Monday, February 01, 2010

Digital Perception

Digitization has really screwed things up.

Whether the screw up is a good thing or a bad thing still remains to be seen. But recent talks of ebooks and piracy brings up two important (and I feel thought-provoking) issues.

First is the perception of ownership.

Second is the perception of value.

Ownership used to be an easy concept to grasp. If something exists tangibly (you can see, hear, taste, smell, and/or touch it) and it is in your possession (you bought it, traded for it, found it, created it, were given it), then you own it.

People get loans in order to own big things, like houses and cars, and until they pay off those loans, the bank is the true owner.

It's a pretty simple concept. Equally simple is the concept that if someone takes something you own without your permission, it is theft.

When we bring multimedia into the picture, things get sort of odd.

If you buy a CD, you own a physical object (the plastic disk) and also have the rights to listen to the music on it. You can legally sell the CD, though it would be considered illegal to make a copy for yourself first, because you're only entitled to listen to that content if you own the CD.

If you buy a song on iTunes, you don't own anything physical. You own a bunch of code that, when played on your iPod or computer, you can listen to the same as you can listen to a CD. You are allowed the rights to listen to that music depending on the terms of the sale. iTunes currently limits the number of computers you can have an iTunes account on (it's 5). If you try to transfer songs you bought to a sixth computer, you can't through iTunes.

If you listen to a song on the radio, you have the rights to hear that song, because the radio station and advertisers paid for it. It is within your rights to make a copy of that song from the radio and listen to it over and over.

It is not within your rights to borrow a CD from the library, make a copy of the CD, and listen to the songs over and over. That is considered theft.

So what constitutes ownership in a digital world?

If you digitally copy a song off the radio, and sync it with iTunes, do you own it?

I don't know the legal answer. I don't really care about the legal answer. I know I can record TV shows and cable movies, put them on a DVD, and keep them legally. I know I can buy used DVDs for dirt cheap and keep them legally. I know I can download pay-per-view movies, and depending on the terms, keep those movies for an extended period of time on my DVR, or forever on Tivo.

Do I own these movies or shows? Do I have the rights to watch these movies and shows?

If you Tivo a TV show, and skip through the commercials, is that stealing? The ads pay for the show. If it is stealing, I don't believe the average consumer cares.

Digitization has changed the perception of ownership in a digital world.

Those who create digital products know that these products are easy to copy and share. Even with the restrictions they put on these products (Macrovision, DRM, proprietary formatting) anyone with a bit of ingenuity can find their way around these copy protections.

In fact, a lot of people believe there should be no copy protection at all. If you legally buy a CD, it is yours to do what you want with. You can sell it, or loan it to your mom, or legally make a back-up copy.

These people wonder why they can't do that with intangible, digital media. They wonder why their rights are restricted.

If I bought a song on iTunes, shouldn't I be able to do the same thing with that song that I could do with a CD I bought?

And what of experiences? What constitutes ownership of an experience, rather than a tangible object?

If you sneak into the movie theater, it's stealing. You didn't pay for that experience.

If you borrow a DVD from the library, or watch it over at your friend's house, it isn't stealing, even though you didn't pay for the experience.

If you borrow a DVD from the library, and copy it to watch later, it is stealing.

If you Tivo the same movie to watch later, it's legal.

The concept of ownership is muddied in a digital world.

I'm sure there are laws that show the dividing line. I'm also sure that most people don't know, or in fact care about these laws. A movie is a movie. A song is a song. You can get them buy paying for them, or for free, through legal and illegal means.

In a digital world, without a tangible object (the plastic disk that is the CD or DVD), perception of ownership is cloudy.

But perception of value is not cloudy.

I don't know a lot of people who go into Best Buy and steal DVDs. They believe that it's wrong to do so. Theft of a tangible object means a monetary loss to the owner of that object. A tangible object has a perceived value beyond what the set price is, simply because it can be seen, heard, tasted, smelled, and touched.

Someone created it. It exists. Therefore, it has a perceived value.

I do know people who download music illegally. They feel it isn't theft, because there is no loss of a tangible object. They aren't paying for the experience the music provides, but there are other ways to experience music without paying for it, so why not download it for free? Downloading doesn't equate to a lost sale.

Now let's bring up books, since you all know I was heading there.

A book has a perceived value. That value varies wildly. You can buy a book for $24.95 new, or get an unread used copy of the same book in perfect condition for $3 at a used bookstore. What is the book truly worth?

What if you got the book from the library? Is the perceived value of a book in the ownership of the tangible product, or is it in the experience of reading the story?

