This has nothing to do with ebooks directly, but everything to do with the same old problems of creating and distributing non-scarce content.

Jeff Bewkes, CEO of Time Warner, thinks the solution for online television is “asking online users to verify they subscribe to some form of pay TV before they get to watch content on other platforms. Whether consumers pay through their cable company, the telephone company or a satellite provider doesn’t matter. This, Bewkes says, will preserve a robust environment for video by making sure that no matter where it is watched, it continues to benefit from a dual-revenue stream of subscriptions and advertising.”  Check out the rest of the article.

The problem here is that, once again, the distributor is looking to preserve the old ways of making money without a thought to how to provide more value to the customer.

You know why Hulu is great?  They provide easy-to-access, totally free video online.  They show commercials, but not many of them, and they try to make the ones they do show count.  Most of them are a little longer than your typical tv commercial, but usually quirky and just more interesting than your average commercial.  I’ve found myself actually paying attention to commercials on Hulu.

And of course, the big content providers are constantly trying to kill Hulu.  In the end, they probably will, making everyone worse off than before.

So, why won’t this “dual revenue stream” model work?  First of all, it will be impossible to implement with anything resembling the convenience of Hulu.  How do you prevent sharing of accounts?  That is, me and 1,000 of my friends get one cable subscription, and share a user id?  Well, what the cable companies will do is limit the number of computers you can use, or limit the IP addresses, or something like that.  Inevitably, this will prevent legitimate uses of the service.  For example, in my house we have four computers regularly in use – my personal laptop, my work laptop, my wife’s laptop, and the desktop hooked up to the tv.  Can my one cable subscription allow me to watch on any one of those?  If so, how can it prevent me from giving my user id to my neighbor?

What’s really absurd is the underlying assumption that, without subscription fees as well as advertising revenue, quality video content just can not be produced.  Think about all the television shows that only have one of those – HBO series, for example, or anything on regular network television.  Are these shows of substandard quality?

The next revolution in the way we watch video content won’t come from Time Warner, or any of the other big content providers.  They have too much invested in the old ways of doing things, and are terrified to embrace the new.  For the most part they seem afraid to even try to understand the new.

Online video isn’t about convincing people that “if content has value to them, it’s worth paying for”.  That’s utterly irrational.  Online video is all about taking something in infinite supply and using it to increase the value of things that are finite.  Until the content providers realize this, they will always have to crush the Hulus of the world out of existence before they show people that there’s a better way to do things.

The industry needs to understand that a) fans are always thirsty for more content, b) there’s a lot of content to give, and c) this is not the time to be cheap.

What industry are we talking about here?  Obviously it doesn’t matter.  It happens to be the music industry, but the idea applies to anyone who deals with distributing content.

iTunes Pass, as the article says, is a great idea.  You pay now, and you get everything the artist releases in the future.  It guarantees a payment up front, some of which Apple might even pass on to the artist.  And, since we’re talking about infinitely copyable digital content, there’s no “loss” when the new content is released straight to the customer who has already paid.  Being paid up front means the risk is lower for the content to come – not only is there already money to go towards production, but there is a better sense of the demand, as well as committed fans who may be eager to pay for related goods.

There’s even a small chance that fans win here, too.  If a model like this is successful, and the content companies realize that they don’t have to collect money for each and every transaction, maybe we’ll see some real change in the markets.

Article: Why iTunes Pass is a Great Idea.

In order to facilitate the process of connecting writers with publishers, then, these two Millennials are building what you might call a digital social marketplace for books. Not eBooks, primarily, though WordHustler is optimized for Amazon’s Kindle and iPhones, but physical books. “We didn’t set out to reinvent the wheel, just to make the wheel turn better,” Walls explains.

This is good news. Over at WordHustler, they’ll take your digital manuscript and submit it to publishers, as well as provide all sorts of tools to help you along the way.  Looking at their FAQ, they understand giving away the stuff that doesn’t cost them much (or anything) and selling the stuff that’s hard.  You can search their database for free, and even bypass all of their services and go straight to the publisher.  But they’re betting that they can print and ship your manuscript and handle it properly at a price that makes it worthwhile to pay them instead of trying it yourself.

