Techno-Panic Headlines: 'Enhanced Ebooks Are Bad For Children'

from the sensationalism dept

It's no secret that the media loves techno-panic stories, especially when they can quote some scientist or researcher condemning a new technology. Sometimes the studies they point to are bogus, but more often than not the fault lies with the reporters, who oversimplify or flat-out misrepresent the findings. The Guardian recently published a perfect example of this, where even the story itself seems to admit that the facts are far less sensational than the headline.

And that headline is pretty blunt: Enhanced ebooks are bad for children finds American study. Bad for children, huh? That must mean there were some pretty clear negative results in whatever this study looked at, right? Not so much. When you read the details, you discover that the study was looking specifically at a book's ability to promote literacy and reading comprehension, where it found that ebooks with interactive graphical bells and whistles distract focus from the text and are inferior in that regard. But the study's authors also note, quite firmly, that this is simply something for parents and educators to keep in mind when deciding on activities for their kids, and that enhanced ebooks are still fantastic for helping to engage kids who are otherwise uninterested in books. Basically, they say a lot of enhanced ebooks fall more on the play side of things than the study side—but kids play, and it's actually great if some of that play involves storytelling and reading, even if it's done in a lighter fashion. In short, they absolutely do not say that enhanced ebooks are "bad for children".

Children reading enhanced ebooks also "recalled significantly fewer narrative details than children who read the print version of the same story", said the researchers, speculating that the extra features may be distracting. But while "print books were more advantageous for literacy building co-reading", ebooks, and particularly enhanced ebooks, were better "for engaging children and prompting physical interaction".

...

Chiong told the Guardian that enhanced ebooks "absolutely still have a place. Kids seem to love them. If enhanced books can engage kids who might not be as interested in reading, we will achieve an important goal. In our study, we were specifically looking at book-reading with a focus on learning and comprehension. That is only one of many purposes for reading. If the purpose is to just have fun or explore a classic tale in a new way, enhanced books are great."

What's not mentioned, but seems obvious, is the fact that this same argument could be applied to books with sound effects, pop-up books, and for that matter just books with illustrations—all things that potentially detract from "pure" literacy but serve to make kids more interested in reading. The researchers also note that enhanced ebooks can be done well and done poorly: the right kinds of interactivity, actually relating to the narrative, can be far less distracting and maybe even beneficial—it's the unnecessary ornamentation that is the core problem. That's not unlike any form of entertainment, even for adults: just see debates about the use of 3D in movies for an example.

So what we actually have here is a pretty interesting study that sheds some light on the way kids interact with enhanced reading material while refraining from taking any extreme positions on the technology. Every newspaper headline writer just fell asleep while reading that sentence.

Filed Under: ebooks, education, learning, techno-panic

Barnes & Noble: Ebooks Should Be Expensive So Amazon Won't Kill Us And Make Ebooks Expensive

from the got-that? dept

Joe Betsill points us to the news that Barnes & Noble is the latest to weigh in on the price-fixing case against Apple and some publishers over ebook pricing. It's really bizarre. At best, it can be summed up as "we have to stop Amazon from offering cheap books, because if they do that, then we (Barnes & Noble) might go out of business, and then Amazon would be all alone and it might raise prices." Yes, the argument is that we're better off having expensive ebooks today, because if we don't, we might have expensive books in the future. I'm still trying to figure out how that makes any sense. At all.

Filed Under: competition, ebooks, price fixing
Companies: amazon, apple, barnes & noble

Ebook Sales Of Harry Potter Lead To Increased Physical Sales As Well

from the funny-how-that-works dept

For years, JK Rowling absolutely refused to offer an ebook version of the Harry Potter books, claiming that doing so would lead to piracy. As we pointed out at the time, that was ridiculous, because the books were already widely available in unauthorized forms online, and putting legitimate versions up wouldn't change that -- it would just allow people who wanted to pay to do so. It took years, but when Rowling finally came to her senses on ebooks, she even went further and ditched the DRM (and the middleman). And, while there were some questions about the true value of the setup, overall, it's hard not to consider it a pretty massive success.

In the first month alone, it appears that almost $5 million worth of Harry Potter ebooks were sold. But here's the interesting bit. Even with DRM-free books, and plenty of infringing copies being out there, not only did tons and tons of people pony up for the ebook, but it also increased physical book sales as well, even as some worried that it would cannibalize such sales:

The Harry Potter e-books are DRM-free. ”Obviously there were fears piracy would increase as a result of being DRM-free, and that sales of the e-books would cannibalize sales of the physical titles,” [Pottermore CEO Charlie] Redmayne told The Bookseller, “but we were delighted to see sales of the physical books go up, and piracy come down.” He also said that “though there had been an increase in piracy immediately after launch, the community had rejected these illegal versions because of how the e-books were brought to market.”

