Penguin Unfriends Libraries

In joining the other publishing benchwarmers today, Penguin pulled the rest of its catalog from Overdrive. Enjoy the Penguin press release on this occasion:

In these ever changing times, it is vital that we forge relationships with libraries and build a future together.  We care about preserving the value of our authors’ work as well as helping libraries continue to serve their communities.  Our ongoing partnership with the [American Library Association] is more important than ever, and our recent talks with ALA leadership helped bring everything into focus.
Looking ahead, we are continuing to talk about our future plans for eBook and digital audiobook availability for library lending with a number of partners providing these services. Because of these discussions, as of February 10, 2012, Penguin will no longer offer additional copies of eBooks and audiobooks for purchase via Overdrive.
Physical editions of Penguin’s new and backlist titles will continue to be available in libraries everywhere.

This sort of sentiment begs the old saying that starts out “With friends like these…” They could have at least thrown us a bone as to whether it was Overdrive or libraries that were making them nervous about their bottom line. In looking back at Molly Raphael’s report from meeting with publishers last week, I’m guessing that it is us.

“A key issue that arose in each meeting is the degree to which “friction” may decline in the ebook lending transaction as compared to lending print books. From the publisher viewpoint, this friction provides some measure of security. Borrowing a print book from a library involves a nontrivial amount of personal work that often involves two trips—one to pick up the book and one to return it. The online availability of e-books alters this friction calculation, and publishers are concerned that the ready download-ability of library ebooks could have an adverse effect on sales.”

(Emphasis mine.)

That last sentence gave me the twitchy eye. Perhaps it could be explained as Molly’s interpretation, but there is something about that “could have” phrase. It suggests a line of thinking for which there is no supporting empirical evidence. Has there been any research, a study, or other inquiry that shows a correlation between an increase in library eBook lending and a drop in sales? There is raw data that exists showing how many eBook checkouts in a library region and there are sales figures showing the sales for that area. Has anyone analyzed these numbers? Who is doing the market research for these people?

Can their presumption be proven? Has it already been proven?

All I know is that limiting your market is not always the best way to expand it. If you want people to read, then you make it as widely available as you can. The placement of obstacles just stymies the average modern consumer, a person whose demand for instant gratification will just have them move on to the next thing.

This is just a nice reminder that publishers have shifted to selling a product, not a culture. I guess the latter is up to us to provide.

(h/t: Librarian in Black)

Andrew Sullivan on the Book Publishing Industry

Daily Beast blogger Andrew Sullivan has a feature on his blog called “Ask Andrew” in which you email a question and he records a video response. As he is a critic of the publishing industry in its current form, I asked him:

In the past, you’ve made statements that the publishing business model needs to change to reflect our modern technological culture. In your opinion as an author, what would the publishing industry need to do to accomplish this?

I almost missed it, but I was delighted to see that he recorded a response. Take a look.

Wiley Chases the BitTorrent Roadrunner

From TorrentFreak:

John Wiley and Sons, one of the world’s largest book publishers, have sued 27 BitTorrent users at a federal court in New York. The publisher claims that the defendants have shared copies of its “For Dummies” books without permission, and demands compensation.

A year and a half after the Recording Industry Association of American wound down its litigation campaign against file sharers, a publisher is ready to pick up the same playbook and run with it. Yes, this is the same playbook that spent $64 million dollars in legal fees for $1.4 million in settlement money. To proclaim this as a defense of intellectual property is an insult to the first word of that term; there can be no logical or academic argument that this will yield different results than have been gained in other industries pursuing the same strategy.

The article has some choice quotes from the filed complaint.

Wiley argues that through the massive piracy that occurs on BitTorrent, their company is suffering severe losses that might cost several authors their jobs.

“Defendants are contributing to a problem that threatens the profitability of Wiley. Although Wiley cannot determine at this time the precise amount of revenue that it has lost as a result of peer-to-peer file sharing of its copyrighted works though BitTorrent software, the amount of revenue that is lost is enormous,” Wiley’s attorney writes.

