

The downward spiral of ownership and value (happened to music, books are next) - AndrewDucker
http://www.librarything.com/blogs/thingology/2011/01/ebooks-the-downward-spiral-of-ownership-and-value/

======
DennisP
The article talks about how the music industry is shrinking, but says nothing
about musicians. Musicians who embrace the new reality are doing fine. What
the Internet is really doing away with is a giant industry that used to be
useful, but now is merely parasitic.

The same is happening to the book publishing industry. We don't really need
them anymore. Instead of giving $15 to a publisher who then gives $1.50 to the
author, we can just give $1.50 to the author directly and be done with it.

In the process, we'll see lots of articles like this bemoaning the 90%
shrinkage of the publishing industry, while actual authors make more money
than ever.

~~~
bad_user

          What the Internet is really doing away with is a giant industry 
          that used to be useful, but now is merely parasitic.
    

That can go both ways: the Internet is also breeding a generation of customers
that used to value and support music & books, but now is merely parasitic.

    
    
          we can just give $1.50 to the author directly
    

I'm all for eliminating middle-men, but free is still a whole lot better than
$1.50; and when downloading hundreds of songs from PirateBay, that's several
hundreds of dollars versus free.

    
    
         Musicians who embrace the new reality are doing fine. 
    

Citation needed.

I would also love a functional gift economy, instead of one of scarcity ...
but on the Internet a gift economy doesn't really work, because most users are
not giving back. How many users of open-source software are giving back
contributions and donations?

Even when your software is used by lots of corporations; you either have to
beg, or your software has to be broken (in need of a fix).

And I quote from
[http://www.undeadly.org/cgi?action=article&sid=200603210...](http://www.undeadly.org/cgi?action=article&sid=20060321034114)
...

    
    
         OpenSSH is in use by millions around the world 
         however the revenue stream just simply isn't there.
    

Music, books, software: all of them require effort and lots of it. Being able
to work on such things full-time is wonderful; and if broken
technologies/legislation like DRM are the only solution for it, then that will
be the future.

~~~
bediger
You're denying basic free market economics with an emotional argument. In a
competitive market, the cost of a good tends towards its marginal cost of
production. We get all excited as the cost of solar cells tends lower and
lower, as the marginal cost of their production gets smaller. Do we "value"
solar cells less because of this?

"the Internet is also breeding a generation of customers that used to value
and support music & books, but now is merely parasitic."

To borrow a phrase, "Citation needed".

~~~
davidw
The problem is that there are two "costs" of production:

* The cost of reproduction - which in terms of software, music, and now books, is essentially zero.

* The cost of producing those goods in the first place, which is very high in many cases. These are called 'sunk costs'.

Prices are tending towards the cost of reproducing stuff, and people are
struggling to come up with ways to cover actual production costs, which
haven't really changed much.

Now, certainly, in the past, there were no guarantees that if you wrote a book
over the course of a year, that you'd be able to make up for a lost year's
worth of wages, but at least you had a shot at it - and also a shot at earning
several times that if you had a hit.

If, instead, you spent a year writing a book, and it were easy, legal and
acceptable (we're not quite there with all three) to just copy it all over the
internet once it was released... where would you get your money from?

This is all described pretty well here:

<http://en.wikipedia.org/wiki/Public_good>

~~~
_delirium
> struggling to come up with ways to cover actual production costs, which
> haven't really changed much

The cost of buying food hasn't changed much, but the actual costs of doing the
recording/release/distribution have decreased a lot, which lowers barriers to
entry and increases supply.

To produce a recording whose production values are seen by the average casual
music fan as "good enough", and then sell an mp3, requires much less capital
investment than putting out a decent-sounding record in 1975 would have, or
even a decent-sounding CD in 1990.

Sure, home recording on a Macbook isn't going to get you the quality a
professional studio would get you, but the quality gap is much less than it
used to be, especially for someone who spent some time reading (free)
documentation on the subject. Rather than home recording producing
unreleasable cassette demos, they're now often good enough to upload to
YouTube or sell directly to fans. As a result, the people who've paid for
professional studio time now have to compete directly with all those home
recordings, whereas previously they could more or less ignore them. That
drives down prices.

Related, many artists actually put a negative value on their time: there are
quite a few people who love what they do so much that they're actually willing
to subsidize their own art-production by working other jobs (e.g. waiting
tables).

~~~
davidw
Each type of 'information good' is a bit different:

Musicians can at least do concerts, which are excludable and rivalrous, and so
make for a pretty good 'traditional' product that they'll get paid for.

Writing a book is likely a bit faster than 50 years ago due to computers, but
not _that_ much, as most of it's in your head. Isn't it Neal Stephenson who
says he writes everything freehand?

