What Price Entertainment?

December 10th, 2007 · 9 Comments
by Kassia Krozser

Bubbling under the surface of various discussions about entertainment media is the question nobody in the industry wants asked: what is the value of what we’re selling to our customers? With physical media, it’s easy enough to point to a book and say, “You get all that and more!”

The device I choose today might be different tomorrow.

With digital media, consumers are scratching their heads. Especially since the fashion is to make the use of digital media less flexible than physical media. It’s a particularly interesting question for the book business — how do you go from a culture that encourages, on various levels, sharing to one that makes it a crime to trade reading material?

Think about it: it is expected that people will pass on favorite books to friends (“read this, you’ll love it”), we accept as a given that used bookstores will introduce readers to new authors, heck, even the library has an aura of free (though I would like to remind all readers that this is not the case; we need to be aware of how libraries are funded and make sure that funding is protected). I’m not just talking about sharing books between friends — I’m talking about sharing books between family members and even devices.

If I cannot easily move content between my laptop (which, contrary to popular belief, I don’t take everywhere) and my iPhone (in theory someone will develop a killer reader app) and my Kindle (Santa might bring one, you never know) and some other device to be named later or developed next week, then what good is that book? I am a huge re-reader. I am a flaky consumer. The device I choose today might be a different item tomorrow. You cannot trust me.

Ebooks are not a one size fits all concept. Some readers are enjoying long-form fiction in that format. Others are looking for short reads. Some find the ease of electronic reference materials to be a lifesaver — the husband has been a happy camper since joining O’Reilly Media’s Safari program. Not only has he reduced his purchase of doorstops — doorstops that become obsolete when software changes — but he’s able to find answers to nagging questions instantly.

Notably, sometimes he’s working at his desktop, sometimes he’s working on his laptop, sometimes I allow him the pleasure of using my machine (this gives him the opportunity to note that my memory and storage are nowhere near his. which in turns allows me to note that it’s getting be time for a new laptop). O’Reilly offers him the right amount of flexibility at a reasonable price.

I cannot overemphasize how important this flexibility is. Why would any consumer want to pay physical product prices for less freedom of use? Restricting use lowers the value of the product to the customer. Of course, restricting use also lowers potential sales as explored in a recent AP article about ebooks:

When major publishers sell e-books, they encrypt the files with so-called DRM, or digital rights management, technology. It keeps the buyers from passing on the files to others, at minimum. DRM sometimes does other things as well, like preventing printing, or setting an expiration date after which the book is no longer legible.

DriveThruRPG abandoned DRM in 2005. Customers hated the hassle of dealing with it, and it didn’t offer very good protection against piracy, Wieck said. Now, the site sells unprotected PDFs with a faint “watermark” with the customer’s name on every page. Sales rose 30 percent after the change.

There is a belief that DRM is the only way to fight piracy. Not true. There is also a belief that every pirated version of book is a lost sale. Also not true. Here at BSHQ, we have had two (two!) documented instances of DRM authentication failures in the past month (and don’t get me started on the frustration that happened when the totally unnecessary iTunes authorization server failed, delaying my happiness with the iPhone for a day). The authorization servers failed in both instances. Products paid for, not usable, more hassle for us, the people who’d fulfilled our end of the bargain than necessary.

Will I be buying ebooks that require use of Adobe’s Digital Reader or whatever it’s called again? No. My enthusiasm ebbed when I had to download and install special software. It waned when I received repeated failure to authenticate, try again later messages. It completely disappeared when Adobe’s customer service told me that resolving my problem would require a phone call during specific business hours.

Yeah right. Digital rights management should not make my life harder. This is a valuable lesson for all publishers to learn. I don’t want to be a pirate. I am more than happy to pay for convenience and ease of use. I am lazy. In the case of these books, I was making an impulse purchase — I had no real need for the books nor did I plan to purchase them in physical format. Had this experiment worked to my satisfaction, I would likely make the same type of impulsive purchase many times in the future.

This is the price of entertainment: customer satisfaction.

What are you giving the customer versus what are you taking away? In the case of O’Reilly’s Safari, you gain up-to-date reference books in a flexible environment for a reasonable monthly fee. In the case of DRMd ebooks — whether they be from a publisher or via Amazon — you get device lock-in and lack of flexibility.

I might be the odd one out here, but I do not believe that ebooks will “replace” physical books, at least in my lifetime. I see the two as complementary. It is very important to stop seeing the two as competition. It’s time to focus on reality: different formats require different pricing structures, royalty models, and marketing strategies.

On an unrelated note (but hey, gotta fit everything in today!), I was greatly (greatly!) amused by the attempts of the Associated Press to find a new angle on the ebook story:

But if you look away from the mainstream publishing industry, e-books are already a success in a few niches, where they are giving rise to new ways of doing business. The standout example is role-playing games, but buyers of college textbooks and even romance novels are warming to e-books.

Even romance novels? Oh, man, where have you people been? Do you honestly think that Harlequin’s decision to offer its entire frontlist in electronic format was the result of an overnight decision? No, sillies. Harlequin has been watching the ebook market carefully over the past ten years and realizing that there are a lot of romance readers out there who are happily buying and reading ebooks.

