Prediction for 2011 from Smashwords Founder

[Lemurion]

Originally Posted by bhartman36

Digital files are a lot different, because they can be copied indefinitely and distributed much more widely. This differs from libraries in that a) libraries only lend out one book to one person at a time, and b) you make a deal to bring the book back after your designated time. You're absolutely right that with a paper book, you have the right of resale, and I think an e-book should be no different. But that still involves DRM to make sure that you don't retain a copy after you sell it.

E-books are also different in that, as I said, they're not sold piecemeal. If someone downloads an e-book, they're downloading the whole e-book, unless the supplier offers free samples. Thus, there's no such thing as a person downloading an e-book that wouldn't have had to either buy it outright in digital form or borrow it from a library as paper (and libraries, in case you're wondering, already pay premiums specifically designed to compensate publishers for the lost income).

E-books are in a rather precarious position right now. They don't want what happened to the music industry because of piracy to happen to them. Luckily, e-readers today are better designed than the MP3 players were in the Napster age. The distribution is more sophisticated. But the industry needs to settle on a format so that one format can be read across devices. If I had to guess today, I'd say that format would probably be AZW/Topaz, because Amazon seems to be dominating the market (at least, here in the U.S.).

The fact that a novel is a unit, just like a song, has no bearing on whether every illegal/unsanctioned download is a lost sale or not. It's irrelevant to the question.

If you take a look at the "Deals, Freebies, and Resources" forum, you will find that a lot of people treat free downloads as being more like picking a book up off the shelf in a store than buying it. They download it on the chance they might like it, may or may not try a few pages, and only sometimes read it. Many of those people say they would not have bought the book had it not been free.

Are these downloads lost sales? I don't think so, and I think most people here would agree with me.

Why then would anyone think that pirate downloaders would behave any differently? They download books that catch their eye when they browse the eye-patch version of "Deals, Freebies and Resources." Sometimes they read them, sometimes they don't.

The only time I would call it a lost sale would be if the person deliberately goes looking for that particular book to download, and they would have bought it if they could not have found it illegally.

Otherwise, they're just picking it up off the shelf on the chance they might like it.

I'm not justifying the behavior, but it's nowhere near accurate to say that every download is a lost sale.

You can't lose sales from someone who wasn't going to buy the product anyway.

[Elfwreck]

Originally Posted by Andrew H.

DRM doesn't treat everyone like convicts anymore than locks on houses or cars do so, or security tags in libraries and stores do so. If *you* feel treated like a convict, I think that's your issue.

Security tags in stores are removed when you make a purchase; the store doesn't monitor your use to make sure you only wear that shirt in pre-approved buildings and that you can't give it to your cousin if you decide you don't like it.

And your decision not to buy books with DRM is a political decision.

No, it's a practical one. I read on three different computers with different types of internet access and at least two, sometimes as many as four, dedicated devices with incompatible filetype support. The ability to convert between formats is important to my ability to enjoy the books I read.

It's fine as it is, but 99% of the book buyers select books that they *want to read* and don't really care about DRM.

Most buyers select books that are pushed at them by marketing agencies, and are astonished to discover there are thousands of other books they'd enjoy reading just as much.

I've met people in the last two months who owned ebook readers, love classics, and didn't know Project Gutenberg exists.

My mostly non-techie sister has a Kindle. It would make no practical difference to her if all of her books were drm'd or if none of them were.

And that'll hold, as long as she doesn't acquire a Nook II next year as an upgrade.

[bhartman36]

Originally Posted by Lemurion

The fact that a novel is a unit, just like a song, has no bearing on whether every illegal/unsanctioned download is a lost sale or not. It's irrelevant to the question.

Of course it's relevant. The equivalent of a novel isn't a song. It's an album. The comparison to a song only works if publishers sold chapters. People don't download books illegally to see if they like them. Once they've done the download, they've got the whole book, so what would the advantage be of them buying it, even if they thought it was the best book ever written?

Originally Posted by Lemurion

They download it on the chance they might like it, may or may not try a few pages, and only sometimes read it. Many of those people say they would not have bought the book had it not been free.

