E-Books, Business Models and Sloppy Reporting in NY Times

A New York Times reporter asks an interesting question — How Much Should an E-Book Cost? — in a Week in Review article, but her reporting is so shallow that the answer is murky at best.

kindle pic 999She starts this piece with an anecdote about a best-seller by political thriller writer David Baldacci. The book’s Amazon Kindle price was originally set at over $15, but that price set off a rebellion among the author’s fans, one of whom wrote on the comments at Amazon that the price was just too high to bother with his work.

The fan’s comment, Rich writes:

was a chilling sentiment for authors and publishers, who have grown used to an average cover price of $26 for a new hardcover. Now, in the evolving Kindle world, $9.99 is becoming the familiar price. But is that justified just because paper has been removed from the equation?

For many readers, this may sound like sufficient reason. Buying music, after all, is so much cheaper now that there aren’t discs and plastic cases. Shouldn’t the same logic apply to books? And if not, won’t the temptation to steal electronic copies online simply increase?

Publishers and authors say it is much more complicated than the cost of paper and shipping. The lower e-book price “is not sustainable,” said Mr. Baldacci, whose novels regularly rise to the top of hardcover best seller lists. If readers insist on cut-rate electronic books, he said, “unfortunately there won’t be anyone selling it anymore because you just can’t make any money.”

First things first: The price of Baldacci’s book was re-set at $9.99 (a price I will henceforth refer to as $10), and it’s selling like digital hotcakes; I guess you can make money this way, after all. Nowhere in the article is this mentioned. I truly hope that’s a reflection of sloppy editing, not incompetent reporting.

Now, sellers have every right to charge more for popular books, especially when they’re new. This is basic supply and demand. But the revolt by Amazon customers has had everything to do with the publishing industry’s belief that it can charge higher prices for inferior products.

The kinds of books I buy for my Kindle, as I noted in a recent piece for the All Things Digital site, fall generally under the casual entertainment category. I buy a Kindle book the way I buy a movie ticket — for books, like most movies, that I’ll read or watch once and forget about. A physical book is more like a DVD–something I want to own and enjoy again and again.

So my Kindle purchases are like the books I used to buy in airport newsstands, such as mysteries, thrillers and semi-trashy novels that I’d sometimes leave in hotels or airplane seat-back pockets once I’d finished them. And once I got accustomed to reading e-books, I started doing something that had been out of character in the analog era: buying new books that, in print, were available in hardcover only. Why? The $10 price felt right. In fact, my new-book purchases soared.

Then the Kindle prices started soaring for new best-sellers. I stopped buying. (I save these titles to a list I keep on the Amazon website, called “Too expensive on Kindle,” and periodically check to see if the price has dropped. So far, not yet on any of these.)

Hiking prices this way creates a bad deal for the customer. Amazon’s price for a new hardcover is typically just a couple of dollars higher. This means I could buy the hardcover, read it and donate it to my local library, and–after the tax deduction–come out ahead. I’d do even better taking the book to my local used-book store and getting cash.

The ability to give away or sell a used book is called the “First Sale Doctrine” in copyright law. But by sending me a digital file and tethering that file to a specific device, Amazon and the publishers have removed my right to transfer it, and thereby destroyed a portion of the book’s value. By all rights they should offer me a better price, considerably better, than the hardcover (or, for that matter, softcover) edition.

Nowhere in Rich’s article does she even hint at this. Moreover, she appears to entirely take the word of publishers on several key facts, notably when they claim that Amazon’s $10 price is a loss-leader and not a price to which they’ve agreed. An Amazon customer service person told me that the higher new prices for Kindle books were a reflection of the publishers’ decision that they, not Amazon, wanted to charge higher prices.

I’m not saying all this to defend Amazon (in which I own a small amount of stock). In fact, I find the Kindle an extremely troubling device, in part because of the way it removes my rights to do what I want with what I’ve purchased. Amazon’s digital rights management system is, like that of the DRM employed by the entertainment industry for movies and music (thankfully disappearing with the latter), a system for restricting customer rights, and it’s bad news in every way.

Moreover, I agree with Cory Doctorow that the publishing industry is foolish to allow Amazon to set the terms of its future existence, as Amazon is certainly trying to do. The publishers could market their own electronic versions and cut out the middleman entirely (like my publisher, O’Reilly Media — though O’Reilly sells via Amazon, too, in non-DRM versions in all cases). Amazon’s value-add, however — or their own myopia — is sufficiently robust that they toe the line, at least in part.

