Sometimes you encounter an idea that seems so obvious it’s amazing that nobody has thought of it before. That’s how Yoav Lorch feels about Total Boox, his intriguing new reading platform that is about to be unveiled this March. The idea is simple: instead of paying up front for a book you may never even look at, you download it for free and then only pay according to how much of the book you read.
This sort of system would certainly make me more likely to abandon a book if I don’t like it!
But it seems like a potential hassle administratively—I mean, just how will that work technologically? How often does the device report back to the company (i.e. is it possible to finish a book and then delete the file before it registers that the entire book was read)? What if the price goes up while you’re reading something?
And the fact that, in theory, they’ll know exactly what you’re reading and when creeps me out a bit.
In all the discussions about why book publishers demand that eBooks should be $15 and not $10, they say it is because they cannot afford to sell books at $10. That is, they cannot cover their legacy cost models on that number. Right. Which is why you must rebuild your cost structure for a digital goods industry with far lower prices. You start by paying your top execs much less than millions of dollars a year. Then you move your offices out of fancy midtown office buildings. Why should eBooks cost $15? Amazon is far more of an expert on optimal book pricing. They have far more data than publishers, since they experiment with pricing hundreds of thousands of times a day across millions of titles. Amazon can tell you the exact price for a title that will produce the most number of copies sold. Amazon is pretty sure that number is closer to $10 than to $15. Yes, they want to sell more Kindles. And they believe that lower eBook prices mean more eBooks sold which means more demand for Kindle. The negative coverage of Amazon is centered on them selling eBooks below cost in order to reach the $10 price point. But that is a function of publishers setting the cost higher than $10. If the profit-maximizing price for an eBook is $10, then publishers must adapt to set a wholesale price lower than that, even if it means your legacy cost structure doesn’t allow it. And that’s the rub. [By the way, as publishers continue to resist this market force, new “publisher” models are appearing and will replace the traditional functions of publishers with more digital-friendly models.]
…as the growth in ebook demand continues to increase, access to legitimately free ebooks is decreasing. The reason is that the Big Six publishers are fucking stupid. If you want to borrow an ebook from one of the Big Six, your ability to get it from the library is down to almost zero.
Now, what happens when you take all the ereader and tablet and laptop users who have been behaving like good citizens by borrowing their ebooks from the library and you cut off their legal supply? They’re going to get their fixes from the Dark Side of the internet. Or from each other.
Some suggest that higher e-book license pricing is fair because, unlike physical books, e-books will not wear out. (That underlying assumption is not necessarily true. I have books on my bookshelf that are over fifty years old. By comparison, whether I or anyone else will still be reading from my e-book collection on a Kindle or Kindle app in fifty years remains to be seen.)
More to the point, the longevity of a public library book is related more to a book’s enduring popularity than the integrity of its binding. E-books could be far more efficient economically than physical books. But, alas, currently they are not. Libraries cannot resell e-books and cannot pay less for variable, limited term licenses. So libraries are in a continual state of buying too few copies of a popular title in the short term and too many in the long term.
Is the doubling of prices fair? It would be if e-books were twice as cost-efficient as a physical book, either because they could be loaned to two or more people at once, or because the e-book is useful to the library for twice as long. In other words, price alone is not the right way to think of the value to a public library of an e-book or any item a library acquires for the benefit of its patrons. A better measure of value is the price per circulation.
This last point is the big IF. With its move, Random House has made clear what it wants out of a new relationship with libraries- more cash per copy. In return, libraries need to demonstrate what they expect for their money. What should libraries require from their premium ebooks in exchange for premium prices? Here’s my list:
- Portability - the ebooks shouldn’t be locked to the distribution platform of a particular vendor; most libraries have existed longer than Overdrive, Adobe, Apple and Amazon combined and libraries would like to continue existing after those companies have been long forgotten. Their ebooks should persist as well.
- Transferability - libraries can make their ebook assets go a lot farther if they can be traded to other libraries or library consortia.
- Privacy - libraries should never be forced to expose their users to the prying eyes of anybody!
- Accessibility - libraries will increasingly be relied on to provide text-to-speech and other accessibility technologies to users who need them.
- Integrability - libraries don’t want to be sources of friction, they want to provide integrated information environments. Library systems will increasingly provide capability such as annotation, discussion, advanced discovery tools and social interaction; they won’t be able to do that if their ebooks are walled off behind third party DRM.
This messaging is all about the revenue Random feels they lose by allowing readers to borrow books for free, instead of purchasing books at high agency prices. Presumably, trade books priced at very high levels compensate for lost income. But higher prices means that many libraries will have to cut back their book acquisition, further restricting access to digital books, which is an obvious publisher goal of this strategy. Increasingly, the most popular titles are not going to be available at any library, and those that are, will be far more available in rich communities than poor ones.
On Wednesday, Oberhausen bought Eisenhower in War and Peace by Jean Edward Smith for $40 via OverDrive. On Thursday, the price was $120. The print version of the book, with the library’s discount, is a little over $20 (it retails at $40). For Blessings by Anna Quindlen the ebook price went from $15 to $45.
“We’re happy they are continuing to sell to libraries, very happy,” Oberhausen said. “But this price increase is really, really hard,” she said.
Random House, which first announced the price hike (without details) on February 2 when it reaffirmed its commitment to the library ebook market, provided the following breakdown for what it is now charging library ebook distributors:
- Titles available in print as new hardcovers: $65- $85
- Titles available for several months, or generally timed to paperback release: $25-$50
- New children’s titles available in print as hardcovers: $35-$85
- Older children’s titles and children’s paperbacks: $25-$45
Amazon.com removed more than 4,000 e-books from its site this week after it tried and failed to get them more cheaply, a muscle-flexing move that is likely to have significant repercussions for the digital book market.
The dispute quickly reignited fears in some corners about the power Amazon enjoys as the shift to e-books accelerates. Amazon is dominant in both the physical and electronic markets for books.