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TrueSlant.com blogger Roger Theriault has picked up a story from the MobileRead forums that Random House will go against the recent rush by its Big Six buddies to the "agency" e-book retail model recently introduced by Apple.
Apple's approach is for publishers to retain control over the list price, rather than allowing the list price to be pegged by the e-tailer, as is currently employed by Amazon. It also allows publishers flexibility in timing release of e-books - delaying them rather than releasing them simultaneously with publication of hardcover editions.
Random's decision is based on two approaches to e-book publishing that are at odds with the philosophy of at least three of its fellow publishers. A RH spokesperson voiced the opinion that publishers “have no real experience at setting retail prices.” That explains why Random held back from embracing Apple's iPad tablet. The other reason is timing of e-book releases. “Our current policy is we release e-books at the same time as physical books,” she said. "I haven’t been convinced that it’s good for the author or consumer to delay the release."
You Wanna Turn Us Off Too? Murdoch Voices Harper Opposition to Amazon's $9.99 Cap
Business World reports that HarperCollins owner Rupert Murdoch took a swipe at Amazon's $9.99 e-book price, boosting Macmillan's lonely public stand against the retailer's rigid pricing tactics. "We don't like the Amazon model of selling everything at USD 9.99," he said, calling for a renegotiation of Harper's deal with Amazon, and Amazon said it's ready to hear what he has to say.
Murdoch acknowledged that he stands to lose money by opposing $9.99. "They pay us the wholesale price of USD 14 or whatever we charge," he said, referring to the wholesale price that Amazon might pay to Harper for a $28.00 e-book. "But I think it really devalues books and it hurts all the retailers of the hard cover books." Amazon takes a loss on such transactions but has used the loss-leader strategy to gain a dominant position for its Kindle e-book reader. It's worked so far but publishers have worried that a day of reckoning will come in the form of a demand by Amazon that publishers lower their wholesale prices to accommodate that $9.99 retail price.
Though he didn't refer to Macmillan, Murdoch's position mirrors Macmillan's and clearly indicates that the new e-book retail model introduced by Apple as part of its iPad tablet rollout has united the publishing community. "Apple, in its agreement with us, which has not been disclosed in detail, does allow for a variety of slightly higher prices," Murdoch coyly said.
Publishing's Weekend War: 48 Hours That Changed an Industry
The facedown lasted from Friday evening to Sunday afternoon but when it was over the landscape of the book business was permanently altered. On Friday, in reaction to Macmillan's refusal to play the Kindle pricing game by Amazon's rules, the retailer punished Macmillan by extinguishing the publisher's Buy buttons on the Amazon website.
Obviously, Amazon hoped this tactic would bring Macmillan to its knees. Instead it triggered another wave of customer outrage as Kindle owners reacted just as they had in 2009 when Amazon reached into their Kindles and recaptured files without notice or explanation. Though the response of the author community was mixed, many authors were angered at becoming victims of a war they scarcely understood but they too blamed Amazon.
Amazon also underestimated the possibility that other major publishers might support Macmillan. This turned out to be a well founded concern. In the past few weeks all of the big houses except Random House conducted discussions, and in all likelihood negotiations, with Apple to forge a new retailing model that would return control of e-book pricing to the publishers, who had become alarmed that Amazon's insistence on a $9.99 price cap would force them to accept lower wholesale terms. Conditions were ripe for mutiny, and on Friday the test of wills began. By Sunday, as Amazon realized that this was a fight it could not win, it capitulated.
I stated that this might well be a turning point for the book industry - both e-book and print - and I stand by that statement.
I also made a prediction that publishers will no longer be able to hold the line on the current 20-25% royalty rate offered to authors. In fact I guaranteed that they won't be able to, and I stand by that guarantee as well. Authors, and more importantly their powerful literary agents, have viewed the new landscape and found it rich with the potential for profit. They perceive the current royalty level as arbitrary and without basis in the economies of e-book production and distribution. The current rates cannot and will not hold. Just as Amazon blinked in its stare-down with Macmillan, Macmillan and its Big Six companions will also blink in the inevitable confrontation with authors.
Guaranteed: E-book Royalties Will Rise When Publishers' Hands Untied
I don't know if people still make pinkie bets, but when I was a kid that's what we called friendly wagers with no money at stake - just the satisfaction of being right. And I'm making a pinkie bet right now: If publishers can untangle themselves from the current e-book pricing model that ties their hands with a $9.99 ceiling, author royalties will rise. Any takers? Warning - before you extend your pinkie, you must know that I never bet on anything I'm not absolutely certain about.
Currently the e-book royalty offered to authors by five of the Big Six is 25% of the publisher's net receipts, and Macmillan's is even lower. Indeed, it's the lowest in Big Publishing: 20%. And because it is, Macmillan has attracted less support from the author community for its facedown of Amazon than it would otherwise receive. Here for instance is a line from a Silicon Valley blogger that called Macmillan "evil": "they're trying to force all ebook vendors to adopt the new contract, while forcing authors to accept a below industry average (20% vs. 25%) on ebook royalties."
If, as a result of negative publicity, Amazon relents on its rigid pricing formula, e-book revenues will increase and it will be so much harder - indeed, it will be intensely embarrassing - for publishers to continue parceling out the mingy royalty they now proffer. How much higher will the royalty go? Publishers will kick and scream over every point they have to give up, but in time someone will blink and go to 50%, and the rest of the industry will follow.
You can bet the house on that, but I'll accept a friendly pinkie.
Richard Curtis (who is happy to disclose that E-Reads pays 50% royalty to its authors, and has paid it from Day One, 2000).
Today a publisher brought to my attention an oddity on the Amazon.com website. It seems that you cannot purchase more than three copies of many bestsellers. On the evening of January 28, 2010 I viewed the top ten books on the Amazon.com bestseller list. In every case I was prohibited from putting more than three copies into my shopping cart. To make certain this was not a fluke, I sampled the first 50 titles on the list but did not find any exceptions to the three-to-a-customer rule.
You can see this for yourself by clicking on the following links for the top five titles, then going to the "Quantity" drop-down box over the "Add to Shopping Cart" button. (As listings change, future visitors to this posting may not find the same condition.)
It was not until I clicked on #53 - What Would Google Do? (list price $17.91, Amazon price $9.18) - that the Quantity drop-down box indicated I could buy as many as 30 copies. I did not try to buy multiple copies by buying three and three and three etc. - I don't really need one copy of Food Rules let alone six or nine or thirty - but I'm sure a clever shopper could find a way around the rule. It occurred to me however that if I did order three copies ten times, the freight and handling charges would be substantially higher than if I purchased 30 in one shot.
But that's just incidental to the bigger question of why one must buy no more than three copies in one transaction.
I can understand this restrictive practice in the case of a high ticket item, where one $10,000 fur coat or $50,000 diamond ring per customer is enough. Pictured here is a Prada Ostrich Leather Tote listing on Saks Fifth Avenue's website for $5,850.00. On the bag's web page is this notice: DUE TO POPULAR DEMAND, A CUSTOMER MAY ORDER NO MORE THAN THREE UNITS OF THIS ITEM EVERY THIRTY DAYS.
