Thursday, February 19, 2009

A New Business Model for the Book Publishing Business

Eco-Libris is happy to host guest writers that present interesting and creative ideas that goes along with our mission to make reading more sustainable. Today we are happy to host author Justin Locke who writes about an issue that has many sides, including environmental and social ones - the lack of compensation of authors for re-use of their books and how it can be fixed.

We hope that not only you will enjoy this piece, but you'll also take part in the discussion we hope to generate following this post. If you need further incentive check out
the giveaway at the bottom of the post :)

A New Business Model for the Book Publishing Business

by Justin Locke

The Internet has been viewed by many in the book business as merely a glorified sales brochure and order form, but this is "horseless carriage" thinking. The way it is being used by the major used book resellers (i.e., Amazon and Half.com) has fundamentally changed the environment of the book business, in very much in the same way that television and VCR's changed the movie business, and radio and recordings changed the music business.

For those of you who don't remember, when television came along, Hollywood viewed it entirely as a threat. The big movie studios nearly went broke, as up to then they only made money selling tickets in theaters. But after a while, they figured out how to do a new business model and take advantage of this new medium. Now, big Hollywood movies make most of their money, not from theatrical releases, but from television and DVD sales.

Something similar happened in the music business. Before recordings and radio, orchestras had a simple business model: if you wanted to hear a concert, you had to buy a ticket. But when recordings and radio came along, the musicians' union negotiated to put various fees in place so that musicians would get additional payments for "electronic transcriptions."

Composers of music have similar "re-use" payments structures under what is known as ASCAP. When an orchestra plays a piece that is under copyright, a payment is automatically made to the composer. Same thing if their music is played on the radio or TV. Every time you hear a golden oldie in an elevator, a little payment gets made to the owner of that original song. It might only be .2 cents, but it adds up in a hurry.

Unfortunately, the traditional book selling establishment has at its core a 19th century business model, one that is very similar to the music business before electricity. If you want to buy a book, you buy it new. That's where the money is made, period. There are no provisions for more payments down the road. Yes, Amazon's Kindle and other e-book deals are more or less doing what movies and music have done. But what is getting missed is the huge change in the used hard copy book business.

Here's the big thought: While books themselves are still made of paper, the WAY in which used books are sold and distributed has changed. Radically. It is as much of a change as television or radio.

Books are not electronic of course, but the way in which used books are now marketed on the internet has fundamentally changed, into its own new form of "electronic distribution." We need to recognize this, and change the way the business works to capture proper payments.

The used book market is different now because in the old typical traditional local used book store, the store might have a title you want and then again, they might not. So physical used books stores, while nice things to have on the block, are not a huge threat to new book sales, as they are not the place to buy "hot" or new books. You are limited to what they have in stock right now, which could be anything.

But now, virtually any book, even one that is recently published, is available "used" (at a lower price), on the internet. And when someone buys and reads a used book, the copyright owners of that book get zilch for that "re-use" of their intellectual property.

Pardon my vision here, but I think it's time that authors got the same deal as union musicians, composers, television actors, and screenwriters.

What I am proposing is a very simple system similar to the ASCAP model. If a copyrighted book is sold on line, the author (or their estates or whatever) should get some small payment for that "re-publication" (from the legal definition of the word "publish": "to make available for sale") of their work.

I don't know what that fee would be. I am hoping you, dear readers, can offer some insight and suggestions. Perhaps 15% of the sale price, or perhaps 25 cents, whichever is greater? Right now I am getting 100% of nothing, so I am open to suggestions.

In terms of execution and monitoring, I would think that ISBN numbers would make this a breeze to set up. Authors would also need to register, just like members of ASCAP. You would have to accrue a minimum of maybe $50 to get a payment (to save mailing checks for 25 cents).

All sorts of little details would need to get ironed out of course, but that's the concept. And I confess, I have no idea how one would set up a literary form of ASCAP. Federal legislation? I await your insight.

Note, I suspect that it might be a good idea to exempt non-internet on-site sales in bookstores. It's a tradition, it's too easy to cheat, and they don't make much dough anyway. Also the bookkeeping might prove onerous. Although with printed bar codes, maybe not.

Amazon charges $4 for shipping a book when most books only cost $2.50 to ship. Shouldn't some small piece of that remaining $1.50 go to the person who created the book? Composers and musicians and movie producers get re-use payments. How is it that musicians and B-movie moguls have shown themselves to be smarter than authors of books??