The whining by author Baldacci, unchallenged by reporter Rich, is just pathetic. No one is forcing him to release his books in digital form. He and his publisher are entirely free to say no, or to offer their own digital edition. The real worry, as Rich does report:

The doomsday scenario for publishing is that the e-book versions cannibalize higher-price print sales. Publishing houses, already suffering from the recession, could be forced to cut author advances or lay off more editors.

Ah, now we understand what’s really going on in this situation. It’s about the enormous advances that Baldacci might have to trim. It’s the possibility that people will buy at the paperback price (actually higher) for a new book, not that they’ll stop reading what authors write.

The business is definitely changing. It’s too bad that publishers and rich authors are resisting change with all their might.

It’s equally problematic that journalists on these issues can’t be bothered to dig just a little deeper when they raise important questions.

Government’s Long History of Supporting Journalism


In 1791, James Madison penned a short essay that foretold a long, and ongoing, financial involvement by government in journalism. Madison said, in part:

Whatever facilitates a general intercourse of sentiments, as good roads, domestic commerce, a free press, and particularly a circulation of newspapers through the entire body of the people, and Representatives going from, and returning among every part of them, is equivalent to a contraction of territorial limits, and is favorable to liberty, where these may be too extensive.

postoffice act1792.jpgThe following year, partly in response to Madison’s advice, Congress passed the Post Office Act of 1792. One of key provisions — in what, looking back, is a pivotal development of a robust and free press in America — let newspaper publishers mail papers for extremely low prices. It was an outright subsidy, for a social purpose.

The goal wasn’t to give newspaper owners a special deal because they were nice people (many were not) or would support government positions (many did not). It was to ensure that knowledge would spread as quickly, and as widely, as possible. The First Amendment forbade interference in what people could publish; the Post Office law provision helped make it financially feasible to ensure that other people could receive and read what was published.

By all historical accounts, the 1792 law worked. It was central to the rise of the nation as a society based on knowledge.

More than two centuries later, as the newspaper business falls on hard times that may be terminal, we’re hearing some calls for a taxpayer bailout of the industry, on the grounds that their journalism plays such a vital role in society that taxpayers should subsidize it directly. Today, a member of Congress described at a conference his proposed legislation that would exempt newspapers from income taxes in certain circumstances.

I’m against direct subsidies. They are poisonous, especially so if they are designed to prop up a business that is failing in part because it was so transcendentally greedy in its monopoly era that it passed on every opportunity to survive against real financial competition. In my view, the newspaper industry deserves to die at this point.

I’m not against intervention at a more basic level, as I’ll discuss below — namely, a build-out of fiber optic lines to every home and business in America so that everyone can compete freely in a true marketplace of knowledge.

But as people decry or laugh off a bailout of newspapers, as the New York Times’ David Carr did yesterday in his column, they should remember that government has never entirely lacked financial influence — and it doesn’t lack it now — over the journalism business.

Governments play major roles in the success or failure of all kinds of business. How corporations do business, and which ones pay which taxes, are decided by lawmakers. But journalism organizations have enjoyed their share of special treatment — and we should be glad, based on our nation’s early history, that they did.

Intervening via the mail, as noted above, was the linchpin. A few decades after the Post Office Act of 1792, Alexis De Tocqueville traveled around the states to research his pathbreaking volumes on Democracy in America. He observed how widely knowledge had spread in a largely rural nation. The essential instrument of this, he explained: “The post, that great instrument of intellectual intercourse, now reaches into the backwoods.”

By the mid-1800s, says Bruce Bimber in his book, Information and American Democracy , our postal system became the most dependable and comprehensive in the world. It was an unprecedented exercise in governmental assistance, Bimber argues — “a kind of Manhattan project of communication” that helped fuel the rise of the first truly mass medium.

Support for media has been a long-running thread. Even in the 20th Century, favorable mail rates helped countless magazines and newsletters stay solvent (or better). The rise of the Time Inc. magazine empire was aided immeasurably by the fact that it could mail its publications at a cost to the publisher that barely began to cover the actual cost to the system. (In the 21st Century, Time’s maneuvering to ensure its own favorable rates, at the expense of publishers of smaller journals, made some economic sense but also had a odiously anticompetitive aspect.)

Newspapers have enjoyed other special federal and local advantages, meanwhile. One of the most flagrant special-interest favors in U.S. history has to be the Newspaper Preservation Act of 1970, in which newspaper publishers got Congress and the Nixon administration to give the industry an exemption from antitrust laws. (I spent more than a decade at a company that was helped by this law.)

