Tuesday, May 12, 2009

"Pernicious" Pricing and Increasing E-book Piracy

It looks like book publishers are now suffering the fate of media markets who have gone before them into the digital frontier. Best selling e-books are cropping up on self-publishing books sites offering free titles to the masses.

"For a while now, determined readers have been able to sniff out errant digital copies of titles as varied as the “Harry Potter” series and best sellers by Stephen King and John Grisham. But some publishers say the problem has ballooned in recent months as an expanding appetite for e-books has spawned a bumper crop of pirated editions on Web sites like Scribd and Wattpad, and on file-sharing services like RapidShare and MediaFire." More: NYTimes

Authors seem divided on their opposition to such activity. Harlan Ellison threatens pirates with medieval measures saying those that stick their hand in his pocket will draw back a bloody stump while other authors like Cory Doctrow offers free digital downloads of their books on the same day they are released to traditional bookstores.

“I really feel like my problem isn’t piracy,” Doctorow said. “It’s obscurity.”

Richard Sarnoff, CEO of the company that owns megapublisher Random House, seems to think the escalating problem of piracy is the result of publishers not offering services consumers want at a price they are willing to pay.

“If iTunes started three years earlier, I’m not sure how big Napster and the subsequent piratical environments would have been, because people would have been in the habit of legitimately purchasing at pricing that wasn’t considered pernicious,” said Richard Sarnoff, a chairman of Bertelsmann, which owns Random House, the world’s largest publisher of consumer titles. - More: NYTimes

I have a lot of respect for Random House since I have been a customer of their online audio books division, Audible.com, almost since it's introduction. I think their monthly subscription program offers an excellent value for the money. But, I'm sorry, Mr. Sarnoff, but in my opinion the current pricing for Kindle editions of hard copy books offered on Amazon does border on the pernicious. So, it is not surprising the tide of online piracy for e-books is rising.

The publishing industry is saving huge amounts of money if they don't have to print, bind, warehouse and distribute hard copy books. According to some authors, publishers aren't even putting much effort into editing any more either. I see increasing evidence of this in the hard copy books I have been reading lately, finding them peppered with misspellings and poor sentence structure. So I find it incongruous that they demand almost as much for an e-book as a printed one.

Audio books require extensive investment in production, with the hiring of quality voice talent, rental or maintenance of a fully equipped recording studio, editing and mixing often including music and sound effects. E-books, though, in their current form, are little more than reformatted Word documents. If they don't include illustrations (which sadly, most fiction these days doesn't), most formatting can be totally automated using the digital file submitted by the author. Furthermore, consumers are asked to lay out higher and higher amounts for single-purpose viewing devices - much more than MP3 players that can play most audio books. The new large format Kindle costs more for a monochrome display device than a consumer pays for a well-endowed color-capable computer that can be used for a myriad of activities. No wonder e-reader manufacturers are nervous about Apple's announced plans for a color tablet.

I hope Random House will draw on its experience with Audible and develop a more reasonable pricing structure, hopefully accompanied by device subsidies if device manufacturers cannot (or will not) come down on retail prices.

Now if Amazon could talk some sense into the movie studios and get them to be more reasonable in their video-on-demand prices. I bought a Roku box to enable me to watch movies from my instant Netflix queue on my big screen TV and was excited when I got an e-mail announcing that the device would now support Amazon's video on demand service. But then I went up on Amazon and saw that they wanted almost as much to purchase a digital download - with no guarantee that the title would remain available indefinitely for download - than a hard copy DVD. Only a $2 difference? Give me a break! I am so anxious for video-on-demand to evolve into its full potential that I even went through the device authorization procedure but when it came down to it I just couldn't force myself to go through with the purchase, knowing if I waited a couple of months I could buy the regular DVD for just a little more than half the price.

Of course ultimately, what I would like to see is a slightly higher Netflix subscription that offers ALL of their titles digtitally available on demand. Surely it would be more profitable than having to maintain shipping centers and DVD inventories. Then if cable producers would offer their programming ala carte, we'd truly be in entertainment heaven!

Monday, May 04, 2009

Newspaper lifelines - large format e-readers and new subscription paradigms.

I was pleased to see that larger format e-readers may become available soon from Amazon as well as Apple and even the Hearst publishing empire. Although I appreciate the ability to pack a lot of reading material, music, and video content with me in the palm of my hand when I travel, I vastly prefer to read material in a larger format when I can relax at home. I'm also glad the device makers are painfully aware that widespread adoption of such devices will probably not begin until they break the color barrier. Users have become conditioned to high quality color graphics in most of the media they consume (me included) so have a tendency to balk at mere black and white offerings. We tend to think of the "Farmer Gray" days as the 1950s!

As for paying for subscriptions, I have no problem with that for high quality content, as long as the advertising to content ratio is not too high. I apply the same rule to my print subscriptions now. As a technology professional I am often offered free subscriptions to a plethora of technical magazines but so many amount to little more than an ad venue with content limited to canned PR releases. If that amounts to most of the content, I pass. In fact, at times I have had to almost argue with publishing sales people on the phone who insist that I "need" their publication to stay on top of technology developments when I refuse their offer for a free subscription.

I hope the publishing companies are thinking about what the shift in media can mean to their old traditional business model though. For example, if I see an article in an online subscription publication that is particularly interesting, I would like to share it with my friends without them having to have a full subscription. The frequency of article sharing could be managed by account settings.

Publishing companies should also hire someone to track news related to that month's feature articles and send out email updates to their subscriber base. This would be considered a value added service that would help justify payment for a subscription. This feature could include the ability for subscribers themselves to suggest other URLs for additional information about feature article topics, adding a social networking aspect to the subscription experience. In fact creating a social network environment for subscribers could prove attractive as well.

They say Amazon is working on a Kindle-like large format device. I hope device designers will keep in mind that many of us in rural areas can't get reliable cell phone signals at home, especially those in the "Empty Quarter" (that was what it was called at an Economic Development conference I went to years ago!) of the Great Basin (the high desert areas of Oregon, Idaho, Utah, Nevada and northeastern California) or the upper Rocky Mountain regions of Colorado, Wyoming and Montana. So, we need a device that has cell phone, USB, and WIFI download capability - similar to an iPhone with sort of an iNews version of iTunes.

Maybe this is what Apple is currently working on.

Then there is the looming presence of Apple, which seems likely to introduce a multipurpose tablet computer later this year, according to rumor and speculation by Apple observers. Such a device, with a screen that is said to be about three or four times as large as the iPhone’s, would have an LCD screen capable of showing rich color and video, and people could use it to browse the Web.

Even if such a device has limited battery life and strains readers’ eyes, for many buyers it could be a more appealing alternative to devices dedicated to reading books, newspapers and magazines.

Such a Web-connected tablet would also pose a problem for any print publications that hope to try charging for content that is tailored for mobile devices, since users could just visit their free sites on the Internet. One way to counter this might be to borrow from the cellphone model and offer specialized reading devices free or at a discount to people who commit to, say, a one-year subscription. - More: New York Times

I definitely like the idea of a "free" device with one or two year subscription like a cell phone. Paying full bore for my iPhone was painful - especially considering that I was required to pay an additional $30 per month for data access whether I use the web with my iPhone or not (which I hardly ever do - its like using excruciatingly slow dial up if you are not near a WIFI hotspot!). They say that is the reason Apple's iPhone sales have not been as strong as they expected.