The Abdication Crisis: UK Publishing Meekly Follows US Digital Marketing

We attended the London Book Fair this week and hence the lack of articles. Was this due to a lack of real digital news or the fact that many in the UK digital world appear on hold awaiting the US to lead or to settle GBS (Google Book Settlement)decision?

Whilst we ponder the future, we ask ourselves a number of questions, some we can answer or are confident to predict, others where we are far from the answers. The one think that is certain, is that UK publishers large and small now are taking digital seriously and many are taking their first tentative steps forward.

Some thoughts on the digital UK landscape:

Will the retail model still hold water over the library model? Free rental access has appeal over pay. Who seriously wants to own an ebook for life? The existing library model needs to be revisited and the UK needs to be wary of US suppliers dumping their library repository content into the UK market. This is not happening tomorrow but today.

The thoughts of repositories brings us to observe the current ‘aggregator’ bragging model – ‘mine’s bigger than yours’. In the physical book world size mattered, but in the virtual digital world size often marginalises the offer. When it comes to changing suppliers in the future we have to assume, or hope, that the encrypted licences can still be validated, however we have already seen the problems of changing distributors.

The major digital repositories are US controlled and focused and we are all aware that territorial rights are a challenge. Despite UK publishers public statements, privately they many still compromised.

Will digital be ceded to Google , Amazon, Adobe, Sony, Apple. These are an interesting group of technology companies and with the exception of ‘fortress Amazon’ are all from outside publishing.

Will Amazon break free of their wireless constraints and make it to the UK, or leave the market to the likes of Sony? Where do publishers place their bets?

The problem with the UK is its love of exclusive deals. Digital deals such as Sony/ Adobe, Overdrive/ Waterstones and Blackwells / Espresso may move the agenda forward but can also marginalise the competitive position against the real competitors.

Will UK copyright and deals be controlled and determined in the UK and subject to UK law or be effectively usurped by the back door and rail-roaded by the US interests. The impact of change is not restricted to the finished book but goes rights across the life cycle from acquisition and rights contracts, to what was once death but is now GBS (Google Book Settlement). Will the DMCA (Digital Millennium Copyright Act) approach be adopted by all and will take down notices, reactive contention and copyright disputes be the norm tomorrow?

The UK market appears to be placing a great deal of trust in the US to sort out the digital landscape and for the UK to merely follow. After all, the precedent was set not many years ago by Bush and Blair, but one would hope that we have learnt from that abdication of independent leadership.

Spotify Continues to Grow Announcing Libspotify

We have been strong supporters of Spotify, which lets us play music on-demand and share playlists for free if you don’t mind the 20 second advert every 30 minutes. It makes more sense to listen to what you want when you want where you want rather than buying loads of tracks most of which sit dormant on the drive like the CDs on a shelf. Its somewhat strange to be ahead of the curve in the UK and Europe but Spotify certainly is one step ahead of the game and clearly states where music is going. All four major labels and indie consortiums The Orchard, Merlin and CD Baby already allow Spotify to play their music in an increasing number of European countries.

We reported on the recent move to team up with 7Digital to offer purchasing of downloads.

However its getting a whole lot better with the news on the launch of libspotify which gives developers the ability to build services on its platform using an API and port Spotify to a variety of different devices . We could be talking Spotify on mobile phones, XBoxes, PlayStations, TVs, networked audio players and any other place developers want to put it.

Digital Music Just Got Cheaper and DRM Free

Often price wars are won by no one but the consumer. The producer is often out of the control loop and their RRP becomes meaningless, other than to act as a discount mark. The reseller may control the price and discount but its often down to the depth of their pockets, the nerves to fight it out and the margin hit they can stomach. Supermarkets can often cross subsidise pricing, but ‘one product offer’ stores such as music and books only often have the one product mix, one opportunity and when they make steep discount move these are made its often in hope that they can be retracted as quickly. No retailer wants a discount war unless they are in control and have the margin to play it.

Today we see price wars breaking out in the music download market. They are not driven by the producers, nor the artists but by two giants who want to destabilise the others offer and capture share.

