Thinking more about the Apple e-book litigation, I couldn’t help but feel a little sympathetic to the book publishers who, at least on a first read of the facts, didn’t seem to have the first clue how to deal with Amazon or Apple when e-book readers started taking off commercially. I wonder if part of the problem for the publishing industry was that prior to digitization (and the release of the Kindle in particular), the only distribution model the publishers had ever dealt with was the sale of paper-based books to retailers for on-sale to customers. They had never had to deal with “device manufacturers” before. This was not the same for the movie, music and to some extent video game industry who had always had to deal in some way with consumer devices that enabled enjoyment of their content – either by manufacturing and distributing the devices themselves (like some of the early video game consoles) or by contracting with manufacturers of devices like music and movie players. Where there was failure to contract, there was litigation – but that happened much earlier in the day (think player piano and Betamax video recorders). So digitization brought with it not only the threat of digital piracy for the publishing industry (a threat faced by all other digitizing industries) but also the specter of having to deal with consumer devices for the first time (Kindles, iPads, Nooks etc). Does this explain why the publishing industry struggled so much to get digital sales models to work, and why they still haven’t  been particularly successful at least in contrast to other digitized industries? Or am I way off base here?

6 thoughts on “Digital Book Distribution Models

  1. Michael Risch

    There are a couple of assumptions there:
    1. Is digital publishing not successful? The Apple issue was that they wanted price inflation for a bigger cut, but that’s not a success issue. They got Apple to cave and Amazon to raise prices. I would call that pretty successful indeed.
    2. Is music successful? Mike Carrier’s Wisconsin article says that music publishers are luddites who don’t get digital publishing, and the response by Masnick on that paper agrees.

    So, I’m not sure what the baseline is, or how you measure success.

  2. Jacqueline Lipton

    From reading the Apple judgment, I didn’t get the impression that the publishers got Apple to cave. It seemed like the other way around – Apple was asking for significantly higher agency commissions than the publishers were comfortable with (or could necessarily profit from), but they agreed to Apple’s plan because it would put pressure on Amazon to raise prices. My impression was that the publishing industry, unlike say the music industry, had never before dealt with on-sellers as their “agents” (which was the model Apple had employed with iTunes) rather than as independent distributors – which was the model the publishing industry originally employed with Amazon, like with its other paper-based distributors. This independent distributor model initially gave Amazon too much discretion over retail price and the publishers were rapidly losing control. The publishing industry hadn’t previously dealt with distributors who wanted the content so they could use it to help market their consumer devices. Apple solved a problem for the publishing industry by showing them how to put pressure on digital re-sellers who were marketing their own devices, while at the same time keeping a certain amount of control over prices itself. The Apple prices were still better than what Amazon was doing for the publishing industry, but it seemed from the judgment that Apple had the upper hand in the negotiations and wasn’t necessarily concerned with ensuring that the publishers had viable long-term e-sale markets. In other words, it seemed like the publishers were never able to secure viable terms from any of the e-sellers. Or am I misreading the judgment?

  3. Jacqueline Lipton

    And also with the court striking down the arrangements with Apple as an antitrust violation, that model can’t be considered a success, can it?

  4. … except that a majority of the Big Fivepointwhatever publishers are subsidiaries of media empires, and many of their top executives (specifically including their legal departments) come from media:

    HarperCollins is part of the Murdoch empire
    Random House (well, until a couple of weeks ago!) was part of Bertelsmann (it’s now more tangled)
    Simon & Schuster is part of CBS/Viacom/whatever internal structure they’ve adopted this week
    Hachette seems like an exception — if one follows the money, the control is an arms manufacturer! — but one must remember that the US imprint Grand Central used to be… Warner books

    So, as attractive as this theory seems on the surface, I don’t think it does more than explain some awkward miscommunications;* the facts just don’t support it. One of the major publishers is a corporate affiliate of the long-time biggest record/video club, so there was expertise (for some value of “expertise”) to be had; remember all of those BMG flyers that used to arrive in your campus mailbox?

    * I’ll pause at the irony of “awkward miscommunications” from an industry that has, for the past century, held itself out as a gatekeeper for quality in writing. But not for long…

  5. Jacqueline Lipton

    Yeah, well there is always that, I suppose …

  6. Michael Risch

    No, I think that’s an accurate reading of the judgment, but it is a judgment against Apple, so I would expect it to put Apple in the lead. If the publishers were still in the case, I suspect it would look a little differently. I wonder just how much arm twisting was needed for the raising prices part (as opposed to the distribution of revenues).

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