Amazon would love to have the same sort of success with the Kindle that Apple has had with the iPod, and by the same means (DRM famously made it impossible for iTunes purchases to be played on any other device, etc.). And in a way that sort of confinement does build brand loyalty if your brand is the best around (at the moment) and people would be buying your product anyway. But with Sony’s eReader stealing attention (and readers), and the uncertainty in a considerable fraction of the market about ebooks in general, competition renders DRM as much a prison for the retailer that wants to prevent piracy as the consumer considering piracy.

What Kassia says is in line with leveler heads: ‘Books, not format.’ Forest, not trees.

I agree with you totally about ease of use, but I’m not sure what the answer is. With iTunes, we are able to play files on our computer, and burn CD’s, not just the iPod. (I don’t even listen to an iPod.) We bought the song, we own the recording. The iPod is also quite useful as a portable hard drive device, and stores other things like video, books, etc. It may have initially made its big push on DRM, but now it dominates the market on the basis of ease of use. And new devices — it’s the multi-service — games, music, books, newspapers, video, Internet/e-mail, camera/photos, and the ability to transfer such files from the handheld to the laptop to the desktop to someone else through the Net. That’s where we’re going, right? And that’s when I’ll buy one.

Book publishers will go along with it. Most authors I know are eager to do it. They get maybe six weeks to six months in a bookstore to make a splash. Electronic format offers them a whole new way to go. But book publishing is definitely not going to be making the multi-tasking e-readers, and probably not the POD either. They aren’t filters and gatekeepers.

And print books need to be bundled with electronic format editions. People want both. That’s what I’d like to see publishers working on. It would help them with the piracy concerns a bit too.

The good news is…I don’t consult for publishers, so I am perfectly happy to have this conversation (and if I were consulting for publishers, I’d still be happy to answer this question — especially since it allows me to avoid, for a few more minutes, the laundry!).

There’s a bit of circularity when it comes to DRM. Vendors say it’s the publishers, the publishers say it’s the authors, the authors, well, they’ve been told for over a decade that the evil pirates are out there to steal their work. The truth is, everybody is complicit. Everyone hates DRM, but I’m not hearing that anyone, especially big publishing houses, is looking to eliminate it. Jeff Bezos has told me (and Kirk who wrote the article) that the Kindle is DRM-agnostic (meaning you can have or not, it’s the seller’s choice). Personally, I think this is careful phrasing, because format is a form of DRM. If you cannot read a Kindle book on your Sony Reader, it’s a way of managing (Amazon’s) digital rights.

(The Kindle does support a variety of non-Kindle formats, so if standards were utilized to the point where digibook retailers sold books in an open enough manner that consumers could port their purchases to the Kindle — provided that said format was supported — that is one solution to the closed system problem. Going the other way is a bit trickier, especially since I do not have a comprehensive grasp of the technical mumbo jumbo; when it becomes necessary, I bribe Kirk with wine to explain the concepts in little words until I understand.)

So we need to reverse the chain. But let’s start with this: I am not opposed to DRM, per se. I don’t believe it works, at least not as intended, but I can see positive aspects and uses. Most people do no know what DRM is, but they know there is something coming between them and their legal purchases. Make DRM better for consumers and consumers will love you. It’s not stopping piracy. Withholding rights is not stopping piracy. Think of a better way. So teach authors the truth about DRM so they can make informed decisions about how to license their work (author Naomi Novik has felt our pain and discussed on NPR). Publishers can then enforce standards — such as the EPUB standard — on device makers. The hardware will not limit anyone’s capability, and, just as other operating systems are regularly update, so can the operating systems for devices (there are technical things here I’ll let smarter minds explain).

This is oversimplifying the process because Amazon will still sell books in the proprietary Kindle format, because it has a vested interest in tying the consumer to the Amazon store. But Amazon is not the only game in town (nor the world) and if other devices and other retail outlets are perceived as more reader-friendly, readers will adopt them (there is a reason people are talking up the Sony Reader); this could exert the right kind of pressure on Amazon. We’re seeing a huge uptick in ereader technology, and it’s going to turn into a mad mess if such issues as interoperability and portability are not addressed right now. There is nothing like market competition to create necessary pressure on closed systems. The worst thing the publishing industry can do is create the same kind of confusion the music industry did — it was like the music folks had meetings with the goal of making it impossible for people to buy and listen to music. You want to increase piracy? Come between a dedicated reader and her book.

For my money, the smart thing for publishers to do is to utilize the standards in place (not perfect, not by a long-shot, but standards evolve. Slowly.) and focus on selling the book, not the format. They can also pressure device makers and retailers to make consumer-friendly choices (number one on the list!). Publishers aren’t letting just anybody sell their books because they want to make sure DRM is “protecting” (and the quotes are deliberately sarcastic) digital books. If I came in with an awesome, price conscious, magic ereader to go with my store that sold only DRM-free products, I wouldn’t get through the front door. Publishers (rightly) want to protect their products.

