DRM Is Not A Binary Decision

Consumer rights with respect of ebooks continue to be up in the air.

Only last week, Sony, the prime driver for Adobe’s ACS4 adoption back in 2006 said that they were coming back into the Digital Rights Management (DRM) market.

This week the Electronic Frontier Foundation announced they have commissioned the vocal DRM opponent, Cory Doctorow, to take on DRM technologies that they believe threaten security, privacy, and undermine public rights and innovation. The objective of their Apollo 1201 Project, is claimed to be "a mission to eradicate DRM in our lifetime."

Named after the US Apollo space prograame which took some 10 years to achieve what on its creation was viewed by many as an impossible mission.

What is certain is that the DRM that today inhibits consumers ability to transfer files between the various ‘walled gardens’, is going to either change radically, or be unilaterally be removed. It is hard to envisage what we have today as being sustainable over the next decade. The EFF mission goes past ebooks and is aimed at games, apps, video and all cases when DRM inhibits interoperability.

EFF raise the issue of Section 1201 of the Digital Millennium Copyright Act (DMCA) which outlaws the circumvention of copy controls. They agrue, ‘That ban was meant to deter illegal copying of software, but many companies have misused the law to chill competition, free speech, and fair use. Software is in all kinds of devices, from cars to coffee-makers to alarm clocks. If that software is locked down by DRM, tinkering, repairing, and re-using those devices can lead to legal risk.’

However as we have argued many times DRM is not and should not be a binary decision, where DRM is either on or off. We should look hard at the whole issue not just one element and we look at opportunities as well as threats.

One issue that must be addressed is provenance of ownership. In ebook terms look at this as an’ex libris’ stamp that can be traced back to the sale. It doesn’t have to be invisible and it may be open to abuse but if validated could revolutionise the ownership versus licence position and enable the first sale doctrine and resale of ebooks. This may be apporant to many in the trade but if watermarking soft DRM is not adopted then this door shuts whilst the stable door of DRM is potentially flung wide open. Some would say a very stupid situation.

The resale of ebooks is currently being fought out in the Dutch courts where Tom Kabinet is being challenged by the Dutch trade. Tom Kabinet which to resell ebooks and offer a service similar to ReDigi is try to establish in the music market. The court has instructed Tom Kabinet to close temporarily as not all titles can be proven to have full provenance of ownership. So the courts may take a different position if such a position could be established. The door is half open to the trade to create an opportunity, or to blindly slam shut and rejoice in potentially a false victory.

Judith Mariën, a Tom Kabinet’s founder, said that she believes that despite the court verdict, it is ‘good news’ in that the court ruled that the site’s basic business model is essentially legal.

What is important that the trade start to think consumer, think service, think and avoid closed doctrine and protectionism for the sake of protectionism.

Buy, Read and Then Return Your German eBook?

When we look at the Amazon dashboard we are often confused as why, or how, there can be the odd one ebook return. After all you can see everything you need on the screen, make your mind up and even sample the content before you buy, so why is there a refund. The official Amazon policy on returned eBooks is: 'Books you purchase from the Kindle Store are eligible for return and refund if we receive your request within 7 days of the date of purchase. Once a refund is issued, you will no longer have access to the book. To request a refund and return, visit the Manage Your Kindle page. Click the Actions tab for the title you'd like to return, and select "Return for refund"'

Some would suggest it reflects Amazon’s customer-friendly return policy and others that it’s easier for them to do than other services where the horse has literally bolted out the stable door and isn’t coming back. Some go as far as to suggest that it's like going into a restaurant, buying your meal, eating it and then getting your money back.

Barnes and Noble state that 'Once purchased, eBooks cannot be refunded.' and this also is the policy of Sony who state 'Please confirm all purchases before you complete them as all sales are final. There are no refunds for digital content.' Kobo Books doesn't provide information on their refund policy and consider all sales are final and once the services commences, customers cannot cancel the contract or payment. The iTunes Store Terms of Sale, also state that all purchases made on the iTunes Store are final. This policy matches Apple’s refund policies and provides protection for copyrighted materials.

However, we now read in eBook Fieber.de bout a change to German consumer law that potentially gives everyone a no quibble return window of up to 14 days on digital products. These new regulations come into effect in June this year and will require online retailers to offer refunds for ebooks and other digital downloads under an extended “right of withdrawal”.

So you buy the ebook, quickly read it, then return it within 14 days and you get your money back. The question is how will retailers stop abuse especially with respect to services which don’t synchronise activity post download?

Retailers will have the option of trying to get consumers to waive their right to a refund and no doubt the small print may be about to get even longer and smaller.

We had to look twice to ensure it wasn’t April 1st, or a spoof by the German equivalent to The Onion, but it appeared not, so someone in the German legislature must be just having a laugh.

How Do We Compete With Amazon?

The questions over what the industry can do, or not do about Amazon’s dominance, were raised yet again last week. It was first sparked first by Barnes and Noble's declining interest and funding of its Nook venture, then we had Sony shutting up it US store and handing the keys to Kobo as it battles with many greater corporate issues, then came Kobo itself filing objections to a Competition Bureau agreement impelling four of the biggest publishers operating in Canada to renegotiate their contracts with ebook retailers and finally by an article by Jane Friedman in which she raises the new Amazon policy to drop its escalating royalty rate of 50%-90% on ACX titles sold exclusively to a non-escalating 40% and audiobooks distributed non-exclusively to a non-escalating rate of 25%.

The Kobo filing claims that prior to the Canadian adoption of the agency model it had been ‘losing millions of dollars per year” under wholesale terms and also that when, ‘In the U.S., when Agency Lite was brought into existence, Kobo saw its net revenues steadily decline. Kobo has since stopped investing in marketing in the U.S., closed its office in Chicago and is focusing on other markets. Its market share and revenues are now negligible there.’