But books are not luxury purchases. Why would Amazon prevent us from buying as many copies of a book as we want? After all, the more we buy the more money Amazon makes, yes?
In listing the books here I included their list price versus their Amazon.com price. I wonder if therein lies a clue to the restrictive policy. Assuming a 50% publisher discount, Amazon's profit margin on these books is slim to none. For instance, on A People's History of the United States (list price $18.95, Amazon price $10.00) Amazon nets about $.50 profit. Food Rules retailing for $11.00? The wholesale price would be $5.50. Amazon is selling it for $5.00, a $.50 loss. For The Help (list price $24.95, Amazon price $9.50), Amazon is losing $3.00 a copy.
Nothing unusual here: retailers in every business work on a slim margin, and loss leaders are a common competitive practice. However...
Suppose I opened a bookshop and stocked it with bestsellers purchased from Amazon. I could buy 100 copies of The Help for $9.50 each and sell them in my store for, say, $15.00. Even folding in the cost of freight from Amazon to my shop, I would make two or three dollars profit and still sell the books far beneath the publisher's list price.
I anticipate your question: why would people buy from my shop when they could get the same book cheaper from Amazon? The answer is, some will but some won't. That's why we have independent bookstores (barely, but we still do have them).
If this reasoning is correct, then the Amazon's three-to-a-customer rule makes sense: Amazon doesn't want resellers stocking their stores with Amazon books. Why not? Because Amazon doesn't make any money on those resales.
Authors will recognize an irony here. When their books are resold via Amazon, Amazon gets a piece of the resale of those used books but the authors get nothing. Could it be that Amazon is worried that it is not benefiting from resales that do not use Amazon as agent?
This theory could be all wet. But if it is, I invite smarter business heads than me to speculate on just what's behind the three-book cap on Amazon's bestseller shopping cart. Meanwhile, publishers and authors may be hurt by the curtailment of large book orders on the Amazon.com retail site.
When Galley Cat invited me to make some predictions for the coming decade, I conjectured that sometime in the near future we would see the merger of a major retailer and a major publisher. Here was my reasoning: "A combined publisher/retailer solves many problems for both.The retailer owns the content and doesn't have to pay a premium for it. The publisher does not have to pay a premium to distribute its books. There would be huge efficiencies of manufacturing and distribution."
I've had about a month to think about what I said, and I want to revise it. The efficiencies of a retailer/publisher combine would not merely be huge. They would be decisive. If you don't believe it, ask Barnes & Noble and Amazon.
In 2003 Barnes & Noble acquired Sterling Publishing, described at the time as "one of the top 25 publishers in America and the industry's leading publisher of how-to books." Publishers were gravely concerned, and they had every reason to be. Barnes & Noble's own titles were like a supermarket's house brand, often undercutting the prices of outside purveyors.
And now Amazon is a publisher too. It started with its Encore program aimed at identifying overlooked books and authors. That was followed by the creation of a service called CreateSpace aimed at self-published authors. And now Amazon has begun publishing mainstream authors like Stephen King and recently acquired Stephen (The 7 Habits of Highly Effective People®) Covey for the Kindle.
The potential for mischief created by such combines was cogently articulated a few years ago by Morris Rosenthal and I urge you to read it. In essence, the savings generated by dissolving the barrier between seller and buyer enable the combine to lower prices below - sometimes far below - those charged by publishers that do not own their own retail branch. To state the case as simply as possible: Barnes & Noble and Amazon.com, the two most powerful retailers in the book business, have become competitors of the very publishers they serve.
Though these retailers have no qualms about becoming publishers, publishers on the other hand are terrified of becoming retailers for fear of provoking the wrath of their key accounts - B&N and Amazon! When publishers do dip a timid toe in the water and try to sell their books direct to the consumer, they offer them at full list price, which cannot possibly compete with the deeply discounted prices charged by B&N and Amazon. Yet, if they wanted to, publishers could sell their books directly to the public at 40% discount or higher and thus level the playing field.
The solution? To survive, to remain competitive, publishers may have no choice: they must either become retailers or end up being acquired by them.
At this moment Borders, one of the best and most popular bookstore chains in the business, is in a life and death struggle to remain viable. If a publisher were smart it would rescue Borders and go into the retail business.
Retailers, I said a while ago (see Direct Sales: Publishing’s Last Stand), are intermediaries in a world that is rapidly disintermediating. As big as they are, retailers like Barnes & Noble and Amazon are vulnerable to market forces bent on eliminating middlemen, and that's precisely why they have begun publishing books. The digital revolution demands a direct relationship between content provider and consumer. Merging a publisher and a bookstore like Borders would bring both struggling enterprises a little closer to that direct relationship, to profitability and to competitiveness.
Eric Engleman, in his Amazon Blog, writes that Kindle fans are punishing a publisher that has held back the Kindle version of a just-published book.
The book in question is Game Change by Mark Halperin and John Heilman, the juicy tell-all about the 2008 presidential campaign. Though it has generally garnered raves for its brilliant investigative reporting and jaw-dropping revelations, and indeed has received 59 five-star reviews on Amazon, it has also received no fewer than 119 one-star reviews, with scarcely any ratings in between the two poles. Why?
"The book has been deluged with one-star, negative reviews from people who are protesting publisher HarperCollins' decision to delay the Kindle version to Feb. 23," writes Engleman. "Those one-star reviews have contributed to a ho-hum average customer review rating of a 2.5 stars (out of 5). Customer reviews are an important factor for book sales on Amazon, and it will be interesting to see if the Kindle protests spread."
You can read both the raves and the boo-hisses here, but as to the latter, they can be summed up by this one: "No Kindle version? No Sale!"
The wisdom of simultaneously publishing hardcover books and e-books was questioned at the end of last year by a number of publishing figures including literary agent Nat Sobel whose posting here sparked an outpouring of strong feelings on both sides of the issue. Now the strong feelings have spilled over to consumers. The "windowing" (delay) of e-book reprints may seem like sound publishing practice for many kinds of books, but a hot-gossipy and time-sensitive book like Game Change may be the exception to that rule.
Consumers may not consider, and certainly may not care about, sound publishing practice. But for HarperCollins, Game Change's publisher, there's a solid economic reason for withholding the e-print. The hardcover lists at $27.99 on Amazon, discounted to $15.39. If it were available today on Kindle the price would undoubtedly be the standard $9.99 that Amazon is trying to impose on the book retail business. "Some in the publishing industry fear that Amazon's standard $9.99 (or lower) for new release books on Kindle will create a 'sticky' price in consumers' minds, dragging down the overall perceived value of books," writes Engleman.
