L. to r., panelists Craig Morgan Teicher,
Josh Koppel, Andrew Weinstein,
Len Feldman and Erica Lazarro.

In a forum held by the Children’s Book Council this past Tuesday on “The Current State of E: Publishing in the Digital Age,” a group of panelists discussed some of the thorniest issues that the industry is currently facing: where digital publishing stands and where it is headed. Speakers included Len Feldman of Follett Digital Resources, Andrew Weinstein of Ingram Digital, Erica Lazarro of OverDrive and Josh Koppel of ScrollMotion; PW contributing editor and digital publishing reporter Craig Morgan Teicher served as moderator.

Teicher posed a series of questions to the panelists, which raised many familiar areas of debate, including format, pricing, rights, and piracy.

One thing the panelists could all agree on: the advantages and opportunities e-books have to offer. As Koppel said, “E-books add a fantastic functionality to what a book is. Adding interactivity to that experience is also very interesting. And thinking about ways they can be fun [is important], because it’s for children.” Weinstein added, “It’s about bringing the book to where children will be spending the majority of their time.” And Lazarro pointed out that “we’re seeing a lot of uptake in schools.”

But are children’s book publishers ready, Teicher wondered?

Koppel called publisher readiness “a difficult challenge.” He used the example of Napster’s effect on the recording industry to show the publishing industry exactly what not to do. “The music industry cowered at the prospect of losing control over format,” he said. In his view, addressing publishers, he spoke to “a great opportunity for companies like mine to be R&D divisions for companies like yours. The opportunity is there for us to work together.”

Teicher mentioned that book publishers do seem willing to embrace partnerships where the music business did not. “In my experience,” Weinstein said, “publishers don’t want to be the experts in technology”; instead they are the experts in content. Some publishers have had a wait-and-see attitude toward digital initiatives, Weinstein noted. Others have been experimenting.

Lazarro at OverDrive suggested that publishers view digital as a revenue opportunity for content. “Digital is really a part of your supply chain,” she said. “Companies like ours can help remove barriers for entry, and help you find ways to sell.” And she called digital “incremental income, not taking away from traditional revenue.”

“We’re all still very early in this market,” Feldman observed. “Market potential is still potential. What I’d say to publishers is: you have to have some understanding of the technology in-house. It allows you to be a more informed buyer.”

The Rights Way Forward

Digital rights are a tricky and ongoing issue for all companies involved. “It’s getting better,” Feldman said, “but there are still issues.” Lazarro explained, “There was a point in time when contracts didn’t allow for books to be sold in this format. Now it’s become part and parcel, and electronic permissions are being included in the bundle. It’s still a gray area when companies approach publishers with a one-off creation.”

Feldman said that publishers have to weigh their market opportunity vs. the cost of selling rights. “Get out in front of the problem,” he told them. “You’ve got to make the economic choice.”

And going digital means that it’s much harder to control the flow of the content into the market. “Embargoes work in the [traditional] supply chain,” Weinstein said, “but they do not work in a digital world.”

On what device will e-books be read, down the road? Koppel believes that the format of choice will be the iPhone. Holding up his own, he told the audience that “this device is becoming much more ubiquitous,” pointing out that 70 million iPods have been sold. In a discussion with audience members, some said they allow their children to use their iPhone; another said she wouldn’t let her kid near it.

For Koppel, the breakthrough of the iPhone is the touch screen. “When you combine touch and children’s content, [it’s] much bigger than high-def resolution. Electronic-ink technology of the 1990s is somewhat limited, when you look at how dynamic it is to be able to engage with the screen.”

For middle-school and high-school students, the phone format may be fine, Feldman said, “but for primary school they need color, and you need to try to maintain the layout of the page. He quoted Apple CEO Steve Jobs, who says that no one wants to buy a dedicated reader. “In the long run,” Feldman said, “you need a multipurpose device with color, across the board. You need the ability to render the page the way it originally worked as well as the ability to render it [in other ways].”

But Feldman also brought up a key obstacle to success, at least in the near future. “We sell to school districts around the country,” he said. “And schools are enormously taxed [these days].”

Popularity of iPhones aside, the majority of e-books are still being looked at in laptops and desktops, Lazarro said. And for Weinstein, “It’s not about one device. Depending on which consumer you ask it’s going to be a different answer: e-book reader, BlackBerry, iPhone. The industry is trying to move beyond one device. Rights issues get in the way, but once you get past that, it’s about the technology. We still feel the primary vehicle of complex materials is something more powerful like desktop or notebook.”