Also, from an environmental perspective, instead of publishers always being motivated to make past editions obsolete as much as possible, and always look for ways to sell new books and cut down more trees, authors and publishers would have economic incentive to encourage the purchase and "recycling" of used books, as it would become an added income stream. Updates to existing books could be sold on line. Not sure if this would be a meaningful carbon change, but it's worth looking into. As the cost of paper continues to go up, who knows, could be a huge paradigm shift.

I have a new page on my web site that invites people to start doing this on a voluntary basis. I call it my go-green publication partnership: http://justinlocke.com/gogreen.htm

Big picture: If this added payments system were to work with books the same way it has worked with movies, added income will encourage ever more creation of new products, instead of publishers and authors being squeezed at every turn. At last, readers will not have to choose between supporting their favorite authors and a cheaper deal. Everybody wins, and furthermore, it's the right thing to do.

(c) Justin Locke

GIVEAWAY ALERT!!!

Thank you for reading. We invite and encourage your comments. And we also have a giveaway!

Justin Locke is donating a copy of one of his books, and the the winner will get to choose between Real Men Don't Rehearse, his very popular and laugh-out-loud musical memoir of his playing days with the Boston Pops (see the writeup in this month's International Musician Magazine) , and his new book, Principles of Applied Stupidity (How to get and Do More by Thinking and Knowing Less). Find out more about each book and his other publications and his professional speaking at www.justinlocke.com

How do you get a chance to win this prize? please add a comment below with anything you have to say or comment on this issue. That's it!

Submissions are accepted until Thursday, February 26, 12PM EST. The winner will be chosen by Justin Locke and will be announced the following day.

Yours,
Raz @ Eco-Libris

12 comments:

Vera said...

I really enjoyed the post by Justin Locke! I've long heard my professors complain about how they get no royalties for sale of their used books online - I've never paid much attention, but this article really put it in perspective. Being an author is hard work, and I agree with Mr. Locke that authors should receive some sort of compensation for used book sales as well.

Would love to win a copy of 'Principles of Applied Stupidity'. My e-mail is vvperesk@gmail.com.

justin locke said...

just a little addendum here, from the wikipedia listing on ASCAP:

In 2005, ASCAP collected US $750 million in licensing fees and distributed US$646 million in royalties to its members, with a 12.5% operating expense ratio.

see http://en.wikipedia.org/wiki/ASCAP

Elsie said...

Very interesting ideas are presented by Mr. Locke. It would be a treat to win a copy of "Principles of Applied Stupidity" ...the title makes me curious!

Thanks for the opportunity!

pumkinlady430@yahoo.com

Ken said...

Interesting idea. But I don't agree with the concept.

Can't used DVDs can be resold online without royalties? I think even the movie industry recognizes there is a limit... otherwise, how would you like to pay a % to GM when you sell your used car to the next person? Or 1% back to the house builder when you move?

Plus, Most of the books I bought used were for small amounts. $4 for $45 retail book. There is the recycling and whats good for society. Would it become a bigger hassel to re-sell resulting in more items thrown away vs. reused?

Just a few thoughts
ken@dopplerVUE.com

Jenna said...

This sounds like an interesting read. I would love to read it!

justin locke said...

Well I am very happy to see some comments on my post. These have presented some very cogent, interesting, and challenging arguments, and I would like to offer a response.

Several posts (this discussion is happening on numerous blogs) have made the point that a book is a”physical object,” and therefore an owner can do what they want with it. Examples of both cars and Audio CD’s have been offered. Fair enough.

But here’s is one response: there are no instances I know of where an object that contains intellectual property is sold free of any conditions. For example, when you install a windows operating system, you must agree to some severe restrictions, e.g., in terms of only installing the system on one machine. Many an office manager would love to take the “object” he owns of a windows disk and install it on all of the computers in their office. But this is not legal (in the USA anyway).

Further, when you buy a car, it is not clear of certain legal limitations. For example, you may not remove the anti-air pollution equipment. You may also have to pay an annual city excise tax on your car, and you are also probably required to pay for an annual state inspection. Also, even though you own your condo, you probably have to pay a maintenance fee. You may own your house, but local zoning laws may prevent building a 3rd story or renting out the carriage house.

So even though you “own” something, those rights are seldom absolute. Your rights of ownership may be limited in some way for the greater good of society.