Sometime in the first half of this year Google will open the doors to its bookstore, called Google Editions. Ian Paul, in PC World, writes: "Unlike Google's biggest competitors, Amazon and Barnes & Noble, which rely heavily on restrictive DRM, Google's store will not be device-specific - allowing for e-books purchased through Google Editions to be read on the far greater number of e-book readers that will flood the market in 2010"
That spells good news for the makers of all those new e-reading gadgets that may be well engineered and loaded with fun features but are hard-up for content. Amazon has its Kindle, but because its system is closed (that's what DRM means) you can't easily get Kindle content on a non-Kindle device. Same goes for B&N and its Nook.
Now you'll be able to download Google's vast (half a million at launch) library on just about any device available. Since most publishers have not given their content exclusively to Amazon or B&N, you'll be able to find and buy it from Google editions and read it on your Que, Skiff, Cool-Er, Flepia, or any other device. Just try not to be embarrassed when someone asks you the name of that e-book reader you're holding in your hand.
The deal Google offers publishers is 63 % of gross sales. This compares favorable with the 50% offered by most e-retailers. But Google is also offering to partner with retailers. If you decide you'd like to open an e-book retail store but don't know how and where to acquire the content, Google will furnish it. Your company would get 55 percent of revenues less a commission for Google.
"Google's e-books would reportedly be indexed and searchable like many books are now through Google's Book Search," says Paul. "Unlike titles offered through e-readers, Google Editions books would not have to be accessed through a dedicated reader or special application.Instead, any device with a Web browser will be able to access a Google Editions book. After you purchase and access your online book for the first time, it will be cached in your browser making the book available when you're offline."
Separation of E-Book Rights: Publishers' Worst Nightmare
Publishers are fighting the last war, but they'd better turn their heads forward if they don't want to lose the next one.
The notice served by Random House to authors and agents, vowing to protect its backlist from predatory e-book developers, focused so much attention on previously published books that just about everybody took their eyes off an infinitely larger issue and an infinitely larger prize: the future.
When we look back at the fireworks triggered by Random House's action we will see it as a noisy squabble over a relatively small number of contracts with ambiguous definitions of the word "book". Very old books have entered the public domain beyond the reach of proprietary publishers. Very new ones, on the other hand, dating from around 1990, carry explicit language defining e-rights that no buccaneer would dream of challenging. That leaves a body of post-World War II titles predating the e-book revolution, and in a great many cases their contracts have just enough references to things like "information storage and retrieval rights" and "no competing editions" to intimidate most would be poachers. There may not be that many books worth fighting over, and certainly not that many worth suing over.
But there is one body of books that publishers will have to fight for if they are to avoid calamity: the ones that have not yet been published. Events of the last few weeks have introduced a concept so terrifying to book publishers that they have refused to think about it: the separation of e-books from the suite of rights that they have taken as God-given for centuries. Who can blame them for living in denial? Deprive publishers of e-rights and they become mere printers, game set match.
We don't have to look at ancient history to see how another right that publishers took for granted was pried out of their clutches, and that's audio. For decades "audio" was a sleepy little curiosity that no one felt worth fighting over. For many of us, it meant a boxed set of Caedmon records of Dylan Thomas reading his play Under Milkwood in 1953. But as recording media evolved from vinyl to tape to CD to streaming, the audio business became a billion dollar one, and authors and agents began demanding separation of those rights from the fundamental package just as they had done early in the 20th century with movie and television rights.
The turmoil of the last few weeks, capped by the dramatic announcement by business book author Stephen Covey of his intention to sell his e-book rights to Amazon, should make it crystal-clear that severance of those rights from a publisher's franchise is now a viable option for authors. At the moment it is an option for big-name stars only, but don't so many revolutions begin on the backs of the mighty? As we recently wrote, agents have been sitting on the sidelines waiting to hear the words "e-book" and "advance" used in the same sentence. Now they smell money. A recent all-expenses-paid junket by agents to Amazon's headquarters may have had some influence on these developments (See Why Don't Agents Want to Play? Amazon Flies a Bunch to Seattle to Find Out).
The implications of separation of e-rights are profound and for publishers they must be excrutiatingly threatening, for their biggest nightmare is that Amazon will become a publisher. Now that Amazon is a bidder for electronic rights, that day has arrived.
It must be said that publishers have brought some of this on themselves by pegging the e-book royalty rate at 25% of net proceeds or even less. There are enough independent e-book outfits offering 50% (including - full disclosure - E-Reads) that it was only a matter of time before authors and agents did the math and came to the conclusion that 50% was twice as large as 25%.
The nightmare is out of the box. Is there any way for publishers to get it back in and contain the threat? The answer is yes, if they are willing to bite the 50% royalty bullet. Earlier this week in connection with Random House's dictum, the Authors Guild urged that very condition. Random House, said the Guild, should "start offering a fair royalty for those rights." Their statement went on to say:
Authors and publishers have traditionally split the proceeds from book sales. Most sublicenses, for example, provide for a 50/50 split of proceeds, and the standard trade book royalty of 15% of the hardcover retail price, back in the days that industry standard was established, represented about 50% of the net proceeds of the sale of the book. We're confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail. Savvy agents are well aware of this. The only reason e-book royalty rates are so low right now is that so little attention has been paid to them: sales were simply too low to scrap over. That's beginning to change.
While it's well and good for publishers to pore over their old contracts, they really need to examine the boilerplate in their current ones, and where it says "25%" they should consider amending it to 50%. Otherwise they may see their digital book rights calve off irretrievably like glaciers falling into the sea.
If Amazon Reviews are Meaningless, Why Are Authors Paying to Have Them Written?
About two years ago we asked Do Amazon Reviews Count? and wondered why we saw so few of them quoted by respectable publishers. "We live in an age when peer review is meaningful if not significant," I noted, thinking about the fabulously successful Zagat restaurant review model utilizing the opinions of our very own next-door neighbors.
If the same group-sourcing dynamic could be applied to books, we could see a revolution in the way books are reviewed to match the way they are digitally delivered. If Amazon could assemble a cadre of reviewers to replace the publishing establishment's phalanx of critics, endorsers and other brand-bestowing literary Gatekeepers, the 21st century's paradigm shift would be that much closer to total.
But it all depends on the integrity of Amazon's reviewers, just as our assessment of a restaurant's ambiance, service and food depend on the integrity of the men and women who write it up for Zagat. So, it was with no small measure of concern that I read a blog by Scott MacDonald in Quill & Quire calling our attention to a website called readerspoils.comthat arranges for authors to pay for reviews on Amazon. "Yes, that’s right," MacDonald writes, "for just $15 U.S. you can get a completely 'honest' review of your book posted to Amazon in mere days!" In fact, he adds, while $15 is the base price, the site "is apparently selling reviews only in bulk quantities: 100 reviews for $1,400 and 500 reviews for a mere $6,500." The site's owner is a self-published promoter named Clark Covington (pictured left) who describes himself as "a book writing fool. I’ve written several nonfiction books, and have a fiction novel in the works." For many agents the redundant phrase "fiction novel" instantly identifies the author as a writing fool, but we'll let that pass. Because when it comes to P. T. Barnum pitch, Covington is nobody's fool. Here it is:
"Up until now the publishing industry kept a tight lock on their book reviewers, paying them large sums of money and giving them many freebies to urge them to review books for well known authors. The time has finally come where you, the self published author, can get quality, real life book reviews for the price of a couple of tickets to the movies..."
