Seems that e-books are the talk of internetville. But doesn’t all this talk sound familiar? Stop me if you’ve heard this one:
Sales are down! Piracy is destroying the industry! Lawsuits! Copyright!! DRM!!!
Oh yes, that’s right. We DID hear all this before. From the music industry. We heard it when the cassette tape format was invented. We heard it again when CD burners became a household item. And we got to hear it again when Napster + broadband internet connections made it possible to download an entire library of audio in minutes. And now that books are on the block, we get to hear it again from the publishing industry.
Until recently, artistic works such as music, video, pictures and stories required a medium to contain the art and transfer it from one person to another. That medium (Tape, DVD, CD, Book, etc…) had a production cost, a fixed physical expense that someone had to pay because that THING had to be manufactured, packaged, shipped, received, warehoused, and stocked.
For decades, we’ve been told how much it costs to make THINGS and to ship THINGS and to stock THINGS. And the cost of the THINGS keeps going up because of [fill in the blank].
But consumers were never buying the THING. People don’t really want a cassette tape. Or a book. Or a computer file for that matter. Consumers want the art that the medium carries. They want the story about Frodo and Sam. They want the song by Jagged Spiral. They want the picture of the pirate flag.
With the internet, the medium is all but removed from the product, leaving an intangible stream of ones and zeros. At long last, the products of art have been un-THING-ified. Virtualized.
One of the reasons consumers never wanted the medium in the first place was that it adds unnecessary cost to the art. Well, now the medium is almost completely gone, but where are the savings? We should be seeing prices dive for the virtual products, but the industries still try to justify the old prices.
This is a problem.
Why are e-books selling for $9 when the hardcover version is $13? Why in the Hells do they both list at $29?
Seriously. Twenty Nine American Dollars is the Publisher’s Suggested Retail Price for an E-Book? Is that supposed to make you think that $9 is a good deal?
I’m not the only one calling the publishing industry out on it’s bullshit. New York Times Bestselling Author Michael Stackpole lists plenty of other reasons publishers can’t justify their e-book pricing.
The industry holds the price up, because they won’t let go of the THING-ness of their product. They see every sale of a virtual product as a direct equivalent of the sale of a physical product. They think that every e-book sold is a physical book not sold.
Reality Check: Virtual products are not Physical products.
Truth is, the publishing industry should be thrilled to death about internet distribution. E-books may have a lower cost, but they have a far higher margin than their physical counterparts. If you don’t know what that means, ask an accountant. If you can’t make your business work with this new math, then hire a fucking accountant, and change your business to become profitable. The last thing you’d want to do is waste money on lawyers to fight the system. Ask the recording industry.
Why is the industry is down? Why aren’t people buying? Its simple. The product is virtualized, but the price is not.
Hey, it’s a free market, and it’s not against the law for businesses or even the entire industry to use business practices leading to their own obsolescence. It also isn’t against the law for them to starve to death because they refuse to adapt to the new technology.
But it looks like instead of taking advantage of the new technology they have available, the publishing industry has decided to try to force a square peg into a round hole. When that doesn’t work, they sulk and stare at the dwindling sales and blame…
Before you break out the flamethrowers, understand that I’m not endorsing piracy. Piracy is unlawful and unethical. Google is evil for doing it, and so is everyone else who does it.
But I am telling you that it is entirely true that (music/movie/ebook) piracy is NOT “killing” the (recording/motion-picture/publishing) industry. It wasn’t back when cassette tapes came out. It wasn’t back when the VCR was released to consumers. Author’s careers are not being destroyed because their books are available for free at the library, or borrowed from friends, or sold in used bookstores. Musicians aren’t going broke because their songs are played on terrestrial radio, spotify, and pandora at no cost to consumers.
The publishing industry is down because of many factors, but piracy is the last one to worry about. Wasting time on it is like rearranging deck chairs on a sinking ship. Keelhauling every pirate in the universe won’t fix what’s wrong with the publishing industry, the music industry, or any other industry, because Pirates are not a problem; they are a symptom.
Let’s look at the problem that causes piracy to become popular:
Free as in “E-Books”
Price a product high enough and two things will happen.
Sales of that product will decrease.
Some customers will find other ways to get the product for less.
The music industry already learned this, but let’s look at how it pertains to the publishing industry, by examining these ‘other ways’ to get the product for less than the listed price:
You can get every Dean Koontz book ever written for free… at the public library.
You can get every Stephanie Meyer book for free… by borrowing them from your niece.
You can buy the latest Stephen King novel for One Dollar… on Craigslist. (In hardcover.)
You can buy Scott Sigler’s latest for just a couple bucks… at the used bookstore.
And you can get the latest of pretty much any e-book for free… by pirating it via bittorrent.
Care to wager that library usage is way up? Borrowing/lending? But you won’t hear about the publishing industry claiming that libraries are “Destroying the industry” or trying pass laws banning the sharing of books. That would be just as laughable as saying that pirates are destroying the industry. It’s just one more way customers can get the product if they don’t think it’s worth the list price.
Am I suggesting that publishers are causing an increase in piracy by setting their prices too high? Yes. Just like they are “causing” people to check books out at the library, or borrowing them instead of purchasing them at the bookstore. Just like they are causing consumers to obtain the product through other methods, or pass on the product altogether.
Of course publishers have to fight piracy, or people will think they’re OK with it. But to declare that piracy is destroying the publishing industry is simply not true. Illegal? Yes. On the rise? No doubt. But look at the cause:
Your business plan sucks.
Here’s where you should be focusing. Not on pirates. Solve this problem, and piracy will diminish, along with borrowing/lending and library usage.
But, we doesn’t understand business or teh Interwebs!
I can already hear the publishing industry screaming at me that it can’t make a profit off what people are willing to pay for e-books. What’s more likely is that they’ve been lying to the world for years about the costs attributable to the media (packing, shipping, storage, etc
You can price your product whereever you like, but products are never worth more than people are willing to pay for them. It doesn’t matter how much they cost to make. Like I said, price it too high and people won’t buy it or they will find cheaper alternatives. Yes, including piracy.
This is the spot where I’d make a “buggy whip manufacturer” reference, but q.e.d. right?
The solution starts by acknowledging the real problem.
The solution starts with letting go of the paradigm of treating ones and zeros on the web as a physical product. Virtual products are not Physical products.
The solution starts when people stop crying that change is bad, fighting against the new tech, and trying to cover up bad business models by blaming pirates.
I suspect the solution requires a generation of post-internet people growing up with virtualized products; people who weren’t born into a system of 100% THINGS and then had to suffer the paradigm shift to the virtual. These people will have a more intimate understanding of this “problem”, and perhaps when they grow up to take over for the current regime, they will arrive at a more elegant solution – one that works to Everyone’s advantage.