December 15, 2008

The actual value of the written word


The Dear Author blog documents an attempt by a major New York publisher (Macmillan) to suppress trends in ebook pricing by charging exorbitant amounts (hardcover prices) for ebook versions.

When Georges Santayana said, "Those who do not study history are doomed to repeat it," he was referring to history, not stuff that happened last week. The lessons learned by the music industry--if they've been learned at all--are apparently too fresh to be heeded.

I believe that at the heart of the music piracy problem was the realization among the first of the "wired" baby boomers that they'd been paying over and over for the same products. I'm old enough to have owned exactly the same tracks on vinyl, cassette, CD, and MP3.

All legitimately paid for, I should add. But once you instill in your customer base the belief that they're being ripped off--literally sold the same bill of goods over and over--the guilt-free impulse to rip you off in turn increases and spreads exponentially.

Publishers would rather complain about piracy than address a lousy business model. For example, despite Japan's inefficient retail sector and higher fixed costs, paperbacks printed and sold in Japan are often cheaper than in the U.S., with better binding quality.

Long before ebooks, something was seriously out of whack with the U.S. book business.

Take the problem of returns. In Japan, the author doesn't get an advance but is paid a royalty on the number of books printed. Think about how that one difference would affect the whole economic thinking of authors, agents and publishers.

(Robert Whiting's comments on getting published in the U.S. and Japan can be found in the August 2006 issue of Number One Shimbun, the newsletter of the Foreign Correspondents' Club of Japan, available as a PDF download here.)

The digital revolution forces publishers to come to terms with the actual value of the written word or recorded note. The music industry made a ton of money thanks to a flurry of format shifts--not new ideas--and now Hollywood is doing the same thing.

And like real estate speculators riding a bubble, they thought the ride would never end. Seth Godin sums up the problem succinctly:

Businesses live in ecosystems. A series of rules and assumptions that, taken together, make a thriving mechanism . . . We get stuck because we believe that the rules of our ecosystem are permanent and transferable. In fact, they are almost always temporary and rarely transferable.

Because "the rules of this new business didn't match the rules of the existing business," publishers still think they're in the paper products business, not in the storytelling and information business. Until they realize otherwise, the situation isn't likely to change.

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