Indeed, it's good to see that Rowling's team figured out ways to add value to get people to buy, but it again highlights some points we've been making for a while. Just because things are available for free, it doesn't mean people will automatically go the infringing route. If you offer something better that people want, they'll buy it. On top of that, the fear of cannibalization may be overblown as well. We've heard similar stories in the past as well, where authors have found that wider ebook infringement also means increased physical sales.

Filed Under: drm, ebooks, harry potter, jk rowling, pottermore

UK Consumer Ebook Sales Increase by 366%: Publishers Association Calls For Digital Piracy To Be 'Tackled'

from the pesky-facts dept

One of the beloved tropes of the copyright industries is that they are being destroyed by online piracy. Superficially, it's a plausible claim, not least because of the false equation of copyright infringement with "theft", and the lingering suggestion that every time something is shared online, a sale is lost. Of course, as Techdirt's report, "The Sky is Rising", demonstrated from publicly-available figures, the facts are very different: all of the creative industries are thriving.

Here's news from the UK book publishing industry, where things are indeed looking pretty good given the current financial climate:

Consumer e-book sales increased by 366% to £92m [$150 million] in 2011, with sales across all digital formats accounting for 8% of the value of sales of all books, according to the Publishers Association's Statistics Yearbook 2011, published today (1st May).

Just as significant is the following comment from the Chief Executive of the UK Publishers Association, Richard Mollet, who is quoted in the above article as saying:

"story of the year is a decline in physical sales almost being compensated for by a strong performance in digital", with the combined sales of digital and physical books decreasing by 2% in 2011 to £3.2bn [$5.2 billion], according to PA data.

So you'd think the Publishers Association would be celebrating this resilience in the face of economic downturn, and underlining how its members are really getting the hang of this online stuff. But no:

Mollet said: "For many years now publishers have invested in digital products and services and this is being reflected in the increasingly mixed economy for books in the UK.

"However, online copyright infringement is increasingly making its presence felt for authors and publishers and that is why we continue to call on government and other stakeholders in the digital economy to work with us to do more to tackle it, and to ensure that the UK's e-commerce performance is as strong as it can possibly be."

Of course, no evidence is presented that the "presence" of online copyright infringement is a problem -- it's simply taken as a given, because that's what the orthodoxy says. But here's an alternative hypothesis: it's because people have started sharing ebooks online and making others aware of their virtues that the market is finally taking off. Now, that may or may not be true, but there is as much evidence for it as there is for the contrary position -- that is, not much.

So before the copyright industries start calling for yet more government crackdowns on copyright infringement, with ever-more disproportionate measures and a concomitant erosion of civil liberties, they might like to produce some independent, peer-reviewed research that backs up their claims about the supposed harm of online sharing. After all, if anything, these latest figures from the UK publishing industry confirm that, once again, the Sky is Rising.

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Filed Under: ebooks, piracy, publishing

Nobody Cares About The Fixed Costs Of Your Book, Movie, Whatever

from the this-is-economics dept

We recently pointed out that book publishers are fooling themselves by thinking that they must charge super high prices on ebooks. That post seemed to set off some angry folks inside the publishing industry who did the standard thing: talking about all of the overhead that goes into publishing a book. We hear this all the time. But it's meaningless. It's cost-based accounting, rather than value-based accounting.

The consumer doesn't care how much it cost you to make the original.

Nor should they. They only care about the value to them of the single copy they get. And this makes sense for a variety of reasons, both economically and psychologically. This is the point that economists have been making for ages, trying to get people to understand the difference between fixed costs and marginal costs. Fixed costs don't impact pricing. Maginal costs (the cost to produce the copy) do. That's not to say that the fixed costs aren't important -- they are -- but they don't factor into the pricing decision, they factor into the investment decision. That is, you don't take on a project if you don't think you can create a business model that will give a total return on investment over the fixed and marginal costs. But the pricing on the individual item is entirely about the marginal costs. And this is actually a good thing. If you did pricing based on the average cost, including fixed costs, you actually lose the incentive to be more efficient and lower your fixed costs, since you get to just bake them into the price. But the public doesn't care about how much you spent. As far as they're concerned, you may have spent stupidly and inefficiently. They only care about the marginal benefit they get from the copy.

In many ways this is reminiscent of the stupid debate we've had for years, where a lobbyist from NBC Universal kept challenging me to explain how he could keep making $200 million movies. But that's stupid. If you start from the assumption of a high cost, you're not building value, you're just spending budget. All we should care about is how people can make profitable offerings, and there are lots of ways to do that at a variety of price points -- but you should never set the pricing decisions on the fixed costs, because the buyer simply doesn't care.