In many states, newspapers get special tax treatment, notably exemption from sales taxes. The state of Washington, for example, just cut newspapers’ main business taxes by 40 percent (to the same rate enjoyed by Boeing and timber companies, the state’s most powerful industries).

Print publications haven’t been the only beneficiaries of government favors. The gifts to the newspaper and magazine businesses are dwarfed by what broadcasters carved away from the taxpayers: namely free use of the public’s airwaves. Local TV broadcasters, in particular, took advantage of this windfall, worth hundreds of billions of dollars over the decades, to make money at a rate that made even newspaper shareholders envious. (And local TV “news” has been, for the most part, a cesspool of violence, celebrity gossip and trivia that would have to improve to be mediocre; newspapers are only now becoming as lousy as local TV news has been through its entire history.)

I’ve only cited a few of the ways the nation’s governments have been doing financial favors for the journalism business. Consider newspaper racks on your community’s sidewalks; they’re a subsidy in their own right, because not everyone can put a rack there. I could list many other special favors, but you get the idea.

The key point, again, is that calls for a federal bailout don’t come in the context of hands-off treatment in the past — even though I personally find the direct subsidy idea abhorrent for all kinds of reasons, not least the way current proposals would protect enterprises that manifestly don’t deserve it and the near certainty that such a bailout would lead to more direct government interference in the journalism itself.

What could government do? The 1792 Post Office Act had a noble outcome, and is instructive for today. So is a more recent federal endeavor: the Interstate highway system.

In the 1950s, America’s state and local highways were relatively well developed. What the nation decided it needed, and what corporate America couldn’t begin to provide, was a robust system of long-distance roads.

With data, the reverse is true: the long-distance data highways, the “backbone” networks, exist in abundance. What we really need now is better local conveyances, the ones running to and into our homes. Big telecom carriers say they’ll provide these connections — that is, they may provide these connections if they feel like it — only if we allow them to control the content that flows on those lines.

Imagine if we’d given the interstates to corporations that could decide what kinds of vehicular traffic could use them. If you want to worry about a threat to the journalism of tomorrow, consider the power being collected by the so-called “broadband” providers right now.

If we’re going to spend taxpayers’ money in ways that could help journalism, let’s build out the data networks, by installing fiber everywhere we can possibly put it. Let private and public enterprises light it up, and let that market thrive — a market of ideas and business models based on the same principle America stood on in its early days, namely widespread access to knowledge. I’d be delighted to see my tax dollars used for that purpose, and I’m betting most other people would, too.

(Photo of postmaster instructions via the Smithsonian Institution)

When Others Delete Your Past

Searching for Thomas Crampton  



Searching for Thomas Crampton

Industries that talk proudly of the “content” they offer — raise your hand, journalism organizations — have a special need to preserve what they’ve created in a consistent and easy-to-find way. Content, in this context, includes the links that people have been using to find it.

You would imagine that the news industry would understand this. If so, you would be overestimating the industry’s collective common sense.

Continue reading When Others Delete Your Past

Using Distributed Media (and People) to Ask Hard Questions

Rice at Stanford

Ari Melber, at Personal Democracy Forum, explains “Condi Rice’s Tortured Macaca Moment,” in which Stanford University students questioned the former secretary of state about her role in our nation’s torture of prisoners in recent years. To call her response inept is an understatement, as many have explained (see Scott Horton’s deconstruction).

But Melber nails the larger import of what the students did:

(T)his incident also shows the prospects for what we might call a substantive Macaca Moment – using YouTube and citizen media to scrutinize our leaders on the issues, not gaffes.

Continue reading Using Distributed Media (and People) to Ask Hard Questions

Twitter to Factor Reputation in Search

CNET: Twitter Search to dive deeper, rank results. Twitter Search will also get a “reputation” ranking system soon, Jayaram told me. When you do a search on a “trending” topic–a topic that is so big it gets its own link in the sidebar–Twitter will take into account the reputation of the person who wrote each tweet and rank the search results in part based on that.

This is important, even if it’s just a promise. Perhaps the key missing link in our ability to sort through the mass of information now cascading over us is how we combine popularity and reputation. The former is easy to measure, but the latter is a hugely complex task.

But when we figure this out — and it’ll take the combined brainpower of technologists and social scientists alike — the result will be one major step toward where we need to be going.

