The Stormy World of E-Books From Tea Cup To Hurricane in Five Years

The growing popularity of E-Books today can be seen in E-Book sales which are way, way up and the big brouhaha involving the Big Six Publishers, Apple and Amazon.  I’m sure everyone has heard of or read a story or two about the anti-trust suit the U. S. Justice Department has filed against Apple and some of the “Big Six” Publishers alleging that they colluded to raise the price of E-Books via something called “The Agency Model.”  Just a little bit of related background information regarding the situation! The term the “Big Six” Publishers refers, collectively, to the six largest traditional publishing houses in the U.S.: Simon & Schuster, Penguin, Macmillan, HarperCollins, Hatchette and Random House.  The DOJ suit has been filed against Apple and all of the Big Six Publishers sans Random House.  And the Agency Model is a departure from the traditional “Whole Sale” method of selling print books which allows book stores to purchase books from publishers and then set the sale price of the books – that is the bookstores set the price consumers actually pay for the books they sell. In contrast, the Agency Model has the publishers offering their E-Books for sale to booksellers at a set price and telling those booksellers that if they wish to sell their E-Books they have to agree to sell them at the price the publishers dictate or they cannot sell them.

Notably, three of the Big Six Publishers named in the suit, Simon & Schuster, Macmillan & HarperCollins have already settled the matter with DOJ. And with this story, like most stories, there are many sides to the situation. Apple and the Big Five Publishers involved in the suit are loudly proclaiming that A. They have not colluded to raise the price of E-Books and that B. The Agency Model is the best defense against the proverbial 300 pound gorilla in the room – the retail giant Amazon. Amazon introduced the first wildly successful E-Reader the Kindle in 2007. Amazon is seen as a big threat by the publishers because they initially used the “Whole Sale” model of selling E-Books and sold them at cost, or in some cases under cost, in order to spur sales of its Kindle E-Readers. And all of that was one thing in 2007 when E-Book sales accounted for less than 1% of the entire book market. However, this year E-Books sales are expected to rise to account for 40% of the entire book market thus the brouhaha between the DOJ, Apple, The Big Six Publishers and Amazon – as any issue over E-Books and E-Book prices isn’t about just a little bit of money now — it is about a lot of money. So the issue of E-Books and what is the best business model to use to benefit publishers, authors and customers has gone in a scant five years from being a storm in a tea cup to a major league hurricane. With that in mind another side of the E-Book equation, and one that the Big Six Publishers aren’t expounding loudly, is the fact A. their old print based business model is out of date and on the road towards becoming obsolete and B. They are in large part to blame for the partial monopoly they say Amazon has had in selling E-Books due to the DRM software they insist that any bookseller selling their E-Books incorporate into those E-Books. That the old print based way of doing business in the publishing world is changing isn’t surprising as the transformation of the preferred reading format from print to digital is indeed revolutionary – after all it has been more than five hundred years since Gutenberg perfected his printing press and the written word went from truly being written on parchment to being printed on paper and bound in printed books. So the fact that E-Books are taking off as a format and changing the way people read and thus purchase reading material is bound to upset the traditional way publishers have done business in the five hundred year print era. And DRM is, as a Gigaom article well stated late last year, a stick the publishers gave Amazon, Barnes and Noble, Sony and other E-Book sellers to beat them with. This is because the restrictive DRM software locks customers into an E-Book platform. What that means in plain American English is that if you own a Kindle or a Nook and buy E-Books for it from Amazon or Barnes & Noble you cannot read those E-Books on other devices – you can’t, for example, buy E-Books for your Kindle and then read those E-Books on your Nook or vice versa. So if you bought a Kindle in 2007 and have 45 E-Book on it you’re going to be hesitant to buy the new Glowlight Nook because you can’t transfer the E-Books you purchased from Amazon to your new Nook. And likewise if you bought a Nook and have purchased 30 E-Books for it and then decide you’d like to upgrade to a Kindle Fire you can’t read the Nook Books you previously purchased on your Kindle Fire. Thus the publishers have indeed given the E-Book sellers a stick to beat them with because most people are going to stick with buying E-Books from the company they started buying E-Books from to begin with so they can access all the E-Books they previously purchased.

And I will admit two things in relation; firstly, that if you have a tablet like the iPad you can download the Amazon and Barnes & Noble apps to it and access E-Books purchased through either store via that tablet through the appropriate app. But tablets cost more than dedicated E-Readers and you can’t access all E-Books from all vendors on all tablets. For example, the first e-reader I purchased was a Sony Reader and I have all the pre-2010 Dresden Files E-Books on it – I bought them but I can’t access them on my iPad because there isn’t a Sony Reader app for iPad.  And secondly, that there is software that allows you to unlock the DRM software and thus access the E-Books you’ve purchased so you can read them on any device you own; however, that is a legal grey area as according to the users agreements for E-Books from Amazon, Barnes & Noble and others you aren’t really buying an E-Book when you click that “Buy” button – you are instead buying a license to it – so technically you are not supposed to unlock the restrictive DRM software so you can read your Kindle Books on your Nook or your Nook Books on your Kindle.

And now for the links! You knew there’d be some for further reading – and here they are:

Here’s a link to a Chicago Tribune Editorial, titled Mystery solved! Artificially raising e-book prices simply to preserve an outdated business model is bad for the publishing business and readers that discusses the issues of the changing publishing landscape:

http://www.chicagotribune.com/news/opinion/ct-perspec-0426-ebooks-20120426,0,1423394.story

Here’s a link to a Huffington Post article, titled The Big Six Book Publishers Need to Innovate Like the Good Americans That They Are that in essence discusses how publishers need to change and offer creative and innovative E-Books to keep pace with the changing technology and consumer demands:

http://www.huffingtonpost.com/jesse-aizenstat/apple-publishing-lawsuit_b_1443304.html

Here’s a link to a Paid Content article, titled “Why I break DRM on e-books”: A publishing exec speaks out, which relays the experience of a publishing executive who thinks publishers should discontinue the restrictive practice of creating E-Books in the DRM format:

http://paidcontent.org/2012/04/24/breaking-drm-publishing-exec/

Here’s a link to a PEW Research article titled The Rise of E-Reading which discusses the growing popularity of E-Books and the corresponding rise in E-Book sales:

http://libraries.pewinternet.org/2012/04/04/the-rise-of-e-reading/

And as a final thought here’s a link to the December 2011 gigaom article titled How publishers gave Amazon a stick to beat them with which also discussed how the use of DRM software has backfired on publishers:

http://gigaom.com/2011/12/02/how-publishers-gave-amazon-a-stick-to-beat-them-with/

Linda R. 

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