The End Of Ownership?

e-Books aren’t owned, they’re licensed.  There are various reasons for this policy (on the part of publishers) which has some serious consequences for both consumers and culture.  On the consumer side, it enables device lock-in and makes e-books more ephemeral (your device could die or your vendor could stop supporting it).  On the culture side, it largely erases books from physical history and diminishes the creation of “hybrid value” brought to books by readers and communities.

In most cases, when you buy an e-book, you are actually getting a license to read it, not genuine ownership.  This is the case with nearly all e-book distributors, including Amazon and Barnes & Noble.  Google, the coy elephant debutante of the e-book world, has been careful in their formal language to talk about “providing access” to books, rather than selling them, suggesting that their cross-platform cloud-based solution will take this even further.

There are many reasons for the trend away from ownership:

• publishers think digital copyrights are barely worth the paper they aren’t written on, believing licenses (together with DRM) give them more protection from revenue loss through piracy and fair use;
• special restrictions are more easily included in licenses (e.g. no resale, no robo-read-aloud, device limitations, etc);
• those restrictions can give more flexibility in pricing models, which is how publishers recover investment in a largely speculative business;
• licensing opens the way for other revenue models, like subscriptions, for publishers and distributors to explore;
• licensing is the norm in the software world and the rest of the digital media world, partially to restrict rights for consumers and liability for vendors.

It would be nice to believe that ownership and licensing are equivalent for consumers, since both come down to “you pay and you read”.  Unfortunately, it’s not the case.  Some of the consumer consequences include:

• vendor lock-in: I can’t read my Kindle book on my Nook (or my Linux netbook);
• 1984 redux: Amazon could (ironically) delete copies of 1984 from buyers’ digital shelves because those buyers (probably) lived in nations where they had fewer rights than people in other places (1984 is out of copyright in some parts of the world but not in the US, due to the Mickey Mouse Protection Act);
• no sharing: I can’t lend my e-book to a friend or family member; even the Nook’s much-touted sharing features are extremely limited (you can share a book exactly once and only if the publisher allows);
• ephemerality: if a vendor goes away (either entirely or in part) and your e-book is under DRM, you will have “access” to a very random string of bytes (of course, Google and Adobe and Amazon are too big to fail, right?)

Given these issues for the consumer, I’m surprised that I buy e-books in the volume that I do.  But the convenience is compelling (a roomful of books in my briefcase) and I’m gambling that the market will drive some of the deficits away while grandfathering in my digital investment to date.  But the end of ownership has consequences for intellectual culture that are more serious, especially the diminishing of intellectual history and hybrid value.

Book ownership is one foundation of intellectual history for both individuals and the culture.  The books on our shelves constitute a history of our learning and thinking; our own shelves can yield reflection, insight, and inspiration; browsing someone else’s shelves can offer us a glimpse of their minds.  Though browsing a digital shelf might give the same opportunities (or potentially better ones!) for reflection and disclosure, their reliance on cloud-based data could make that impossible.  Repressive regimes make a big deal out of burning books as a way to cement their domination, and the end of ownership will make that even easier (with a reduced carbon footprint, of course).

In his 2009 op-ed piece defending the controversial Google Books’ Settlement, Sergey Brin compared their effort to saving the Library of Alexandria.  Ironically, the swathes and swatches of knowledge which survived that ancient calamity did so because there were many copies (some translations) of the works in many places.  Ownership, physically at least, saved the day and gave us what survived.

A second casualty of the end of ownership is to the creation of hybrid value by readers.  When I buy a book, my rights to the book (to mark up, to lend, to hang on to, to be found by future generations, to resell), allow me to add value to that book for myself and my community.  A book that I can talk about with friends is more interesting than a book just for my personal enjoyment.  A book that I (or a student, child, or friend) can return to in 10 years has more value than is contained in the moment of reading.  The five musty volumes of “Tom Swift” I found in my grandparents’ attic touched me more than the complete set that I now have on my Kindle.  It’s not just about accessibility, but about personal relevance.

Hybrid value is what enables serious intellectual discourse.  Academic publication, with its lists and chains of references, was the original “remix culture” where the value of a contribution included the vitality of its intellectual offspring.  In principle, digital technologies should make this discourse even richer and, in the short term, technologies like “Google Scholar” have been boons to conversation and scholarship.  But the end of ownership puts the traditions of distributed intellectual stewardship at risk.

What to do?  Here are a few ideas and I’d love to hear more:

• embrace open and common standards for packaging (e.g. epub .vs. mobi/azw);
• insist on vendor-independent “survivable” DRM (often social DRM) or no DRM at all;
• create frameworks for capturing and sharing user added value (that’s what we’re trying to do with sBooks);
• personally backup your cloud-stored e-books in anticipation of either distributor disaster or improved openness.