The result of these announcements was to further fuel the debate on Amazon and its dominance of the marketplace in both ebooks, audio and the huge US market. It would be wrong to believe that they can be beaten on discounts, as the only winner in a discount war is the consumer and the one with the strongest nerve and deepest pockets. Wishing for a white knight may have been feasible ten years ago, but today it isn’t going to happen and no start-up is going to suddenly change that. Apple is tied to its own Appleworld and will never venture out into Android land, Google, well they may have scanned everything that has been printed, but please be careful what you wish for. Amazon has effectively woven itself into the publishing DNA and is not just at the consumer end but right across the value chain.

We have harped on about books being different till the cows have come home, been milked and gone back to pasture. Yes, books are different, but interestingly ebooks aren’t that different and maybe that’s where we often loose the thread. We have now to accept that we don’t live in a book centric world and that the larger media and home entertainment umbrella has several component strands. Books is the baby among several stronger digital sectors and the networks today are the gorillas. 

We are fast becoming the one sector that still is DRM obsessed, sell through orientated and like King Cunute think we can stop the digital tide sweeping over us. Only last week it was widely reported that the majority of books on our shelves are unread and a recent US poll suggests that some 25% of US citizens didn't read a book in 2013. We continue to think ebooks are just books in a digital container and in doing so we kid ourselves, confuse many and potentially miss the opportunities.

Amazon watches, learns, then acts and changes consumer behaviour in ways that many in the book industry have failed to grasp. At a basic level they offer, used books, marketplace, KDP, Goodreads, Book Depository, publishing, audiobooks, self publishing, on-demand and that is without its other media and technology arms. Just think it was just a little old internet shop in 1995, which right up to the turn of the century many predicted it would not survive. This last week they started to roll out their fresh food delivery service in the US and it is widely predicted it will soon come to Europe and some are already trying to protect the giant supermarkets, who ironically, have been often demonised for their destruction of the High Street. 

The Amazon is a huge river that is fed by many large tributaries and supports many ecosystems and is very important to the ecology of the world. Amazon the business is now no different.  

We have to analyse and think differently just punching the biggest kid in the schoolyard is futile and you just get hurt. Amazon’s weakness and its strength maybe is that it acts as a lone wolf. Some would suggest that It often buys to take out the competitive threat, or like with its audio market purchases, sets out to quietly corner the market.

Yes publishers need to develop their own direct business,but apart from the few this isn’t going to be a major channel to market, is only aimed at the consumer end  and some would suggest is too little too late.  Niche players may carve out a healthy living but the minute they get on the radar they are themselves vulnerable.

So where is the answer? It is almost certainly not within the book market by itself. Amazon crosses other media sectors and is competing for a strong position in many but it is a lone wolf. It rarely hunts in packs. It may have a federal approach to those it owns, but it retains a tight strategy grip over them. Perhaps its strength is its weakness? Perhaps a joint ventures that cut across current boundaries and create something that is not easily replicated is the answer. Last week we wrote about Nubico and although that is not necessarily the answer it starts to point in the right direction. People belong to very large subscription bases who all face threats and an everchanging power struggle. Lining up the ducks may appear hard today but if they create something of real value then maybe, just maybe there is an alternative.

iRadio to iTunes

Apple broke the album mold and introduced us to not back to singles but tracks. It priced these at a point that was attractive and tied it t their iPod, iPhone, iMac, iPad and the rest is history. Now they plan to introduce iRadio to the family and hope to cash in on the move to music on demand.

So how will they fair against the established communities such as Pandora, Google’ ‘All Access’ and Spotify. Will they be able to lure customers away from subscription based services to what is reported to be an advertising paid model? Will consumers accept free with ads even if it links seamlessly to iTunes to buy?

The challenges Apple face in trying to close down on this low margin high volume business is not just consumers and attracting advertisers but also convincing the music producers and publishers that another low margin licence service will work for them. They already have disparity between existing revenue models and Apple are unlikely to want to pay the going rate for their licences. It is rumoured that Apple has signed a deal with the Warner and Universal for their music rights but has still to complete on the latter’s publishing rights. It has still to close a deal with Sony with a few days to go to their launch of the service. All deals are based on Apple paying a fee for the music rights and a separate fee for the publishing rights on music streamed. The interesting aspect is the ratio of the number of times an individual will play the same tune versus the cost to purchase. The user doesn’t care and may play a track 50 times but the meter is running and everyone else will be watching. In Apple’s case they have to either pull in the necessary advertising revenues or sales through iTunes to cover the royalties. But why would a user buy a track when they have unfettered access to play it for free?

The challenge for the music business is grappling with the clear migration from purchase to subscription or ad based licence deals. The music business has a track record of poor transition to new models and technology and only recently has started to see the new shoots of a digital recovery, but this has been on the purchase model which may not prevail as more become switch on to on-demand streamed services.

The challenge to Apple is that they are not leading this market and are coming relatively late to the party. They believe that the tie to iTunes will work in their favour but other will argue that it will further heighten the difference between owning all one’s library of music and merely playing it when you want to at a lower operational cost. 

When is it Sale and When is it a Licence?

All publishing and media sectors are constantly looking over their shoulders at not just the dynamically changing technology, but also the impact of digitisation on other sectors.

The music sector’s contract and reward system is once again being tested by artists who believe that they have not been correctly rewarded in the iTunes digital world. Twenty years ago, lawyers could not have imagined innovations such as the iTunes Music Store, and in certain contracts, it's now unclear which royalty rates apply. The issue is about the definition and associated reward of ‘sales’ versus ‘licences’. The norm is for digital sales to attract between 10 and 20% payment, whereas licence sales can attract higher payments up to 50%.

So the question is what is a sale and what is a licence?

Steve Jobs, once published a piece titled "Thoughts on Music," in which he principally talks about the move to DRM free (worth a read in itself). In the piece he says, ‘Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the 'big four' music companies; Universal, Sony BMG, Warner, and EMI.’ These words are now coming back to be used today against the music companies.

The first legal test case was brought by Eminem’s management FBT Productions who claimed that they were due not the 12% royalty revenue from digital sales paid by Universal Music, but 50%. FBT argued digital sales are not "records sold" but constitute a licensing of master recordings which entitling them to 50% of net receipts. The claim was upheld then rejected by the courts in March 2009, but now has now been overruled on appeal. The court found that the contracts were "unambiguous". The case is now opening up a stream of slimilair claims and legal actions and the FBT's case against Universal alone is worth $17-20 million in disputed royalties and could cost the label twice that over the next decade.