Amazon has launched a new campaign reducing the price of 100 of its mp3 downloads to 29 pence. This is only a small number of its 5 million music downloads on offer but is focused at those that sell, current chart toppers and genre leaders.

The response from Apple was to introduce a new three-tier pricing system for downloading tracks from its 10 million track iTunes online store. Downloads now cost either 59p, 79p or 99p per track with the majority of songs priced at a price of 79p. Apple’s tracks will now be DRM (Digital Rights Management)free and able to be played on any player not just Apple's iPod.New releases will now often be priced 99p.

Major labels said the price of a song should reflect how much buyers were willing to pay for it. That is wise of them and obvious to everyone else! By removing DRM protection from the downloads we see the death of the highly unpopular DRM-limited music.

The music legal download business is now moving into uncharted waters with the big two potentially squaring up on the only thing they can – pricing and the rest now wondering how the battle will unfold. What is certain is this is the beginning not the end of this price war and their biggest competitors don’t charge but operate different business models.

We often watch other media markets to learn lessons and with the debate still ongoing on ebook pricing,DRM being the normal ebook practice, the current High Street madness on book discounting, then perhaps music is worth watching today.

The Potential Role of Libraries?

Barbara Fister writing in the Library Journal ‘What If You Ran Your Bookstore Like a Library?’ continues to raise the issues of libraries and bookstores in the new environment.

She points out that threat of the superstore of ten years ago has been responded to by the US libraries and they are now offering the same, if not much more. She cites that libraries also encompass a value previously derided and little understood – that sharing books is good. The word ‘sharing’, to many morphs into ‘file sharing and piracy’ with parallels being drawn with the music industries mess and their relentless quest to prosecute all before them in the name of moral right and the law. But Fister points out that sharing is not the problem but could be the solution.

‘The idea of self-immolating books is hard for a book lover to fathom, and avid readers are not likely to be persuaded that sharing books is morally wrong. What’s more, it’s not at all clear that preventing sharing would be good for business. Without the word-of-mouth publicity that comes largely through exuberant sharing, most author’s works would go unnoticed. In any case, sharing is a fact of networked life: used books begin to circulate as soon as new ones are published, through swap and sale sites. There’s no stopping it, short of mass book burnings or a revision of copyright law too horrible to contemplate.’

She believes that ‘rather than learn from the mistakes of the music business, publishers seem poised to repeat them—with restrictive digital rights management (DRM), a sluggish if not hostile response to digital media, and a tendency to ignore consumer preferences.’

Her solutions are to firstly propose a scheme where consumers are offered incentives to buy new books – buy one at full price and get the next one at discount, from anywhere, from any publisher. Her second one is to only rent ebooks on a subscription based model. She says the current situation is like Netflix saying, “Through our service, you can buy a DVD for only half the price of a movie ticket. What a deal! But you can’t sell it, you can’t share it, and you can only watch it on a DVD player that you buy from us for hundreds of dollars.” She suggests publishers could negotiate subscriptions of collections to libraries.
Her third thought is along the same lines that we have suggested before and turns the current POD (print on demand) model from one of print and distribute to distribute and print. She suggests that the community printer could be the library and that we move to a just in time as opposed to the current just in case short cycle model.

We would believe that her first suggestion would be difficult to administer in the current climate but could be offered on a localized or store basis. Her second suggestion is plausible and we believe on line and subscriptions/ rental will become increasingly important as outright purchases of downloads becomes less attractive. The POD community model makes sense with the question of who provides it an interesting one. It could be libraries, academic / campus store or third parties and you can safely bet Ingram are thinking about it whilst Amazon are still honing their delivery service. It makes sense for physical books to be drop shipped locally and electronic ones to be drop shipped remotely but the consumer and the transaction to remain local.

The question is whether the libraries have the vision and strategy to respond.

How do we reward the songwriters?