When you have a valuable service to sell, it makes sense to give away the related things that promote your service and make it more valuable.

Now, they need to take it one step further.  What about the people who don’t find a publisher?  Or who don’t want a publisher in the traditional sense?  WordHustler already has the digital version of all the manuscripts.  It’s a small step from there to a “store” full of free ebooks.  Rather than gathering dust on the author’s shelf, rejected manuscripts have a new chance at life.  And giving them away for free means that they may still find their niche, making it much easier to find a market for the next book.

And then there are those who aren’t interested in finding a traditional publishing outlet.  There are many more ways to get a book into people’s hands and make money.  Sometimes it doesn’t involve a book at all.

But I’m getting ahead of myself.  The site sounds really helpful.  If you have something you’re trying to get published, go check them out.

Article:  BNET Media Blog | WordHustler Aims to Build Digital Marketplace for Book Publishing

[Forrester Research] says convenience is key. It defines the concept in this way: A “comprehensive measure that considers the total product experience.” That includes researching the product, obtaining the device, using it, and eventually getting rid of it. The study also says that in successful products, convenience is not a benefit, but “a measure of how easy your product makes it for people to get the benefits your product promises.”

They also cite the easy downloading of books without needing a computer as the reason that the Amazon Kindle was an unexpected success.  They call ebooks on Amazon “cheap”, which is funny, but the point remains.

So, if the convenience of the total product experience of the Kindle was what made it so successful, how much more successful could it have been if Amazon had removed the intentional inconveniences?

What if you could install additional software on it?  Software to read other formats, perhaps?  An open web browser?  What if you could plug in an SD card, like every other reader on the market?

Amazon couldn’t do these things without giving up a lot of their control.  If you could use an SD card, then maybe you could use an Eye-Fi card and not depend on Sprint’s network to provide the Whispernet.  If you could use a web browser, you wouldn’t need to pay 99 cents to access a blog.

And that’s not to say that both generations of the Kindle aren’t convenient.  Being able to get a new book wherever you are is tremendously convenient.  And Amazon’s marketing (not to mention Oprah’s) means that, while few have heard of many of the ebook readers on the market, most people are familiar with the Kindle.  For the non-technical user, perhaps this is enough.  Amazon’s sales support that theory.

Article:  How to predict gadget success | Business Tech – CNET News.

I love Techdirt.  Many of the ideas I present here are based on (or, honestly, stolen from) things I read there.  If you don’t read Techdirt, you should.

Here’s a good article to start on.  It helps that it’s about both my favorite band and one of my favorite concepts.  Nine Inch Nails has made a lot of money recently since ditching the record label and experimenting with new ways to sell music.  Giving away MP3s and other digital content and selling collector’s editions, cds, dvds;  Recently they’ve made concert footage available for people to mix and edit and do whatever they want.

This concept of taking things that you can copy as many times as you want and using them to promote the things that can’t be easily copied, the things still worth paying for, is the future of most media.  TV, movies, books, music – new technology means that you can do so much more with your content, things that weren’t possible even a decade ago.  It just takes a little innovation and good ideas on how to make people want to give you their money.

Take the example of two of my favorite authors, Charles Stross and John Scalzi.  I became fans of both by reading novels they were giving away in electronic form for free.

I first read Stross’ Accelerando a few years ago.  It was, and still is, available as a free download.  Since then, I have had a beer with Charlie, and read most of his books.  I own probably half of them (including a paperback copy of Accelerando, though that’s because I inadvertently put it on my Amazon wish list, and someone bought it for me for Christmas).  I will continue to buy his books as they come out.

I first read Scalzi’s Agent to the Stars at about the same time.  It, too, remains available for free online.  I have not had any personal contact with him, but not because I couldn’t – his blog is widely read, and he really communicates with his commentors.  I haven’t spoken with him because I haven’t really had anything to say, though I read his blog regularly.  I own a few of his books, too.

Both of these authors gave things away for free, connected with fans, and made me want to buy their books.  Will this work all the time, for every author?  Well, maybe not in exactly the same way.  But the model has so much possibility.  Eventually, no one will pay to simply watch a movie or read a novel.  People will still pay to see a movie in the theater, or see a musician in concert.  But the content itself will be free.  Some people won’t be able to make any money any more, and that’s unfortunate.  But many will, and some will make much more than they ever thought possible.  In the end, society will be better off.