With a freebie, it's different. The person offering it as a freebie explicitly wants people to download it for free. Maybe those people will like it, and maybe they won't. But the point is that the writer and the people downloading the work have an agreement that the work is free. It's not a lost sale to the writer, because the item wasn't being put up for sale to begin with. Change that equation to one where the writer doesn't agree, and the whole thing is different. Whether you read the first few pages and delete it, or you read the whole thing through, the fact of the matter is that it's still a lost sale, because it's only by obtaining for free what you would have had to pay for that you know whether you like it or not.

Originally Posted by Lemurion

Are these downloads lost sales? I don't think so, and I think most people here would agree with me.

If it's explicitly a freebie, then no, it's not a lost sale. If it's not a freebie, then it's a lost sale by definition.

Originally Posted by Lemurion

The only time I would call it a lost sale would be if the person deliberately goes looking for that particular book to download, and they would have bought it if they could not have found it illegally.

Just because someone doesn't go looking for something doesn't mean they wouldn't have bought it if they found it for sale somewhere else. If you pilfer something for free, rather than buying it for the seller's price, that's a lost sale, no matter how you choose to parse it. If you steal a Ferrari, you can't turn around and say, "Well, it's not a lost sale, because I wouldn't have been able to buy it anyway." If you take something someone's selling without paying for it, it's a lost sale. Period.

[Lemurion]

Originally Posted by bhartman36

Of course it's relevant. The equivalent of a novel isn't a song. It's an album. The comparison to a song only works if publishers sold chapters. People don't download books illegally to see if they like them. Once they've done the download, they've got the whole book, so what would the advantage be of them buying it, even if they thought it was the best book ever written?

With a freebie, it's different. The person offering it as a freebie explicitly wants people to download it for free. Maybe those people will like it, and maybe they won't. But the point is that the writer and the people downloading the work have an agreement that the work is free. It's not a lost sale to the writer, because the item wasn't being put up for sale to begin with. Change that equation to one where the writer doesn't agree, and the whole thing is different. Whether you read the first few pages and delete it, or you read the whole thing through, the fact of the matter is that it's still a lost sale, because it's only by obtaining for free what you would have had to pay for that you know whether you like it or not.

If it's explicitly a freebie, then no, it's not a lost sale. If it's not a freebie, then it's a lost sale by definition.

Just because someone doesn't go looking for something doesn't mean they wouldn't have bought it if they found it for sale somewhere else. If you pilfer something for free, rather than buying it for the seller's price, that's a lost sale, no matter how you choose to parse it. If you steal a Ferrari, you can't turn around and say, "Well, it's not a lost sale, because I wouldn't have been able to buy it anyway." If you take something someone's selling without paying for it, it's a lost sale. Period.

I think the problem here is that you and I have a fundamentally different understanding of a lost sale.

By my definition, a lost sale only exists when there would otherwise have been a sale to lose. So, since not all illegal down-loaders would have bought the book, not all illegal downloads are lost sales.

Human nature is human nature. When people are presented with a large amount of "free" stuff, they generally follow the same pattern of behavior whether the product is legally available or not. If something is available for "free," people are more likely to take it than if it has a price.

Every instance of theft is not automatically a lost sale and neither is every illegal download. Some are, some aren't. We're never going to know the exact breakdown, but arguing that all illegal downloads are lost sales is as foolish as arguing that none are.

Piracy impacts every industry's bottom line - but multiplying the number of downloads by the sale price isn't the way to calculate that impact. This is the real world where things are more complicated than that.

[Steven Lyle Jordan]

As so often happens around here, the discussion has devolved into another DRM argument. I'll come back when everyone remembers that there were 9 other points to Mark's article...

[Lemurion]

Originally Posted by Steven Lyle Jordan

As so often happens around here, the discussion has devolved into another DRM argument. I'll come back when everyone remembers that there were 9 other points to Mark's article...

Yes, he made a lot of interesting points (I don't agree with everything he said - but they were all worth bringing up).

I still think he's missing the boat on the obscurity issue, though.

[Andrew H.]