Thousands of artists signed their deals before iTunes. The Allman Brothers and Cheap Trick also filed a lawsuit against Sony BMG which was settled out of court. Pink Floyd's recent lawsuit against EMI also included the issue of the royalty rate of downloads and was settled behind closed doors. Now the Temptations are among a growing number of artists suing Universal Music. The Temptations class action is not just aimed at iTunes revenues but that from others including Amazon.com, Napster, Rhapsody and ringtone providers by such as AT&T, Verizon, Sprint and T-Mobile.

As we move increasingly into the digital world and from outright sale to a digital licence we have to ensure that there is a common understanding of both the associated rights and rewards. In this new world of ‘net receipts’, ‘walled digital gardens’ and often ‘honesty box’ trading, it may not be enough to assume a common understanding exists and like Universal and others, surprises can prove very expensive.

Related posts: March 2009 'Should music contracts reflect Today's Digital World'

April 2007 'Eminems music publisher sues Apple'

Are Sony's Days in eBooks Numbered?

Sony once aimed its sights at being a big player in digital publishing. It created its own ebook format, was one of the major drivers behind Adobe updating the neglected ACS3 with the ACS4 DRM service, were the early backers of the ePub format and of course introduced several eink ereaders. It even entered into one of those ‘exclusive trade deals’ with UK retailer Waterstones. However it failed to deliver the list, didn't not develop a plausible platform and lost the eink world to Kindle. Some five years on and how times have changed. Sony were around at the begining of the digital reading chapter, but this may be one ebook that will remain unfinished and is in danger of slipping from the front list and going out of digital print.

Sony’s problems would be small if they were just about their ill fated venture into ebooks. However, today Sony have just announced a 159 billion yen ($2bn) net loss for the last quarter of 2011 and have slashed their full-year forecast to a loss of 220 billion yen ($2.8bn). Hard times, require hard action and Sony have reacted and announced that in April ex-PlayStation exec, Kazuo Hirai will take over from Howard Stringer as Sony president and CEO.

The reasons for the challenges facing Sony are as many as the different markets they deal in. They include the implications of the losses it made on selling its S-LCD display shares to Samsung. Also there is the cost of the migration of Sony Ericsson back to Sony with the associated creative accounting on deferred tax assets and a fickle electronics market,where Samsung have eaten into Sony’s once strong market share and it has dropped some 15.7% in the last quarter. Then we have the floods in Thailand a strong Yen and a sales drop of some 24.4% in its consumer products and services sector. Even Sony Music and Sony Pictures didn’t lift the gloom with Picture only registering a modest profit and Music seeing a sale year on year decrease of some 11.7%.

Its hard to see Sony making a comeback into digital publishing and its offer would require some serious investment and change of fortunes at a time when the business obviously reqires to focus on its core operations.So as Waterstones look set to announce another partner is Sony's ebook venture at the end of the road?

Paws in The Proceedings

Some would suggest that 12 weeks is a long time during a period of rapid change, others that it is a mere blink of an eye. For the last 12 weeks we haven’t written a line about technology, digitisation or publishing. The reasons for this paws in the proceedings were many. It wasn’t that we felt we had little to say, or that things weren’t happening, or we felt that that publishing was now digital, nor did we have writer’s block.

So what have we missed during this last 12 weeks?

Legally things have continued much as before. The Goodle Book Settlement continues to go on and on. Although Judge Chin has at least set a legal agenda and timetable the parties have now moved on from snippets to distribution and it is worse than watching paint dry. One can almost guarantee that by the time they finally settle the agenda would have some new twist, will mostly be irrelevant and the only ones to profit would be the lawyers. The Office of Fair Trading still can’t seem to get its head around agency pricing, but we must recognise this is the same body who once thought CD pricing in the UK was fair. The Authors Guild’s have lodged a case against the HaitiTrust’s digitisation of orphans, which would seem to suggest to some that the lawyers in the AG are steering the ship and making hay whilst the sun shines. Also we now have the extension of music copyright to accommodate those aging musicians and the ever youthful Cliff Richard.

As we have often said, publishing is a rights business without a rights registry and apparently trying to migrate into the digital world, using at best paper and worst telepathy.

Should we have expected any different in 12 weeks on the legal front?

Market developments however never stop and Amazon certainly keeps announcing acquisitions, partnerships and new services. Any venture that raises its head above the parapet is fair game on Amazon’s radar and if it isn’t then its probably failed. The potential acquisition by Amazon of The Book Depository would appear to be good for consumers but potentially bad for the traditional channel. However some would suggest that the traditional channel has so far failed to compete online. Amazon have also pushed forward with their Overdrive library partnership which potentially is a game changer and they are also quietly pushing their Prime service offer to underpin their services. The only cloud on their horizon continues to be US sales tax issue.

The only other market news to grab our attention was the establishment, or ‘Disneyfication’ of Harry Potter into Pottermore.com. Despite Rowling’s previous position on the digital revolution, the move was logical, but the model is somewhat limited for others and who would want to be an agent in these changing times!
Technology has been relatively quiet during the quarter. Perhaps it was summer or perhaps they are all queued up awaiting Frankfurt. Sony did continue to huff and puff with a new model based on the old same story and its hardly surprising that they are even stalling in their own backyard. They may be lifted if Waterstones once again adopt them as their ereader answer, but for now look a spent force.

Rumours of an Amazon tablet have started to firm up with some even reporting on its testing. Its hard to say whether it is a Nook beater or a iPad rival today, but it is certainly one to watch especially if tethered to Whispernet and offered on the same connection terms as the Kindle. Sorry Amazon brand managers, that should read ‘Kindle’ not the ‘the Kindle’. What is clear is that apart from THE Kindle reader black and white eink is going out of fashion.

Finally, it was interesting to see Google acquiring Motorola. This says much about the continued rise of mobile technology and could offer some very interesting options for Android and Google integration.