Even if the industry is having trouble figuring that out, it does appear that more and more individuals are. Mathew Ingram has a post over at GigaOm making this point for books based on an equally interesting discussion by author Chuck Wendig:

An e-book is a digital good. Ephemeral and intangible. Sometimes we don’t even have access to the e-book itself in the form of a file — in the case of Amazon, we’re just “renting” the e-book the same way you rent Taco Bell food. You bought it. It’s inside your device. But if Amazon decides you don’t need it anymore, one snap of the wizard’s fingers and the e-books are poof, gone, siphoned from your reader like gas from a gas-tank. E-books have no supply — if I buy one, it doesn’t reduce how many remain, because theoretically infinite copies remain. No cost to reprint. No cost to remake. It just… sits out there, attempting to be the very embodiment of the Long Tail.

This is what the audience sees and believes.

It matters little what the e-book actually costs.

It only matters what the audience thinks they should cost.

Your costs don't determine the price. The market determines the price, and ignoring what the market thinks is a big mistake.

And, of course, this applies to all sorts of content. As I was writing this, I came across a similar discussion, but on the movie side of things. It's a post by Stacey Parks at the Independent Filmblog, which notes that nobody cares what you spent on your film. She's not talking about end consumers per se (though it applies to them as well), but distributors who buy films. And this actually drives home the overall point: in a functioning market, no buyer -- whether a middleman/wholesaler or an end user -- cares one bit what the total cost of production was. They only care about the marginal benefit to them in relation to the supply. This is just classic economics -- and those who seek to price it outside of what economics suggests is reasonable will discover that people just don't pay. It's not because they don't understand how much money you put into fixed costs. It's because you spending so much on fixed costs is your problem, not the buyer's.

Filed Under: ebooks, fixed cost, pricing, publishing

Excitement Over B&N/Microsoft Teamup Is A Bit Premature

from the what-exactly-is-the-plan-here? dept

There's just something about when also-ran brands suddenly team up to try to "do something" that gets clueless people excited. It almost never works however. The latest is that Microsoft and Barnes & Noble have settled their (somewhat acrimonious) patent dispute (in which B&N was making the case that Microsoft violated antitrust law with its patents) in order to work together on a new spinoff company built around the Nook ebook platform. To be fair, lots of reviewers have raved about the Nook, and noted that it's actually a better device than the Kindle. But actually getting the market to agree has been a pretty big challenge. Could Microsoft help? Perhaps, but these kinds of linkups don't have much of a history of working well. In part, it's because you have different parties with different priorities. In part, it's because deals like this usually involved a lot more planning than executing. But, largely, it's because these companies don't really understand the market. At least, they seem to think that if they do a few superficial things up front, that will suddenly catapult them to the top. They may discover it's a lot more difficult than that.

But, of course, that hasn't stopped some from getting really excited about this. B&N stock shot upwards in response, though perhaps it was just because investors were happy that the company was able to "unload" the Nook. But, then, you see comments like this:

"With the new Windows rollout, there are so many things you can do with the Nook beyond e-reading," Glickstein, who is based in New York, said today in a telephone interview. "Now that Bill Gates and Microsoft are in on the tech side, it’s absolutely compelling."

Of course, you could do lots of things with the Nook beyond e-reading that have nothing to do with Windows. Tying the Android-based platform to anything having to do with Windows seems like a step backwards, not forward. Also, er, someone should tell this guy that Bill Gates retired four years ago. But, you know, why would anyone who's in charge of analyzing these kinds of things be aware of little facts like that?

Filed Under: android, ebooks, nook
Companies: barnes & noble, microsoft

Did The Publisher's Own Insistence On DRM Inevitably Lead To The Antitrust Lawsuit Against Them?

from the the-DRM-they-required dept

We've discussed in the past how it was the book publishers' own stupidity that put them in a position of demanding DRM from Amazon when Amazon wanted to launch the Kindle. The end result, of course, went exactly against the publishers' best interests, because it locked everyone in to Amazon as the platform. Because buyers can't easily switch to another platform and take their books with them, they have to keep using the Kindle (or Kindle app) if they want to continue to have access to the books they've bought in the past (because, remember, you don't own what you think you "buy" with ebooks).

Making Amazon such a dominant player in the market was a huge mistake -- and it was totally avoidable. We'd already seen the exact same thing happen with music and iTunes, where the labels originally required DRM, and Apple complied, locking many people into iTunes (a lock-in that was eventually taken away). We couldn't figure out why the publishers were so stupid to give Amazon such power, but it sounds as though it was a combination of technological illiteracy and an irrational fear of "piracy" trumping business sense.