If a book is only read once, the reader who bought it for $24.95, and the one who bought it for $3, and the one who got it from the library, all had the same experience.

In a normal system of supply and demand, goods are worth what consumers are willing to pay for them, dependent on the number of goods and the number of consumers. Those who want a book right away are willing to pay a higher price. Other are willing to wait for it to be sold used, or for the cheaper paperback edition, or they put their name on the library waiting list. While the experience of reading is the same, and the prices varies, there still is a perception of value because the book is a tangible object. Books are loved, treasured, shown respect. Books are our friends. We display them proudly in our homes.

Now along come ebooks.

The perception of ownership is tougher to define with something that exists digitally, as a bunch of ones and zeros in binary code.

But what's really tougher to define, is the perception of value.

A print book exists as a physical object, and has a perceived value based on supply and demand.

With ebooks, the supply is unlimited. They can be reproduced and delivered for free (or for pennies.)

Even though the experience reading an ebook is the same experience as reading the $24.95 hardcover or the library copy (and by experience I mean the act of the words being absorbed by your mind), there is a much lower perceived value in ebooks.

Because ebooks aren't tangible. Everyone believes they cost less to create and distribute than their print counterparts. And they're correct. They do cost less, and they aren't tangible.

And their intangibility makes the perception of ownership sketchy. Do you own an ebook if you buy it? Or do you only own the rights to use it on a specific device? Is that true ownership?

It's easy to price a print hardcover at $24.95, because the market will decide if it can sell at that price. Only so many exist. Supply and demand.

But I believe publishers are making a mistake trying to use a supply and demand model, and its pricing structure, with ebooks.

Because the perception of ownership of ebooks is sketchy.

Because the perception of value of ebooks is lower than with print books.

And because ebooks, like all digital media, are damn easy to copy.

There aren't many bootleg print books. Costs too much to print and bind, and there are no outlets to sell them.

There are a lot of bootleg DVDs. They cost less to produce, and there are markets for them.

But there are a lot more illegal digital movie downloads than there are pirate DVDs.

It's much harder to stop illegal movie downloads. One reason is because they aren't being sold--they're being shared. Another reason is because the people sharing them are numerous, individual users.

In fact, there are over a billion of them.

Downloading illegal movies is a pain in the ass. For a good quality, lessor known movie, let's say something 8gbs, it can take weeks, even with a lot of bandwith and a decent server.

DVDs have come down so much in price, I'd much rather pop over to Best Buy and spend $5 on a new copy of the Bad News Bears than download one. (the original, not the crummy remake)

Still, a lot of people experience movies by pirating them. And they don't find it any more wrong than borrowing a movie from the library or recording it on Tivo. Because perception of ownership and value is different for digital products.

Now publishers want the price of ebooks to be high, for several obvious reasons.

First, they don't want ebooks to cannibalize print sales.

Second, because they make a larger profit on high priced ebooks.

Third, because if ebooks fully take over, their role in the publishing process could become greatly diminished.

But ebooks aren't subject to the rules of supply and demand, because they can be copied and shared by pressing a button. And because the consumers have a lower perception of an ebook's value, but still want the experience, I predict they won't pay what the publishers are asking.

The consumers will go elsewhere.

One growing option is piracy.

Downloading a 4.7 gigabite DVD movie, at 1mb per second, takes over an hour.

Downloading 30 ebooks in .txt format takes 8 seconds.

Downloading 1300 ebooks in various formats (epub, mobi, pdf, doc) takes 13 minutes.

Is it really in publishers' best interest to price ebooks at $14.99?

Is it in authors' best interests?

Is it in readers' best interests?

One of the headlines in Publisher's Weekly today was "Agent Community Happy With Macmillan Move."

Well-known and respected agent Richard Curtis called it a "terrific thing." Curtis said the move “restores control of book pricing—on both e-books and print—to the publishers,” and that this is the healthiest thing for the industry.

You're free to draw your own conclusions. I've drawn mine. I believe that people won't pay $14.99 for ebooks. It will lead to fewer sales and more piracy. I believe the way to fight piracy is with cost and convenience. I believe a cheap, or free, ebook model is coming in the future, no matter how much the entire industry seems to be hoping otherwise.

But then, who am I?

I'm a writer.

The reason the publishing industry even exists is because of writers.

We create the content. And in most cases, we get paid very little for this.

Now Amazon and Apple are offering writers 70% royalty rates on ebooks, and the ability to set our own prices.

"A terrific thing"?

Indeed it may be. For the writers

But not for the publishers and the agents.