Recent developments in the world of publishing, clearly demonstrate yet again that the primary objective of the content industry is to make a tidy profit. Nothing wrong with that, if you ask me; however, it usually turns into a rather sticky mess when that pursuit is clouded by accusations of skulduggery, conspiracy and outright price fixing.
I refer to a recent lawsuit filed by the US Justice Department against Apple and 5 major book publishers, over allegations of conspiracy, collusion and price fixing. According to this article from the Wall Street Journal, it could change the course of a rapidly expanding eBook publishing industry. But how so, you ask?
Well, it is really down to opposing business models, (i.e. the so called agency versus wholesale approach to eBook pricing), where, on one hand, an agent such as Apple will allow publishers to set their own price, and take a cut (in this case 30%) from sales on its iBook platform. On the other hand, a wholesale pricing model is one where the retailer (e.g. Amazon or Barnes and Noble) sets the price for eBooks and can effectively apply discounts as they wish (even if it means selling eBooks at a loss). Obviously, this latter scenario leaves publishers with less control over prices, and consequently profits, hence the opportunity to take advantage of a more favourable option could not fail to be attractive.
However, the question remains about the value proposition for consumers, who are themselves increasingly embracing eBooks for its convenience, ease of use and, perhaps more to the point, a huge potential for significantly lower prices overall. One might argue that eBooks do not require paper, glue, physical stores / shelf space or any significant distribution / transport costs, therefore they really shouldn’t be priced anything close to their physical versions. Surely, this quest to keep prices high can only be in favour of publishers, and their bottom lines, mustn’t it?
So what are the key arguments / rationale for keeping eBook prices artificially high? Perhaps the main reason has to do with high operating costs incurred by large publishers, as well as the need to maintain a powerful marketing and promotional machinery. Furthermore, it may also be argued that lower cost eBooks are somehow cannibalising the margins to be had from physical books. Whatever the case, it seems publishers stand to lose out if they don’t do something (innovative?) to counter the effects of change.
Hmm, now where have we seen this before, (and how did that industry cope / survive)? Ah, yes, the music industry went through something similar, except they chose to sue those pirates and freeloaders (aka the people formerly known as customers), that supposedly ‘stole their bottom line’. However, they seem to have found other ways to complement dwindling revenue streams, e.g. via ticket sales for live performances. By the way, death may no longer prevent artistes from performing before a live audience, assuming this deceased artist hologram idea catches on.
Luckily the book publishing industry don’t have to take quite so drastic a measure, especially as it has been shown time and again that new media formats and channels do not necessarily mean the complete demise of existing ones. This is arguably the perfect time for publishers to embrace even bolder / more innovative thinking to discover complementary initiatives that will bolster an industry under threat, real or imagined. They must observe and capitalise on consumer trends and emergent user behaviours. For example, the sheer capacity, variety and anonymity (i.e. no tell tale covers) of reading material to be found on your average eBook reader means that users now carry, consume and explore hitherto unthinkable (at least in public) subject matter. The current boom in romantic erotica sub-genre, aka Mommy Porn, is an interesting case in point.
Perhaps even more fundamental, is a need to seriously consider the verboten idea of evolving copyright into something much better aligned with the digital age. Unfortunately, that will be a tough sell to the publishing industry, if this report of a speech given by HarperCollins International Chief Exec, at the London Book Fair, is anything to go by. According to the article, “others in the book trade, including the Publishers Association” have criticised the recent Hargreaves Review of Copyright, which some feel could weaken the current copyright regime. As you may have gathered by now, I don’t subscribe to that point of view, but then I am only an author and may not see things in quite the same light as a successful publisher might.
In many ways, this whole situation could be seen as a remix of circumstances surrounding the birth of copyright. In 1710, the printing industry lobbied for creation of a law to govern the rights to print or reproduce works (now known as the Statute of Anne), in order to protect their interests and the authors / creators of said works. Copyright is essentially an artificial system, which routinely needs a degree of manual intervention whenever new and disruptive content technology or consumer trend emerges. That, in my opinion, is the fundamental flaw with copyright which any revision thereof must try to address. In an age of multi-platform, multi-channel and multi-format publishing, there really is no place (or time) for manual intervention each time a new and disruptive trend, challenge and opportunity presents itself. I for one would be more than happy to attempt to demonstrate just how such a system could work (based on real copyright content), but then I would probably need a hefty six figure advance from some far-sighted multi-publisher to make it happen. Who says there is no future for publishing?
It’s not often one gets an opportunity to attend three compelling events in one evening, but as luck would have it, the stars were aligned and I managed to do just that in a mad scramble from one venue to the next. Such are the benefits of living and working in a great city like London, but less so were the thorny issues under debate at each of the three events.
It took a minute to digest and process various messages from these events, but as promised / tweeted, below are three key points, take-away or opinions:
1. Publishers must embrace multi-platform models as business-as-usual (Publishing Expo 2011)
It was standing room only at the Multi-Publishing & Digital Strategies Theatre in a packed final session on “the future of multi-platform publishing”. According to one of the speakers, “the bleeding edge of multi-publishing model is one third print, one third digital, and one third live events.”
My Comment – Never mind multi-platform, it sounds more like a multi-model approach will be necessary for the entire creative industry, in my opinion.
