16 July 2008

eBooks

The software industry tried every method of copy protection they could come up with until they finally discovered two things. (1) It was a losing battle. (2) Enough people were honest enough that you could make a living without worry about the dishonest people.

Then it was the music industry. Despite all the hubbub over Napster, we now have unfettered mp3s from Amazon and iTunes Plus.

From iPhone App market: a look into one niche

Content will be a serious obstacle for smaller developers. While there are free eBooks out there, and channels for procuring commercial eBooks illegally, to create a legitimate eBook reader, a company has to have a legitimate source of material that is desirable. This, of course, involves the potentially long and drawn out task of licensing material from a plethora of different publishing houses, something better suited for a larger company like Amazon. There also needs to be a way to track downloads and pay out royalties. Not necessarily something a small software house has the means to do. This leave us with the potential of large companies such as Amazon or ebooks.com commissioning someone, or writing an application in house, to take care of the task.

It used to be, you’d by a vinyl record and you could play it on just about any record player. You could buy an audio cassette and play it on any cassette player. You could buy a CD and play it on just about any CD player. You could buy a video cassette and play it on any VCR.

(Though there was hand-wringing about illegal copying all along.)

So why shouldn’t I be able to buy an eBook and read it on any eBook reader? Why should a developer who creates an eBook reader be worrying about licensing content?

It’s way past time for the book industry to realize that they need to stop worrying about the same old issues and move on.

Here’s another one: DriveThruRPG. They sold PDF role-playing books with copy protection. They and their publishers eventually figured out that if they got rid of the copy protection, they could succeed. I can buy an eBook from them and it will work with almost any PDF reader I care to read it with.

Even the one built into the iPhone!

If I want to write a PDF reader, I don’t have to think a minute about licensing content.

(Incidentally, I like PDF, but I think it isn’t all that good for as an eBook format.)

It’ll happen, but I keep wondering why we have to wait when we know where we’re going.

(Since I mentioned DriveThruRPG, I’d also like to mention Your Games Now.)

(And then there is the irony of the iPhone App Store using FairPlay just as it’s being used less and less by the iTunes Music Store.)

2 comments:

ThumMeister said...

You state that "It used to be, you’d by a vinyl record and you could play it on just about any record player."

True, if you ignore the period between 1948 and 1950. In 1948, RCA and CBS each attempted to establish its own proprietary technology as the de facto standard vinyl record format. This was the "Battle of the Speeds," pitting RCA's 7" 45 rpm single vs. CBS/Columbia's 12" 33 1/3 rpm LP. As soon as the battle began, record sales plunged, because consumers didn't want to be stuck with music equipment that used the losing format, whichever that was (as we've seen recently in battle between HD DVD and Blu-Ray)). In 1950, the parties executed a patent cross-license deal, enabling the release of multi-speed, multi-format record players, and record sales zoomed right back up again.

Likewise, you write that "You could buy an audio cassette and play it on any cassette player." That's only true if you ignore the standards battle between the cassette and its contemporary competitors, such as the 8-track and microcassette. The cassette won, dominating the market for portable (mostly in-car) music for 20 years.

The same is true for the other examples you cite: "You could buy a CD and play it on just about any CD player. You could buy a video cassette and play it on any VCR." Both of these standards emerged from standards battles among proprietary standards.

These standards battles may seem messy and inefficient, but they are great examples of market forces at work. Each vendor hopes that its proprietary format will establish a sufficient market-share lead for network effects to drive it to become the market-dominating de facto standard (relegating the others to niche markets or death). Such network-effects-driven market dominations are immensely profitable. If no clear winner emerges, a couple of the weaker competitors will make a deal to combine their standards, hoping that this will give the combination enough of a market share advantage to initiate network effects. Other deals will follow, until either a clear winner emerges OR a final deal embraces all of the competitors.

Cooperating from the outset is not the most economically-efficient option for anyone. With whom do you cooperate? Just anyone? On what commercial terms? The standards battle is necessary to place relative values on the competing options, so that a subsequent deal is possible, delivering the best solution to the market at the best price.

Since the mid-1990's, there's been quite a bit of research into the economics of standard setting, and the bottom line seems to be that the market actually does this quite well. Early arguments that inferior technologies were imperviously "locked in" have been largely debunked.

As a consumer, the simple thing to do during a standards battle is...nothing. Don't buy any of the competing products, unless your short-term need is so great that you don't care who wins in the long run. That's exactly what consumers did with record formats in 1948-1950, with consumers did with HD DVD players until Blu-Ray won, and what consumers are doing now with eBooks.

So, don't worry. Be happy! Market forces will give you a great eBook player and universal eBook access Real Soon Now. :-)

Robert Fisher said...

Well, yeah. I purposely glossed over the format wars because I don’t think that’s the issue here. Heck, you could say PDF won the eBook format war already.

Although the format issue and this issue—the idea that player vendor and content vendor have to be the same—do get intertwined.

“So, don't worry. Be happy! Market forces will give you a great eBook player and universal eBook access Real Soon Now. :-)”

I hope so, but I don’t know. I’ve been an observer (and participant) in this for many years, and it doesn’t really look like any significant progress has been made.

There is some progress—as in the RPG sector. But it seems so many publishers still don’t realize that the piracy they’re so worried about is already as bad as they fear. Not producing digital books isn’t protecting anyone from digital piracy. In fact, there is a thriving (pirate) eBook industry that’s getting more and more sophisticated as the other (legitimate) eBook industry continues to stagnate.