~~~
_delirium
One possibility some self-publishing writers are using is to also sell
traditional products of some sort, e.g. limited-edition letterpress or
handmade editions of their books.

It does lead to different economics, since it rewards a writer by how many
ardent fans they have (preferably well-off ardent fans who're collector
types), rather than total readership.

Not sure how many total writers it'll be able to support; I suppose we'll see.
But then, I'm not sure how many total writers traditional publishing would be
able to support either, even absent piracy; the industry seems to be
converging on a model that picks and heavily advertises relatively few large
blockbusters per year, which only serves to support a fairly small number of
writers, though it admittedly supports each of the lucky few quite handsomely.

------
drblast
Of all the literature produced by the current system in the last century, how
much of it is actually valuable in the sense that having it is a great boon to
society?

How much of that would not have been produced had the publishing industry not
existed? I'd wager that authors would still produce literature regardless;
you'd have to be insane to write a book with the sole intention to live off
the proceeds. It hardly ever happens NOW. You could make more money cleaning
pools.

The loss of the entire publishing industry is not necessarily a great
disaster.

Like publishers, the music industry never produced culture; it marketed the
latest fad to teens relentlessly. That's a live-by-the-sword, die-by-the-sword
business model. When teens decide you're no longer cool or necessary, there's
no alternative but bankruptcy.

Now, if I could actually find physical copies of great new music that isn't
compressed all to hell for not-outlandish prices, I'd buy it in quantity. But
that's not what the music industry is selling.

Same for publishers; these people aren't providing the same value they used
to, which is to cull through the crap and only offer the good stuff to the
customer. The Internet does that for me now.

As for the financial incentive for the author to write, I really don't care. A
patronage system could work. Public funding could work, and might even cost
less than enforcing copyrights.

But nobody owes anyone else a living, least of all the middleman between the
author and the audience.

If we're really worried about piracy and the book is that great, only sell
paper copies. Self-publishing makes that possible too.

------
hxa7241
The article seems confused, or stuck in obsolete ways of thinking.

The real purpose is not to pay for 'books'. It is not to 'protect' author's
'rights. It is not to have 'ownership. The purpose here is to pay for
_production_ of books. Production does not essentially depend on 'ownership'
or 'rights' at all.

Books are data. You do not 'own' data in the normal sense. It is an abundance,
it is infinitely copyable. Gluing together the ideas of books and ownership no
longer makes much sense. And similarly for 'rights': they were a practical
means of funding production in a material world, but now they are not.

It is somewhat reasonable to observe the apparent lack of confirmed business
model for funding book production in an internet world. But the undertone that
we are slipping into doom and dread is funny when you think about it. Are we
losing something? Has the internet taken something away? No, it has _given_ us
something. We do not have less now, we have _more_. So, we need new ways to
organise ourselves and production. Why is that such an impossible thing to
imagine? We can build the internet, but we cannot re-arrange what we do a
little? We should have at least an iota of confidence in human capability.

You hardly even need optimism: simply look around. We have had at least a
decade of 'piracy' of music. Oh no! Surely the world must have collapsed! Ask
yourself: do you have less music to enjoy now than before? I very much doubt
it. There is more music now than ever.

This whole 'end of the world' fantasy is largely just industry FUD. Stop
perpetuating it, and instead celebrate the internet and think of ways to use
it to do _more_ than before.

------
RyanMcGreal
> The role of piracy. I think we know. And the trends are negative, for both
> readers and authors.

Except that the role of piracy is anything but clearcut. As Tim O'Reilly
famously said in 2002 [1]: "Obscurity is a far greater threat to authors and
creative artists than piracy."

Again and again over the past several years, we have seen both studies and
anecdotal stories from artists finding that file sharing produced a net
economic benefit. If "piracy" increases ten times and sales double, that still
means doubled sales.

[1] <http://tim.oreilly.com/pub/a/p2p/2002/12/11/piracy.html>

~~~
tree_of_item
The author quotes Tim O'Reilly and shows why he isn't necessarily correct.

> Don’t need to take my word for it. Just look at all the other industries
> that have gone digital. Take music. Physical music sales have been declining
> steadily for more than a decade, and while digital sales rise, they make up
> only a fraction of the loss. (They’re not even rising much anymore either.)
> Revenue from Pandora, Spotify, YouTube ads and the like are loose change
> next to CD sales declines.

> What’s the shortfall? All told, the United States recorded music industry is
> worth less than half of what it was a decade ago, and the downward slope is
> only getting steeper. Outside of the big markets, the declines are greater.
> The Spanish music industry fell 55% in the last five years alone. In China
> rampant CD copying and file sharing have left a nation of 1.3 billion people
> with a $75 million recorded-music industry. As a recent Economist report put
> it, the “worst-case scenario has already come to pass.”

Sales are not doubling everywhere. The industry has shrunk to a fraction of
its previous size.