Long-winded answer with lots of thoughts flying in and out. I’m sure I’ve missed pieces and concepts and notions, but think I’ve made a start on answering your question. Or I hope I have. I truly believe that the successful (digital) publisher of the future will maintain a reader-centric focus, meaning the focus is on user experience, not locking doors after the animals have escaped. Book, not format. Ease-of-use, not proprietary. This also goes for device makers.

I’d kind of like to change the conversation here by asking Kassia a question — you seem to be putting forward that publishers need to standardize electronic formats and get rid of DRM. I totally agree with that, and as far as I’m aware, most of the publishers agree with the standardization and go back and forth on DRM a bit because of pirating, but are mostly leaning toward dumping it because they want a wider number of electronic publishers and vendors to sell to. But right now, book publishers don’t control DRM — companies like Amazon do. And it’s difficult for them to standardize electronic formats because they don’t design the formats — the companies making e-readers and e-books do. It’s not like the dinosaur CD-ROM days when the publishers were trying to be the e-publishers too. So how should publishers work it, given that they seem to have little control over what’s happening except for selling the rights?

If the answer is the sort of thing you get paid for in consulting, feel free to tell me you’re not answering here. I’m just curious and trying to learn more. Your blog is extremely helpful on the digital aspects of publishing.

And a lot of people involved in technology don’t understand the situations book publishers are dealing with and the way the business is structured. I was reading a tech “guru’s” essya that lumped literary agents in with real estate agents and talent agents, and who suggested that literary agents should say no to more prospective clients (literary agents say no to 98% of the writers who contact them,) and specialize in niche areas (all literary agents specialize, but not always exclusively because there’s not enough money in doing so.) So this guy clearly knew nothing about the business and how it is different from movies or real estate, which is often the case. Kassia does know about book publishing, but others come roaring in outrage about book publishing without any understanding of things like the peculiar distribution system.

Publishers can’t mobilize R&D divisions because they don’t have any R&D divisions. They can’t afford them and the type of one they’d need is very different from what R&D divisions are in other industries. Harper’s imprint is essentially sort of a small test R&D lab, and is the kind of thing publishers can do. If it works, other publishers will copy it. Eventually, they hope to get rid of the returns system altogether.

But they can’t reorient their distribution system just because it isn’t working so well. They have to convince their vendors to agree to changes, with vendors who are often monopolies. And don’t want to get rid of the returns system. They borrowed just in time delivery from the music business in the 1990’s and that sort of worked and sort of didn’t.

If they don’t get on the ball, other industries are not going to step in and take over the business because those industries don’t want the business. It’s too small, too difficult, too lacking in profit, too idiosyncratic, too resistant to advertising strategies, too little growth, etc. Publishers may be replaced by other publishers, but they won’t be replaced by Sony.

Amazon and Google don’t want to own book publishers. They don’t want to make books, they want to profit off them. Amazon does want to be a premiere electronic publisher, but it doesn’t want to have to own Random House to do that. And it has no interest in sharing its tech expertise with Random House so that Random House will be more efficient. It wants Random House humbled and dependent and handing over product at a cheap price. And Google I think wants nothing to do with publishers at all.

Either publishing shrinks or it goes forward. Right now, they’re working at going forward while shrinking. They have no tech staff, they can’t get tech staff, and being tech familiar is not enough. They probably won’t die off, but they’re behind other industries and they’ll stay behind. They will always be a small, low profit, low growth industry, even if print completely dies off, which won’t happen for quite awhile. They put too much of the PR responsibility on the shoulders of the authors. They need to be less dependent on retail booksellers. And they need to get their ass in the game, but they won’t stop being cautious.

Even if a publisher pays for a nifty website, certain aspects of the infrastructure of the publisher (its model for accepting, processing, and acquiring ms.-submissions, marketing and distribution tactics, and general working philosophy) urgently need updating. And I’m not speaking as a member of the “tech world,” nor am I even really addressing ebooks v. print: I spent the same amount of time in the Nineties and Twenty-First Century as the publishers in question, was educated by the same apparatus that educated the children of their editors and CEOs, and have difficulty understanding the mind behind such a statement as Kassia recorded, “This is all new to us.” Read Walter Mossberg’s column in the WSJ, for God’s sake, visit Yahoo! or any of the other AP/Reuters-disseminators. Sit on the Metro, the El, the T, any public transit system with or without a nickname. Where are they living, that they have no inkling? It’s true that generations tend to misunderstand or confuse each other, but this is the next phase of their own business, not glow-in-the-dark rollerblade wheels or slap bracelets.

