Technology Can Keep Publishers From Perishing

Justice Department, publishers decided on a strategy to fight
the grave and gathering menace posed to their business model by
the rise of digital books: They would meet about it.

“These meetings took place in private dining rooms of
upscale Manhattan restaurants,” says the department’s complaint
in its antitrust lawsuit. Later meetings took place in Europe,
though presumably not at the Paris Chipotle.

The case will turn on whether the publishers were meeting
to fix prices. If they were merely discussing new ways of
selling digital books and their effect on prices, the publishers
may beat back the government. Of the six defendants — the
Hachette Book Group, HarperCollins, Simon Schuster, Macmillan,
Penguin and Apple — the first three have already settled.

Apple, for its part, was not present at any of these
meetings (its corporate cafeteria is reportedly quite good). So
why is it being charged? The government’s theory of the case is
that Apple was part of the conspiracy to limit price
competition. More likely that, like the co-worker who encourages
the office gossip, Apple acted as an enabler.

If it were a crime for New York publishers to gather at
fancy restaurants, then the entire industry would be doing time.
Whether this was collusion is for the courts to decide. The
larger question raised by the lawsuit is not legal but
existential: Can publishing be saved?

The main villain, in the publishers’ account, is their
once-loved, now-hated coopetitor: Amazon — specifically, its
“wretched $9.99 price point” for most digital books on its
Kindle device.

There is no doubt Amazon has reduced publishers’ profit
margins. And it has been known to use bullying tactics. At the
same time, Amazon has made it easier for authors to publish and
promote books, and for readers to find and buy them. Its impact
on the publishing industry, it almost goes without saying, far
exceeds the wretched $9.99 e-book. Yet publishers and even the
Authors Guild are irrationally antagonistic toward Amazon.

One mistake publishers have made is viewing digital books
more as a threat (to the prices of physical books) than as an
opportunity (to gain more readers in all formats). One in five
Americans have read a digital book, a proportion that will only
grow, and there are signs that reading books is more popular now
than ever. Revenue from digital books doubled in 2011,
accounting for almost $2 billion of a $27 billion industry, and
sales of digital books for younger readers were up an astounding
475 percent in January from a year ago.

Publishers obviously see the potential — that’s why they
were so excited about the iPad in 2010. Where they erred was in
seeing it merely as a shiny new cudgel with which to battle
Amazon and raise the price of digital books. But who’s to say
they weren’t just exchanging one master for another? Apple has
sharp elbows, too.

Perhaps the saddest aspect of this lawsuit is its portrayal
of desperation. The complaint reads like the minutes of a
support group for publishers with PDSD (post-digital stress
disorder). The predominant emotion, and verb, is fear, as in
“publisher defendants feared that ….”

We do not dismiss the anxiety that new media causes old
media. We are familiar with the many scary charts and graphs.
But technology has enabled writers (and even, dare we say it,
retailers) to foster deeper relationships with readers.
Publishers have not seized the same opportunity, even though
they have a valuable asset. The modern term is “content,” but it
has also been called “literature” — and technology greatly
expands its market.

Read more opinion online from Bloomberg View.

Today’s highlights: the View editors on Romney’s critique of
Obama’s Afghanistan policy; William Cohan on more missing MF
Global money; Albert Hunt on key swing groups in the general
election; Noah Feldman on Egypt’s bungled elections; Pankaj
Mishra on Pakistan’s rising middle class; Norm Matloff on the
ascendancy of the English majors; and Paul Fourier on Europe’s
social safety net.

To contact the Bloomberg View editorial board:
view@bloomberg.net.

• Tweet

• LinkedIn
• Google +1
• Print

http://www.bloomberg.com/news/2012-04-22/technology-can-keep-publishers-from-perishing.html

Tags: http://www.bloomberg.com/news/2012-04-22/technology-can-keep-publishers-from-perishing.html, powered by article dashboard army general lynch, powered by article dashboard army general retire, powered by article dashboard currency conversion fee antitrust, powered by article dashboard general contractor in philadelphia, powered by article dashboard navy general military training, powered by article dashboard pakistan vs india 2007, powered by article dashboard us army general brigadier, powered by article dashboard who was the first african american army general