Author Charlie Stross has a great blog post discussing a variety of issues around the history of Amazon and how it became such a dominant player in the market, in which he notes:

However, as subsidiaries of large media conglomerates, the executives who ran the big six had all been given their marching orders about the internet: DRM restrictions would be mandatory on all ebook sales, lest rampant piracy cannibalize their sales of paper books.

(This fear is of course an idiotic shibboleth—we've had studies since 2000 proving that Napster users back in the bad old days spent more money on CDs than their non-pirate peers. The real driver for piracy is the lack of convenient access to desirable content at a competitive price. But if your boss is a 70 year old billionaire who also owns a movie studio and listens to the MPAA, you don't get a vote. Speaking out against DRM was, as more than one editor told me over the past decade, potentially a career-limiting move.)

Once the publishers realized (way too late) that they'd turned Amazon into something of a monopsonistic buying power, they struggled to figure out what to do -- and the end result appears to look something quite like collusion -- which is why they're being sued today by the Justice Department. As the details of the lawsuit make clear, the deal with Apple wasn't just a deal to bring another competitor into the market, but one that was explicitly designed to increase prices for consumers.

As Stross notes, this was plan B. And it has now failed. That means that it's time for Plan C -- and the only reasonable plan C to get out from under Amazon's thumb is to drop DRM:

It doesn't matter whether Macmillan wins the price-fixing lawsuit bought by the Department of Justice. The point is, the big six publishers' Plan B for fighting the emerging Amazon monopsony has failed (insofar as it has been painted as a price-fixing ring, whether or not it was one in fact). This means that they need a Plan C. And the only viable Plan C, for breaking Amazon's death-grip on the consumers, is to break DRM.

If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").

And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.

I know there's been some talk about whether or not Apple or Amazon is the more "evil" party in the ebook world -- but it really seems like the publishers dug their own graves here. In their desperation to avoid the dreaded word "piracy," they never bothered to understand the real issues or the obvious results of focusing so strongly on DRM. Handing Amazon so much power was stupid. Colluding with Apple to try to get away from that original stupid decision was potentially even more stupid. The only real path to fixing things is to go back and fix the original stupid decision, and recognize that piracy is a hell of a lot less of a "threat" than handing over the entire market to a single player (or even just two major players).

If only they'd realized this originally -- just as tons of people had warned them.

Filed Under: antitrust, charlie stross, doj, drm, ebooks, kindle, publishing
Companies: amazon, apple, macmillan

If Publishers Can't Cover Their Costs With $10 Ebooks, Then They Deserve To Go Out Of Business

from the you-don't-price-based-on-your-bloated-infrastructure dept

With the legal dispute over ebook pricing going on, one thing we've heard over and over again from the traditional publishing industry and their supporters is that higher prices for ebooks make sense because of all of the "costs" that the publishers have to cover. This is a fundamental error in how pricing (and economics) works. It reminds me of the MPAA folks who demand to know the business model for making $200 million movies. Years ago, someone who understood these things taught me why cost-based pricing will always get you into trouble. If you start from the overall pricing, including overhead and other fixed costs, then you're not basing the price on what the consumer values -- and, more importantly, you're taking away your own incentives to become more efficient and decrease costs. Instead, you're just "baking them in." But the most important reason not to base pricing on overhead costs is that your competitors won't do that, and they'll under cut your price and then you're in serious trouble.

That moment of reckoning is coming for book publishers, even if they don't realize it yet. David Pakman, who watched all of this happen in the music industry for years, is pointing out that publishers are fooling themselves if they keep trying to rationalize higher ebook pricing:

In all the discussions about why book publishers demand that eBooks should be $15 and not $10, they say it is because they cannot afford to sell books at $10. That is, they cannot cover their legacy cost models on that number. Right. Which is why you must rebuild your cost structure for a digital goods industry with far lower prices. You start by paying your top execs much less than millions of dollars a year. Then you move your offices out of fancy midtown office buildings. Why should eBooks cost $15? Amazon is far more of an expert on optimal book pricing. They have far more data than publishers, since they experiment with pricing hundreds of thousands of times a day across millions of titles. Amazon can tell you the exact price for a title that will produce the most number of copies sold. Amazon is pretty sure that number is closer to $10 than to $15. Yes, they want to sell more Kindles. And they believe that lower eBook prices mean more eBooks sold which means more demand for Kindle. The negative coverage of Amazon is centered on them selling eBooks below cost in order to reach the $10 price point. But that is a function of publishers setting the cost higher than $10. If the profit-maximizing price for an eBook is $10, then publishers must adapt to set a wholesale price lower than that, even if it means your legacy cost structure doesn’t allow it. And that’s the rub.

The public seems much more interested in lower prices, not higher prices. You can understand why the publishers don't like it, but they really ought to learn how pricing elasticity works. They can make a lot more money with more optimal pricing.

Filed Under: ebooks, fixed costs, pricing, publishing