2. But how do you value Intellectual Property? (IP For Innovation And Growth)
This has to be one of the thorniest questions for IP, because consistent and intelligent valuation of IP is at best confusing, or non-existent. IP is really just an economic mechanism, so a fundamental attribute should be the ability to establish an agreed value for the property in question, but this presents a severe problem because current valuation are highly subjective and always dependent on the buyer or seller’s points-of-view. Throw in the ability to effortlessly copy and distribute works via digital technology, and you’ll get the somewhat muddy picture.
My Comment – There is a clear opportunity here to create a dynamic and transparent IP valuation model or approach, which can produce the right valuation for IP, based on the buyer / seller relationship and context
3. And does a cash economy make IP any less relevant? (Private Equity Africa)
Apparently, it’s all about cash in Africa which leads me to wonder if and how global IP will work in a cash economy. This event does not immediately appear to have much in common with the others on IP or the creative industry, and even one of the speakers afterwards, said he considered Intellectual Property in Africa to be, and I quote, “nothing more than intellectual masturbation”. However, when you think of the thriving industry and market for music and filmed entertainment (e.g. Nigeria’s Nollywood), it is easy to see how IP can provide an important boost to developing economies. Therefore, even if there is little point in enforcing IP Rights locally, all developing economies must be interested and involved in any discussion relating to global IP rights and digital distribution / piracy.
My Comment – when it comes to content and IP, it is a level playing field as all jurisdictions and stakeholders struggle with the impact of digital technology
Overall, one clear trend I can see emerging from the above is that such tough questions / issues will need even tougher answers and resolutions to overcome. For example, they may well be pointing to the same underlying problem – i.e. a flawed and inflexible concept of economic value – but perhaps that is rightly the subject of another blog and blogger.
Certainly seems like there’s a lot of change in the air, what with the threat of Apple’s latest toy to tablet PC dominance, or the challenge of streaming music services, and even news of Swans getting divorced! I wonder what’s next, and how will it affect the creative industries of music, film and publishing?
First of all, there were lots of opinions and perspectives on the ever changing digital media landscape at the just concluded MIDEM conference in Cannes, including:
- Perhaps as a sign of shifting attitudes, at least one major artiste and the keynote speaker did not offer the usual tirade against file-sharing, but actually appeared somewhat in favour of it as a “taste test” by end-users, (which roughly translates into something along the lines of “good quality works will be successful in spite of file-sharing”).
- There was also an interesting discourse on media and cultural change in an interview with the “Cult of the Amateur” author, Andrew Keen, who slated the amount of amateur rubbish being put out there in the name of reality shows and user generated garbage, erm content.
- Forrester’s Mark Mulligan provided some great insight on the state of the music industry and various emerging trends, challenges and opportunities, speaking of which, one panel session speaker actuallylikened mobile music apps to babies in that “they’re easy to conceive but hard to deliver!”.
But please don’t think this is just about the music industry, because here is an equally damning insight into the book publishing industry by Phil Cooke, a publisher and self proclaimed change catalyst. Interestingly, most of these observations were covered in Lawrence Lessig’s book, Remix, which I recently reviewed here for the BCS. It would seem that music, publishing and other creative industries are just playing catch-up with key messages from this book – which claims, among other things, that the future creative and commercial landscape will have room for sharing, charging and otherwise hybrid business models.
However, one dire trend that looks set to continue is the involvement of lawyers in the tensions between rights-owners and file-sharing fans or pirates, depending on your point of view. Hmmm, I wonder how much the lawyers charged those Swans for their quickie divorce! But, on a serious note, it might be easy to blame lawyers for any number of things, given they stand to make their fees one way or another regardless of outcomes, however the real problem is that, despite ongoing efforts to find a lasting solution, today’s Intellectual Property laws are still hopelessly unable to cater for digital content, Internet distribution and emerging consumer usage patterns. Period.
Note: This post was previously published on my BCS DRM Blog, where you can find the original post, and reader comments, in the archives.
This is really a sequel to a post written for end of last year (which can now be found here), about the likely direction of things to come, and the perils of following the crowd / herd mentality, particularly for those in the creative industries. Read on for some key messages and evidence in support of those observations:
1. Privacy? Fuggedaboudit – According to Facebook founder, Mark Zuckerberg, “Privacy is no longer a social norm”. Yet people remain fixated with this fantasy that they can stay private online, as perhaps encouraged by such guides as this NY Times article on 5 easy steps to stay safe and private on Facebook!
2. Opening up protected video – The Digital Entertainment Content Ecosystem (DECE) has come up with a way to enable playing of protected content on various compatible devices. So is this really Interoperable DRM at last? Maybe, but perhaps it might just be a little too late. A good explanation of this move, and its implication, is available on the Copyright & Technology blog. In any event, one key question remains i.e.: what happens to your protected digital content if / when the provider goes bust?
3. How to make the same mistake twice, or not – Moves by the publishing industry to protect revenue by delaying ebook releases smacks of a similar pattern of mistakes made by the music industry over digital content. According to this excellent Forrester blog, “there are better ways to Window eBooks” and it would be prudent for publishers to take heed.
4. The future is Mobile – Contextual applications enabled by mobile / geo-location services will be the killer proposition, no question. Just ask Google.
There you go. Comments welcome.
Note: This post was previously published on my BCS DRM Blog, where you can find the original post, and reader comments, in the archives.