The New Digital Economy, Part III

This is the third in what turned out to be a series of posts.

We left off yesterday with me suggesting that publishers will soon face the same sort of decisions that the four major music labels (Sony BMG, EMI, Universal and Warner) are confronting now.

The Internet has changed (and is still changing) the way consumers choose/experience entertainment and shop. Shifts in consumer patterns are forcing changes in service delivery and business models.

I said I thought two questions would decide the future of publishing houses:

1) How will the individual publishers resolve their ambivalence to Google and its Google Search program?
2) What value will publishing houses bring to the table in an age of increasing digitization?

I predict the first question will be answered fairly soon. The second question may not be answered for many years.

Once upon a time, there was an ambitious little company out in Mountain View, California. Among their many goals was a desire to see all the world's written knowledge scanned and made available to everyone with access to a computer. They wanted to create a virtual Library of Alexandria--that place of legend, supposedly housing all the knowledge of the ancient world.

The company, of course, was Google. The ambitious project I just described was their "Google Print Library." IMHO, they could have saved themselves a lot of grief if they had just named the project "Alexandria" to begin with.

You see, Google already had another initiative called "Google Print." THAT program is just like Amazon's "Search Inside." You can go to the books.google.com website and enter the title of a book you're interested in. If the publisher or rightsholder has given permission, Google will permit you to read several full pages to help you decide whether to buy the book. Google also provides links to retailers selling that book. Go here to see an example of what happened when I searched for The Great Gatsby . The neat thing about this is that you can comparison shop by checking the price of that edition at Amazon, B&N and BookSense.

Google has gotten smart in the years since they began this program. They now call it Google Books Partner Program to make it clear that publishers, authors or rightsholders have to opt in.

Unfortunately, in the beginning, Google staff weren't quite as clear in their language when describing the two different initiatives that both had "Google Print" in their names as they are here today. Their enthusiasm for their "Alexandria" project (remember they called it Google Print Library) had them talking about scanning all the books in the world without bothering to get the rightsholders' permission first. Listeners confused the Google Print Library with Google Print.

Google NEVER intended to make whole pages of the Alexandria books available for preview (unless, of course, the book is now in the public domain, in which case they'll make the entire book available). Their plan was to make the text searchable and then only offer a snippet (a few lines) around the search term to put it in context. Along with up to three snippets, Google offers the card catalog information and a list of retailers selling the book. See an example here.

Historically, when a book went out-of-print, the only way to buy it was to locate a used copy. As all writers know, used book sales don't generate profit for publishers or authors. Now, however, Google was making it possible to put both in-print AND out-of-print books on a virtual bookshelf where they could be seen and purchased for an indefinite period of time.

Once a book is digitized, publishers using POD technology can afford to fulfill small orders on an out-of-print book (assuming, of course, they still have the license to do so).

Instead of celebrating, the publishing world was up at arms. Misinformation and rumors had most writers thinking Google was blatantly disregarding copyright laws and posting "their" books online for people to read for free. No one was interested in hearing that they were mixing the details of two separate programs. Writers got busy circulating petitions to stop Google. To read my early emails on the subject, go here.

The confusion in the public's mind over Google Print (think Partner Program) and Google Print Library (think Alexandria) led to groups of authors and publishers filing two lawsuits in late 2005 in the state of New York. The author lawsuit was filed by three writers and the Authors Guild, which according to The New York Times is "a trade group that says it represents more than 8,000 published authors." The plaintiffs in the second lawsuit were publishers: McGraw-Hill Companies, Pearson Education, the Penguin Group, Simon & Schuster and John Wiley & Sons.

Fast forward to today. How do publishers feel about Google and its initiatives now? I did a series of searches on the Google Books Partner Program. Less than eighteen months after filing suit, all five of the publishers listed in the second lawsuit have given permission for books to be listed on the site.

I also checked on others of the Big Seven publishers: Both Random House and HarperCollins have announced their own versions of the "Search Inside" program. You can go to their websites and view the books for sale. While I applaud the effort, I wonder how much traffic they get. It probably doesn't occur to many people to go to a publisher's website to shop for books. HarperCollins appears to be hedging their bets by participating in the Google Partner Program in addition to setting up their own "Search Inside" lookalike plan. Random House has not signed up for the Google Partner Program. Their executives have been quoted as saying they do not want Google to control their digital access.

In my post of April 13, I reported that Penguin, Random House, and Simon & Schuster have all signed up with ICUE, a British initiative to download books to mobile phones.

The reason I originally specified the publishers' attitudes toward Google as an indicator of the future is because the Partner Program embodies some of the principles publishing needs to internalize in a digital age: (1) Digitize your stock; (2) Get it online where readers can find it; (3) Provide links so that readers can buy it RIGHT THEN without having to go wandering around.

I'd add a couple of other principles, too: (4) Provide your stock in as many mediums as possible (print, e-pub, audio, and in formats that permit download to cell phones), (5) Invest in POD technology, and (6) Explore social networking options.

From what I can gather in the news, while the majority of the Big Seven publishing houses are moving forward very aggressively to position themselves for the future, a couple appear to be lagging behind.

Tomorrow, we'll talk about the second question: What value does a publishing house add in a digital world?