Book, Music Execs Talk e-Commerce
Calvin Reid -- 2/19/01
Good content and lower prices win over rigid digital security

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New digital business models, reasonably priced and enriched digital content and the possibility of a new view of digital piracy were just a few of the topics batted around in an afternoon seminar organized by the Book Industry Study Group to examine recent developments in digital distribution in the music industry.

Called "What Can the Publishing Industry Learn from the Music Industry?," the seminar presented panels of music and book publishing executives grappling with the issues surrounding digital commerce. The book publishing industry is beginning to deal with the demands of digital business with which the music industry is particularly experienced, but both panels offered the audience their hard-won information.

The Internet, said keynote speaker Michael Overdorf, chairman and CEO of Innosight, a research and consulting firm, can be a "disruptive technology" to some firms. These technologies can allow consumers to bypass expensive specialists. But it may be difficult for a large, conventional firm to accommodate or manage these new technologies. The phrase comes from The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, a much-cited work on business written by Clayton Christensen, founder of Overdorf's firm. Best applied to small segments of a firm's market, disruptive technologies are often unprofitable in the short run, but they can undermine a firm that ignores the impact of their innovation unless, cautioned Overdorf, "you manage in a fundamentally different way."

This was no secret to the music panel, whose responses were the product of firsthand dealings with the Napster file-sharing phenomenon, the music industry's number-one disruptive technology.

Direct access to consumers plus back office efficiencies and cost savings were hailed by Kevin Conroy, head of AOL music, as the great benefits of digital technology. But the panel was chastened by the tumultuous fight over file sharing and digital piracy and acknowledged the failure of the music industry's efforts to suppress Napster or successfully market its own file-sharing application. Conroy even offered a reluctant, albeit highly qualified acknowledgment of the heretical notion that digital piracy can be promotional--that unauthorized copying may actually spur content sales.

"You can make something so secure," said Larry Miller, president of Reciprocal Entertainment, a firm offering digital-rights management services, "that no one can get it." More important, the panel pointed to the need to develop "interoperability," or some kind of standard for digital file formats and playing devices as well as offering value-added content that is richer and more desirable than pirated content. "Something beyond vanilla content," said Brian Queen of Global Media and Entertainment, "so that pirates have to compete with you."

Will giant record companies and book publishers become dinosaurs in an era when artists can easily offer their works directly to consumers? Not necessarily. Cary Sherman, general counsel for the Recording Industry Association of America, pointed to the need for new partnerships between content companies and their artists: "Big companies will continue to create big stars who will move on to have different economic relationships to each other." Conroy emphasized that big companies will continue to promote megastars conventionally and use the Web to support new artists and target niche markets. "It's not an either/or position; you need a dual strategy."

Later, on the publishing panel, Steven Brill, founder and publisher of Brill's Content and Contentville, though ambivalent toward so-called e-books, was enthusiastic about what he called "e-magazines," advertising-supported digital anthologies of shorter works. He even quipped that in the magazine world piracy is called "pass-along readers, and our advertisers love it."

Taking up a related issue, Tom Turvey, formerly director of e-books at Barnes & and now v-p of business development at ebrary, pointed to superdistribution, encouraging consumers to pass content on to friends and the need for inexpensive devices and more content. "There's only about 20,000 e-book titles total, and that includes public domain works," he said.

And who said no one buys e-books? M.J. Rose, novelist, e-book self-publisher and e-publishing reporter for Wired News, noted an often overlooked fact: long before Stephen King offered Riding the Bullet as an e-book, scores of small, unheralded e-publishers such as and DiskUs Publishing were selling e-books to a growing and enthusiastic reader base. These days, she said, small firms such as are selling thousands of e-books a month (primarily general nonfiction and technical works but also a lot of genre fiction) for very reasonable prices. "People know e-books don't cost $13 to make," she said. And, pointing out marketing guru Seth Godin's self-publishing and Web marketing ventures, she noted that "people wanted digits and real things. If you give e-books away, you'll see people also buying the print editions. Publishers and authors must become copublishers."

"Digital publishing is more than just e-books," said Michael Miron, CEO of ContentGuard, a digital-rights management service, citing the growth of print on-demand, advertising-supported texts, online publishing and alternate digital editions-- all new digital business models. Miron said, "The genie is out of the bottle. The low-cost channel will always win. The paper book will still be here when I'm gone, but there will be a wide variety of ways to consume content digitally."

New Criteria for 2001 IeBAF Awards

The International eBook Award Foundation has made some revisions for its second annual e-book competition. The changes aim to make the contest more accessible to smaller e-publishers by lowering the eligibility requirements. To submit titles for the 2001 Frankfurt eBooks Awards, a company must have published at least 10 different titles (in print or electronic form) in the past year. Last year, participants needed to have published 20 different authors, a requirement that led to the nominees being dominated by electronic publishing divisions of large print houses. The judges will also be looking for entries to feature functions that enhance the e-book reading experience.

Also, the prize money has been shifted a bit; the Foundation has eliminated the $100,000 grand prize in favor of a $50,000 grand prize for fiction e-books and another $50,000 award for nonfiction e-books. Along with the increased emphasis on enhancements, the Foundation has eliminated the distinction between original e-books and e-books that had been first published as print titles, and created an additional $10,000 prizes for best fiction e-book and best nonfiction e-book. The $10,000 award for best technology achievement remains the same as in 2000. In addition, the Foundation has added a children's e-book prize for an as yet undetermined amount. The adult winners will be announced on October 10 at the Frankfurt Book Fair; the children's winner will be announced during the Bologna Book Fair in April 2002.

To be eligible in the adult categories, e-books must have been published between July 1, 2000, and June 30, 2001. Submissions will be accepted in English, German, French, Italian and Spanish, and can be sent in the PDF (Glassbook), .rb (REB1100/1200) or .lit (MSreader) formats. Deadline is June 30. For more details, go to