If [T]he [T]imes killed its paper print-run and followed the Kindle-only model, that would leave the newspaper with $346 million in its pocket. Okay, distributing the newspaper electronically in a secure way needs some electronic infrastructure…let’s stick a figure of $10 million on that. That still leaves $336 million to spare–a figure not to be sniffed at.

While it’s true that printing and delivering a newspaper is a huge cost that makes less and less sense by the day, this analysis still misses the point.  Replacing one ridiculous expense with a more ridiculous but smaller expense is not the way to succeed.  Newspapers must accept that the only way forward is to focus on the the scarce things they have to sell, and give the rest away.

And no, I don’t mean selling the printing presses and the buildings that house them.  While these things are scarce, and might bring in some extra cash, they won’t solve the problem.

But what do newspapers have that they could sell?  They have experienced reporters who will do more than scan Google and Technorati for the latest news.  They will actually investigate, research, and report.  These are all valuable things that take time and effort.  Businesses would pay for extensive, accurate, and timely information about their respective industries.  They already do pay for information like this.  Collecting this sort of information, weeding out what’s not important, presenting it in a readable way, these things are all hard.  These things are all valuable.  These are things you can sell.

But how does everyone else get their news?  For free.  Delivered via blogs and RSS feeds and however else people find it convenient.  Some will still pay for paper copies, at least for a while longer.

The difference is that, instead of trying to figure out ways to restrict your content, to keep people from getting at it, to inflate the price with artificial scarcity, you get it out there.  You use your content to build your reputation as a great place to come for good information.  And when people want to pay for your reporting and researching skills, you keep giving the content away.  Those who are paying you can have it first, maybe, but after that it goes out onto the internet where others can use it and build on it and consume it and keep building your reputation and naturally inflating the prices, sustainably inflating the prices (provided you continue the high level of service).

Saving the newspaper industry won’t really be about the newspaper at all.  It will be about transitioning an old industry that focused on putting things on paper into a new industry that focuses on collecting information and putting it together to be consumed.

Article: Fast Company – Should The New York Times Ditch Paper, Distribute Kindle E-readers?

If electronic publishing—and that includes the reality that it’s very easy to “pirate” electronic text—is a form of publishing that some authors and publishers have a hard time adapting to, then that’s just too damn bad for them. As my father liked to say whenever I’d whine about something as a boy, “things are tough all over.” If they can’t cut the mustard, then it’s just a fact that over time they will fade away.

A comment I left at Teleread prompted a contributor there to send me to an interesting article on the future of novels.  My first thought was, “that’s the biggest and most obnoxious tip jar I’ve ever seen on a website”.  That led me to think, “There’s no way the person who wrote this article has any concept of infinitely copyable digital content”.

But I was very wrong.  And the article comes from an author, someone who has experienced some of the changes in the world of publishing fiction, which puts him in a much more qualified position than many to speak about the industry.

He makes the point that some will be harmed by changes – the electronic revolution will mean that some won’t be able to make a living by writing any more.  That’s unfortunate – no one wants anyone to lose their livelihood.  Certainly when I say that you can’t charge for an ebook, I don’t mean that I think authors should work for nothing just so I don’t have to spend $9.99 at Amazon.

I do think that authors need to find new ways to make money, and it’s nice to see some authors agreeing with me.  People are thinking about new ways to publish fiction.  It’s not going to be the end of fiction, but it might be the beginning of the end of the way the publishing industry does business today.

Luckily, many authors will adapt, and many publishing companies will adapt, and people will still get to consume fiction.  But the way it gets paid for will probably be very different.  Not scary, but different.

Amazon press conference on 2/9: I can haz kindle too?.

Interesting article at CrunchGear about the upcoming Amazon press conference.  It seems very likely that the second generation Kindle will be announced.

More interesting, though, since it’s been widely assumed that the new Kindle is coming out early this year, is the wish in one of the comments for the ability to resell an ebook purchased for the Kindle.  This is not going to happen, and it’s a big reason why ebooks are going to have to wait to become a real part of the mainstream.

