E-Books and E-Bucks

The buzz at Seybold San Francisco 2000, the conference where publishing meets technology, surrounded the emerging respectability of e-books. Spurred on by the success of Stephen King's toe-in-the-water experiments, Adobe, Microsoft, and various others are jockeying for position to turn your Palm or laptop into an extremely expensive substitute for a cheap paperback. That's fine—I'm not one who buys that old saw about how terrible it is to read from the screen (if I was, would I sit in front of them and read for hours every day?)—but I do have my doubts, and they have more to do with publishers than with e-book software and hardware vendors (or readers, for that matter).

Too many publishers seem to be looking at e-books as a golden opportunity to reduce their printing costs and take all the savings as extra profits. In some of the academic-text pricing models I've seen, they seem to assume that the physical book itself has no value whatsoever to the reader, and that since the words are identical the cost should be identical. Or worse, higher, because you can make copies of digital books for all your friends, you evil pirate customer you, and so they have to charge more to offset that huge loss in potential income.

Sigh. They Just Don't Get It.

Costs should be lower for digital originals. A book that today costs $10 might return its author a dollar in royalties, if they're lucky. In the digital world, they could still get that dollar—and the book should cost only three. There's no retailer—the publisher sells direct to the customer—so there's no retail markup; and there are no substantial materials costs. (There are still production and marketing costs, which is what they get their money for.)

After all, the consumer still has to pay for download time, storage media, paper and ink if they print it out, and the cost of the Palm or laptop to read it on. That should more than take care of the 'saving'.

But it's more than that. E-books should cost less, because in the digital age, information is worth less.

A thousand years ago, books were scarce. Monks wrote them out by hand on vellum, and as if that wasn't labor-intensive enough, embellished the pages with beautiful illustrations and gold leaf. Ordinary people didn't own books; the Church owned books. One per church.

Then came Gutenberg and the printing press. And pamphleteers, newspapers, magazines, comic books, paperbacks, pulp fiction, penny dreadfuls, coffee-table books, textbooks, guidebooks, books, more books, books about books. These days a book has a shelf-life of only a few months before it's remaindered. The number of books in print is bigger than ever. Even without the web, we're drowning in information.

What happens to any commodity when supply increases beyond demand? It loses value. And if ever a commodity was in oversupply, that commodity is Information at the beginning of the 21st century. There's too much of it, good, bad, and indifferent.

The web wasn't the original cause of this oversupply, although it certainly hasn't helped. Its main effect has been to make it totally obvious exactly how much information there is out there these days. Type 'Beethoven' into Google and you get 378,000 results. Faced with these staggering numbers, readers know that if the first piece of information they come across is too expensive, low-quality, or otherwise unacceptable, there's always more out there.

In this environment, the value to an individual of any single unit of generic information, be it a book, CD, magazine, website, song, or article, is less than it once was. Market forces are pushing that value towards zero. Prices, however, have been slow to keep pace. In the long run, they'll have to.

So how do information creators and merchants (not only authors and publishers) make money? One way is by aggregating information. Instead of selling a hundred people a hundred different books, sell all of them a CD-ROM containing all of those books, or internet access to a database containing all of them. Sure, you lose a few dollars from people who would have bought more than one of your titles, but they're in the minority. If the pricing model is right, most authors should be no worse off; with a database system you could even track reading stats and pay the more popular authors accordingly.

This sort of thing is already going on in academic libraries, which are buying licences and subscriptions to complete databases of journal articles. The same model could just as easily apply at the individual level—and not only in the book world. Music companies have been slow to start up 'pay-per-listen' MP3 databases because of copyright concerns and the lack of widespread high-speed home Internet access, but why haven't they started releasing compilation DVDs containing a dozen whole albums each? They could price them like movie DVDs, make customers feel they're getting better value for money, and still make as much money as if they'd sold them separately.

I suspect that, because of the practical problems surrounding micropayments for individual titles, subscriptions to databases containing a range of titles will be the successful model (at least initially) in the book world, too: say, a database with an e-book of your choice and another 10 or 20 random titles, all for $10; or 100 random titles for $10 (on the understanding that most readers would only want to read a few out of any 100 titles chosen at random); or an 'e-book of the month' club that you could pay for once a year (say, $20 a year lets you download one of the publisher's titles each month). None of these models are that far from one that's already worked in another medium: subscription cable TV.

Whichever model publishers follow, they'll still have to maintain a high-quality list of titles. People won't subscribe or resubscribe to a database full of low-quality reading. They may buy low-quality individual titles if they're cheap enough, but with so much information out there and only so many hours in which they can read, they won't do that all the time. Publishers will still have to maintain some standards.

But e-books offer publishers the chance to relax their standards a little. Not in terms of quality, but in terms of marketability. At present, countless manuscripts are rejected by publishers not because they're inherently bad, but because the publishers don't think they'll sell in sufficient quantities to make money. In the print world, those quantities are fairly high, because printing costs have to be recouped. On the internet, they don't, so a book can start making money on much smaller sales.

This means all sorts of previously-unprofitable books become potentially profitable. They may never have a huge readership, but they can get a readership, and can make money for their authors and publishers. Publishers may not make as much money per title as they once did, but they can get more titles 'out there'. And the chances of missing out on a surprise hit will be greatly reduced: we've all heard about quirky runaway bestsellers that were rejected dozens of times by publishers who considered them unsellable.

Publishers really have no other choice than to explore all these possibilities. Once the hardware and software problems of e-books have been resolved to readers' satisfaction, they will sell, and if publishers don't sell them, authors will. The publishers' traditional role as intermediaries between manuscript and print will disappear, because authors will be able to (can already) publish their work themselves. All that publishers will then be able to sell is, to authors, their marketing clout, and to readers, their ability to identify worthwhile books. In other words, the roles of publishers and literary agents will merge.

But what about copyright? Won't all these e-books, whether sold individually or as part of a database subscription, be ripped off? Well, yes, they probably will be. Nothing new there. But if titles are priced cheaply enough, and access to good-quality titles is made simple enough, the incentive to readers to look for pirated books will be low. (There's plenty more to say about copyright, of course, but I'll save it for another day.)

Readers want good quality information, and, as generations of book-buyers have shown, are prepared to pay for it. If it's priced at a level appropriate to 21st-century information glut, they'll be able to buy more for their dollar. Even though they still won't be able to read it all.