Tuesday, April 06, 2010

Future Thinking

Last February, I did a post on DRM (digital rights management) here prompted by an article on Ars Technica titled "The Once and Future e-Book" by John Siracusa.

I summarized the frustration of consumers with DRM:
Bob pays for his "product." But if he wants to switch formats, make a copy of the film so his kids can watch it in their room, copy a song so he can listen to it in his car or download the e-book so he can read it on his phone, frequently he becomes a victim of DRM, which will not permit him to make perfectly legal copies. But, since he has all the parts of the encryption [cipher, cypher-text and key], he or a cyber-savvy friend will probably figure a way around the encryption. And, of course, he will feel perfectly entitled to do so since he paid for the product in the first place.

While we can understand Bob's frustration, he crosses the legality line when he sets out to circumvent DRM. Much worse, the next time he buys a product--remembering the aggravation Alice [the seller] created for him--he may be more inclined to download the product for free online than go through all the hoops Alice put him through to use his own, paid-for product.
Last Monday, the New York Times Ethicist took up this question here when a reader wrote to say that he'd purchased the hardcover version of Stephen King's Under the Dome when he found the publisher--wanting to encourage sales of the p-book--had withheld the e-book from the market. Not wanting to take the 3 1/2 pound novel on a trip, he downloaded a pirated digital version. The reader was asking the Ethicist his opinion.

The Ethicist showed uncommon good sense when he responded, "Sadly, the anachronistic conventions of bookselling and copyright law lag the technology ... it is a curious sort of theft that involves actually paying for a book ... Your paying for the hardcover put you in the clear as a matter of ethics ..."

Interestingly enough, another voice has joined this debate. Peter W. Olson, the former head of Random House, is now a Senior Lecturer for Business Administration in the Strategy Unit at Harvard Business School (HBS). There was a post about him two days ago here at Working Knowledge, the HBS faculty research blog.

In May, 2008, Bertelsmann [the parent company of Random House] named Markus Dohle to be the new RH chief executive, replacing Olson who had been CEO since 1998.

The Harvard blog indicated that Olson and Professor Bharat Anand have been sharing an unpublished case study titled "The Random House Response to the Kindle" with students:
"The odd thing is that no one is really focusing on the reader. A disproportionate amount of publishers' resources are dedicated to the manufacturing and physical distribution of books, when in fact their key function is editorial in nature. In a sense, many book publishers are trying to buy time, to postpone a reckoning with reality."

Instead of making books more accessible and attractive, publishers are attempting to prop up the print book business by upping the price of e-books, Olson says.
I've repeatedly pointed out that the publishing industry need only to look to Detroit to see the cautionary example set by the Big Three auto makers. In March, I quoted the BBC:
While it was inevitable [the Big Three] would eventually lose their monopoly position, their failure to adapt their production methods and meet changing consumer tastes has accelerated their decline.
Olson described his students' forward-thinking:
"One thought they proposed that seems well worth pursuing is the idea of bundling the e-book and print book together," he says. "After all, why should they be viewed as adversaries? Why not offer both and see if you can make the market more attractive, with additional features like a video interview with the author? An e-book can be a much richer and deeper experience than anything we've seen before."

Students were also intrigued by the concept of dynamic pricing, or charging varying amounts based on how many "extras" are packaged with an e-book.

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