One of the major issues facing publishing today is risk management.  And it’s not just the advances that get paid out and never recouped – it’s the books that never get published because the risk is too great.  When someone isn’t published because they can’t write, that’s fine.  But when someone isn’t published because their book is too long for a first novel, or in a genre that’s not hot enough right now, we all lose.

So how do we fix it?

What if we take a page from the mortgage industry?  I know, they don’t have the greatest reputation these days, and when I say, “mortgage-backed securities”, you probably get a little nervous.  But the underlying idea behind mortgage-backed securities is sound.  It’s just the implementation that failed.  Bundling risky things with less risky things to create a package of moderately risky things makes a lot of sense.

How would it work for publishing?  Let’s say you have two known authors in the same genre.  Pick three other authors that no one has heard of, but writing similar stuff in the same genre.  Package them all together.  If you buy the two books from the known authors, you get the three unknown authors for free.  This works even better if we use ebooks, where “printing” and “shipping” one additional unit doesn’t cost anything.

Another option is for a group of unknown authors with a similar target demographic to form a legal partnership and act as one unit.  They could save on marketing costs and act as evangelists for each other.  Share the costs, share the risk, share the profits.

If publishers could lower their risk, they could publish more authors.  As long as we keep effective filters (like indie bookstores!), publishing more authors is a win for everyone.

Good post at Techdirt on Friday about a particularly nice response to debate about the morality and whatnot of sharing digital content online.  Two things jump out at me.  First, Alex Feerst, the IP lawyer who wrote the response, lays out a lot of the underlying ideas at Manfred Macx a lot better than I ever have.  If you don’t understand our philosophy, read his letter.  Or, read this excerpt:

These two issues – payment and ownership/control of copies should be conceptually separated. They are connected under our current system, but they are not naturally or necessarily connected. We can unfasten them and toggle them separately to see what happens. If we could imagine other ways for you to get paid for your work (maybe we can’t, but assume for argument’s sake we can) as an artist, then whether or not people “take” your song is beside the point. You only want to stop people from taking things because you need to get paid. If you got an acceptable income from your work, you would probably not care about who plays or doesn’t play your song. This is because, unlike a screwdriver, it is not bound by physical world zero-sumness. In fact, you’d probably prefer such a system because you’d get paid and at the same time a greater number of people would hear your song. I think your teen correspondent mentioned a similar point.

Emphasis is mine.  This is what we do at Manfred Macx.  We are trying to allow authors to earn an acceptable income from their work without needing to think about who might have given a digital copy to a friend (or a couple thousand anonymous P2P users).  Fighting against what technology allows is a losing battle.  Embracing new technology, and seeing how it can work for you, not only good business, but it’s future proof.  If you stop caring about copies of your content, you still have a business when the next killer delivery system comes out.

Both articles, however, don’t address one important point made by Jason Robert Brown, the composer who originally argued with the fan and started this whole thing.

Let’s say I invent a self-replicating screwdriver. There’s a whole pile of them in my driveway – if you take one away, another one will appear in its place. Weirdly, my neighbor also invented a self-replicating screwdriver. I think mine is better, but that’s neither here nor there. On my driveway, there’s a sign saying “Screwdrivers $4.00″. On his driveway, there’s a sign saying “Free screwdrivers!” There is no legitimate defense of the idea that it’s okay to take my screwdriver for free just because there are an infinite number of them available. If you want a free screwdriver, go get the one from my neighbor; but if you want mine, the fruit of my labor, as Locke would have it, then you are obligated – in every sense of the word – to pay me the price I am asking. I don’t owe the commons a free screwdriver, nor do I owe them free sheet music to my songs. Nothing you’ve written above changes my mind on that matter.

This is really important.  When someone is using a business model that you feel is outdated, you may write blog posts about how wrong they are, you may boycott them, you may even petition your elected officials to relax the laws on which these models depend if you feel they are no longer just or relevant.

What you can not do is take and share their content without their permission, and then think you have the right to tell them why their business model is wrong.  You forfeit that right when you fail to respect the wishes of the content creator.

I just bought an album of MP3s from Amazon.  I saw this tweet from @ninhotline, and watched this video of David Bowie performing with Nine Inch Nails playing behind him.  I’m a huge Nine Inch Nails fan, and at this point it’s nearly criminal that I have almost no knowledge of David Bowie, who Trent Reznor counts as one of his biggest influences.  One thing led to another, and I decided to buy the album.

Now, for most people, buying an album of MP3s makes a lot of sense.  I mean, who uses cds anymore?  I don’t even know.

But I’ve never bought an album of MP3s.  I bought a single MP3 before, but it was an extenuating circumstance, and not characteristic of my behavior.  I don’t like buying MP3s.  I’ve mentioned before that I think it’s immoral to sell something that can be instantly and perfectly copied, and I still stand by that.