What should an e-Book cost?

Pricing in the middle of a technological revolution is always tricky. Opportunities, expectations, tradition, fears, idealism, and greed all collide, trying to strike a new balance on a moving train.  The current situation with e-books is no exception.

Currently, the main e-book distributors/manufacturers (primarily Amazon), are pressuring and “bribing“  publishers to accept prices which will spur and spread adoption of the new technology.  In actively trying to make e-books more attractive to consumers, the ebook vendors have ended up striking a balance between consumers who say “copying is nearly free, so e-books should be really cheap” and publishers who say “production costs haven’t changed a bit, so e-books should be priced close to p-books (physical books).”  But the story isn’t so simple.

P-books (the artifacts) are also cheap. The cost of producing and distributing the physical book itself is generally a fraction of the sale price, with notable exceptions for art books and some text books.

Publishing is a hits-based business where a few titles do well and carry the rest of the titles which break even or lose money. Prices reflect the cost of producing books which didn’t end up doing well. The uncertainty of “what will do well” is compounded by some publishers’ laudable desire to contribute to the public good by disseminating important ideas and works even when the profit is marginal.

Publishers are (part of) society’s solution to Sturgeon’s Law that “90% of everything is crud.”  The cost of this social function is built into the cost of books.

Marketing costs can be significant as in most consumer goods where part of the price is paying to convince people to pay the price.

Book production costs are largely up front and by the time the book is out for sale, the publisher has already put down its money for editing, production, graphics, rights clearance, etc. This is part of the reason that books start out expensive and get cheaper as costs are recovered. Part of publisher’s beef with Amazon’s $9.99 best-sellers is that it disrupts this traditional method of cost recovery.

Production processes remain print-oriented and do not always taken advantage of technological improvements; the e-book price thus reflects the costs of p-book production. This isn’t because authors and publishers are technophobes (most aren’t), but because their key differentiator is the addition of editorial value (design, layout, organization) for which print is still the dominant paradigm.  It’s not clear how to make an e-book better and publishers differentiate by improving their product which currently needs to focus on ink on paper.

Most e-books are licensed rather than sold conferring substantially fewer rights than the sale of a p-book. This is based on both the e-book vendors attempt to lock in market share and the publishers’ desire to protect their IP.  On the other hand, licensing gives consumers good reason to pay less for e-books than p-books, and they will become more sensitive to the difference as vendor lock-in, DRM woes, and the other perils of licensing become more prominent.

Consumers don’t like paying for the same book twice, whether the second copy is an e-book, an audio-book, or a print book.  Author contracts often separate out these items, but consumers don’t generally see them this way.  (Adaptation rights are another story).  Paul Graham does a great job of discussing this issue (among others) in his essay on post medium publishing.

What should an ebook cost? Given this complicated mix of factors, the better question is how can the useful enterprise of publishing be sustained as information goes digital?

Despite the claims of the more radical digerati, publishers play an important role in the ecosystem of ideas and editorial added value is a very real thing.  ”Crowd-sourced” editorial value doesn’t generally improve content or address Sturgeon’s law because the law applies even more to crowd-sourced metadata, which is amplified by (what might be called) the “RTFA law” that for everyone who has read a published item, 10 people have opinions about it.

The challenge is that editorial value needs to be sustained while the underlying exchange mechanism (physical books for money) is disappearing.  Consequently, the question of e-book pricing is not just about setting a price for another format; it is about reimagining how the added value created by publishers is monetized in the digital domain.

I’m not going to answer that question here, but here are some starting places:

• develop e-centric production processes that inject editorial value into e-books directly, making them more valuable than p-books; think about how to make e-books beautiful;
• emphasize e-book “ownership” rather than “licensing” as people will pay more for something they own; find ways to add more benefits to ownership (access to ancillary materials, etc)
• consider bundling e-books (and even audio-books) with p-books, at no or nominal markup, as a way to spur adoption (and an alternative to $9.99 pricing);
• look at alternative models for timely recovery of production costs; for example, selling “book futures” or transparently dynamic pricing (so a hot item will go up (a little) in price and people know that ahead of time);
• explore alternative marketing strategies, including viral approaches or counter-intuitive ideas; e.g. suppose that every hardback included 4 discount coupons for the same title to pass on to friends (with barriers to abuse);
• commoditize the routine aspects of e-books (formats, distribution, DRM (if you have to)) so that competition is based on real editorial added value, not ephemeral accidents of technology.

The point of these ideas is not that they’re sure-fire prescriptions, but that the shift to digital will require a radical reinvention of publishing.  As a self-serving notes, the technologies and ideas that we’re developing at sbooks.net are designed to create an infrastructure for just these kinds of innovations.  If you’d like to try something, drop us a line!