Thursday, March 8, 2012

eBook Prices In Question As Publishers Struggle To Profit

Make no mistake, I have nothing against any business making money. In fact, as a one-time business manager I can tell you the importance of being able to make a buck on the people who work. If the business makes money there are more hours to go around, a better chance for pay raises and a better impact for the community.

Successful businesses are good for the human condition.

However, fair business practices are also important to the human condition. Businesses want us (consumers) to be faithful to their brand, to buy their products and services on a regular basis. But when I hear about business colluding to raise prices for the consumers, especially when the product they offer has no inherent additional costs, I sit up and take notice.

Especially when the product in question is produced by a third party, namely eBooks.

This week word got out that the U.S. Department of Justice has offered a settlement against several big name eBook publishers whom they accuse of colluding to raise prices for digital material. Among those whose practices are being questioned are Apple, HarperCollins, Simon and Schuster, Hachette, Macmillan and Penguin.

At issue is the way books are currently marketed and prices set. The DOJ says these companies agreed to use an "agency model" rather than the traditional "wholesale model" which forced all eBook prices to jump and essentially forced book sellers to pass costs on to buyers.

Here's the problem: eBooks are a hot commodity right now and publishers know they need to capture their fair share of that market, but they are unsure how to do that without seeing diminished profits as a result. There is certainly nothing wrong with creating a market which allows successful businesses to continue to thrive, but it shouldn't come as a result of their ignorance or resistance to innovation.

eBooks last forever. I have written those words right here. I have also written that if we expect the eBook market to succeed we need to address some very real problems in how we created and distribute them.

Ask yourself this: If your next new car was going to last you forever, how many new cars would you buy? And how long would you keep them? Just imagine the chilling effect this would have on the automobile market.

yet this is exactly what happens with an eBook. As it stands now eBook can be copied, loaned, traded, given away freely to other readers; they don't wear out, burn, or fall apart from overuse. In essence, eBooks last forever. If we truly expect publishers to stay in business we need to address this issue, and the sooner we do that, the better.

This is where innovation comes into play. It wouldn't take much effort for the publishing industry to create digital copies which resist copying or even expire after a predetermined amount of time. DVD's were once encoded in such a way, and for a short time, so were some video cassette tapes. Because an eBook is a program and not a document it is not unreasonable to expect the same could be done for them. (I write about the benefits of this here.)

However, rather than innovate, or seek a technological remedy for their (very real) problem, publishers seem to have sought a quick fix by raising prices. If the DOJ succeeds in forcing them to capitulate to the settlement (which seems likely) this might give readers pause when it comes to the eBooks they buy, which in turn will have a trickle down effect on the entire industry.

It seems to me the time is long past due for a technological solution to this issue. The sooner publishers wise-up to this fact and stop trying to beat the system the sooner we can all get back to business.

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