Tuesday, October 5, 2010

Aggregating Deep Discount Readers of eBooks

The book publishing industry should be terrified of readers like me. Over the last year, I have purchased a grand total of one new book. Why only one? I have a huge stack of books, both print and digital, in my aspirational reading queue. I read plenty of books, but there are many more books that I would like to read; so many in fact that I see no reason to spend $30 on a book when there are plenty of minimal-outlay books already waiting to fill my hours.

The books on this stack come from a variety of sources. I read ebooks from my wife's Kindle account. The print books are almost all purchased at used book sales, typically for $1 or $2 each. The publisher's revenue from all of this book enjoyment is $0, and of course the author gets only a small fraction of that in royalties.

No matter how terrifying the idea is, discount readers like me represent a big opportunity for book publishers as they move there properties onto digital platforms. Discount readers come in many forms; it's safe to say that the billions of books lent by libraries went to people unwilling to pay full retail price for books. Libraries contribute modestly to the income streams of publishers and authors; used book sellers not at all. In their print businesses, publishers have learned to segment their markets by offering paperback versions as well as remaindered books, but they have largely neglected the deep discount end of the demand curve.

There's a huge amount of value to society in deep discount demand, and it not just in the benefit to readers like me. Libraries include the preservation of our written culture in their mission; this activity wouldn't happen if the first-sale and fair use doctrines didn't limit the control that publishers and authors could exert over the use of their works. We need to think about how to do preservation as we translate the book business into a digital industry.

I've been thinking a lot about business models for ebook publishing, and a lot of my thinking has surrounded market segmentation methods. I've been looking for ways ways that discount readers like me can be aggregated into sustainable revenue streams to sustain institutions such as libraries.

One obvious model to serve the discount reader is to offer subscription packages. I've come to the conclusion that ebook subscription packages have many structural problems. Subscription packages inevitably cannibalize sales of the items they contain, and there's a lot of incentive for the package to exclude items that readers would really want.

In the course of studying academic publishing models, I think I've found a  way for the book business to serve deep discount readers, to reinvigorate libraries, and to create a new, sustainable revenue stream for publishing: public acquisitions of ebook rights.

Here's how it might work for me. There are lots of books I aspire to read, many more than I have time for. There are also lots of books that I'd like to have on my reading devices, because I've read them once in print. I want to use these books in many ways, on many devices, at any time in the future. I want to be able to search them, and have others read them. I don't want to have to mess with DRM. And I want them to be preserved and available forever in public libraries.  I also like the one new book I've purchased (Clay Shirky's Cognitive Surplus: Creativity and Generosity in a Connected Age) enough that I would also pay something towards letting you read it too! Imagine that I could offer $1 for each title on my list to have this magic occur. (Cognitive Surplus is a thought-provoking meditation on the things that happen when the barriers to collective action are lowered, among other things. You should read it!)

OK, here's a stretch, imagine that millions of other people feel the same way!

If millions of people feel this way, there's absolutely no reason this magic can't happen. I have advocated that libraries should work together to collectively acquire ebook assets. The same mechanisms that would allow libraries to act collectively could be used by individuals to act collectively on behalf of books that they care about.

 If a hundred thousand people offered a dollar to Clay Shirky (and Penguin, his publisher) for Cognitive Surplus to be released as a creative commons licensed ebook, certainly at some point they would examine their prospects for future sales and figure out how to say "yes". Once a book is liberated in this way, all the magic just happens.

 I'm not expecting J.K. Rowling to cash in her Harry Potter rights anytime soon, but I think there are many types of works and many types of authors who would find it financially advantageous to monetize their work in this way if it became popular. I also think that it's very common for readers to be passionate about the books they read in ways that transcend their narrow financial self interest.

 If you agree with me that mechanisms for public ebook acquisition by readers should be developed, I would very much like to to hear from you, either privately or in the comments!


  1. Not only do I agree with the notion that mechanisms for reader-sponsored public ebooks should be developed, I would go so far as that a model for such projects might already exist.

    Over 1000 true fans (as Kevin Kelly would put it) were so taken with Tom Henderson's pitch for a book dedicated to Punk Mathematics that they funded the writing of the book with $28,000 via Kickstarter:


    That being said, it looks like that the book won't be placed in the Creative Commons, but a reader-supported push in this direction is just another campaign away.

  2. Eric,
    Does your model include the notion that the contributions towards public access for an ebook would need to reach a threshold? Like http://www.kickstarter.com/, but for an ebook?


  3. Mita, Adam- Kickstarter is a great model to show what can be done on a small scale; there are tens of millions of books to open up.

    @JMarkOckerbloom points to the street performer protocol. There are pieces of this puzzle lying around in many places.

  4. My point in bringing up kickstarter was to make the point that a threshold needs to be included in the model. The publisher, in your model, would set the threshold. If they set the threshold too high, and they don't get enough contributions, then the ebook stays closed and they get no additional revenue. If the publisher sets the threshold about right, they get maximum revenue and the book is made available to all. I could see this new broker system developed by the Copyright Clearance Center or even CrossRef.

  5. I reread my comment and think I need to be clearer. If the threshold for pledges is met, the publisher gets all the pledge revenue (held in escrow via that street performer protocol that John Mark mentioned, for example). If the threshold is not met, they get 0.

  6. Adam- Yes, there has to be a price associated with a rights transaction. It's hard for me to imagine how there wouldn't be. I don't think that tip-jars are a viable business model for ebooks.

  7. Adam- In Threshold Pledge Systems there's a task that people are asked to sponsor, and I see how a non-threshold system could make sense. In an ebook public rights market, presumably the book has already been written, and the release is a discrete event, so non-threshold systems don't make much sense. I'll work on trying to say this more clearly.

  8. I've been mulling around another idea.

    We would take the existing 'Writer-in-residence' program one step further. Each year, a library would financially support one writer in exchange for, say, the public ebook rights of the results of said residency.

    It would be as if we turned the One Community, One Book from a community reading project into a community *writing* project.

    And then our patrons would then really become patrons! Ha!

  9. Hm. I would love to be able to do something like this. I'm much more likely to borrow books from the library than to buy them these days -- which turns out to mean that I am reading many more books, which is great -- but sometimes I would certainly like to be able to kick the author some extra royalties, without having to clutter up my full-to-bursting bookshelves. (Like right now? Nnedi Okorafor's Who Fears Death. OMG is this book good.)

    But I wonder if it wouldn't run up against the same sorts of problems that have dogged micropayments in, e.g., webcomics. (A history that newspapers criminally neglect when they talk about monetizing themselves online; are journalists utterly unaware there is a historical context for these conversations? Apparently so.) I'm not deeply familiar with this history myself, but I gather that there have been many attempts made at various forms of micropayments and they generally don't work. People say they want to support their favorite artists, but they don't actually do it, even when the threshhold is very low indeed.

    Maybe ereaders (and books read on smartphones, etc.) offer a way to put an extremely-low-contribution thing directly into the reader's flow: click this button and it will take 99 cents from your credit card without your even thinking about it. But I don't know that the threshholds are actually lower there than in previous technologies. What's the motivational aspect of this program?

  10. And then, via Cory Doctorow (http://www.guardian.co.uk/technology/blog/2010/oct/05/free-online-content-cory-doctorow?CMP=twt_gu), I discover http://flattr.com/, a pirate bay startup for micropayments to artists. Totally different from your rights acquisition idea, but dovetails with my question about motivation. I wonder if it'll even vaguely work.