Friday, November 25, 2011

It's Not About Libraries, It's About Amazon

When Douglas County (Colorado) Libraries decided to put "Buy this book" buttons on their online catalog pages (example), the response was strong. In just 11 days, the buy buttons had garnered almost 700 clickthroughs. According to Library Director Jamie LaRue, the library is putting buy links direct to publisher-supplied urls when they are provided (often to Barnes and Noble).  Of the 700 clickthroughs, 389 went to Amazon and 262 to Tattered Cover, the independent bookstore with 3 locations in the Denver area. In isolation, this data seems to be strong support for the notion that a digital presence in libraries can support sales of books. The withdrawal this week by Penguin from library ebook lending platforms (such as Overdrive) would seem to be a profoundly shortsighted move.

Viewed from a big six publisher's point of view, the situation looks different. If Douglas County's book buying rates match the rest of the country, its residents would purchase 2.1 million books per year, almost 6,000 books per day. The 7.1 million items circulated by Douglas County Libraries in 2008 would present as an attractive market opportunity.

It's hard to know what the bookselling environment will look like 10 years from now, after a transition to digital reading platforms. While some publishers hold out hope that they could play a much larger role in servicing the demand that libraries meet in today's market, it's not libraries that worry them today, it's Amazon. Today's big six publisher sees the Douglas County clickthrough numbers and worries that those 389 library patrons are being captured by Amazon. Amazon is pushing $79 Kindles to those patrons and then effectively owns their book consumption.

The casual observer might not imagine how much of a threat Amazon presents to a big six publisher. After all, Amazon is sending them huge amounts of money. But think about how this might play out. If Amazon, with its proprietary e-reading ecosystem, grows to dominate book sales the way it currently dominates ebook sales, then it will be easy for Amazon to squeeze out the big publishers. Amazon can acquire exclusive content by dealing directly with authors, and is already doing so. They will be able to demand that publishers reduce their margins so that they really are marginal. Publishers would have no choice but to surrender and perhaps die.

The Penguin move should be seen not as corporate verdict on libraries, but as a reaction to Amazon's entry into the library market. When Overdrive was distributing content to libraries on their own platform, the publishers were able to view Overdrive, and libraries in general, as a counterweight to Amazon. But the extension of Overdrive lending to the Kindle flipped libraries into the Amazon column. That's the best way to understand the Penguin decision, though you won't see them saying that.

The recently announced Kindle Owner's Lending Library demonstrates that Amazon, blessed with its trove of marketing data, understands the power of libraries to promote sales. But it also demonstrates that Amazon is not content to leave libraries to libraries. Amazon wants in on the lending action, too.

Bookstore closings and bankruptcies are just the first set of casualties in the war for dominance in the ebook industry, which has only just begun. Institutions with footprints as large as libraries won't be able to avoid cross-fire, or even direct attack. Neutrality won't be an option. The advance of technology doesn't respect the innocence of bystanders.

What's clear to me, at least, is that libraries could do worse than to follow the lead of Douglas County, stepping into the marketplace for ebooks without fear, with eyes open and with server logs studied.

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Sunday, November 13, 2011

eBook Markets Need eBook Quality Standards

Yes, the Kindle is UL rated!
Underwriter's Laboratory (UL) issued its first standard, covering "tin clad fire doors", in 1903. It then became easier for architects to specify fire-resistant doors for new buildings, which no doubt was a boon to tin clad door manufacturers, who no longer had to compete with doors made with too-thin tin. The UL® labels now let consumers buy all sorts of electrical products without thinking about whether their new Amazon Kindle will burst into flames in the middle of Maharaja's Mistress.

Think about all the things you didn't have to think about today. If you nuked a mug of water for tea this morning, you probably didn't consider whether the microwave's magnetron would fry you. You probably don't even know that your microwave oven has a magnetron. Our modern civilization is built on being able to not think about these things. Quality standards such as those developed by UL help us to think less, and help marketplaces sell more.

Unfortunately, if you're an avid ebook reader, in 2011 you have to think more than you want to about ebook quality. When Neal Stephenson's new novel, Reamde, came out, early purchasers of the book were dismayed to find that it was rife with typographical errors. (But not the title. That "typo", for ReadMe, is intentional!) Amazon was forced to suspend sales.