During the period we lost Michael Hart the founder of Wikipedia and ebook visionary and also Steve Jobs finally stepped down at Apple. Both have left a significant digital legacy and have changed publishing from the outside.

The one thing that is now starting to gain column inches and much speculation is what some call ‘Netflix for ebooks’ or in Europe ‘Spotify for ebooks’. This is a change in the consumer model, from outright purchase and ownership, to rental and subscription models. We have long argued this and Amazon well poised to move both on the consumer and now library fronts . However, the industry seems reluctant to embrace the change and is bogged down with yesterday’s contracts, terms and model.

Perhaps digital publishing is just like herding cats

Sony Network and New Tablets Collide

Some have been known to release bad news when there is lots of other bad news, but not good news on the back of bad news. However, Sony has done just that.

A Hacking attack on Sony has resulted in its PlayStation Network being taken offline and being still unavailable after five days! The PlayStation Network is used by 70 million registered account holders and owners of PS3 and PlayStation Portable machines and is used to download games, films and music, as well as to play online with friends.

Sony has thanked its users for their patience and assured them that it was working "around the clock" to strengthen the network infrastructure. However in its blog statement they did not reference any potential issues relating to stored personal information or credit card details.

The hacking group, Anonymous, deny that they were behind the attack but do that some members may have acted on their own without the group's knowledge. Anonymous has criticised Sony over its treatment of George Hotz, an American hacker who unlocked the PS3's closed operating system to allow pirated games to be played on the machine.
The timing of this could not be worse for Sony as it clashes with the Easter holidays and their first foray into the tablet PC market.

Sony has announced two tablets which will hit the market later this year and will both use Google's Android operating system. Sony has stated its intent to become the second largest tablet player within one year.

Sony Tablet S1 will have a 9.4” display and is wedge shaped with a thicker upper portion which Sony claim makes it easier to hold. The S2 is a folding device equipped with dual 5.5-inch screens. It has a rounded design and is small enough to fit in the inside pocket of a jacket. Both devices come with Android 3.0, WiFi and 3G and utilise Sony's premium network services, which include the currently stricken PlayStation Network for gaming and also the Qriocity media service.

Users will also be able to browse and buy electronic books which obviously raise the question over Sony’s poorly performing eInk readers and whether these will be dropped for the new S1 and S2. By combining tablets, ebooks, games and lifestyle interfaces the S1 and S2 start to become interesting tablet options.

However announcing a common platform when their flagship PSN service is on its back is not the best of timing.

Sony and Apple Sparring?

Sony Music UK have apparently denied a report from Australia's The Age this week suggested that Sony's new Music Unlimited service marks the beginning of a move away from Apple iTunes. Michael Ephraim, head of Sony Computer Entertainment in Australia, stated that it could well be time for Sony to review its partnership with Apple and iTunes flippantly commenting , "Does Sony Music need to provide content to iTunes?'

Some would suggest that publishers are being held to ransom by Apple and it ever changing rules as it strives to earn a value share of everything sold on its platforms. Sony already have one huge spat with Apple over Apple’ds rejection of Sony’s ebook app. Another service Sony plan to launch later this year will enable mobile phone users to pay and play first generation PlayStation games on their handsets. Again this looks like a head to head crash between Apple and Sony.

It is an uneasy situation with content aggregators building cross device platforms whilst content publishers grapple to keep control of their content and pricing and device manufacturers, such as Apple, still remain firmly aligned to selling tin and software but want more.

Apple To Take Back AppleWorld ?

Yesterday Apple, as it often does, threw what some though was a ticking bomb into the ebook world. The company has told applications developers, including Sony, that they can no longer sell content, like e-books, within their apps, or let customers have access to purchases they have made outside the App Store.

The problem with Apple is that it controls its app world with an iron fist and as already documented is capable of changing the rules as it sees fit and with no recall and then changing them back just as quickly as it did last years on its stance on developer tools.

But before we look at some of the responses we are always reminded of that now infamous Steve Jobs quote he made in 2008, on commenting on the Kindle where he said, "It doesn't matter how good or bad the product is, the fact is that people don't read anymore... The whole concept is flawed at the top because people don't read anymore.”

We are all realising that the power is in the access and interoperability, not in closed worlds. Kindle is making its device successful despite the iPad, because consumers recognise that Amazon is a platform and that its device is independent and the Kindle device is a bonus but not a nessessity. Couple this with a ‘cloud’ approach and we start to see a significant game change where the likes of Amazon, Google and Kobo benefit and the likes of Sony and Apple don’t. The money is in the eyeballs and content not in the tin.

Ars Technica in their report quotes Apple spokesperson Trudy Muller,'We are now requiring that if an app offers customers the ability to purchase books outside of the app, that the same option is also available to customers from within the app with in-app purchase.'

They continue to point out that ‘If an app lets users access content that they purchased via Amazon's website, for example, then that same app must also let users buy the same book via Apple's own in-app purchase system. If the app developer doesn't want to use Apple's in-app purchases to sell content, then the app can't access content purchased elsewhere either.’

‘This is notable because it will require Amazon and Barnes & Noble (as well as Sony, whose iOS app is not yet available) to change how their offerings work. Apple wants its 30 percent share of content sales whenever possible.’

How would the move effect Amazon.com? They offer free mobile apps specifically to give customers the ability to read their e-book purchases on all devices allowing an iPad owner to still to buy and read Kindle books bought from Amazon on their iPad. How would effect any exclusive Kindle Editions or where a publisher doesn’t have a contract with Apple for a title?

In his blog Terry Jones (no not friendly Python) wrote how Apple's actions reminded him of Microsoft with the browser and the OS. He posses the thought, ‘Imagine Apple claiming that such a separation is technically impossible and that the App Store is fundamental to the iPhone experience.'