Since children’s books are often bought for family libraries and passed down, the panelists were asked how that practice will be affected in the new digital world.

“The reality is, digital formats change,” Feldman said. “No format lasts forever. MP3s may be around in 15 years, but lots of people bought DRM’ed material from companies now out of business.” But format change is not unique to the digital world; Feldman used the recording industry’s example of outmoded formats like LPs, eight-tracks and cassettes. “I challenge anyone who has a digital format to tell me you’ll be able to read it in 50 years,” he said. “If I were looking to buy something to pass down for my family, I’d buy print.”

What can be and has not yet been addressed, Feldman said, is the consumer’s expectations for how long a format will be around. Koppel reported that the ability to save and pass along a book in digital format is “something we’re working to do. The way to do it is to personalize it, to add content around that book.” And as Teicher noted, this is an especially complicated issue for publishers because “they’re the only industry that’s been able to rely on the same format” for its entire existence—the book.

At What Price Progress? (No, Really, What Price?)

E-pricing is a huge issue in the industry, all agreed. “Amazon has made a strategic decision to drive the price down,” with its $9.99 e-book pricing, Feldman said. In his opinion, what Amazon is doing is educating its customers that this is what books are worth. “We’re dealing with two things,” he said. “There is every reason for publishers to price e-books at whatever they want to price it at. On the other hand, Amazon and B&N are pricing books considerably lower. I don’t like the trend—it devalues books.”

Weinstein said that at least the book industry does not have the same problem as the music industry. “For decades publishers have been good at pricing their content for their market,” he said. “In the music industry the pricing structure was broken.” He spoke to the success of music distribution through iTunes, allowing customers to buy a song or two from a CD rather than have to purchase the entire CD. But he added that the same needs don’t apply in the book business. “You’re not buying a James Patterson novel for chapter two.”

“There’s a lot of work to do to figure out how to price a book,” Koppel said. “It has to make sense to consumers. And it’s dangerous to lose pricing control as an industry.”

An audience member wondered about the future role of libraries, given this digital discussion. Feldman said he still saw a need for them, adding that people will need help locating materials as well as using them. Libraries are an important part of OverDrive’s efforts, Lazarro said, and Weinstein pointed out that there is a “large portion of books that people don’t choose to own, and don’t buy directly,” which can be found in the library.

The problem of protecting content from filesharing was also discussed at length. “I think DRM is important,” Koppel said. “You need to create walls where people can own stuff. Through pricing or through a smart distribution method, you need to give them an opportunity to sample. Piracy in some ways,” he contended, “is people responding to high prices and inaccessibility.”

“It’s a tough situation,” Feldman admitted. “There is a way to keep the honest people honest. DRM is the best system now to keep people from duplicating, but it’s not a perfect solution.” However, he said, just because it’s not perfect doesn’t mean publishers should stay away from e-books.

Weinstein took that notion a step further when he stated, “Not participating in the e-book space does not make you immune to piracy. Every publisher has to weigh the risks and benefits of putting digital content out there. I hear there are a lot of books [on filesharing sites], but I don’t hear about a lot of people downloading them.”

Giving away sample chapters of novels may be helpful for potential e-book customers, but as Feldman pointed out, “I don’t know anyone who’s successfully sampled picture books. It’s tough, because picture books are so [short] and the value is in the graphics.” He stressed the need for additional content like animation, for added value to the reader.

While giving away digital content might seem antithetical to the notion of trying to make revenue from the enterprise, “if it’s a business-to-business transaction,” Weinstein said, “I would argue you give up the entire content. It only increases the opportunity.”

So what might the e-future look like, for children’s books? Feldman is excited about the potential ability “to introduce content from the students themselves. They will have a far more interactive and lively experience.” Weinstein is also bullish on the academic advantages of e-books. “We really see e-books and a student virtual desktop as much more robust than [just textbooks],” he said. “The ability to manage all those resources on a simple desktop when it acts as one curriculum is much more efficient for students.” And he added that some of this will be “translating into the trade market.”

Koppel foresees the ability to take a book and customize it for a specific age group. His company is currently designing an e-reader, which will be available before Christmas. While he was reluctant to provide many details on the reader, he did mention its customizable elements, such as the ability for parents to enlarge text for a picture book. “These are things you’re going to see this year,” he said.

For publishers, Lazarro said, e-books will provide a handy way to package additional material, user-generated content, or assets that are already in-house, such as author interviews.

Koppel’s parting recommendation to children’s book publishers: take your content and use it in the most fun and surprising ways possible.