I've been watching an important effort on ebook quality. It's worth supporting. The entry deadline for the Publishing Innovation Awards is this week, November 15. Entrants submit ebook files which are evaluated for quality, innovation and design. New this year is the "QED" seal, which is awarded to entrants that satisfy a checklist of basic ebook quality no-brainers:
  1. Front matter: the title does not open on a blank page.
  2. Information hierarchy: content is arranged in such a way that the relative importance of the content (heads, text, sidebars, etc) are visually presented clearly.
  3. Order of content: check of the content to be sure that none of it is missing or rearranged.
  4. Consistency of font treatment: consistent application of styles and white space.
  5. Links: hyperlinks to the web, cross references to other sections in the book, and the table of contents all work and point to the right areas. If the title has an index, it should be linked.
  6. Cover: The cover does not refer to any print edition only related content.
  7. Consumable Content: The title does not contain any fill-in content, such as workbooks and puzzle books, unless the content has been re-crafted to direct the reader on how to approach using the fill-in content.
  8. Print References: Content does not contain cross references to un-hyperlinked, static print page numbers (unless the ebook is intentionally mimicking its print counterpart for reference).
  9. Breaks: New sections break and/or start at logical places.
  10. Images: Art is appropriately sized, is in color where appropriate, loads relatively quickly, and if it contains text is legible. If images are removed for rights reasons, that portion is disclaimed or all references to that image are removed.
  11. Tables: Table text fits the screen comfortably, and if rendered as art is legible.
  12. Symbols: Text does not contain odd characters.
  13. Metadata: Basic metadata for the title (author, title, etc.) is in place and accurate.
Next year, I hope they add a checklist item for typographical errors. If a publisher can produce print with minimal errors, there's no excuse to allow them in digital books. As the Reamde debacle showed, even typos can create significant customer service expenses for retailers.

A few years from now, it's likely that any ebook that doesn't meet these standards will be unsaleable; for now, a QED seal is a great way for publishers to realize the value of making a good digital product, and for readers to be able to think less.

Notes:

  1. In building Unglue.it, we've realized that we need to give book lovers some assurance that the ebooks they support for ungluing will be of a quality that they will be proud to have contributed to. We'll point to QED as a reference point for the quality we expect from unglued ebooks.
  2. I read the print version of Reamde. I thought the spin-up was Stephenson's best, but there was a lot of carnage as things spun globally out of control.

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Tuesday, November 8, 2011

Creative Commons Media Neutrality and eBook Rights after Rosetta v. Random

Here's where it gets complicated.

Not so long ago, book publishers had no idea that there would be such things as digital books. Publishing contracts mentioned nothing about ebooks. Literary agents made sure to keep derivative rights separate, so that translation rights, film rights, stage adaptation rights, etc. for a successful book could be separately monetized.

When ebooks started to become important, the digital publisher Rosetta Books took advantage of the situation, and started acquiring ebook rights to well-known books such as Kurt Vonnegut’s Slaughterhouse Five. This did not please the print publishers at all. Random House, one of the "Big Six" US publishers, took Rosetta to court, saying that their publishing contracts gave them exclusive rights to distribute books, and ebooks were books.

And here’s where it gets REALLY complicated. The District Court ruled against Random House, but narrowly, and the Appeals Court upheld. It wasn't that the ebook's bookness was obvious one way or another.  The courts only refused Random House’s request for an injunction.  Random House had asked the court to order Rosetta Books to immediately “cease and desist” selling ebook editions of Random House books.  Without an injunction, Random House would have had to continue with a lengthy legal preceding to assert its publication rights.

Instead, Random House negotiated a settlement with Rosetta Books, one which allowed some older books to be issued in ebook format by Rosetta. Rosetta got their ebook rights and Random got an undisclosed revenue share, according to Publisher’s Weekly. The details are not public, but the practical result seems to be that if Random House does not want to reissue an ebook of a book based on an older contract, they will allow the author to contract separately with a third party, such as Rosetta.   Open Road Media is a more recent, and more aggressive, ebook "reprinter," and they have also contracted separately with authors and estates for ebook editions, such as the "enhanced" From Here to Eternity; Random House retains print rights only.