To us we see Apple as having a habit of firing shots and thinking later and tend to do this most in the App Store and with developers. Apple is never going to be the ebookstore leader but they can’t afford just to be demoted to tin provider

So the big line up:
Google growing multi platform with Android and opportunity to bury stuff in firmware (information content hungry and advertising driven)
Amazon the ‘online WalMart’ who have a books vertical, brand and loyalty that is proven by current Kindle sales (despite the iPad) but must counter their Amazon only world by offering all platforms
Apple has great tin, innovation and music business, but no book understanding.
Abobe still trying to control the content and design of content with CS6 and ACS4
Sony – lost souls who stumble along
And the pretenders who are very reliant on the big boys to allow them to play or simply follow

New Sony Reader and other EInk Runners

Sony
It appears to be the worst kept secret that Sony is about to launch next month a new ereader, some say two. We have seen the signs coming with they lowering of the price of their existing readers through ‘special deals’ and the fact that their current offer looks as exciting as an old desktop PC in the tablet mobile world.

So what do we expect and will it make a difference and reverse what is clearly an also ran offer? Lighter, improved page turns and contrast, increase memory and maybe free 3G! We think its too early to see what their Android position is following their recent recruitment campaign.

The challenge for Sony is breaking into the big league and getting wide adoption as a viable alternative to Amazon, Apple and Google. BBeb is certainly past its sell by date and the Sony store is bereft of content and looks unappealing. Price could be a trump card given they have the corporate backing but tin alone isn’t the answer and they have failed so far to build a real content base and attraction. The devices as they stand aren’t going to hack it in the educational market. Some would suggest that Sony’s biggest problem is that it has an inbuilt corporate aversion to risk.

Expect it next month.

Notion Ink
On the other hand we wait with some interest for Notion Ink’s Adam tablet with its dual eInk-and-LCD display. The latest news is not good on the price which is reported to be $498 but its dual-mode display, with Wi-Fi, GPS, optional 3G, a camera that rotates 185 degrees, and its own app store sound interesting. It is expected to ship later this year, but will that be too late, or just right and will it have the mass appeal to make its mark in a crowded market.

Qualcomm
There is still much interest in the technology promised by mirsol which uses display technology that provides colour e-ink outside the WINK Corporation. The technology is called interferometric modulator display and similar to LCD uses RGB subpixels to generate colours. However it requires far less energy and is reflective, allowing for superior sunlight visibility whilst giving long availability and with refresh rates that are fast enough for video.

Kogan
Meanwhile down under Kogan Technologies has launched a 6-inch eBook ‘lookie likie’ reader into the Australian market at a price of just AUD$189. It has all the usual eInk features and wedge of give away public domain books that sit on the virtual unread shelf and is compatible with Adobe ACS4 DRM. We struggled to remember which reader it looked like but that hardly surprising with logos transferring faster than premiership footballers swop shirts and clubs!

Huawei
China looks to the West with the release of its first eReader, the Huawei T62W. Yet another lookie like eInk reader with a 6″ touch screen, WiFi, 3G connectivity, Bluetooth, and a microSDHC slot.

Sony Asks: Do You Know the Way To San Jose?

We thought a recruitment ad placed by Sony on LinkedIn last month raises a few questions as to where the sleeping giant is going next.

Senior Staff Engineer (Android) – Digital Reader Business Division at Sony Electronics based in San Jose

It clearly would indicate Sony is looking at Android with the new job having responsibility for, ‘developing application software for digital reading and other consumer electronic devices.’ So is Sony thinking Android tablet, mobiles, eink readers, multi platform and will this engineer make the difference?

If anyone what’s to apply you should note that apart from the usual technical requirements to both understand technical jargon and program in it, the applicant will find that a ‘linguistic skill in Japanese is a definite plus.’

Anata wa dono yōna hon ga wakarimasu ka?

3D Coming to Screens Near You?

Sony appear to have all the 3D bases covered. They are filming in it, developing it, providing devices to rum on it and distributing it. 3D is certainly going to change gaming and its going to change sport filming but will it really take over and become the next big digital change? Many like ourselves, were impressed by the cinematography of Advatar and less impressed with Tim Burton’s quick 3D fix on Alice, but 3D is coming and big money is waging on it win.



There are some interesting issues. First, the Eyecare Trust claim some six million people in the UK, or 1 in six, will not be able to view the 3D images properly. The claims relate to people who have poor binocular vision and will have difficulty processing and viewing the 3D effects. They may only see blurred images and could have side effects such as headaches. Glasses may be the cure but the health risks when increase when people are subjected to prolonged and close exposure, such as experienced by gamers. There is no real health warning with 3D and the effects of excessive exposure are not established, nor are they know with respect to age.

The 3D section of the PlayStation 3 terms states, ‘Some people may experience discomfort (such as eye strain, eye fatigue or nausea) while watching 3D video images or playing stereoscopic 3D games on 3D televisions… If you experience such discomfort, you should immediately discontinue use of your television until the discomfort subsides.'

Reggie Fils-Aime, the President and COO of Nintendo of America recomends, "Very young children not look at 3D images…. the muscles for the eyes are not fully formed... This is the same messaging that the industry is putting out with 3D movies, so it is a standard protocol.’

3D is coming and gaming powerhouse, Ubisoft’s UK marketing director, Murray Pannel predicts a 3D TV in every living room within three years and that 3D gaming will be at the forefront.

However we have the cost of production of content. Here we have two different approaches, one which shoots in full 3D and one that merely transforms to 3D. There are basic two technologies. First stereoscopic or full 3D, which is like in Avatar and costs around 70% more than normal and requires you to shoot in 3D from the start. It works by giving depth of field, enabling the viewer to see ‘into’ the image. The other is slightly cheaper, around 50% of mormal and is called dimensionalising. This involves taking a 2D film and in post production making it into 3D. The finished product may not be as good, but is a way to turn a back catalogue into 3D and capitalise on the 4 times greater revenue 3D movies are making over 2D. Tim Burton’s Alice used this post filming technology and is why some of the imagery is not focused. 2D depends on a focus point and is when it it is turned into 3D it can become blurred. There is also a contrast issue where 3D 'dulls' an image and light has to be adjusted to compensative. Images may appear different when the same original film is viewed in 2D and 3D. Finally, shooting has to be on the diagonal not face on and this can make original 2D film look weird.

Sport appears to be where TV production is cutting its 3D teeth and Sony filmed the whole World Cup in 3D.


