Monthly Archives: January 2008

Giving away the content freely is good for business

Well, there you go! Here is proof that Digital Rights Management and attempts to control copies of intellectual property does not help business. Paulo Coelho put online “pirate” copies of his own books and that made sales soar. I’m taking Coelho at his word that there is no other explanation for the increase in sales than the fact that he book available freely on the internet. His sales went from close to nil (1000 copies a year is nothing) to being a bestseller (millions of copies a year!). And these are sales not just copies that people downloaded for free. See the writeup at Torrent Freak for the details. This real world experience completely refutes the received wisdom that to maximize profits, publishers must prevent people from freely copying intellectual works. Not only that but the question which comes to my mind is if Coelho’s sales were so poor initially and he was able to make them soar by offering free copies of his book, then what benefit did he get from working with a publisher? Even, if he did get a benefit from working with a publisher did that benefit outweigh the costs? Because, as we all know, publishers do not provide services for free.

Here we have an instance of the content creator willingly giving away his work for free, so the author is able to give us the real deal about sales figure and how making the work available freely affected them. However, in cases where the work is leaked illegally, the publisher is left to build a narrative as to what happened. Usually, that narrative is based on the bunk notion that all illegal copies are lost sales. So they figure the book has sold X copies and Y copies were downloaded illegally. Then they consider Y to be a net loss. In other words, in a world where free copies are not available the book would have sold X+Y copies but because of copying, it sold only X and so they lost Y in profit. They do not consider that perhaps the situation is more like Coelho’s. Granted, the Y copies were made illegally. But maybe if they had not been made at all, the total sales would be a number much smaller than X. So in a world where free copies are not available, the sales would not have been X+Y but would have been Z where Z is only a small fraction of X. So in the end, without the free copies they would have lost much more than Y.

The story here is that doing away with DRM and lowering the cost of access helps making the work visible. With so many movies, books, games, tv shows available out there, being visible is most important because if people do not know the work exists, they will not even consider buying it. DRM and high prices are the prime obstacles against visibility. It is high time to recognize this.

Book publishers still do not understand the digital medium!

Hubert Guillaud noted in a post titled Perplexité des éditeurs face au numérique that a study reports that book publishers still do not know how to handle the digital revolution. (The actual study is a pdf file.) I will here quote two passages of the study and offer my reaction.

By and large, professors aren’t interested in using digital textbooks. Thus, for digital content to be significant in the college marketplace, it will require “a profound change in way professors teach”. (pp. 9-10)

The opinion expressed in the first sentence is most likely correct but the conclusion does not follow. Professors are a relatively minor part of the equation here. There are much more important factors at play so let me imitate the quote above to express where I think the problem really is. “By and large, students are not interested in using digital textbooks in arcane formats, delivered in ways that impede fair use or that are overpriced. Thus, for digital content to be significant in the college marketplace, it will require a profound change in the way digital content is made available.” The fact is that for any given textbook, if there were an acceptable digital edition of the textbook beside a paper edition, many students would select the digital edition. The publisher just needs to make an acceptable digital edition available. It does not matter whether the professor likes digital editions or not. But for the vast majority of textbooks I have had to buy, the situation boils down to this:

  • In the vast majority of cases, there is just no digital edition.
  • Or if there is a digital edition, it comes with unacceptable DRM. This is no joke. I’ve seen digital books which did not allow cut and paste or printing pages or some other nonsense.
  • Or the digital edition comes in an arcane format. Again, I’m talking from experience. Some digital books available through our library at UVA are just not readable in any Unix-based OS because the company publishing them has chosen a proprietary format for which readers are only available for Windows (and perhaps Mac OS). When I’m paying for such book, I do not want to take a chance on a format which might lose all support because the one single company promoting it goes belly up.
  • Or the price is unacceptable. Users are not idiots. If a paper book costs $20, I understand that part of that price goes to the printer who prints the copy I am buying, part goes to the shipping company who moves the book to the retailer and part of it goes to the retailer. There’s no way the PDF of the same book should cost $20. In this day and age, if a publishing company cannot market their digital edition of books with substantial savings over the print version then they just do not know how to publish.

This last point about price needs elaboration. Book publishers are infected with the same mentality afflicting the entertainment industry. They think that whatever profits they have made in the past are representative of the natural order of things. High profits and their continual increase is just the way the universe is ordered. Or it is a god-given right or something just as essential. The reality however is that how profitable an industry is changes along with cultural change. Publishers have to realize that maybe, just maybe, the publishing industry is destined to become much less profitable than it once was. By trying to protect their historical profits with restrictions like DRM, they are in fact making their product much less appealing that it would otherwise be and they are hurting their bottom line. And yet, the study reports:

In terms of the use of file format, one publisher candidly declared: “As long as the DRM (digital rights management for security) is good, we go into it.” (p. 10)

In other words, that publisher does not care about whether the format benefits the customer as long as it provides restrictions that will allow the publisher to sleep at night. Is it possible to be more anti-customer? Is it?

Now, go back to the first quote about professors above and reread it. Now consider that I am one of those future professors that the publishing industry is counting on. My interest is in the free flow of information but their interest is creating obstacles to justify their existence and the fees they impose on people who want access to information. Consider also that my opinion is not a marginal one but is shared by other future professors and by young professors who have just joined academia. If publishers think that they are marketing their digital goods correctly and that problems with iron themselves out once customer mentalities change in their favor, they are headed towards oblivion.