You are then instructed to select how many reviews you want, prepay for them, and enter information about your book, whereupon "You receive an email from us when all of your reviews are posted on Amazon, usually within a week of your purchase." In case you're still on the fence, Covington furnishes sample Amazon reviews including video testimonials."I admit it, this sounds unbelievable," Covington adds, beating us to the punch. "This sounds too remarkable to be true, this is the type of thing that makes you want to call your local attorney general and tell them a scam is brewing." Covington claims to have access to 5,000 reviewers. How does he line them up?
"With a few strokes of luck and a hearty bribe, that’s how," he boasts. Readers interested in reviewing can register on the site, and apparently there is some sort of consideration. I came across one complaint by a reviewer who claims to have gotten stiffed.
This operation is so patently humbug that it would be falling-down-funny if it were not for the stain it casts on the potential honesty and integrity of Amazon's review system. Yes, it is true that the imperfect old review system is also subject to manipulation and even corruption. But Amazon represents an opportunity to get it right, to hear the recommendations of intelligent peers and neighbors about books that interest us. If we lose our trust in their honesty - the Quill & Quire article is called One more reason not to trust reader reviews - we also lose our literary value system.
Many of us grew up in a world where there were legitimate books and there were vanity books and everyone knew which ones to take seriously thanks to the tastemakers and gatekeepers. If they were biased, if their judgment was flawed, if they sometimes exalted the worthless and trashed the sublime, we lived with it because it was the only system we had. But now there is another way, and as we move into a socially networked future most of us are willing to give it a chance - unless we suspect the game is rigged.
Reading Fine Print: What Are The Terms For The Books You Buy?
This week, thanks to the retraction of 1984 from Kindle customers and the uproar/apology that ensued, there are a lot of people raising the flag of consumer rights for ebooks. It seems the corporate expectations for control are revealing themselves to be out-of-step with the popular expectations of ownership. But maybe we get the service we deserve. How complicit are we in enabling the controls that irk us?
When we quoted Peter Brown, executive director of the Free Software Foundation, who said "The real issue here is Amazon's use of DRM and proprietary software. They have unacceptable power over users," we knew that he had touched on a sensitive nerve.
But I'm afraid I disagree with Peter Brown and his perspective of the broader implications. And while the Reddit discussion is engrossing, there's not much being said about one little word.
Liability.
When Peter Brown says Amazon has "unacceptable power," the truth is that we grant companies this power when customers accept the opaque and deliberately over-protective terms of use that we all too often gloss over to get to the good stuff as quickly as possible.
How many Kindle owners have read the terms that state:
Use of Digital Content. Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use. Digital Content will be deemed licensed to you by Amazon under this Agreement unless otherwise expressly provided by Amazon.
Changes to Service. Amazon reserves the right to modify, suspend, or discontinue the Service at any time, and Amazon will not be liable to you should it exercise such right.
Termination. Your rights under this Agreement will automatically terminate without notice from Amazon if you fail to comply with any term of this Agreement. In case of such termination, you must cease all use of the Software and Amazon may immediately revoke your access to the Service or to Digital Content without notice to you and without refund of any fees. Amazon's failure to insist upon or enforce your strict compliance with this Agreement will not constitute a waiver of any of its rights.
It may seem Draconian, but essentially Amazon is stating that it has rights, too, to protect itself from companies or individuals using its service. Without those protections, Amazon and other companies would have little incentive to partner-up with new technologies that are ripe with the opportunity to exploit, harm, and cause serious problems without strict legalese behind them.
I think the digital reading experience provided by the Kindle and Amazon cannot be equated with older notions about ownership and traditional physical books. The digital service industry is built around licenses, permissions, and tacit agreements about copyright. What would the Kindle be without its 3G cell phone service (a special license), or the internet cloud functionality of Whispernet, which is a service with terms of use agreements?
When we buy a book in a system comprised of those complex arrangements, what we're really doing is licensing the book for our use so long as those terms are offered. This isn't how we traditionally think about shopping for goods. But in the last 30 years, our society is increasingly becoming familiar with this arrangement, whether it's music or movies or software. It's renting disguised as ownership. We have a hard time acknowledging that this is in fact happening under our noses while we stick to antiquated ideas of entitlement.
It may not seem fair, especially to those who like to reverse engineer and repurpose everything they purchase, but it is a perfectly valid business objective. However, where the business objective comes undone is in enforcement. DRM and unexpected retractions aren't the only enforcement companies use. It can get much more heavy-handed.
As Stephen Fry recently lamented about copyright law, the prosecutions used to criminalize young users are obviously both overzealous and unfair in most cases. A single teenager stealing music doesn't deserve a worse financial penalty than most white-collar criminals with deliberate intent to profit.
The truth is that the intent of most people breaking their terms of use is not to profit, but to enjoy an experience or connection with artists.
But that's not always the case. It may be the most popular reason, but there are always sneaky deviations. And so enters the legalese of terms of use, which try to foreshadow any and all possible infringements and damages. By inducing you to quickly accept their terms, they try to stave off worse case scenarios that could bankrupt a company with litigation. And there's the rub: we want the toys and media these companies develop but we must risk that accepting their terms might not be in our best interests. Everytime we agree to unread terms of use (and we do, don't we?), we may be complicit in feeding that beast that can bite us. And what about the free media that has no such terms - are we all willing to take a risk that we trust free media to cause us no harm, with no recourse if it does? It's a murky problem in these dark days of DRM.
A visitor to our website recently posted this comment in connection with what we call The Orwell Kindle Caper:
Yeah, I did not see a big problem here. As long as customers got a refund, no big deal. As far as the possibility of Amazon arbitrarily deleting content they actually had a right to provide in the first place - I don't ever see that happening. They do actually want customers, after all.
Sorry, pal - it's a big deal. There are some who not only think Amazon's ability to reach into customers' Kindles is a big problem, they are genuinely terrified by the prospect of far graver abuses. Because it's not just about taking back our e-books but taking back our fundamental liberties. At least that's the way technology columnist Farhad Manjoo sees it, and he's stated the case with chilling logic in a blog posted on Slate.
Here's Manjoo's position in a nutshell:
"The worst thing about this story isn't Amazon's conduct; it's the company's technical capabilities. Now we know that Amazon can delete anything it wants from your electronic reader. That's an awesome power, and Amazon's justification in this instance is beside the point. As our media libraries get converted to 1's and 0's, we are at risk of losing what we take for granted today: full ownership of our book and music and movie collections.
Manjoo builds on this disturbing premise. Here are a few excerpts to keep you awake tonight:
"If Apple or Amazon can decide to delete stuff you've bought, then surely a court—or, to channel Orwell, perhaps even a totalitarian regime—could force them to do the same. Like a lot of others, I've predicted the Kindle is the future of publishing. Now we know what the future of book banning looks like, too."