Since they are going to be paying law firms rather than their talent (you know, the people who are at the center of their business model), I guess some authors will lose their jobs. And the bit about not being able to determine how much revenue is lost but saying it is huge? That’s the same underlying rationale that believes that every library loan is a lost sale. One of the books in the complaint might have been downloaded 74,000 times in the last 18 months, but that doesn’t mean each and every single one is a lost sale. That would be like saying that people looting a television store are all potential television buyers; it does not follow that the person carrying off a plasma would be willing to plunk down cash for it in ordinary circumstances.

To me, this is a huge waste of time and money. While piracy is wrong, I don’t think this is an effective deterrent or a useful expenditure for the industry (especially after in seeing how other groups fared using the strategy). The resources here could be spent on finding better solutions and business models, not pissing away money of a shrinking industry. These settlements (if any) will not fund the future of the business. I’m afraid that libraries as consumers will end up footing the bill for this in terms of higher pricing and, quite frankly, I appalled to think that we would end up footing the bill for this brazen stupidity.

My prediction as to how this affair will end up looks like this in the years to come:

Meep, meep, publishers.

(h/t: @joelnaoum)

Where’s the Logic?

From Teleread:

The Bookseller has some interesting coverage of the London Book Fair, but I don’t have time right now to go over all of it. I’ll focus on the one bit that just leaped out at me. A number of execs—David Shelley of Little, Brown, Richard Mollet of the Publishers Association, and Stephen Page from Faber—explained that fighting online piracy is costing publishers a bundle, and is one of the reasons publishers cannot afford to raise e-book royalty rates as some publishers have been requesting.

From the embedded link above that goes to TheBookseller.com:

[David] Shelley told delegates: "Money spent on print and paper will be spent on specialists to fight piracy. The costs of this are only getting more expensive, and could spiral way out of control. There are also legal costs, when sites refuse to take down content." Shelley claimed the "unknown costs", as well as other new digital costs, would replace the cost savings made on digital.

Huh. So, the cost of printing is going to be shifted to fighting piracy. Those costs can only go up with the possibility that they could become unsustainable (that is what spiral out of control means, right?) Then you add in legal expenses on top of this money equation (unless that’s part of the spiral). And then when you add it all, it would replace (read: equal) the cost savings on digital.

Wait, what?

I’m not sure I get it. But in looking at the publisher margins for ebooks: (as I wrote about in a post about two weeks ago)

How much better for the publisher and how much worse for the author? Here are examples of author’s royalties compared to publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

The Help, by Kathryn Stockett

Author’s Standard Royalty:
$3.75 hardcover; $2.28 e-book.
Author’s E-Loss = -39%

Publisher’s Margin:
$4.75 hardcover; $6.32 e-book.
Publisher’s E-Gain = +33%

Hell’s Corner, by David Baldacci

Author’s Standard Royalty:
$4.20 hardcover; $2.63 e-book.
Author’s E-Loss = -37%

Publisher’s Margin:
$5.80 hardcover; $7.37 e-book.
Publisher’s E-Gain = +27%

Unbroken, by Laura Hillenbrand

Author’s Standard Royalty:
$4.05 hardcover; $3.38 e-book.
Author’s E-Loss = -17%

Publisher’s Margin:
$5.45 hardcover; $9.62 e-book.
Publisher’s E-Gain = +77%

They would be taking the money made from this new greater margin and using it to fight online piracy. Which they may or may not be able to do based on the impossible-to-calculate-but-possibly-unsustainable sum of money. But since they have a better margin from eBooks, they have more money to fight piracy.

And that’s why they can’t pay authors a larger royalty.

It’s that kind of logic that makes me think of Eli Neiberger’s idea of going directly to the content makers to purchase the rights. Why deal with a middleman who is hell bent on a Sisyphean task of financially dubious results?? The cost of that madness would be added to the cover price; we (libraries and regular consumers) would be paying to support these ill reasoned expenditures. I’m all for rights holders pursuing actions t defend their intellectual property, but not under the “we must burn down the village to save the village” kind of approach. There has to be a better way.

It’s odd, as I close this post, to think that some publishers actually have issues with their digital content being at libraries. I would think we’d be a lot easier to deal with than your average pirate website.