Library Journal just published an op-ed I wrote about the dangers of going digital. I thought I would share it with some additional details just for friends and colleagues. Digital publishing is fraught with risks for publishers and I’m eager to get feedback on the challenges I’ve identified. Risky as it is, Berkshire Publishing is moving ahead with its first digital content portals (ChinaConnectU is now live, and TheSustainabilityProject is coming soon). We’re putting articles online, and licensing to more partners all the time (most recently to AcademicPub, Kobo, and Chegg). But we are doing this with eyes wide open, knowing that we all have to face the financial and legal challenges involved in going digital. You’ll see my notes inserted below in the text published in Library Journal. Please send along your comments!

Don’t Steal This Book

By LJ Reviews on June 29, 2012 Leave a Comment

By Karen Christensen

The world of print publishing isn’t squeaky clean. > Not only are there issues of underpaid royalties and plagiarism, but criminal activity. I had a friend who told hair-raising stories about working in the remainder book business where bestselling titles were off-loaded at night from the printing companies or warehouses and people went around with bodyguards and Rottweilers. < The potential for theft and fraud, though, is multiplied a thousand-fold with digital publications. As I do so much work in and about China, I’m often asked if I worry about intellectual property (IP) rights there. I do, but I worry just as much about such rights and their impact on revenues here at home.

IP concerns are just one problem facing publishers today and just one factor that adds to our costs. The public doesn’t recognize these difficulties, though. Ebook buyers and acquisitions librarians assume that it’s cheaper to do things digitally. As Dave Tyckoson, associate dean of the Henry Madden Library, California State University, Fresno, wrote recently at LinkedIn, “Publication must be simpler and less expensive electronically, since sources do not have to be produced and shipped in physical formats. Updating in the electronic version is easier, so sources will not go out of date.”

A colleague told me about a confrontation with someone from a state department of education who wanted free ebooks because the publisher was “saving 60 percent of its costs” by not printing. Told by the publisher that her printing costs were actually about 10 percent (and that sounds high to me—Berkshire’s costs are mostly in development and design), he shouted, “Prove it!” and stormed out of the room.

Some background on what makes digital publishing a challenge is clearly in order. First, let’s agree that in some ways the model reduces costs. It’s true that we don’t have to pay for printing, warehousing, or shipping. The additional costs and risks, however, tip the scales the other way. Listen to senior publishers, even from companies with a huge digital presence, and you’ll find agreement that digital products increase revenues but not profits. Some even argue that print revenues make digital resources possible, and that digital editions serve primarily as print marketing tools.

The issues

Theft is easy The 1960s saw a famous title called Steal This Book. Today, that instruction is hardly needed because it’s possible to get free digital versions of so many volumes. I asked the FBI not long ago about how to tackle torrent sites, where I was finding many Berkshire encyclopedias reproduced. They asked about our “chain of custody”—what we’re doing to secure files on our server, at the printer, and with our digital partners. Not much, I admitted, though now we add unobtrusive marks to every ebook file, which enables us to track the provenance of illicit files we find on torrent sites or elsewhere. > Remember Cold War stories about information stored on tiny dots of film? Today, information that sells for thousands of dollars can be sent in an email. We have found our titles at torrent sites and today received this message from Amazon Kindle, “During a review of your KDP submission(s), we found content that is freely available on the web. You can do an online search for the content inside your book(s) to discover which sites are offering the content for free. Copyright is important to us  we want to make sure that no author or other copyright holder has their work claimed and sold by anyone else.” Indeed our copyrighted content, never before available in ebook format, has been typed or pasted into at least two websites.

Sales pricing and fraud Distributors take a larger share of the sales price for digital products, and there is greater potential for fraud. The auditing of digital sales and licensing is new territory. Once I’ve sent a digital file to another company, I am almost entirely at its mercy when it comes to reporting sales. There is no easy way to verify how many copies the publisher has sold and no easy auditing because of all the channels into which digital content can go. This problem becomes even worse when distributing electronic content internationally. > Verification of sales numbers and revenues is a problem for anyone who uses distributors or licenses content. This applies to any content creator or copyright holder, to authors as well as to a publisher like Berkshire who depends on its partners for most distribution. We recently found some of our books being sold in digital form by partner companies who do not have e-rights to them. The recent suit filed by Harlequin authors shows how corporate structuring can be used to alter, and drastically, the percentage that is due in royalties. This is uncharted territory but there is a lot of money at stake. The legal decisions that are bound to come will have major impact on the sustainability of the publishing industry. I feel strongly about the rights of authors – I am an author myself with books published by other companies – and know that authors and publishers are going to have to find new ways to work together in the digital age, so that both can survive and prosper.

