Monday, December 12, 2005

HarperCollins' Plans to Digitize Their Books

This morning's Wall Street Journal (WSJ) prompts me to do a rare second blog for the day.

Jeffrey A. Trachtenberg and Kevin Delaney did a story on HarperCollins' plans to maintain control of the digitization of their books. "Along with a recent initiative by Bertelsmann AG's Random House, the initiative signals a growing desire by publishers to control and participate in some of the new online uses of their books."

At present, HarperCollins (HC) sends copies of their books to Internet companies such as Amazon or Google for digitizing. However, HC chief executive Jane Friedman said they have decided on a change in strategy. HC "will create a digital file of books in its own digital warehouse. Search companies such as Google will then be allowed to create an index of each book's content so that, when consumers do a search, they'll be pointed to a page view. However, that view will be hosted by a server in the HarperCollins digital warehouse."

This means that HC will control how much of any book that a search engine can access. The search engine will still be allowed to crawl the HC website to create an index. Brian Murray, group president of HC Publishers, says, "'This would prevent such Internet companies from selling a digital copy of that book unless HarperCollins decided to partner with them as a retailer. . . We'll own the file, and we'll control the terms of any sale.'"

HC had been a willing participant in Amazon's "Search Inside" program, which is similar to Google's "Book Search" program. Consumers are permitted to read several pages of a book to help them decide whether to purchase it or not. Ms. Friedman said that this has boosted her backlist sales by 6% to 8%. However, Amazon's recent announcement of its Amazon Upgrade program caught her off guard. The Upgrade program allows readers to pay an additional small fee for "perpetual online access to the physical books they buy through Amazon's Web site." Ms. Friedman became concerned, saying, "Is ownership physical possession, or is ownership defined by intellectual property?"

HC is now seeking bids to scan and digitize their active backlist of approximately 20,000 books (plus as many as 3,500 new books each year).

In yesterday's blog, I expressed a wish that the print industry would get ahead of technology instead of lagging behind in the way that the music industry has done. This is a prime example of a publisher doing just that. This initiative allows for the digitization of HC's books, but keeps the control with the publisher. It will involve a huge upfront expense (Ms. Friedman estimates the cost of the backlist plus new books for one year will be in the vicinity of seven figures). However, it then puts HC in an enviable position when negotiating with potential partners to sell the books online.

Bravo for HarperCollins!

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