~~~
DennisP
He says "obscurity is a far greater threat _to authors and creative artists_
than piracy."

The industry is another matter. Its main contribution is file distribution, a
function which we can perform for free now. I expect the industry to
ultimately shrink to zero, while authors and creative artists do just fine.

Over ninety percent of the money we pay for music used to go to the industry,
and we thought that was fine because they were pressing all those vinyls and
CDs. Now the industry thinks they still deserve that ninety percent, just
because they used to press all those vinyls and CDs. Free markets don't work
that way.

~~~
NickPollard
Exactly. Many musicians are doing better than before, due to getting a larger
portion of income through live performance than recorded music. [1]

The recording industry might be shrinking, but the music industry is growing.

[1] <http://www.economist.com/node/17199460>

------
CWuestefeld
_Musicians have always relied on other revenue sources. Performance is the big
one, but merchandise and licensing matter too. Authors don’t have the same
options. Dickens engineered a profitable reading tour of the United States, as
new-model enthusiasts always point out. But how many authors could do that
today?_

The author never really addresses his own question, leaving us to assume that
authors couldn't generally support themselves through reading tours.

I just finished "reading" (by way of audio book, while sitting in traffic) a
biography of Mark Twain. He's relevant here in two ways.

First, he ushered in a new publishing model, wherein his books were sold by
subscription, with sections serialized and delivered periodically. That's
pretty alien now (except in some sci-fi magazines), but it shows that the
economic realities of the times can dictate major changes in the book
publishing business model.

Second, due to bad investments, he nearly went bankrupt. He was able to dig
his way out of insolvency through a giant world-wide lecture tour. Apparently
there were a great many people, across the entire planet (including many out-
of-the-way places you'd never think of) who were willing to pay good money to
see him lecture (this wasn't _readings_ , but lectures). So it's clear that at
least some authors can make a very tidy profit from lecture/reading tours.

Trivia note: OP mentions Dickens on a reading tour. It happens that Sam
Clemens' first date with his future wife was to see Dickens reading.

EDIT: fixed wrong word, "novel" where I meant "model".

~~~
ckcheng
> books were sold by subscription, with sections serialized and delivered
> periodically

Isn't that like what Manning does with its MEAP (early access program)?

<http://www.manning.com/>

~~~
henryfarbles
Most comics are still distributed that way as well.

------
metageek
The article cites the decline in music sales, but ignores the fact that a
large part of the music sales in the 90s was people buying CDs of albums they
already owned--an artificial bubble which burst independently of any increase
in illegal copying.

~~~
jimbokun
Your exact point happens to be addressed in an article linked to from the
article under discussion:

[http://money.cnn.com/2010/02/02/news/companies/napster_music...](http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/)

"It's also a bit unfair to compare the 2000s with the 1990s, since the '90s
enjoyed an unnatural sales boost when consumers replaced their cassette tapes
and vinyl records en masse with CDs."

"But industry insiders and experts argue that the main culprit for the
industry's massive decline was the growing popularity of digital music."

Also:

"Last decade was the first ever in which sales were lower going out than
coming in."

------
hessenwolf
Books of artistic or academic value never made much cash, to my knowledge.
Detective books - well, they can have Dirk drink a bud light and talk it up
for half a page for all I care (and many fictional detectives already do
express brand preferences every five pages). So no great change.

Perhaps they can start writing by hand, copying the world of painting and
sculpture, in which people happily 'invest' in products which have nominal
future cashflow potential other than future speculation.

------
erikstarck
This goes beyond just the digitalization of media. In the age of access you
rent more or less everything. Your car and your home (either directly or via
loans), your music collection, library - maybe even your furniture and
clothes: <http://www.weartodaygonetomorrow.com>

Huge opportunities for startups to be disruptive here.

~~~
JoeAltmaier
New meaning for "a new lease on life!"

Perhaps we'll see "life lease" companies - I'll have the mid-level engineer
package please!

------
maguay
There's another way to look at it. eBooks sales, whether in Kindle, iBooks, or
another marketplace, end up with similar dynamics to the App Store in iOS.
People have paid $0.99-$4.99 millions of times over for apps such as Angry
Birds that would have sold far fewer copies as a $19.99 boxed PC or game
console game. I think eBook readers actually encourage buying books, and for
the vast majority of the public, it's so easy to do that they'll do a lot more
impulsive buys than before.

Additionally, as DennisP mentioned, if the author is actually getting more
money from it, then we're just doing away with a middleman. That's what lot of
startups are trying to do right now, after all, and it's a great opportunity.
For creative writers, musicians, or designers and coders, there's more chance
than before to get your content out there and sell it more seamlessly than
before. That can't be all bad!