And it’s equally immoral to take that thing without permission, so I only use BitTorrent for authorized files, like Linux distributions.

So, how did I end up buying an album of MP3s?  Well, it’s because Amazon isn’t Manfred Macx.  They don’t give you the options that we do.  I can’t download the album (Outside if you’re curious) for free and pay $500 to have a drink with David Bowie (which would be pretty cool.  You’d pay for that, wouldn’t you?  He’s, like, a legend).  And it just seemed silly to buy a cd that I didn’t want, and then wait for it to ship.

As an aside, the process to buy an album was incredibly annoying.  Amazon requires you to use their special MP3 downloader if you want to buy a full album.  Installing it wasn’t too bad, but every time a song finished downloading, it tried to open up Windows Media Player.  I don’t use Windows Media Player.  It’s a piece of junk that came with the operating system, and I want nothing to do with it.  I couldn’t choose a download location, either.  The entire experience was just bad.  But now I have the MP3s.

I realized at some point that my stubborn refusal to buy digital content was hurting me more than it was hurting those selling it.  I still don’t like it, and I still won’t do it often, but it’s silly to stick to my guns, at my own expense, while the vast majority still thinks I’m crazy.

Better to show them that these old business models are tired and outdated, relics of a time when it was hard to distribute content.  Creating the art is still hard.  So is polishing it (the sound engineers, the book editor, etc), and marketing it.  But distributing it?  The only reason you need anyone to distribute your work is to collect the money.  Stop charging for the content, spend that money connecting with your fans, and make it easy for them to give you money for other things.  That’s what we’re doing, and we hope you all will join us.

For years, people in the business of publishing content have used windowing to maximize revenue.  The most expensive version comes out first, and the die-hard fans who have to have it right away will buy.  Lesser fans wait for the the next version, a little cheaper, and the casual fans or not-even-fans wait for the bargain version.  This worked because each version was a reasonable substitute for the others.  For books, reading a hardcover and reading a paperback are not so different.

But as we move farther in the direction of digital distribution, this substitution goes away.  As more people read books on screens instead of paper, the hardcover and the ebook are no longer substitutes.  Sometimes they are complements, and sometimes they are completely unrelated.  For authors we love, we will read the electronic version and take the pristine hardback to the author’s reading at the local bookstore for a personalized signature.  For other authors, more and more people are only going to be interested in the ebook.  The hardcover will not be a substitute or a complement – it will be a waste of space in their living room.

Unless we rethink the way windowing is done, and really only window the substitute goods, this practice will only hurt authors and publishers.  When goods are complementary or unrelated, holding one back hurts sales, not helps.  If you put out the hardcover first, people who want the electronic version will be angry, and are more likely to look for entertainment elsewhere, or turn to filesharing sites who are sure to have nice leaked or scanned copies.

It’s getting closer and closer to launch time.  Manfred Macx is looking for authors interested in taking control of their book and using free infinite goods to sell more of something else.  Leave a comment here or send us an email if you’re interested.  We’ll even let you poke around the private alpha release of the website so you can get an idea of how it’s going to work and what you’re getting yourself into.

Needless to say, we’re pretty excited.  There’s still plenty of work to do, but the site launch is getting close.  It will only get more exciting as launch gets closer, so drop us a line if you want to get involved.

I don’t share the optimism of Teleread and Kindle Nation, but it appears that Amazon has not entirely deserted free ebooks.

They do, however, remain committed to controlling virtually every aspect of the Kindle that they’ve leased you, which is not terribly consumer-friendly.

Still, at least it’s not as bad as it originally seemed.

Free ebooks back at Amazon- John Lutz Urge to Kill | TeleRead: Bring the E-Books Home.

Over and over, when someone proposes giving away something for free in order to make more money on whatever else it is you’re selling, whether it’s the hard copy of your book, the tickets to your show, or anything else, some people see “free” and can’t understand that it doesn’t end there.  People get so mad that you’d suggest that everyone starve because “kids these days” don’t want to pay for music.

One of the comments on the really nice article linked below is one such person.

Eric: I have to say that this model saddens me.   Where’s the respect for the value of the artist’s labor when its given away free?  In over 25 years as a music writer for film/tv/theater, etc. I have many times been approached with some version of “We don’t have much budget on this one but do us a solid and there should be a good budget on the next….”  NEVER, has one of these ever come back with a decent paying gig and more than once people have come back with, “Oh, but last time you were able to do this for us.  How come?”

First of all, it’s clear the guy didn’t read the post.  No one was suggesting you do the show for free.  The author of the article (Derek, not Eric) didn’t actually say to give anything away for free.  He just advocated making an appeal to fans to buy your cd.  Pay what you want, even if it’s nothing, but walk out of the show with a copy of the cd.

