive and healthy is important to keeping alive and healthy democratic institutions.

Perhaps Rupert is right this time.