~~~
ghaff
The (hypothesized--I think it was Tim O'Reilly who has written about this)
issue though is that, with books, time is much more of a limiting factor with
books than with songs or simple iThing games. Even if an author makes
substantially more per copy with an eBook, there's a limit in how many more
copies they'll sell even at a much lower price; people only have time to read
so many more books.

I'm not arguing it's all doom and gloom but, as the article discusses, I hear
a lot of reflexive "Give it away; you'll gain visibility and make money
somehow." I heard that plenty as a consultant by people trying to get me to
speak or write for free and it mostly didn't work then either.

~~~
forensic
Since the invention of e-books and digital audiobooks I probably buy 3-10
times more of these.

Audiobooks in particular, of the on-demand variety where I can instantly get
them on my iPhone through the Audible app, have led to me reading a HELL of a
lot more. It's easy and convenient.

eBooks also help because I buy more books and search through them. I can also
read them on mobile devices while I take a shit in public washrooms.

Right now I am in the middle of:

* 2 non-fiction audiobooks

* 3 fiction audiobooks

* 4 standard ebooks

I task-switch between these 8 products based on my mood. I could never carry
around 8 dead trees or fit 5 audiobooks onto my walkman. It just wouldn't
happen.

Digitization has led to me spending way more money on authors. In the past I
would just get dead trees from libraries or friends, or not buy them because
they were too much money.

Now that I can get an audiobook for an ~$8 audible credit I try out new things
way more.

That I can instantly buy an ebook I need for ~$10 means I read a lot more. If
it's 2am and I want to read some particular book, I can instantly get it, I
don't need to put it on the shopping list and waste so much time finding a
bookstore and standing in line and searching through stacks of shelves.

I spend more time reading/listening and far less time deliberating, searching,
planning, and waiting.

~~~
oiujyhgtfrt
The problem at the moment is that the publishers are marketing eBooks as a new
luxury product to a niche of rich techies who but iPads on a whim.

SO an eBook costs the same as the hardback - screwing you. But the contract
with the author has the same clauses charging them a percentage of buy-backs
and printing faults or damaged copies as the paper version - screwing them.

The publishers need to realize the game has changed - and quickly unless they
want to end up like the record business

~~~
maguay
True ... which is exactly why I think it's publishers, not authors, that stand
to lose the most from this. When smart authors start selling eBooks cheaper
directly on Kindle et al., that's when the real book transition will start.

At the very least, there's a huge potential for a lucrative new market in
cheaper eBooks, only it hasn't been fully realized yet because of existing
publishers.

------
robryan
It's interesting to see where things go, will piracy lower the quality of new
books being turned out or will it breed a generation of authors just as
talented as those in the past that are willing to get by making a
significantly smaller amount than they would have a generation ago.

I can't really say that the declining music sales of the last decade have
effected the quality of music being put out in any noticeable way.

I guess the longer term problem is that it's creating a next generation that
know no other way but to freely obtain content without contributing anything
back.

------
lionhearted
I think we'll see more serialized, short length, low price point works. Will
someone pay 99 cents for 20-30 pages of a well-crafted story? I think probably
yes.

I'm thinking of something like "Harry Potter and the Methods of Rationality" -
obviously Yudkowsky can't sell that because of its fanfiction nature, but
something of that quality level, I think I'd pay a buck to read 4-5 episodes
of it. Especially if I got hooked by the first 10 chapters being free.

This should bring lots of new opportunities, especially for fiction writers.
Hopefully, less fluff and more density too. Would you pay $2 to read a highly
polished 20 page manual by Steve Blank? I would. Hopefully this becomes a way
for content producers to get paid to craft high quality, dense content... I
think this could lead to something of a revolution in quality, dense, though
shorter content.

~~~
DennisP
Stephen King did exactly that, though he screwed up the incentive. He released
a new book one chapter at a time, allowing each chapter to be freely
distributed. He charged a dollar for each chapter download, but it was
optional. He asked only that 75% of downloaders pay a dollar.

Where he screwed up: he promised to finish the book if his targets were met
for the first two chapters. Naturally, for the first two chapters, they were.
People were paying extra just to make sure. But after two, donations dropped
dramatically. Ultimately, King broke his promise after seven chapters.

Nevertheless, he netted half a million bucks for an unedited novel that he
didn't even bother to finish.

~~~
forensic
Wikipedia says he broke his promise because he "ran out of stories" not due to
payment

~~~
chc
It seems unlikely that he would have "run out of stories" if people were still
paying him to come up with more. I mean, he's been coming up with stories for
decades and he runs out just then?