The point is that, in his experience, the bands make more money this way.  This has nothing to do with giving away your work for some idealistic notion of good for society.  It has nothing to do with disrespecting creative works.  The opposite, in fact – it’s all about compensating the creator in a way that allows him or her to continue creating, and treats fans like fans, not potential thieves.

You have to stop and think – is it better to make a living doing what you love, or to be compensated for each and every use of your work?

Article: Emphasize meaning over price = More paid sales | Derek Sivers via CwF RtB on Twitter

It’s no secret that I read Techdirt a lot.  I think they have a lot of good ideas, and a good attitude about things.  A lot of the ideas behind Manfred Macx are ideas that Techdirt talks about all the time.

I was arguing with a friend about this article, which talks about creating artificial scarcity in place of something in infinite supply.  They give an analogy – what if we had Star Trek replicators for food, so everyone in the world could always have enough food, and no one would have to pay for it?  Who, then, would take this food away from the starving?  My friend argued that this would be terrible, taking jobs from everyone who works in the food industry.

Unfortunately, it’s not a very good analogy.  There’s no real substitute for food – people have to eat.  Whether or not you consider  high-fructose corn syrup to be food, you can’t escape the need for calories to survive.  For the analogy to hold, we’d have to replace the entire music industry, or the entire publishing industry, with something free.  No one is talking about doing this.

A better analogy would be if the replicator only made tomatoes.  You could have as many tomatoes as you wanted, they’d always be perfect and delicious, and they’d always be free.  This would put tomato farmers out of business.  But these tomato farmers could likely start growing something else instead.  And what happens to the rest of the economy?  Pizza and pasta restaurants suddenly find that a major ingredient in many of their dishes just became free.  Now, for the same dish, they can charge less, or buy higher quality ingredients, or make more profit.  And if you’re a really talented cook specializing in tomatoes?  Your skills are now in very high demand.

And there is still a demand for the people who bring the tomatoes from the replicator to your table.  There is still a demand for the person who stews and cans the tomatoes, or dices and seasons them.  And all the other food items, the ones that aren’t in infitnite supply, still need people to produce, process, and distribute them.

This is what’s happening in the music industry, and starting to happen in the publishing industry.  Some parts of the industries are finding their functions obsolete.  Instead of looking at the money they could save with electronic distribution, and what good use they could put that money to, the industry is seeking new laws and regulations to limit the infinite supply so business can continue as usual.

Even if every single song, book, and movie was distributed digitally for free, there would still be a need for the music, publishing, and movie industries.  There would still be demand for editors, producers, marketers, and all sorts of other services that these industries have always provided.

Reasonable people aren’t calling for the abolition of the music, publishing, and movie industries.  They’re just asking these industries to look to the future, and stop trying to limit supply to protect obsolete business models.

Edit to add:  This post has been translated to Spanish by a reader.  My Spanish isn’t good enough to read the whole thing, but the parts I understand look good.

It gives me great pleasure to introduce you all to Manfred Macx, a new kind of publishing company.  It’s not a new idea – bands big and small have been doing it for a while, and authors are just starting to try.  But as more and more of our media of all kinds is being distributed digitally, where making an extra copy (or a thousand) is nearly instantaneous and effectively free, we have to rethink the way we compensate creators of content.

At Manfred Macx, the author has a book, and the author has a goal, a target dollar amount that unlocks the electronic version of the book.  The author can sell almost anything;  Paper copies of the book, dinner with the author at a fancy restaurant, a character in the book named after you – whatever.  When the target goal is reached, everyone gets the ebook.

Beyond that, Manfred Macx is creating a community around authors and fans, fostering communication and connection in ways that weren’t possible before the internet changed our lives.

Watch this space for updates, or sign up for the mailing list.  We’re looking for authors right now, and expect the site to go live in November.

One of the big problems with ereaders is the cost.  Even if you get a great deal on the reader itself, you’re still stuck paying the exorbitant prices that Amazon and the like charge if you actually want to read a recent book.

The World Digital Library will make available on the Internet, free of charge and in multilingual format, significant primary materials from cultures around the world, including manuscripts, maps, rare books, musical scores, recordings, films, prints, photographs, architectural drawings, and other significant cultural materials.

Manuscripts, rare books, significant cultural materials – these are the things that are in danger of being lost, things that only exist on paper.  While it’s great to have a paper copy of something written or printed long ago, in the end it’s the content that’s important, and the permanence of the content that’s more important still.

And all for free?  Some time in the not-too-distant future, we’ll see a day when the quality and quantity of free content for ebook readers will make companies like Amazon rethink the way they do business, and maybe even start charging for the real scarcities while giving away the infinite.

World Digital Library via TeleRead