Music continues to loose its way and it looks more and more likely it will go DRM free and be free to consume on an ad paid model. 7digital the London based download store has dropped the price of its 3 million catalogue of MP3 tracks to 50p which way below iTunes 79p. Can you remember the original iTunes price point and do you care? Prices are tumbling, DRM is loosing ground and the record companies are all scrambling to do any deal that generates any money.

It raises the question of royalties and how the creators and performers get paid. The Songwriters Association of Canada (SAC) is proposing to charge Canadian internet and wireless users $5 per month to compensate musicians for revenue losses due to illegal file-sharing. They also propose the radical step of making the sharing of music on peer-to-peer networks legal. So its like a web licence fee you pay irrespective of whether you consume, or don’t, or even if you already pay a service such as iTunes. What next? Lets have a tax on connecting to the web or an extra levy on MP3 devices including PCs. Taxation models don’t work as they create administration which adds a cost and in turn dilutes net revenues and that is without proportioning out the spoils.

Let wake up and smell the coffee, music is changing both its business model and how it is being delivered. Let’s ensure the artists and writers are correctly rewarded through the revenues raised and not sold short by clueless record companies who lurch from one mind-boggling deal to another.

What does this mean to books? Not a lot today but it shows what can happen when the kids take control of the chocolate factory.

Describing things better may be more important than the thing itself

Everyone is finding out the power of metadata. A photo that has no description is merely a picture and on the web, the picture is literally lost in space. However, a picture that has even a simple description can be found by others and organized. The new social dimension of tagging is becoming a hallmark of the so-called web 2.0 and one that encourages sharing and collaboration.

Tagging or labeling online content is becoming the new search tool of choice among web users and interestingly not everyone recognizes they are doing it. Google for example refers to it as “bookmarking”. According to the Pew Internet and American Life Project, the trend in tagging is growing among US web users and it recently found that over a quarter of online Americans (28%) had tagged content such as a photo, news story or blog. Even this blog is now tagged!

Some may argue that the imprecise and ambiguous nature of the tagging is inhibiting its full use, others that any tagging is better than none. We only need to trawl through the pages of eBay to appreciate the many ways one can describe the same thing. But we still find it and in the wider internet the world this is no different.
What does that mean for publishing? It clearly shows that getting the metadata right and structured is fundamental to searching discovering and qualifying content.

Content without context is lost.

Those who tag well will be found and be appreciated. Those who don’t, may be found, but by a disappointed searcher. In the physical bookstore the placement of the book is determined by the physical shelf and store categories. “The Royal Gardens of Europe” could be in architecture, gardening, history, travel but invariably will be only be found in one. My stepfather’s best selling books could be found in memoirs, humour, autobiography, caring and health and even pets and one wonders where “Paws in the Proceedings” hi s latest book will be found when it is released in June? However on the net, these titles should be tagged against every category that is applicable and thereby found by multiple searches.

Digitisation Debate Moves Forward

I was pleased be with many leading industry figures this week. Booksellers, wholesalers and publishers gathered to debate the issues raised in the 'Brave New World' report and how the industry can move forward together. The discussion will be disclosed shortly by the BA, along with the resultant actions and I hope that these prove to be decisive and bold steps. The key is obviously action and quick wins and also helping all participate on a level playing field.

The ironic fact was we gathered in Godalming, the 1894 birthplace of the writer Aldous Huxley, who wrote his groundbreaking ‘Brave New World’ in 1932.

In a week when the wholesale world consolidated and Pearson announced their digital content repository strategy, what was clear was that change is happening.

The ABA (American Booksellers Association) has also announced a new Digital Task Force (DTF) who met for the first time on 10th January in New York. The DTF is composed of 10 booksellers and industry professionals and five ABA staff members, and it is charged advising the ABA on developing its digital strategies. Oren Teicher, ABA COO, briefed the team on the Booksellers Association’s ‘Brave New World: Digitisation of Content’ of which the ABA had requested a number of copies for all team members!

By the end of the year 1300 copies of the Brave New world report have been downloaded from the BA site. The report had many contributors and reviewers and was born out of co-operation and has now hopefully provided the springboard for all to move forward together.