Higher production costs There’s no standard workflow for getting material into different ebook platforms, so we’re doing more work with content than ever. We have to reflow and check material after any conversion and come up with workarounds for different platforms. Amazon’s Kindle, for example, can’t handle Chinese characters; this has led to creating image files for the hundreds of Chinese words and phrases in This Is China. If we cut out print publication, we’d save money on page composition, but many people, and many libraries, still want the print option. Remember, too, that authors may want digital access to their work, but many also want to know that it exists in a print edition that’s been well edited and designed. And even if books are available only as print on demand, we still have a lot of traditional publishing expenses. Indexing should be done differently—and better—in ebooks, but no good system for that exists yet, either. > Apparently publishers are particularly bad at cooperating, as Micah Bowers, CEO of BlueFire, wrote to the Read 2.0 list: “The online market forces unfortunately have not historically favored such standardization for high value content types such as music, movies, books. What would seem necessary to make that happen would be content companies actually working together to form a standard.  They don’t seem willing or perhaps capable of doing that, yet they often require DRM.  The means that the retail channels (iTunes, Amazon) have to come up with their own (it might benefit them ultimately, but they really had no choice).” Can we do better?

> We face a special challenge at Berkshire because all of our books now have Chinese titles and metadata, and some books have Chinese characters and pinyin. We’ve been struggling for weeks with Kindle and Kobo to get the Chinese to display correctly in This Is China: The First 5,000 Years.

Marketing and support aren’t free Most companies with digital products spend massive amounts on sales reps and promotional materials, go to conferences, and run webinars, and customers still don’t know what’s on offer because it’s so difficult to show the full range. Support and user training on a 24/7 basis are a whole new cost, too. Publishers must now offer support by email and phone, and those of us who work with libraries are expected to be open the same long hours. We can easily sell our online publications globally, but that means assisting customers in different time zones, not to mention that many professors need a refresher every semester. > This is new territory for us and I’m worried about it! We’re working closely with existing partners like GVRL and Credo who have extensive experience in these areas, but we also want to reach new and specialized audiences.

Expectations of added value Yes, articles can be updated online in a way that isn’t possible in print, but that new material has to be solicited, reviewed, edited, formatted, inserted, and proofread, and all those stages must be tracked. And updating is not fun. I work with thousands of wonderful authors who write for us over and over, but few want to update articles regularly; they’d rather write something fresh. Then there are the de riguer social media add-ons—Twitter feeds, blogs, videos, and webinars. Each requires staff time, expertise, and a good deal of managerial oversight. > People who love social media hate being asked about its ROI (return on investment) but it’s quite amazing to think that we are willing to invest our time and money in Twitter, Facebook, etc. without any evidence that our own companies will benefit. Is online social networking really good for publishers, or for authors? Next month I’ll be announcing our new social media efforts – Pinterest, and more – with some details about how we plan to measure its impact on our business.

Let’s talk about how we can “prove it” to decision makers, customers, and especially to young people who have become used to downloading music for free. > Time is one of the things we should be talking about. Access to the right information in a form that is easy to absorb and use saves people a huge amount of time. Our job as publishers, librarians, writers, and information specialists is to make life larger. <  My hope is that the threats we face from pirate sites, Amazon, and others, as well as the changing needs of our customers, will make us cooperate more energetically. The human community needs publishers, and publishers need a sustainable model for doing business in the 21st century.

First published at http://reviews.libraryjournal.com/2012/06/reference/dont-steal-this-book/

The Olympics begin tonight, and we’ll be talking and writing about sports for the next couple of weeks, and sending along some free articles that will, we hope, increase your enjoyment of the events in London, or at least convince you that sports really do matter and merit attention. Berkshire editor Bill Siever, who will shortly be busy producing the new edition of our Encyclopedia of World Sport, is an outdoors guy but not a huge sports fan. He writes, “I’ll gladly eat some mushy peas and raise a glass of ale to the health of the athletes from around the world. Just please, God, don’t make me watch soccer!”

With warm regards,