These readers have been flying under the mainstream radar for far too long, but trust me when I say that ignoring this customer base means ignoring the real readers. Oh, and this relates to price on a most basic level: these readers have a set of price expectations that fly in the face of conventional publishing wisdom (I think Harlequin is still setting prices too high, but I also think they’re experimenting wildly…and that’s fine by me, they’re going to find the right mix of technology and pricing). The authors of these books also have a new set of expectations: they are accustomed to receiving 30 – 40% of every dollar earned by their publisher.

Ebooks will probably be the de facto choice a half dozen or so generations down the line. Today’s ebooks are a consumer choice. To buy electronic or to buy print (or to avoid making the purchase at all) is dependent on a set of factors unique to each individual. It is incumbent upon publishers to remember this — and to consider the price paid by the customer in money, time, and flexibility when making these books available.

File Under: Non-Traditional Publishing

9 responses so far ↓

  • Carolyn // Dec 11, 2007 at 8:33 am

    Great article! Thanks for posting.

  • Kathy // Dec 11, 2007 at 2:41 pm

    I agree with every word. What do you think about bundling print versions of books with electronic reader versions or codes for downloading? It seems to me that people may want both versions — the electronic and the physical, so it would make sense to partner them.

  • Kari // Dec 12, 2007 at 7:40 am

    I agree 100%. Great article. I especially agree with:
    There is also a belief that every pirated version of book is a lost sale. Also not true.
    The books I buy in ebook format are also impulse buys. I would NOT buy them in physical form, thus publishers are getting an extra purchase – it is not a replacement for a physical copy. I think pirated versions work like that too (I am in South America where piracy is a big issue – mainly, in my opinion, because physical forms are nonexistent or cost 3-6 times the original price, and many populations cannot afford even the original prices. Nevertheless, many people who use pirated versions (or even most of them) would not buy the physical form under these circumstances anyhow, so there would be no sale regardless.)

  • cristy // Dec 12, 2007 at 9:32 am

    How out of touch with consumer reality must these publishing types be to walk in the exact footsteps of the music industry? A path that will lead them off the edge of a cliff, I might add. DRM simply does not work. Treating your potential customers like criminals is the quickest way to kill your profits. Considering how many books are released each year that fail to break even, e-books are a great way to encourage readers to try to new authors, especially if the price is far less than a print version. The worst part of the hypocrisy is that both the music and the publishing industry say they’re making these bonehead decisions to protect the creators of the work, when in actuality, they’re really only concerned about their own stock price. I’d like to be optimistic and think it will work itself out, but if the music industry is any indication, we’re in for a long fight.

  • bowerbird // Dec 12, 2007 at 3:47 pm

    > how do you go from a culture that
    > encourages, on various levels, sharing
    > to one that makes it a crime to
    > trade reading material?

    and what happens to our cultural heritage
    if we let these greedy heathens succeed?


  • thedigitalist.net » links for 2007-12-15 // Dec 14, 2007 at 8:27 pm

    […] What Price Entertainment? | Booksquare Cogent argument about the barriers to entry engendered by restrictive eBook DRM. The case for social DRM becomes stronger by the day. (tags: ebooks drm) […]

  • Miki S // Dec 18, 2007 at 8:54 pm

    Oh, I agree with this on so many levels! I love eBooks. Love the instant gratification of downloading it NOW! Love the ability to carry 100 books (or more) in my purse because they’re in my PDA or eBook reader. Love that I don’t have to dust them or worry about print over-runs bulking up our already teaming landfills.

    But I’m tired of being treated like a criminal-in-waiting. I’m tired of waiting to see if the books I want will be released in the only DRM’d format I’m willing to pay for. I’m tired of dreading the release of each newly touted eBook reader, because it almost always means yet another hardware-specific eBook format has been unveiled.

    I also think it’s a shame that I CAN’T share these with the same friends I’ve been swapping paperbacks with for years. How many authors have I discovered over the last three years (since I first invested in eBooks) that I can’t get these friends to try because they’re not willing to spend $8 (or $14 or $25) on a new-to-them author…that they would have bought up if they could have tried that first book from me? (Or vice versa).

  • Breaum // Dec 18, 2007 at 9:20 pm

    Like the others who responded, I completely agree. Ebooks and Ebook readers are being created without any regards to the consumer. Both need a reality check. At least in the music industry there were standard formats – ebooks are ridiculous.

    I also buy them mostly on impulse; or when I finish a book at 1:30 in the morning and can’t wait to read the next in the series. Trust me, when that is the case I don’t want to take the time to pirate…

    If you are going to give the ebook another shot, I recommend the Adobe format. You have to make sure you have the right version, but after that it’s fairly painless. I haven’t tried any others – Adobe is free and it came on my system. I think that it needs to be developed a little more and standardized.

    There are those looking to standardize :

    Unfortunately, no one is paying attention.

  • eBooks - why they got it all wrong « Mbreau’s Weblog // Dec 18, 2007 at 10:37 pm

    […] Does your reader work?  Or are you going to run into problems like Kassia Krozser talks about on Book Square, where companies are so intent on making their books invulnerable to pirates that they make them […]