These examples may not be right on point but they do demonstrate that conditions may be attached to ownership or sale of either physical or intellectual property, as circumstances and collective interest may warrant.

Now, bear in mind, I am not making pronouncements here, I am merely debating my side. So:

I would also argue that not all forms of intellectual properties are the same, commercially or technologically or legally speaking, especially in how they are used. People tend to buy CD’s and play them repeatedly, and they may buy movies and watch them repeatedly, but how many people read a book repeatedly? It could be argued that there is more likelihood that many kinds of books (not all) will be disposed of or passed on after a single use, as many books are designed and used in that manner. Therefore the creators of that “kind” of intellectual property may qualify for special protections.

Again, I would argue that taking a book and repeatedly passing it on (via internet used book sales) to an endless chain of strangers, each of whom is paying a penny apiece for the rights to have the typical full use of that product, i.e., one reading, and then pass it on again, is equivalent to old time napster music file sharing. (Arguing, not stating!) At the moment there is an opportunity for individuals to get full use of most books for very cheap or almost free on the internet, and it is my contention that this constitutes the same threat to the book business that old free napster file sharing was to the music business.

Therefore, again, one could argue that the legal precedent exists for some sort of different system– a literary Itunes, if you will– to take its place, where the people who own intellectual property are not denied participation in the online sharing/sale of their intellectual property, regardless of the medium on which it resides, or who owns that the paper media it is carried upon. I hope that anyone who owns a kindle knows they cannot pass on the intellectual property that resides on that device.

Of course, you have certain ownership rights in a physical book– you can certainly use it as a doorstop, or to start a fire, or as wallpaper and no one can stop you. Or you can buy a kindle and do the same to the physical device. But the intellectual property resides on it is not yours, and never was.

If the book’s resale value is derived from the intellectual property attached to it and not the physical book itself, well now it gets vague as to who owns what. Teams of lawyers at Microsoft spell this out on their discs, but the book business, to my knowledge, never has. Just what intellectual property “license” was bestowed upon you when you bought the book? Hmmmmmmm . . .

Speaking as an author/publisher, I never gave a resale/sub-distribution license away, and I believe I should get a payment from other users of my work, work that took thousands of hours to create and bring to market, just as each user of windows vista has to pay a fee, and kindle owners have to pay for new downloads.

Also in England there is further interesting precedent . . . The British government funds a program that pays authors a fee every time their books are borrowed from a public library. It is not a huge sum, but it acknowledges the rights of the book’s creator as being separate from the ownership of the physical book.

Also, back to the environmental issue: right now there is no incentive for authors and publishers to encourage recycling of books. Instead, there is an economic incentive for them to make past editions as obsolete and land-fill worthy as much as possible, in terms of content anyway. This is, in essence, a business model similar to making dixie cups. We have no other way to make money. Do we really want to encourage cutting down trees right now?

It was also argued that a solution would be to price new books higher, but to me that is a disagreeable thought in terms of how both the book business and society would work . . . New knowledge should be available all, not just those with deep pockets. Not everyone lives an easy walk from a major public library.

So I again, I propose that some compromise, where some small payment be made for the re-use of a book’s intellectual property, would be of benefit to all, without being onerous to any.

I look forward to your arguments, they sharpen my brain. Thanks for the challenge. – Justin Locke

www.justinlocke.com

Therese said...

This looks like a very thought-provoking book that I would enjoy reading.

Renee G said...

Thought provoking ideas, although I don't agree with all of them.

rsgrandinetti(at)yahoo(dot)com

I like to read Real Men don't rehearse.

Brooke said...

The art world has a similar issue when it comes to resales at auctions. Europe resolved it by giving a portion of the profits to the artists, but ONLY at auctions, not private resales.

Alice H said...

Thanks for the blog - lots to think about. I agree that authors should get the same deal as union musicians etc. Can't wait to read these books! alicedemske at hotmail.com

justin locke said...

hey folks, keep those posts coming! i am eager to hear all sides, for if my arguments are flawed i would rather find out sooner than later. note the art resale deal in europe (this was news to me!) is explained here:

http://painting.about.com/od/careerdevelopment/a/ArtResaleRight.htm

artists get something like 1-4% with a minimum price and an upper limit too. very interesting. -- jl

wendy said...

I applaud his forward thinking. It is right in line what our president is asking us to start doing. Collectively, all the small ideas become one big push to change the way that we do business in general and re-think the impact our actions have on the enviornment.

madamerkf at aol dot com