NTT Docomo have just launched a 3D LCD display that can be viewed with the naked eye without those glasses at Expo Comm Wireless in Japan. It will display 3D images which can be viewed from eight viewpoints, each of which has an angular range of 15°. The display however cannot show 2D images but they claim, ‘We would like to equip mobile phones and smart phones with the display within a few years.’ 3D LCD displays can be viewed with the naked eye using either a lenticular lens or a parallax barrier, which provides a slit to partially block off light.

The $100 eBook Reader is Coming

We have been saying for a long time that the eInk reader price had to drop to a point where it becomes a throw away commodity. We have seen recent skirmish with Nook and Amazon but today we saw the first real push into that price point space.

eBookNewser has reported that Books-A-Million has been selling one version of the Sony eReader which was originally $299 for $99 and $89 to members. Guess what - within hours the members-only special offer had sold out. Ok we offer was limited to just one version, restricted to members and was a time window offer, but it clearly proves that people will buy at the right price and we will continue to suggest that $100 is it.

If a real price war were to start today it will be interesting to watch. With the recent demise of iRex and Cooler readers and many others probably looking shaky it is easy to see the opportunity for many to dump their inventory onto the market and cut their losses. This has to drive down the high end machines and it is a brave man who stick at the old price. The likely winners are those who like Amazon can cross subsidise any loss, those with a sizeable repository on offer and the brave.

We predict that the price of many readers will fall to $100 before the Christmas buying season. However consumers beware that the first to be on offer will be the old models, refurbished ones and generally those that are sitting on shelves waiting to be written off in the ebooks. Also consumers must ensure that the readers, especially the less know ones, are capable of doing what they says on the box.

Sony: Anything You Can Do We Can Do Too

We saw Amazon drop their price of the Kindle to align to the Nook and now Sony has dropped the prices on its Pocket Edition from $169 to $149, the Touch Edition from $199 to $169 and the 3G Daily Edition is now $299 from $349.

Our take is that this, is too little too late and they have to break the $99 price point to be attractive. Will anyone be prepared to cut to the bone, or run a loss leader to capture the market? The problem with so many ‘lookie likies’ is that they don’t make money on the sales of books, only on the devices and as the price wars heat up then some will go to the wall. It is hard to see anyone but Kobo, Amazon and B&N surviving these wars if they get as hot as they must do soon. Forget the social networking, forget they fancy add ons and split screens, for eInk readers to make it through winter, they have to make money out of content sales.

How long before one starts to give them away to schools, institutions etc. Remember they also will soon face OLPC tablet offer at the low end and more Android tablets at the top end and after all said and done, they are still one channel black and white TVs, in a multi channel, Technicolor and HD world.

Public Libraries, The Internet Archive and Double Standards?

As libraries become a battleground for ebooks, who will win the digital library business?

A heated debate appears to be looming as the Internet Archive announces it is integrating the lending of books within its Open Library with Overdrive to participating libraries in the U.S. and elsewhere. The objective is to increase the number of books that are available for people to borrow digitally. Overdrive already claims some 70,000 titles that are being provided through 11,000 libraries worldwide. Now many more books that are not commercially available will be made available and can be borrowed from participating libraries using the same digital technology

A user can visit OpenLibrary.org to search or browse for books with the "only ebook" check box checked to find books they can borrow and read online. If the book is a commercially available, then the user is directed to Overdrive.com where they can borrow it from their local library using their library card. If the book is not commercially available and no one else has checked out the book, then the user can borrow it for a 2 week period via OpenLibrary.org. The Boston Public and Marine Biological Laboratory are among a number of libraries that have contributed titles for digital borrowing.

The Internet Archive appear to be treading on the very thin ice. Yes they are the same people that fought The Google Book Settlement! They claim that one person at a time will be allowed to check out a digital copy of an in-copyright book for two weeks and that due to copyright restrictions, the physical copy of the book won't be loaned during that same period. The interpretation of Fair Use may appear fair to The Internet Archive but not to authors and publishers who own these copyrights who may not have granted permissions. It also appears to be a different Land grab of Orphan Works which they fought to protect.

Mr. Kahle of the Internet Archive is quoted in the Wall Street Journal as saying "We're just trying to do what libraries have always done." To add insult to injury Mr. Blake, of the Boston Library claims,. "If you own a physical copy of something, you should be able to loan it out. We don't think we're going to be disturbing the market value of these items." Some would seriously question the interpretations being used here and again ask why the Internet Archive appear to not practice what they preached against Google? Are publishers and authors happy with libraries scanning and passing around copyrighted works without permission and on the basis they own a copy?

Despite the current budget cuts, or because of them, the library world is being eyed up by many.

Sony have announced a new US Reader Library Programme which aims to help public libraries adopt eBooks and grow their collection. The programme will offer to enlighten library staff via a one-time web-based session covers digital reading formats, an overview of sources for digital materials, and training on Sony's Reader digital reading devices. Not surprisingly Sony will push Sony and provide digital reading devices for library staff and bi-annual updates on developments in eReading technology.

The Library program reaffirms Sony's commitment to work with local libraries throughout the US, "Libraries play an important role in our civic and cultural life, and Sony believes that it's important to support public library systems as they expand their services and digital offerings, particularly eBooks," said Phil Lubell, vice president for Sony's Reader business. "Our program is a new initiative that will provide librarians with additional resources, enabling them to inform and demonstrate to patrons how to benefit from their growing eBook collections."

Let's face it Sony want to sell ereaders and promote they lacklustre bookstore and must be feeling the heat on the streets today.

We will no doubt hear more on the Internet Archive interpretation of fair use or what some would suggest are double standards. It however clearly shows that irrespective of the financial constraints they face, libraries also face serious questions over its role, fair use and the clear conflict between its digital model and that of the commercial world.

Sony Predicts - A New Writer's Prize

We read in the Telegraph that Steve Haber, president of Sony’s digital reading business division, claims, ‘Within five years there will be more digital content sold than physical content.’ Wow that’s some prediction and far greater than virtually any see elsewhere. So what does he base it on and what’s his and Sony’s track record for predictions?