Trusting Unsourced Quotations

Irish Times: Student’s Wikipedia hoax quote used worldwide in newspaper obituaries.

A Wikipedia hoax by a 22-year-old Dublin student resulted in a fake quote being published in newspaper obituaries around the world. The quote was attributed to French composer Maurice Jarre who died at the end of March. It was posted on the online encyclopedia shortly after his death and later appeared in obituaries published in the Guardian, the London Independent, on the BBC Music Magazine website and in Indian and Australian newspapers.

Wikipedia logoThere are any number of lessons to draw from this situation. No doubt, the main lesson for many critics will be to blame Wikipedia, not the person who tried to pull off a hoax or the many people who fell for it.

Certainly the site’s open nature was instrumental in the student’s ability to pull off the hoax in the first place. But a closer examination, as we see in this piece by the readers’ editor of the Guardian (one of the publications that fell for the hoax — here’s the corrected original obituary), the Wikipedia community performed well in a) discovering the lie and 2) fixing the article.

Still, the invented quote was widely used — by people who should have known better. In the Guardian, there was apparently no citation, even to Wikipedia, which would have been a tipoff in the first instance.

As the Guardian notes in the follow-up:

The moral of this story is not that journalists should avoid Wikipedia, but that they shouldn’t use information they find there if it can’t be traced back to a reliable primary source.

That applies to everyone, not just journalists. I say this again and again, to students and anyone else who’ll listen:

Wikipedia is often the best place to start — but the worst place to stop.

Broadening Journalism Education’s Practice and Purpose

(This is cross-posted from the PBS Idealab blog.)

Accepting an award from Arizona State University’s Walter Cronkite School for Journalism & Mass Communication several months ago, former PBS NewsHour host Robert McNeil called journalism education probably “the best general education that an American citizen can get” today.

Cronkite BuildingPerhaps he was playing to his audience, at least to a degree. Many other kinds of undergraduate degree programs could lay claim to a similar value; a strong liberal arts degree, no matter what the major, has great value. Still, there’s no doubt that a journalism degree, done right, is an excellent foundation for a student’s future.

Even if McNeil overstated the case, however, his words should inspire journalism educators to ponder their role in a world where these programs’ traditional reason for being is increasingly murky.

Continue reading Broadening Journalism Education’s Practice and Purpose

Reimagining the Book

Tim O’Reilly discusses Reinventing the Book in the Age of the Web” — and the context is his (and Sarah Milstein’s) new book about Twitter.

twitter preview.png Perhaps the biggest driver, though, was the need for speed. We couldn’t imagine writing a book about twitter that wouldn’t be immediately out of date, because there are so many new applications appearing daily, and the zeitgeist of twitter best practices is evolving equally quickly. So we needed a format that would be really easy to update. (Again, modular structure helps, since new pages can be inserted without any need to reflow the entire document.) We plan to update The Twitter Book with each new printing.

This is very much my strategy with this book/website, though the things that change rapidly will change mostly here on the site, not in the printed version.

Ebooks Must Fail? Only If They Remain in Current Ecosystem

Evan Schnittman: Why Ebooks Must Fail

How do ebooks cover the huge advances needed to buy books if we cannot generate the cash, especially at their extremely low, discounted prices, cover the advances that an entire industry has come to require? The answer is that ebooks, alone, cannot.

What this means is that unless a very different model evolves, ebooks can never become the dominant version of content sold by book publishers. It means that ebooks will always be priced to sell, but sold as an afterthought, not as the primary version of a work. It means that the need for blended e plus p models will evolve, in order to take advantage of all the great qualities of ebooks, while providing the financial support and structure that print offers. It means that consumer ebooks, as a stand-alone version of an intellectual property, must fail.

This is a valuable lesson in book economics — 20th Century book economics, that is.

The key words in Schnittman’s piece (or at least the short portion I’ve quoted) are “huge advanced needed to buy books” — an assumption that we may need to challenge as the financial ecosystem of books, not just the distribution chain, evolves over time.

The huge advances themselves seem unsustainable. That’s a good thing, because they warp the marketplace.

Moreover, it’s unclear why publishers alone are expected to cover authors’ costs given that, at least in the case of much non-fiction, authors make money in ways other than selling books — namely consulting and speeches, among other things. Why shouldn’t the various parties in this ecosystem (a word I use deliberately) collaborate to sell books and other services and share revenues? Complex, sure, but worth it in the end.