More than a small, highly-specialized subculture (“tech folk”) is concerned about this. This concern is not ill-measured or excessively impatient. Of course change takes time and requires thoughtful strategizing and education on new tools and methods. The issue is not that they aren’t immediately where some group wants them to be, it’s that many of them aren’t trying to move forward at all. I’m even encouraged when I see someone like HC trying out their new imprint, as odd as I think it is. At least they’re doing something.

If it is indeed the case that publishers can’t afford to explore new technology, then those publishers will be replaced by or broken up into entities that can. The most distressing part of Amazon’s and Google’s increasing dominance over book digitization and bookselling is that they’re run, and many/most publishers are not, by people familiar with present/future technology, who have made their fortunes and business on a model that requires their remaining constantly on the cusp, and hardly ever in the actual moment of fruition. Like KatG has said, this isn’t evil, this is business savvy: I worry that the problem publishers have with mobilizing R&D divisions or reorienting their distribution networks, or whatever, will lead to the absorption of some of them into Amazon or Google before the changing of the guard at head-level. For some reason that makes me very nervous.

Kassia, the reviewers’ end, as we all know, is different from the publisher’s end. And I agree (with a smile) that you cannot control the lack of common sense in others. Like you, we have our preferences. I understand and sympathize with the need of publishers to control costs, but our reviewers whose ages range from early thirties to late fifties, all have a dislike of digital copies. And I agree.

I am not opposed to digital in its myriad uses–certainly our site is part of the online revolution–but when it comes to reading, whether for personal pleasure or professional reviewing, it has to be print. Because I just need to get away from the virtual world regularly.

Oh, and thank you for the news about NetGalley. I may give them another try.

The book market lost non-bookstore vendors, not because customers weren’t buying but because vendors cut their print wholesale orders and how they handled orders, and the number of wholesalers shrank to a tiny number. So before publishers can deal with customers, they have to deal with grocery stores. They’ve lost ground with vendors and this makes books less visible to customers. And online, there aren’t enough strong vendors yet either. They first have to work out terms and distribution with retailers and deal with the consignment system. Unlike, say, Levi jeans or Apple computers, publishers don’t own some stores of their own to sell products directly to consumers. Nor do they control much of distribution. They have to deal with the middlemen before even getting to the customers in order to reach the customers. Essentially they first have to convince businesses to sell books, rather than concentrating mainly on getting customers to buy them.

While R&D, marketing campaigns and consumer focus groups are part of most industries, they aren’t part of book publishing. They can’t afford them, they can’t afford the people who do them, and many of the usual marketing efforts have proved not effective with fiction, which sells chiefly on word of mouth and can’t be packaged like non-fiction. And the profit margins on book publishing are so slim that other companies that could do these things as business partners end up getting out of book publishing. Book publishing just isn’t a very attractive investment, even with a willing publisher.

So everything in book publishing is slow, conservative, with minimal expense and not very sophisticated technology. They mostly let the authors try things on their own dime to see what works. It helps if you realize that while authors type novels on computers, only a few years ago, they didn’t turn in the novels as computer files, but as paper ms., which was edited with pencils, not a computer program. Electronic ARC’s are a new thing. Websites are a new thing.

For instance, just four years ago, Tor Books — an international publisher — had an utterly awful website, just some text lists put up without even cover art. Then they got a website update as part of Macmillan so that they were more functional. And then they also launched Tor.com, which is a SFF social site, with columnists, free short fiction, reviews, message boards, etc. This has been very successful and is now being copied by other publishers. But in tech terms, it’s pretty minimal.

Which is why I just giggled when the tech folk expressed outrage that a panel of publishers had no glorious online marketing plans, but instead, were hoping that the tech audience would give them some help for free. Of course they hoped it would be for free — tech people are expensive.

The tech world’s astonishment that a book publisher doesn’t operate like Sony doesn’t help usher book publishing into the future. Book publishing needs cash, which means advertising partnerships for joint products like the Coelho-HP hook-up, not just books alone. There’s stuff publishers could try, as you suggest. They could bundle e-book versions and print versions of titles together. But first, they’re going to have to deal with Amazon’s attempt to keep publishers dependent on Kindle for e-publishing and Kindle on DRM. And they have to do everything on a shoestring budget. Instead of think big, they have to think what’s the most cost effective return. This does not lead to much tech experimentation.

KatG — I’m afraid I’m not following your logic on the concentrating on the end user thought. It seems like the arguments you’re making are precisely why thinking about the reader is critical. Can you clarify? (it’s me, not you!). In a time of increased consumer fragmentation — we have so many demands on our time — it seems like devoting time and energy to R&D, smart marketing, consumer experience is the key to retaining current customers while expanding that base to new readers.