Tuesday, August 05, 2014

Hear, See and Speak - No Used eBooks?

How do industry bodies and major players respond to new entrants who offer something different? Do they go out to squash them in order to maintain the status quo? Do they attempt to reign them in and restrict their influence and impact? Do they invest in them and work with them to create new channels, new markets and new revenues? Some believe that many stick their head in the dark and wish them to go away?

This last week we have all read the Amazon Press Release over their ongoing battles with Hachette and one of the most relevant statements came right at the beginning in their reflections of the current consumer offer.  

A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there's no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market -- e-books cannot be resold as used books. E-books can be and should be less expensive.

The somewhat throwaway line that caught our attention was that, ‘there is no secondary market ebooks cannot be resold as used books.’ With the revelations earlier this year about Amazon’s used ebook patent, we know that it has had its eye on this opportunity, but that the first sale doctrine is maybe a battle too far today. But used ebooks are almost certainly to happen and the change will be either driven by consumer demand or other start-ups who are prepared to push the envelope. It took the likes of Waterstones, Dillons and others some three years from starting to discount in 1991, to the collapse of the Net Book Agreement in 1994. It took years of patient lobbying for the B&Q and other large UK retailers to open up Sunday trading. It took years to change UK licencing laws. Things change in time and they change in favour of public demand.

Last month a judge for the District Court of Amsterdam ruled that Dutch used ebook reseller, Tom Kabinet can continue to operate while it is being sued in court by the Dutch Trade Publishers Association. Tom Kabinet enables users to resell DRM free and digital watermarked ebooks.
The Tom Kabinet site takes a 10% commission on all ebooks sold and have offered to pay a 5% royalty on all sales to authors for each ebook sold on their marketplace.

However, Tom Kabinet like the used l digital music service ReDigi are also up against EU legislators and a strong lobby. Although ReDigi is still in operation today, and have been awarded a patent earlier this year for their marketplace platform they have had to adapt their service in light of losing legal battles.

When Napster first threatened the music production business, the industry fought back through the courts and set out to shut down the new file sharers. The propaganda PR and lobby machines were wound up and the sound bites and messages broadcast. The political lobbing started as the industry  set out to shut down the new file sharers before they could establish themselves. The problem was Napster was free and consumers made it go viral.

The music industry won its battle with Napster, but then had others to deal with who had watched the Napster battle and learned new tactics. Although the music business kept winning they also kept losing and by the time they tried to get the Napster brand under their umbrella it was too late and the stable door was wide open.

The music streamers came next. First there was Spiral Frog who failed to deliver, but they were followed by Spotify and Pandora who did. The big music producers had learned some lessons and bought into the service but also tried to tame it and minimise the risk to their model. However they failed to understand that the threat wasn’t free, nor was it sharing, but it was about the whole ownership ethos that they had profited from for decades. The streaming services asked why you needed to buy when you could access on demand, from anywhere at anytime. Spotify with its 24 million users, of which 6 million are subscribers and the other services started to redefined ownership and how we paid for and listened to music.

It’s amazing how long the music industry took to include downloads into its charts and that they have only just opened the door to include streamed music. Today 228 million downloads happen across the various services every week in the UK and that is up from 142 million in 2013 and 67 million in 2012 (Official Charts Company). The maths of how many tracks on average people download a week, is not hard to calculate and is significant. Some 41.5% of singles are streamed and 12% of the current top ten are streamed. The UK alone has delivered a staggering 18.5 billion streams and in 2013 overall market revenues from streaming pasted the $1 billion mark for the first time. Interestingly, while streaming has experienced explosive growth the overall revenues of the global music market have only increased by a mere 4.3% (IFPY and Spotify).

We wonder how long it will be before they fully recognise the impact YouTube has made and that some suggest that more kids now watch their music today than listen to it. Interestingly, the success of streaming is negating the demand for used digital sales and in a market where growth is clearly in a new ownership model enabling secondary sales makes sense and will generate further income for artists.

Change will happen and denying used digital media a second life and sale will increasingly be seen as wrong and an untenable position by the people that matter the consumers. Denying a second income opportunity also impact creators at a time when their own first sale income is increasingly not meeting their expectations and the pool is being shared with even more fish.

Unlike music, ebook consumption is relatively low and prices relatively high and this will reduce some of the appeal of on demand ebook subscription services. The book market will remain a mixed economy for the foreseeable future with physical, digital, see through and subscription offers.  Perhaps it time that publishers work with new stat-ups to create and support a thought through and complimentary used ebook market and not wait for the collapse of the restrictions they have today and the chance that the result may not be favourable. 


Inkling said...

Quote: "That is unjustifiably high for an e-book."

Given that the context is merely the cost of printing and distributing print books, That remark hints at just how callous Amazon's corporate executives are about all the other costs of creating and selling a book. Amazon's problem isn't what it doesn't know about writing and publishing, but that it doesn't know what it doesn't know and apparently doesn't care,

Keep in mind the costs involved here. Amazon's costs in selling an ebook is mere pennies. Its profit there is far higher than that for print books and its risks far less. More ebook sales for Amazon always means more profits, whatever price that ebook sells for.

The same is not true for publishers. For publishers, books and ebooks require a substantial investment. They don't have Amazon's pennies per sale business model. They may need a price that is $15 to $20 or more simply to recoup their costs along with the costs of books that do lose money.

Not to put too fine a point on it, Amazon is screwed up. Its executives understand no perspective but their own and care about little but their own market share and the large ebook profits that are being laundered to create that growing market share (i.e. subsidizing the sale of Kindles).

That remark is also a clue to Amazon real attitude toward authors. Dismissing their place in the benefitting income that comes from print books sales isn't that removed from dismissing their place in the income derived from the sale of ebooks.


One remark about used ebooks (and music). I suspect the first battle will come over inheriting a digital estate that might include thousands of iTunes songs or Kindle books. A son or daughter is likely to go to court to acquire a father's digital collections.

And what can be inherited, logic suggests, can also be sold as part of a probated will. In fact, if I were a probate lawyers, i'd be writing 'gets my iTunes music collection" and "gets my Kindle ebook collection" clauses into wills.

Martyn Daniels said...

i don't agree with your forthright views on Amazon not undertsanding publishing or writing and believe they probably know and understand more than many as they cover many channels, sectors have introduced offers others have failed to do since they wrapped themselves into the NBA in '64 and failed to ajust to when t collapsed.
Someone said to me last week that Amazon had done little for the market and frankly i was shocked. It was like hearing that sketch in The Life of Brian when they ask 'what have the Romans ever done for us.'
They then claimed that somebody else would have done it anyway and i was reminded of the saying, 'if you lock 100 monkeys in a room for a 100 years they still would not create the works of Shakespeare.'
The question of ownership is very important and one i am working into an article on with the news that Sony ereaders are going and no doubt may soon to be followed by another.