"Most of the e-books, videos, video games, and mobile apps that we buy these days day aren't really ours. They come to us with digital strings that stretch back to a single decider—Amazon, Apple, Microsoft, or whomever else."
"In Amazon's view, the books you buy aren't your property—they're part of a "service," and Amazon maintains complete control of that service at all times. Amazon has similar terms covering downloadable movies and TV shows, as does Apple for stuff you buy from iTunes."
"In The Future of the Internet and How To Stop It, Harvard law professor Jonathan Zittrain argues that such "tethered" appliances give the government unprecedented power to reach into our homes and change how our devices function."
"The difference between today's Kindle deletions and yesteryear's banning is that the earlier prohibitions weren't perfectly enforceable."
"Amazon deleted books that were already available in print, but in our paperless future—when all books exist as files on servers—courts would have the power to make works vanish completely."
"The power to delete your books, movies, and music remotely," Manjoo concludes, "is a power no one should have."
Does he have a prescription for reversing this potential erosion of our liberties? "Here's one way around this," he writes. "Don't buy a Kindle until Amazon updates its terms of service to prohibit remote deletions. Even better, the company ought to remove the technical capability to do so, making such a mass evisceration impossible in the event that a government compels it."
In light of Manjoo's well argued contentions, a threatened class action lawsuit against Amazon reported by Publishers Lunch might bring some of these issues to the forefront of our consciousness.
So yes, faithful correspondent, the Orwell Kindle Caper is indeed a big deal. It's a very, very big deal.
Orwell Kindle Caper: Did Amazon Do the Right Thing?
Publishers Lunch's Michael Cader has commented in depth on Amazon's yanking of unauthorized uploads of two George Orwell books, 1984 and Animal Farm. Cader's views are particularly cogent. In fact I've seen a lot of cogent commentary. What I haven't seen is a contrarian viewpoint defending Amazon. Amazon needs defending? Read on.
Despite all the e-ink spilled over Amazon's seemingly high-handed act of reaching into everyone's Kindle and vaporizing their Orwells, nobody seems to be trying to understand Amazon's motivation let alone support it. Amazon certainly didn't help by failing to apologize or even explain, thus turning a heavy-handed gaffe into a public relations black eye. Nevertheless, we owe it to Amazon to imagine what they - or their lawyers - might have been thinking when they sent down the order to zap the Orwells.
I said lawyers and that's the key. If I were Mr. Amazon (hmm, who could that be?) I would be gravely concerned about my company's liability for infringing on someone else's copyright. Furthermore I would be concerned that those who purchased the copyrighted work from my website might be liable as well, and my actions - simply offering the books for sale - might be responsible for my customers getting sued. Were these infringements inadvertent? Sure. Would that exculpate you and me from a legal action brought by an aggrieved copyright owner? Not necessarily. Ignorance of the law has never shielded the innocent from being drawn into lawsuits. Would you like to be named as a John Doe in an infringement suit? I don't think so. Would I (Mr. Amazon, that is) want to show good faith to the copyright owners by recalling the unauthorized product? My mouthpieces say Yeah, do it now and apologize later.
I haven't seen the communications between Amazon and Kindle owners informing them their books had been yanked, but had Amazon emailed customers saying "We're doing this for your own good so you don't get sued," it might have gone far to snatch some good will from the jaws of intense embarrassment. As it was, Amazon's conduct was lead-footed clumsy, and offering credit towards another purchase just didn't make up for the sense of violation most Kindlelach felt when they woke up to discover their Orwells had vanished. It's still not too late for an explanation (I've just given them one) and apology.
There. I've defended Amazon. But it was damn hard work. Can I go back to picking on them?
Barack Obama Stands at Door of No Return Through Which Slave Girl Ama Passed
"I am a human being; I am a woman; I am a black woman; I am an African. Once I was free; then I was captured and became a slave; but inside me, I have never been a slave, inside me here and here, I am still a free woman.”
This defiant declaration is made by Ama, the eponymous heroine of a stunning novel of the Atlantic slave trade by Ghanian author Manu Herbstein which E-Reads published as an original - one of the few originals it has ever undertaken - in 2002. In validation of our judgment, it was awarded the Commonwealth Prize for Best First Book of that year.
We immediately thought of Herbstein's heroine, who has drawn comparison to Kunta Kinte, protagonist of Alex Haley's Roots, when we learned that President Obama planned to travel to Ghana. There he and his family visited a site known to every African American family that has investigated its African origins. Here is how the New York Times's Peter Baker reported it:
"His one-day stop blended his vision of the future with echoes of the past. He stood in the Door of No Return at Cape Coast Castle, a notorious slave port perched on the windswept sea here where men who looked like him were once held in dungeons until they were marched in shackles to waiting ships. He brought his wife, Michelle, a descendant of slaves, and their daughters, Malia and Sasha.
"Mr. Obama, rarely one to display emotion, seemed especially sober. He said the castle reminded him of the Buchenwald concentration camp and underscored the existence of “pure evil” in the world.
“'Obviously, it’s a moving experience, a moving moment,'” he said. “'As painful as it is, I think that it helps to teach all of us that we have to do what we can to fight against the kinds of evils that, sadly, still exist in our world.'”
As Barack Obama toured Ghana he was greeted by chants of "Yes We Can!" We wonder what he would say to Ama if he had a chance to bring her back through that door. Perhaps it would be the same thing he said to the people of Ghana: “You can do that. Yes, you can. Because in this moment, history is on the move.”
We asked Manu Herbstein, author of Ama, to record his personal impressions of President Obama's visit. You may read his thought-provoking essay here.
Richard Curtis
**************************** Ama
Thrust into a foreign land, passed from owner to owner, stripped of her identity. This is the life of Nandzi, who was given the name Ama, a name strange to her and her tribal culture. A life of struggle and resignation, bondage and freedom, passion and indifference, intense love and remorseless hate. Though forced into desperation, Ama never lets her soul be consumed by fear. While the stories of individual slaves have been blurred into one mass, Ama’s story personifies the experience of eighteenth-century Africans in an unforgettable way. Her entrancing story of defiance and spiritual fire starts from the day she is brutally seized, raped, and enslaved, and ends with her breathing the pure air of freedom. Ama is a deeply engrossing and colorful novel, packed with violence, sex, and action. The resiliency of her spirit will grip readers from the first page to the last of Manu Herbstein’s spellbinding novel. One reviewer said she wished she could award Ama six stars. Read this and other stunning reviews of Ama.
To read an unforgettable scene from Ama, click here. ********************************** Every Blogger owes a debt of gratitude to newspapers and magazines. This posting relies on original research and reporting performed by the New York Times.