Despite this uncertainty, the book publishing industry has managed, for the most part, to avoid destructive legal battles. It seems to be understood by literary agents that ebook rights for works under pre-Rosetta print contracts are to be offered first to the publisher with print rights. While Random House will often waive ebook rights, Harper, S&S, Penguin, Macmillan, Hachette seem to block 3rd party licenses, slowly adding the backlist ebooks to their ebook catalogs, and only if they can get authors to accept the current standard ebook royalties, 25% of net.  If no agreement can be reached on royalties no ebook is published.

For other publishers, the situation is confusing. According to Rosetta, "in England, the agent and author community has been clear for ten years that these backlist electronic rights are owned and controlled by the authors". Smaller publishers will often revert ebook rights because conversion and distribution costs for backlist books make it too expensive to create an ebook only to keep ebook rights.

The effect of the Rosetta v Random non-decision has been that a large number of works whose print rights remain with a publisher have ebook rights which  may be subject to dispute.  Often these books are scholarly works or trade books with little commercial value.

Our goal in building Unglue.it is to work with rights holders to re-license books such as these with the financial backing of book lovers everywhere. These "unglued ebooks" would be "given to the world" under something like a Creative Commons (CC) license. But how can such a license be applied when there is  such uncertainty around ebook rights?

One problem is that the Creative Commons licenses are media neutral. If I release a print book under a CC license, there's nothing in the license to stop anyone from scanning it, turning it into an ebook, and distributing it on their website. Similarly, a CC ebook can be printed and bound, and redistributed with the same license, so long as the other license terms are obeyed.

It's not enough to have ebook rights to release a Creative Commons ebook, you need to have print rights cleared as well! 1 (If you thought this article had reached the zenith of complicationness, you thought wrong.)

If what you're really interested in is ebook rights, then why use a Creative Commons license? With a CC BY-NC-ND license, the allowed noncommercial print uses are probably not very valuable.

Looking at this issue with our legal counsel, we considered the option of creating our own "Unglue.it eBook License" which would be similar to Creative Commons but which would prohibit even non-commercial printing. Unfortunately, this option would:
  1. require us to establish an entirely new publishing "standard" license;
  2. add legalese and restrictions that supporters and rights holders alike would find unfamiliar and undesirable;
  3. lose the benefit of the universal and clear standards of the Creative Common licenses.  CC licenses, for example, can be recognized and acted on by automated search engines.  Precedents exist for what is allowed. For almost a decade, CC licenses have allowed authors such as Lawrence Lessig and Cory Doctorow to publish successful commercial print and ebook editions alongside open access, CC-licensed ebook editions.
A different strategy would be to use a standard CC ND license, but to add a technical obstacle to printing which does not conflict with open access for the digital version.  If we created something inherently digital (e.g. with revisions that include animations throughout that can’t be printed), then printing a version without animation would violate the non-derivative aspect of the license.

We're not enthusiastic about this option either.  Just as legalese confuses normal people, the subtleties of media technology are likely to confuse lawyers and Judges. If someone wants to object to our interpretation of a “derivative use,” there's no technology that can keep them from suing.

A third option is by far our top choice, and is the one we will pursue. Get the various rights holders to agree among themselves!  Since the CC BY-NC-ND license only allows incidental and not-for- profit printing of ebooks, print publishers willing to let an author unglue an eBook using this license should also be willing to waive any conflict with their “exclusive” print rights.

Authors and publishers have mostly managed to get on with business without a clear legal decision on whether an ebook is a book. The possibility of a crowd-funded payoff shared by print and digital rights holders should create a strong incentive for them to work together to unglue the ebook.

How hard could it be?

Notes:
  1.  Or at least, you need to have any publisher with “exclusive” print rights waive those rights with respect to any “non-commercial” printing of a CC ebook for personal use.
  2. My colleague Amanda Mecke contributed to this article.
  3. Yes, that's the new logo for the Unglue.it service, coming soon!
  4. Standard IANAL disclaimer.
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