Well the reality is that it is based purely on the direction of the wind and his finger. To you and I, guess work. Three years ago he said the same point would be reached within ten years and now accepts he was wrong - it's within five. He draws comparison to other media sectors where the media itself was already digital or going fully digital. Sony themselves have a strong track record of getting things both right – the Walkman, and wrong – Betamax. BlueRay is still out with the jury but looking dodgy.

Some would suggest the real reason for the prediction was to get column inches to announce that Sony will sponsor a new category in this year’s Dylan Thomas Prize - the Sony Reader Award for Unpublished Writers. The prize, to be awarded in December, will go to the best book by an unpublished novelist under 30 years old.

Perhaps that news needed a bit of sizzle to get those inches and PR.

Sony on a Roll

So you fancy rolling out a screen so thin it can be wrapped around a pencil?



Sony has announced a rollable full colour 4.1" OLED display that can be wrapped around a cylinder. The screen is so flexible and robust it can be repeatedly rolled up and has a resolution of 432x240 pixels.

The new OLED screens are coming but the question now is whether they can be touch sensetive or have to be fixed to a keyboard. Sony has the technology but has yet to show its application within the mobile device market. Imagine a small mobile that rolls out to be a big media player and still fits into the pocked. Its interesting that as technology gets better and smaller and applications improve we still have this fixed size screen, desire to key in.

Brave New World: 2020 Vision in Digital Book World (Part 1)

Presentation to the Seoul International Book Fair, Seoul, South Korea,

Part 1 The last four years

The Brave New World report was published less than four years ago, in November 2006. Its aim was to identify the opportunities and challenges for booksellers in this new emerging digital market. We did not write the report and walk away. We undertook the task of updating it through the Brave New World blog.

When we started the blog there was no Kindle, no iPhone, no apps; Google were a threat but there was no Book Settlement; libraries were still full of books with not an ebook in sight and digital ebook format wars still prevailed.

We now find ourselves with; a colour tablet, a new ecosystem ‘Appleworld’, a growing digital market, a new pricing model, Amazon present in all areas of publishing, no Microsoft Live Book Search, Google in litigation, epub, Adobe controlling DRM and much more.

Five common threads that have prevailed through the 1500 articles that we have written in our blog

1. The inevitable convergence of technology.

In a highly visual and coloured world, who would have expected a ‘black and white’ device to break new ground? The eInk technology offered the ability to read in bright sunshine, had a long battery life and was the size of a book but lighter. It could store thousands of titles and enable you to carry your whole library around with you. The eInk reader was heralded as the next consumer ‘must have’ and the tool to promote a return to mass reading.

However, it was dull, chunky and reminded you of those early and non-portable laptops or the early mobile ‘brick’ phones. We saw eInk as a transient technology, a black and white TV in a colour TV world.

Despite its failings, short life expectancy, high ticket price and the lack of real depth of digital content, the eInk readers still achieved some significant steps. They dramatically reduced the ebook formats to basically two open ones– Adobe eBook and epub, plus Amazon’s proprietary Kindle format. Also they achieved wide adoption of a single DRM service – Adobe’s ACS4 and in doing so opened up inter-operability between devices.

Importantly, the eInk reader gave the market confidence to move forward with ebooks.

In 2006 we had smartphones that weren’t ‘smart’. Their old and tired operating systems were built for the previous era and constrained their user interfaces and ability to browse the web.

The impact that Apple’s iPhone had on the market can’t be underestimated. Overnight the mobile phone was redefined. First the ‘look and feel’ changed from trying to accommodate keys and screen, to touch screen. Second the device became multi media offering video, audio and colour. Third it continued to exploit the inbuilt camera. Fourth it was wirelessly connected 24x7 to the internet. Finally it introduced, promoted and generated a new form of application – the app with its own app store.

The iPhone also has had a significant cultural impact and introduced new technology which has been enthusiastically accepted by young and old.

It is the invention of the first decade of the 21st century.

The potential rival came from the most unexpected quarter - the search engine and advertising giant, Google. They also took an unexpected strategy to provide an open solution to all the vendors. The Android was capable of multi tasking and also had an open app store.

Just as the iPhone had done some three years ago, the iPad starts to re-defined the mobile and media User interface. Forget that it doesn’t have a camera, is not multi tasking, doesn’t have some simple and widely used connections, doesn’t support Flash. These can be and will be fixed. It is about redefining the user interface, applications and portability.

The question now is not about the applications we will use in the future. Will we now adopt a ‘thinner’ approach, accessing applications from the Internet and running and storing files via cloud computing?

2. The new entrants, the outsiders the technology giants

Google were scanning first and asking questions later. They were hoovering up all library works and creating a sizable repository of digital content. Their main competitor was Microsoft with their Live Book Search book scanning programme.

In May 2007 Microsoft declared that they were pulling out of the race. The sight of Microsoft’s enclosed Stand at BEA 2007 and publishers being shuffled in through the closed door one by one, to be quietly let down in confidence, must go down as the most embarrassing public market exits.

Google was now free to put its foot down, to scan on regardless.

In October 2008 the Google Book Settlement was unveiled. We have written numerous articles on what we see as this ill conceived and audacious ‘land grab’ for little money and exclusive gain of orphan works. Our articles chart the events from day one when we declared it ‘The Great Book Bank Robbery’ to today, when we await Judge Chin’s decision on the revised settlement.

The industry took too long time to understand the implications and had to be informed by many from outside, such as the US Justice Department, before the tide started to turn and people started to understand the challenges posed by the settlement. Whatever the outcome, it heralded a new era where new entrants seemingly went after the prizes.

Google have now announced they are to sell digital books and compete head to head with booksellers through Google Editions and they continued to scan.

However, Google now face significant opposition in Europe to the Settlement and their scanning programme and now face a second class action legal suit from illustrators and image rights bodies in the US.

Google highlighted to an industry that was built on the trading of rights that it didn’t even have a rights registry, nor the collective will to address one without being funded by others.

Apple's Steve Jobs said of the Kindle and reading in 2008, "It doesn't matter how good or bad the product is, the fact is that people don't read anymore... The whole conception is flawed at the top because people don't read anymore.” We have recently witnessed his apparent 360 degree turn with the iPad.