Lev Grossman and Andrea Sachs write in Timemagazine about our love-hate relationship with Amazon. Their conclusion? It depends on who's doing the loving and who's doing the hating. Defining Amazon is about as easy for us as defining the elephant was for the blind monks of Chinese legend. Time succinctly states the case:
"Amazon has diversified itself so comprehensively over the past five years that it's hard to say exactly what it is anymore. Amazon has a presence in almost every niche of the book industry. It runs a print-on-demand service (BookSurge) and a self-publishing service (CreateSpace). It sells e-books and an e-device to read them on (the Kindle, a new version of which, the DX, went on sale June 10). In 2008 alone, Amazon acquired Audible.com a leading audiobooks company; AbeBooks, a major online used-book retailer; and Shelfari, a Facebook-like social network for readers. In April of this year, it snapped up Lexcycle, which makes an e-reading app for the iPhone called Stanza."
As if all that were not enough, Amazon has now become a publisher, too. First, there's its Encore program "whereby Amazon will use information such as customer reviews on Amazon.com to identify exceptional, overlooked books and authors with more potential than their sales may indicate. Amazon will then partner with the authors to re-introduce their books to readers through marketing support and distribution into multiple channels and formats, such as the Amazon.com Books Store, Amazon Kindle Store, Audible.com, and national and independent bookstores via third-party wholesalers."
Amazon has also put its print on demand division into play in the form of a service called CreateSpace aimed at self-published authors.
For publishers the thought of Amazon becoming a competitor in their own space is their worst nightmare come true. As Time puts it, "If Amazon is a bookstore, it's supposed to be buying from publishers, not competing with them. Right?"
You got that right, Time! However, before we get out our pitchforks and start baying "Restraint of trade!" at Amazon you need to be reminded that it is not the only book retail behemoth that is also a publisher. Let's look at Barnes & Noble.
At the beginning of 2003 Barnes & Noble acquired Sterling Publishing, described at the time as "one of the top 25 publishers in America and the industry's leading publisher of how-to books." Publishers were gravely concerned and with every reason. Barnes & Noble's own titles were like a supermarket's house brand, often undercutting the prices of outside purveyors. Their anxieties were well founded. On many occasion, when I pitched a nonfiction book at a publisher, the editor would tell me to forget about it, Barnes & Noble already had such a book and the new one could never match the house-brand's low retail price.
The case against bookstores becoming publishers was stated so cogently by Morris Rosenthal that I reproduce it in full below. Though written four years ago as a followup to Barnes & Noble's acquisition of Sterling, it is word-for-word valid for Amazon as well and should serve as a chilling cautionary tale for all book industry watchers:
Monday, July 25, 2005 Sterling Publishing and Barnes & Noble Books
Barnes & Noble bought Sterling Publishing a little over 3 years ago, and publishing has been a rapidly growing segment of Barnes & Noble's strategy ever since. Sterling has over 5,000 titles in print and is adding about 1100 annually, primarily in the How-To area. Barnes & Noble also acquires books from other publishers, such as the "in easy steps" computer series from U.K's Computer Step publishers, and Barnes & Noble also publishes an extensive backlist of out-of-print and out-of-copyright classics. According to their annual 10K filing, Barnes & Noble also "commissions books directly from authors" and "creates collections of fiction and non-fiction using in-house editors." All of this shapes up as good business for Barnes & Noble, but doesn't cheer most self publishers.
The reason has to do with shelf spaces and market saturation. Barnes & Noble is the dominant bookstore chain in the country, and they have a good record of working with small publishers when it comes to in-store events and stocking titles. However, as their annual report points out - "Each Barnes & Noble store stocks from 60,000 to 200,000 titles, of which approximately 50,000 titles are common to all stores." For the true super stores which stock 200,000 titles (though I suspect they may have meant "books" rather than "titles") that leaves a lot of room for regional or independent books, but the smaller stores seem to do an excellent job stocking the Barnes & Noble published books (and they'd be nuts not to), so it's a scary thing for a small nonfiction publisher to find that a Barnes & Noble imprint is publishing a competing title.
Barnes & Noble now has some 10,000 books in print, and they tend to be lower priced than the competing titles, which while great for customers (vertical supply chain) doesn't make publishers very enthusiastic. I seem to recall Steve Riggio saying last year that they were targeting 10% of book sales as self-published by Barnes & Noble. I also seem to remember him saying three or four years ago that they were targeting 5%, so it stands to reason if they reach 10%, they'll up the ante again.
With half their books coming from their Sterling subsidiary which specializes in how-to, and a good chunk of the remaining half also in the how-to segment, it's safe to assume that how-to publishers are at the greatest risk for the time being. The how-to emphasis makes sense, since Barnes & Noble can easily track which titles are doing well throughout their chain, than commission or acquire similar titles. They don't need to be huge sellers, the acquisition cost for a commissioned book is pretty low (lots of hungry writers out there) and the guaranteed shelf space makes a large first print run, which combined with the lack of middlemen, makes the low pricing possible. If I was in the process of setting up a new imprint to publish nonfiction, I would look long and hard at my business model and focus on titles I felt would do especially well on Amazon or independent stores, as opposed to making plans based on the whole market.
On Collision Course for an E-Book-Off, Google-Mothra Enters Fray Against Amazon-Godzilla
A slumbering monster is awakened by greed and folly and, tormented beyond endurance, goes on a rampage.
The formula for a Japanese monster film? No, it's a riff on a major breaking story in the New York Times.
Motoko Rich reports that "In discussions with publishers at the annual BookExpo convention in New York over the weekend, Google signaled its intent to introduce a program by that would enable publishers to sell digital versions of their newest books direct to consumers through Google. The move would pit Google against Amazon.com, which is seeking to control the e-book market with the versions it sells for its Kindle reading device."
Though Google is currently a facilitator for readers seeking links to e-book retailers, the company now intends to sell digital editions directly to consumers.
Google has discussed such plans with publishers before, but it has now committed the company to going live with the project by the end of 2009. In a presentation at BookExpo, Tom Turvey, director of strategic partnerships at Google, added the phrase: “This time we mean it.”
Google vs. Amazon is not merely a major trade battle but a test of reader preferences, with huge stakes and social implications. Writes Rich:
"Mr. Turvey said Google’s program would allow consumers to read books on any device with Internet access, including mobile phones, rather than being limited to dedicated reading devices like the Amazon Kindle. 'We don’t believe that having a silo or a proprietary system is the way that e-books will go,' he said."
Print Books Dead? "Not Even Wounded," Says Lightning President
Here's a trick question. Do you think that books printed on demand are tangible merchandise? That they are no different from traditionally printed books?
It's natural to think they are, but you might find it helpful instead to think of them as a form of digital book even though they are delivered by UPS instead of by your Internet service provider.
Because the trade publishing industry is in the doldrums we tend to think the book printing industry is suffering too. Nothing could be further from the truth. As I've contended again and again, there's nothing wrong with the book business that can't be cured by distributing books a different way. And that's why I believe print on demand is the salvation of the industry.
This is admittedly a pretty extravagant declaration, but it's supported by some statistics reported in an interview, conducted by Liz Thompson for Bookbrunch, with David Taylor, President of Lightning Source Inc., arguably the largest POD press in the world. (As a matter of disclosure, LSI is E-Reads' printer.) Taylor stated that LSI has printed 70 million books in the decade since POD was introduced, and its facilities in Tennessee and Pennsylvania hold about a million digital files. The business has "grown 20% to 30% in the last six months," he said. LSI prints, binds and ships 10,000 copies a day on machines that run around the clock. In Britain, the firm is building a facility the size of an English football pitch.