There are two possible ways in which it might be possible to resell ebooks, and neither of them works.

First, you could apply DRM to the ebooks.  This removes the concept of ownership – it is impossible to own something that can be revoked by the “seller” at any moment (see here, here, here, and here).  Without owning the ebook, any reselling would have to go through the original “seller”.  The DRM would have to be transferred in some way, and the new “owner” would still depend on some indifferent third party to allow access to the content.  This third party will be incurring costs for each transaction, and would be crazy not to pass these costs onto the customer.

So every time you “sold” the property you “own”, the original seller would take another cut.  And what happens when they decide to stop supporting the DRM anymore?  It’s bad enough if you’ve bought from someone and they take back what you bought.  What if you buy from someone and someone else takes back what you’ve bought? In almost every case, the reseller could make more money than the original seller.  The reseller has no costs beyond the original purchase price, and therefore can sell at a much cheaper price.  Since the copies are exactly as good as the original, only one original need ever be purchased.  This is not a sustainable business model.  Bargaining on irrational behavior on the part of all of your customers will not get you very far.

Clearly reselling DRMed content doesn’t make sense.  So what are the alternatives?

You can resell content without DRM.  But why would you?  You can copy it as many times as you want.  If it was worth $10 to you, surely you can find twenty people to buy it for $0.60 and make a profit.  Or you can give it away, since it doesn’t cost you anything, and the new friends you might make would be worth more than your initial investment.

So reselling non-DRMed content doesn’t make sense, either.  Where does that leave us?

Anyone who reads Techdirt regularly will recognize many of the themes here, particularly those dealing with making money in an industry where it doesn’t make sense to charge for your content.  And every time they post about another band succeeding with a new business model, I try and imagine how that model could be applied to writers and books with any degree of consistency.

So far I’ve been frustrated.  Certianly there are opportunities for authors as we move into an age of reading digital books instead of paper ones, but I have yet to see or hear or imagine any model where authors will be compensated for their work at a level that will allow them to live while giving away electronic versions of all their work.  That is not to say that it can’t happen, or won’t, but it means that there is more work to be done, and it means that there is tremendous opportunity for someone who can solve the problem.

There is no question that people will continue to write if they aren’t being paid.  Thousands of fan-fiction sites, Nanowrimo, and any number of other groups, online and off, demonstrate that people like to write for themselves, or just for the sake of writing.

But if we can’t figure out how to pay writers enough to do it full-time, the quality of the writing will go down.  Sure, Nanowrimo has shown that one can write a substantial piece of fiction in a short time.  But to get something equal in quality to your average published novel takes more than a month.  And books like that will be hard to come by if no one can quit their day job and write full-time.

So readers and writers alike are in this boat together, in need of a new plan to compensate writers when people finally realize that it doesn’t make sense to pay for something you can copy instantly and perfectly, as many times as you want.

The proper price for an ebook in relation to a printed book is an increasingly common debate.  It’s very difficult to put a price on something that you can give away as many times as you want without losing anything.

Publisher Walt Shiel offered these thoughts: “. . .We publish all our e-books with a coupon for a discount (equal to the e-book purchase price) applicable to the purchase price of the print edition.”

It’s nice to see publishers realizing that ebooks can be used as promotion for print editions.  But even this is not a sustainable business model.  The day will come when printed books are merely collectors items, something to keep behind glass.  What will ebooks be used to sell then?  Some authors might give away ebooks to promote speaking tours, seminars, or some other sort of access to the author.  Some could use them to promote limited print editions, such as signed copies.

And for some, this will be enough.  But there’s a limit to the number of collector editions anyone can sell, and many authors aren’t interested in public speaking or teaching.  It’s different for musicians, in the same boat in terms of distributing digital content, but much more likely to do live performances, and therefore able to give away content to promote concerts.

The search for an effective business model for ebooks and the next generation of readers will continue.  The music industry may be a good guide, but the solution may come from an entirely unexpected source.

Article:  Ongoing Reader Debate: Why Are E-Books So Expensive? – mediabistro.com: GalleyCat.