Originally Posted by Elfwreck

Security tags in stores are removed when you make a purchase; the store doesn't monitor your use to make sure you only wear that shirt in pre-approved buildings and that you can't give it to your cousin if you decide you don't like it.

I was actually thinking of the ones that are desensitized and stay in the product, but that's not really important - even *in the store* they aren't treating you like a convict.

No, it's a practical one. I read on three different computers with different types of internet access and at least two, sometimes as many as four, dedicated devices with incompatible filetype support. The ability to convert between formats is important to my ability to enjoy the books I read.

This was in response to Nashira's comment that she did not buy books that she would otherwise read in part because she doesn't want to encourage companies to keep using DRM. That's a political act.

Most buyers select books that are pushed at them by marketing agencies, and are astonished to discover there are thousands of other books they'd enjoy reading just as much.

This is just arrogance. I might just as easily say that most people who buy indie books do so because they can't tell the difference between a well-written, well-edited book and a sixth grade book report.

I've met people in the last two months who owned ebook readers, love classics, and didn't know Project Gutenberg exists.

So? There are much better places to get classics than PG.

[Steven Lyle Jordan]

Originally Posted by Lemurion

Yes, he made a lot of interesting points (I don't agree with everything he said - but they were all worth bringing up).

I still think he's missing the boat on the obscurity issue, though.

If you mean:

9. Discoverability becomes HOT – Amid glut of content, discovery will become the new obsession of publishing. Publishers of all sizes will begin to realize obscurity is the biggest threat facing their business. Solution: maximize availability of product, leverage metadata, create books that resonate with readers, enlist fans as extension of sales force.

How so? This sounds spot-on to me... it's the one thing that keeps me up at night (well, it would if anything did). Or do you think he's missing something here?

[JSWolf]

Originally Posted by screwballl

VHS replaced previous technology...
8 track replaced records for the most part
cassettes replaced 8 track
CDs replaced cassettes
mp3s replaced CDs for the most part
DVDs replaced VHS for the most part
Bluray is slowly moving into DVD territory...

As digital media expands, other things are partially or completely replaced.


Oh and as a side note, Daithi, that 1001books site in your sig has been down for some time.

8-track did not replace records.
Cassettes did not replace records.
CDs replaced records and cassettes.
DVRs replaced VHS (VHS was still used to record from TV)
Blu-Ray killed HD-DVD.
VHS killed Betamax.
TV killed radio dramas.
HDTV is killing SDTV.

[JSWolf]

Originally Posted by nashira

Authors/Publishers who use DRM are loosing sales by default with those of us who don't want to fuss with it. Yet I've brought a fair few Smashwords titles and even though I know how, I haven't passed them around, uploaded them anywhere or done anything remotely close to pirating.

The Agency model of higher prices and no discounts is what is losing authors/publishers sales a lot more then DRM. The Agency model is hurting eBooks more then DRM (at the moment).

[JSWolf]

Question, how do we go about defeating the Agency model and get something in place that works for the consumer?

[Steven Lyle Jordan]

Originally Posted by JSWolf

Question, how do we go about defeating the Agency model and get something in place that works for the consumer?

Maybe you want your own thread for this... we're discussing Mark's predictions, here.

[bhartman36]

Originally Posted by Lemurion

I think the problem here is that you and I have a fundamentally different understanding of a lost sale.

By my definition, a lost sale only exists when there would otherwise have been a sale to lose. So, since not all illegal down-loaders would have bought the book, not all illegal downloads are lost sales.

The reason I think your definition is faulty is because without the illegal download, downloaders would've had to have bought the book to get what they got. The illegal download made possible a function with the book that would've otherwise required a sale.

Originally Posted by Lemurion

Human nature is human nature. When people are presented with a large amount of "free" stuff, they generally follow the same pattern of behavior whether the product is legally available or not. If something is available for "free," people are more likely to take it than if it has a price.

This is true enough. People are more likely to take something that is free than they are to pay for it. So the existence of illegal downloads automatically draws people away from the sold e-books, because those who know about the illegal downloads are drawn to them first.

Originally Posted by Lemurion

Every instance of theft is not automatically a lost sale and neither is every illegal download. Some are, some aren't. We're never going to know the exact breakdown, but arguing that all illegal downloads are lost sales is as foolish as arguing that none are.