Just as the current recession has laid bare the weakness of a traditional book distribution model based on the returnability of merchandise - with return rates soaring deep into the double-digits - it has also revealed the strength of an on-demand system with a negligible return rate.
"The recession," Taylor told his interviewer, "is focusing publishers' minds on cash, on the amount of inventory they have sitting in warehouses, on the cost of transporting stock. Most global publishers in the academic and STM [scientific, technical and medical] markets are saying they want to get out of inventory, and some pretty radical discussions are now taking place which will allow publishers to do just that. Believe me, it's an exciting time to be part of the business."
Among the radical solutions to the inventory problem is the creation of digital warehouses. These are in essence a network of servers containing vast archives of POD files linked to Espresso printers, miniaturized machines that can print and bind paperback books in under 10 minutes. Someone called them ATMs for books, but while the logical place for them is bookstores there's no reason why Espressos could not be set up in facilities not necessarily book related (we half-jokingly suggested a bagel shop).
Certainly one place such networks could be set up is Third World countries, says Thompson, "which have none of the infrastructure of western publishing in place (warehouses, distribution companies) and where building it would not, at this point, make much sense."
In short, says Liz Thompson, David Taylor "believes that far from the being dead, 'or even slightly wounded', digital technology is powering a genuine revolution in so-called traditional publishing."
To witness the revolution, watch this video of an Espresso producing a book in front of your eyes. Order your book, buy yourself a cup of (liquid) espresso and by the time you've consumed it, your book will be ready.
Perhaps it will become apparent why, in 2005, Amazon.com acquired a modest little print on demand operation called BookSurge, and why, three years later, Amazon launched an aggressive campaign to promote its POD services to publishers. Though Amazon's is the quintessentially modern book retailing operation in the history of the world, a number of underlying brick and mortar functions - notably, some 12 million square feet of warehouses - compromise its efficiency and profitability. In The Nine Gazillion Pound Gorilla Bares Its Fangs, a blog posted at the time, I wrote:
If Amazon is capable of printing books on demand, they will no longer have to carry any physical books in their warehouses at all! They simply have to load the files of Random House, HarperCollins, Hachette, Penguin, and every other publisher onto their server and print all of their books - frontlist as well as backlist - on demand. It would not only be a huge savings for Amazon in terms of warehouse space - it would be a huge savings for the publishers, too: they all would eliminate printing, warehouse, and freight costs at a stroke.
That all middlemen are impediments in a digital world is bedrock truth. As stupendous as Amazon is, it is nevertheless a middleman between book publishers and book buyers. The key to disintermediating that function is print on demand. Amazon's 2008 foray in this arena was only the first skirmish. You can expect the company to continue seeking a large share of the POD business currently enjoyed by Lightning Source.
The New Kindle DX: Amazon's First Large Screen Reader
As we've been expecting, today Jeff Bezos announced the new Kindle DX, a $489 large screen (9.7") e-book reader modeled after the Kindle 2. The DX is the first big step in Amazon's effort to create a platform for newspapers, textbooks, and other large scale documents. While developers such as Plastic Logic and Hearst are still preparing their large format devices, Amazon has beat them all out of the gate with a device available this summer in the U.S. (exact first shipping date is yet unknown.)
Besides the larger screen, the Kindle DX offers some special improvements: 3.3GB of storage, wide screen reading (rotate the device sideways), native PDF support (it's unknown if Amazon will support DRM for this format), and resizing/reflowing based on how many words per line you want. Other features remain similar to the Kindle 2, such as 3G Whispernet wireless service, USB charging, and the 16 shades of grey.
Importantly, Amazon has been working to ensure new content is available from newspaper and text book publishers. New arrangements with the New York Times, Boston Globe, and the San Francisco Chronicle will offer special rate subscriptions that will subsidize the cost of the DX. And Princeton, Arizona State University, Case Western, Reed College, and the University of Virginia will all be piloting programs serving text books to students with the Kindle DX. Hopefully, when more information about this initiative comes out, we'll see what Amazon's foray into the $9.8 billion text book market has in store for students at other universities.
The Kindle DX is available for pre-order now, although its price is $120 more than the Kindle 2, which continues to sell well. Many people who've already purchased the Kindle 2 may be feeling annoyed that the new model boasts the extra screen real estate and PDF support, but perhaps the higher cost pushes the Kindle DX farther out of reach for most casual customers. The premium will be worth it for those people who work extensively with large PDF documents, and when Amazon's text book pricing is revealed it may actually represent a big savings for students. Those who use the device over a number of years will probably get the most savings. However, at the rate that the technology is developing, the Kindle DX might not have the long legs you'd expect to justify its cost, especially when students might want to wait until a color device and more text books are easily found at retail to begin their investment strategy in an e-book device. University book stores will have to find a way to compete, and digital text books also means no used texts or selling-back for students. But we have to start somewhere. It might just be that the DX is an appetizer for things to come.
Michael Cader, blogging in Publishers Lunch, says that "The Kindle is probably the only major consumer electronic device aimed at older buyers." He cites a survey conducted by Bowker: "The device is favored particularly by people aged 50 to 64, and women like it disproportionately more than men, while the iPhone is heavily preferred by those in the 35 to 49 bracket," Cader writes.
In one respect, these data should not come as a surprise; generally speaking, adults simply buy more books than the young, period - 60 percent of book purchases are by older persons. But because we associate e-books and reading devices with youthful innovation, the numbers bear some attention.
The party most interested in these demographics is Amazon itself, creator of the Kindle. Amazon asked visitors to its Kindle Community page to disclose their age, and as of this writing 1652 responded. That's a huge number of responders and we're not sure why the question elicited so much action. By way of comparison, the second most responded to question garnered only 20 replies! Nor are we sure why respondents felt compelled to relate their life stories in response to the simple request for "Average Kindle Owners Age" ("59 3/4 years old here...no arthritis here yet. Probably will start suffering from it when I turn 60.") I guess seniors talking about their age like to add a flourish or two..
In any event, though we didn't sift methodically through every response or tally the average, it was clear from a random clickthrough of responses that the majority of those answering the question were in their fifties and sixties.
On the trail of these absorbing factoids, I randomly selected and debriefed a 25-year-old male about his, and his friends', attitudes towards Kindle. Interestingly, this interviewee works for a publisher and uses the device in his professional capacity.
Me: Do you own a Kindle personally?
Him: No.
Me: Because?
Him: The expense. I can't afford one. [It currently lists for $359.00 on Amazon.com] My friends can't either.
Me: Do you read books on another electronic device?
Him: No, call me old fashioned, but I like printed books. And they're also economical compared to the Kindle. If you read eight or ten books a year, buying them is cheap compared to buying a Kindle. Some of us either borrow books from the library or from each other, so it doesn't make sense to buy a Kindle.