The truth is that you have to look at what drives a company to understand what they want out of any market segment. Apple is about Appleworld, a xenophobic and insular control approach to moving device and service sales. Books only interest them if they sell devices.

Sony went head to head with Amazon. They did provide the epub push and forced Adobe to spawn the ACS4 DRM service. However they created four devices in less than two years and although they sold reasonable numbers of units, some would suggest they lost their way and have missed the boat.

Adobe’s support of epub was a brilliant move in not only capturing the high ground but also in tying it to their ACS4 DRM service. It also enabled them to lock themselves into many of the new eInk devices coming on stream. However, the major trick was to ensure that their solution not only supported epub, but also Adobe eBook which was based on the ubiquitous PDF format.

Amazon now covers all the bases from the author to reader. They support authors direct, are a publisher, own the audiobooks market, have the largest physical global bookstore, own a sizeable chunk of the ebook market and have a global brand synonymous with value and service.

Their most significant move has been to drive down the cost of ebooks. Publishers may believe that the agency model gives them back control but when we step back, we find that the ebook price is still a lot lower than originally envisaged by many publishers and Amazon’s revenues are now protected irrespective of the price paid. Some may say this is not a wise move by publishers and one that also presents new potential issues on tax in the US and retail price maintenance in the UK.

3. The Digital Content Itself

The majority of digitisation programmes have merely taken the physical book and poured it unaltered into the ebook. In essence the editorial and production process continued unchanged and the finished book was then ‘converted’ to an ebook, merely replacing the physical jacket with a digital one. For all the huff and puff about digital many publishers’ editorial and production workflow are still rooted in the analogue world.

We wrote a number of articles on the Japanese revolution with the Keitai novels and digital Manga comics. However we saw little movement in the West ‘book straight jacket’ economic model of 250 to 300 pages. We did see limited experimentation with multi media and others starting short story publishing programme. But these were the exceptions.

We believe that Digital Publishing is Publishing and is about everything from author to reader, not just the finished product.

4. The author
The Author has now been given the opportunity to go direct digitally. Previously print on demand (POD) offered a limited channel to market but it was cost prohibitive and demanded relatively high unit price.

Many things are driving the author to rethink digital. The higher royalty rate originally offered by publishers on digital, has slipped along with advances, the midlist and back list authors continue to be overlooked. Publishers such as Random House believe the ebook is ‘just another book format’ and irrespective of contract, to claim digital rights. Others would like to rights reversals not applied to digital and POD to effectively keep books in print.

Scribd, Wattpad, Amazon and Lulu.com have all started to offer authors a digital self-publishing opportunity and channel.

In a weird twist, the new agency model could be the biggest boost to authors going digital by themselves. US author J.A. Konrath claims that he can sell more ebooks at lower prices than a publisher and earn more to boot. Under the 70/30 split things suddenly get a whole lot better! He thinks the $2.99 could become the new bargain rate for authors such as himself and one that which will look very attractive against the ‘safe’ publisher pricing.

5. Social Networking
Social networking has exploded into the culture. Today, Facebook is getting more hits than Google search. Twitter has also exploded onto the scene and Ivy Bean showed that you are never too old to learn and at the age of 103 started to Twitter. Now 104, she has some 55,000 followers.Facebook and Twitter have made celebrities out of people who many would not have even heard of. Together with the likes of YouTube, they have revolutionised journalism, even woken up politicians to new ways of communication and reconnected people who where disconnected in the old world.

In many ways Facebook, Twitter and YouTube are the new Gorillas in the back yard of publishing and pose as much opportunity, challenge and threat as any in tomorrow’s digital book market.

To read the full revised Brave New World report online

News versus Noise: CES Part 1

So what else has emerged from the Consumer Electronics Show in Vegas this week?

The Greening of Notebooks
Sony introduced not one but four new Vaio notebooks with the ‘w’ series catching our eye with its green-tinted plastic case being made of 23% recycled CDs and the carrying case is made of recycled plastic bottles. Why not call it the ‘r’ series for recycled?

Too Long In Labour?
Plastic Logic finally launched its Que e-reader and may prove to be an oxymoron. This has had a longer gesticulation period than an elephant! Will it succeed in what is now a very crowed market of ‘lookie likies’ and even with all its initial super hype is it a case of being always a bridesmaid. Since it offered so much the world has moved on and one would seriously have to question why this when we have tablets, duo screen devices and so much more better value all around us.

WoW at a WoW Price
Dell's Adamo XPS being only 9.9mm thick is now being billed as the world's thinnest laptop and is even thinner than many mobiles! It also opens to sits up, with the keyboard ergonomically tilted to offer a better typing angle. Its 13.4” LED widescreen offers 1366 x 768 pixels but the interesting design element is that motherboard and 128GB solid-state drive are behind the screen, not beneath the keyboard. We thick this could be thinking itself a future tablet but being this thin and only 1.44kg, it may not be the lightest around but it offers much to think about. However it suffers one major drawback in that it will cost you £1,750.

A Tablet For All Seasons
Notion Ink’s Android “smartpad” which claims to support full HD video playback, WiFi, Bluetooth and use the Pixel Qi transflective 10” 1024 x 600 Pixel display a 3-megapixel autofocus camera with video 16GB or 32GB of SSD. Interesetingly it even has a water sensor! The screen can be viewed as a regular LCD, or outdoors in either transflective mode with reduced color vibrancy or at a flick in fully reflective 64-level grayscale mode. The battery life is claimed to be 48hrs standby, 8hrs of HD video playback and 16hrs of internet surfing over WiFi. Price is not know but expected to be around $300.

Lets Get Social?
The Copia reader joins the usual eInk suspects but offers not one but a group of readers joined together by a social networking and reader support. So the question is whether the network pulls is strong enough to tie the devices to the readers or is just a gimmick that is only as good as the network of users. Why create a social network around a platform this way it doesn’t make sense,perhaps they should have looked at the track record of BookRabbit, perhaps they just want to sell tin, but perhaps they don’t know what the want to be when the grow up.