Every instance of theft is the taking of something for free which you would ordinarily have to pay for. The very taking of the item without paying for it is a lost sale, because otherwise, you'd have to pay for it to get the access you're getting. This is especially true for e-books, because if you're really just curious about a book, you can download a sample. (Well, you can from Amazon. I assume B&N and other e-bookstores have the same functionality.) If people who did illegal downloading were really just curious to see if they'd like a book, why not just do that?

Originally Posted by Lemurion

Piracy impacts every industry's bottom line - but multiplying the number of downloads by the sale price isn't the way to calculate that impact. This is the real world where things are more complicated than that.

You're equating a lost sale with someone who read and enjoyed a book. I don't think that's a reasonable way to calculate it. I'm suggesting that downloads are the way to calculate it, because the ability to download and read the content is the thing a buyer pays for. You have to pay for a paper book whether or not you liked it.

[Andrew H.]

Originally Posted by bhartman36

The reason I think your definition is faulty is because without the illegal download, downloaders would've had to have bought the book to get what they got. The illegal download made possible a function with the book that would've otherwise required a sale.



This is true enough. People are more likely to take something that is free than they are to pay for it. So the existence of illegal downloads automatically draws people away from the sold e-books, because those who know about the illegal downloads are drawn to them first.



Every instance of theft is the taking of something for free which you would ordinarily have to pay for. The very taking of the item without paying for it is a lost sale, because otherwise, you'd have to pay for it to get the access you're getting. This is especially true for e-books, because if you're really just curious about a book, you can download a sample. (Well, you can from Amazon. I assume B&N and other e-bookstores have the same functionality.) If people who did illegal downloading were really just curious to see if they'd like a book, why not just do that?



You're equating a lost sale with someone who read and enjoyed a book. I don't think that's a reasonable way to calculate it. I'm suggesting that downloads are the way to calculate it, because the ability to download and read the content is the thing a buyer pays for. You have to pay for a paper book whether or not you liked it.

You are correct about the definition of theft. Where the idea of "lost sales" usually comes into play is when you try to determine how much money an author/publisher/industry *actually* loses because of piracy.

I.e., let's say a legal copy of an e-book costs $10 and 10,000 copies are sold. This means the book took in $100,000. But we also know that 10,000 people downloaded illicit copies of the book. The key question is how much more money the book would have made but for the illegal downloads.

One theory would be that they lost $100,000 - 10,000 sales at $10 each. But this is probably not correct, as some people who downloaded the book would probably never have actually bought it in the first place. Some of these people are people who were interested in the book, but due to poverty, etc., would never have paid $10. And some of these people are individuals who probably won't even read the book, but are simply downloading books because they are free, or because the book came bundled with other books that the person is interested in.

So the real difficulty is in finding out how many people *would have* bought the book, but didn't pay for it because it was free. (I should point out that I'm somewhat skeptical of claims from people who claim that they would never have paid $10 for the book - sometimes this is true, of course...but these are also people who have bought an e-reader and own a computer, so I tend to think that if they wanted the book and it were really not available for free, that they would find some way of either purchasing it legally or else getting it for xmas, birthday, valentine's day, presidents' day, MLK day, etc.).

But I don't know of any reasonable way to determine who would have paid and who wouldn't.

[leebase]

Originally Posted by Lemurion

Why then would anyone think that pirate downloaders would behave any differently? They download books that catch their eye when they browse the eye-patch version of "Deals, Freebies and Resources." Sometimes they read them, sometimes they don't.

How is that really relevant? If you steal food, but don't eat ALL of it, throw some (or even most) of it out -- are you less a theif?

If someone steals a book, reads it, but they NEVER would have purchased the book. Are they less a theif?

Maybe such a person wasn't ever going to give the content creator money, but HOW does that change the fact that they've stolen the usage of the content creator's product?

There are so MANY legitimately free books -- not to mention the library -- that there is NO excuse for piracy. It's not SOLEY an issue of "does the author lose money".

Whether or not it's truly worth it to the content creators to combat piracy is a different question altogether.

Lee