Me: But you spend money on music.
Him: I would rather spend my money on music. I can listen to music while I'm doing something else. But reading a book is a dedicated activity. You can't do something else while you read a book.
Me. You call yourself old-fashioned. Doesn't that strike you as ironic, that a 25-year-old is more old-fashioned than a Kindle-reading fifty or sixty year old man or woman?
Him. [Shrugs] I guess so.
Are you too young for Kindle? The answer is right under our noses - for kids, it's simply too expensive.
Though Kindle is sitting high atop the e-reader heap, a competitor producing a $99.00 device could topple the Goliath, or at least give it a good healthy fight.
With the Authors Guild getting angry at Amazon's Kindle 2 for read-aloud technology (see their statement), many readers (and writers like Neil Gaiman) are wondering how a robotic-sounding voice reading is an infringement on the rights of a published book. And if that's an issue that requires prevention, then why haven't other non-professional readings been restricted (like when you read a bedtime story to your kids), and could they be in the future? And what about the sight-disabled readers and their legal right to access text in this manner?
I seriously doubt the Authors Guild is going to sue moms for reading Dr. Seuss, or sue the blind, or sue publishers for allowing that to occur. What's of concern is who's making money from the added value of the reading performance, whether it's a digital voice or not, and the Authors Guild is trying to make sure that a line is drawn in the sand now before an income stream (audio "performance" rights) dries up, because new technology often gives distributors a chance to make extra money before the author realizes how valuable it is.
Decades ago, audio rights were pretty unpopular. They were sorted into many publishers' contracts as ancillary, or completely left out - that is to say, unless it looked profitable for more than just rare radio adaptations. (No one really even tried to distribute novels performed and recorded to LP records–who wanted to flip a record every 30 minutes for a ten hour reading?) What changed all this was the age of the cassette tape: car radios with cassette players and the Sony Walkman. With the new convenient medium that lent itself well to long listening sessions, there was a new market. And publishers eventually started making extra money from the potentially lucrative books-on-tape edition of their texts, often without having paid authors any additional advance for the audio rights. This was good gravy for the publishers when the audiobook was a hit, even though the books-on-tape market was relatively tiny compared to book sales. By the time that CD technology increased the quality and cost efficiency per unit further, authors and agents already knew it was worthwhile to negotiate better terms and payments for the audio rights, to make sure that this commodity was now compensating everyone properly. In some cases, the rights were starting to be reserved by the agents so that they could be sold to the growing field of specialty audiobook publishers. In the last 8 years, MP3 file distribution of these recordings (especially through iTunes or Audible) has only made the market more competitive. So, unlike 40 years ago, today everyone is aware that the audio rights can make money when handled properly.
The primary distinction of the audio rights is not so much that a real human voice is involved and compensated; it's more that a publisher consented reading or "performance" of the book has controlled distribution (each copy is accounted for), and that the proportionate value of this performance makes money for the publisher and author. This is why parents reading to their kids isn't an issue, or even teachers reading in a classroom. In those cases, the average reader is adding a negligable value (commercially speaking) to the book by speaking it aloud themselves, and that's fair use. Now if that reader wants to go on stage (or the web) and sell their reading performance without publisher consent, it's another story.
With computer assisted reading, the value added is a bit more contentious. First of all, there are disabled readers who require text to be spoken aloud, and digital voice reading is a welcome technology for them. This service is valuable to those people, sometimes at a premium. However, the typical expectation is that disabled readers are adding the value themselves through assistant technology, and that they haven't paid inclusively for that assistance when they purchased the text. For example, you don't pay an additional $1 for read-aloud service offered to you from the book you've bought. You paid $357 for the Kindle 2, which adds that service to the book.
The cost of the digital voice application is a moot point to publishers, agents, and authors. What worries them is that in the future the voice applications are going dramatize the text too well, and that the additional exceptional value isn't compensated to them in any way under current contracts. Amazon's Kindle 2 was developed with the read-aloud function to add value not only to the Kindle, but to make the books themselves a better commodity–to sell more books.
Picture the future, when you've got an e-book of the latest bestseller and you ask your little e-book device to read it to you. Right in front of you pops up a digital hologram of John Houseman (licensed to the device by the actor's estate), and he proceeds to read the book to you in his nuanced dramatic voice (recreated through excellent programming). He reads Chapter 4 to you while you prepare dinner in the kitchen. He sits in the passenger seat, delivering chapter 14 as you commute to work the next day. This is essentially the benefit of read-aloud, although the Kindle 2 or Apple's Text-To-Speech isn't quite that far advanced yet. However, I'm sure you can see that a good digital voice has the future potential to add a lot of value to the reading, enough to give today's properly recorded audio books something to worry about.
The issue is that this value added isn't accounted for in current distribution contracts between the publisher and e-book retailers like Amazon, and potential publisher revenue might be getting lost (or cheated away from the future), and that's what rankles the Authors Guild. I'm not a fan of sword waiving tactics, but there needs to be new descriptive contract language that pertains to the read-aloud service. I'm not sure how accounting for the read-aloud service in financial terms can be done until there's a proven track record for consumer habits with this technology. Those numbers aren't available yet. But Amazon and other companies are investing in the technology more and more, so someone sees there's money to be made there in the future.
In many ways, it's an issue not unlike protecting song performance rights so that companies like YouTube can't make money off "free" performances of copyrighted material. (I'm not sure an amateur 8 year-old singing Miley Cyrus songs for YouTube has much value, but aggregate all the entertainment from thousands of such videos and it starts to paint a different picture until it appears obvious the songwriter is due some small increment of YouTube's revenue from distributing those clips.) Publishers don't want to chase after innocent people, but they also don't want to encourage wholesale ripoffs with loose legal terms. So maybe it isn't a bad idea to start new discussions with all the major players now about the audio rights for e-books and bring the agenda to Amazon's Jeff Bezos or a company like Google. I'm looking forward to having David Niven read me Sherlock Holmes stories on my Kindle 4 and I'd hate for anything to stand in the way.
TrueSlant.com blogger Roger Theriault has picked up a story from the MobileRead forums that Random House will go against the recent rush by its Big Six buddies to the "agency" e-book retail model recently introduced by Apple.
With the Authors Guild getting angry at Amazon's Kindle 2 for read-aloud technology (see their 
Picture the future, when you've got an e-book of the latest bestseller and you ask your little e-book device to read it to you. Right in front of you pops up a digital hologram of John Houseman (licensed to the device by the actor's estate), and he proceeds to read the book to you in his nuanced dramatic voice (recreated through excellent programming). He reads Chapter 4 to you while you prepare dinner in the kitchen. He sits in the passenger seat, delivering chapter 14 as you commute to work the next day. This is essentially the benefit of read-aloud, although the Kindle 2 or Apple's Text-To-Speech isn't quite that far advanced yet. However, I'm sure you can see that a good digital voice has the future potential to add a lot of value to the reading, enough to give today's properly recorded audio books something to worry about.
