Sunday, February 01, 2009

Piracy and Fair Play

Humans are illogical creatures. We seem to have an in-built urge to enforce behaviour that creates a healthy society.

Researchers invented a game that demonstrates this: Person A is given a dollar, and they must offer some portion of it to Person B. Person B can accept the offer or decline it. If Person B accepts, both people come out of the deal with money. If Person B declines, the dollar is taken away and neither person gets any money.

Logically, Person B should always accept what is offered; some money is better than no money.

But humans are not logical. The researchers found if Person A demonstrated greed by offering too small a portion of the dollar to Person B, then Person B usually got offended and refused the offer. Punishing Person A became more important to them than the money.

This is society-preserving behaviour. We exert peer pressure on each other to encourage fair play.

I believe part of the reason why music piracy got out of hand was because people knew the music industry was ripping them off. Blank CDs cost 10 cents each if you buy them in bulk, and once you have the hardware, you can burn a lot of them easily and cheaply. So why did CDs cost twice as much as cassette tapes of the same music?

When people see obvious greed and injustice, they get the urge to punish the perpetrator. Thus, people didn't feel guilty breaking the law by pirating music because they believed they were punishing the truly guilty party. Humans are not logical.

The Consumerist recently had an article noting that ebooks for the Kindle are creeping up over $10 a book. In some cases, this is more than the cost of a hardcopy of the same book.

The Smart Bitches Who Read Trashy Books are living up to their name with a great discussion of that article in the comments of this post, where they consider the real costs of producing an ebook.

It's an important consideration; the publishing house employs the same number of editors, artists and publicity staff to create an ebook. The only element missing is paper, and people's time generally costs much more than even large quantities of paper.

However, the publishing industry also keeps crying that the returns system is killing them, and ebooks aren't subject to returns. Ebooks don't have shipping costs, or storage costs, or pulping costs. There is no such thing as printing too many ebooks.

That's a concrete savings for the company, just as CDs were a concrete savings for the music industry. So why do ebooks cost the same as hardcopies? If the company provides me with less product (I can't resell an ebook to a second-hand shop), then it isn't fair for them to charge me the same price.

We're only human--which means we're capable of breath-taking malevolence when we decide someone's acting like a scumbag. If the publishing industry doesn't play fair with its customers, I think that can only come back to hurt them. I would argue the music industry already demonstrated this.


What do you think? Should ebooks be cheaper than hardcopy books because a file has less value than an object?

Should they be the same price because the content of the book is what really has value, not the paper?

Or is it fine for ebooks to cost more than hardcopy books, because people who can afford a Kindle are affluent enough to afford more expensive books, and a company should charge what the market will bear?

I'd love to hear your thoughts.


Sarf's Travels. said...

A quick correction, CD in bulk cost less that a cent per now. The bulk printing of CD of more than one million units is about $0.0075 per now.

Bulk CD production don't work like home CD burners do. Bulk CD takes a sheet of foil like material, this goes through a that both cuts the foil into CD circles and also imprints the dimples of the CD into it's surface.

This is then sandwiched between two layers of plastic that is briefly heated to cause the whole thing to become one unit.

More full response to your question, when I have time to respond.

Sarf's Travels. said...

I have a little bit of a skewed point of view on this. Paper books in Iceland are incredibly expensive. Both because the mark is small (approx 300k people total) and everything has to be shipped in.

So a pocketbook can cost $20 Can$!

As a result I purchased a Sony E-Reader and am very happy with it.

Because of the cost of paper books here buying e-books is the only cost effective way to read.

I will admit that I downloaded a 13gb archive of SF and Fantasy novels, It has gotten me most of the novels I have purchased and was forced to sell when I moved here.

As to the question of greed. I think that the trap of thinking that a CD/ e-book can be sold for the same price as the paper/ tape version will bite the company. Consumers aren't stupid and will quickly realize that they are being ripped off.

Yes the production costs and editors, advertising costs haven't changed. Except that technology has made this faster and less manpower intensive.

If you eliminate a physical medium then your distributional side of things become almost free. I think that $0.99 is the right price for music. For books my ideal price point is around $3-$4 for a E-book.

There are study's (that are independent) that show for a $0.99 song the artist still gets less than $0.10 per download. So the artists are still getting the shaft from the music industries. If I have a choice of buying music from a music company and buying from the artist, I buy from the artists! This way I know the money goes to the artist.

I feel the same about E-Book, if
I can buy the e-book from the author directly. Then I will, and I support artist commons that produce there own content and help each other promote and publish there works. I think it would be possible for authors to do this also. Have authors get what they give, exchange books for editing purposes. Then share the E-publishing and advertising expense. Web servers can be incredibly cheap to set up, and banner advertising with Google and others is cheap to set up.

Consumers want content at a reasonable price, when and were they want to enjoy it. The whole DRM thing is doomed to fail it puts artificial restrictions on what you can do with something that you bought.

Would you be ticked off if your paper book had a mechanical cover that prevented you from reading the book in any room but your living room, and you could only read the book 3 times, not only that if you lend your book to your husband the book won't open.

If that would Tick you off, why would you put up with in a E-book or downloaded movie or music?

That is my thoughts on E-media and the content providers industry.

Basically the industry is in a state that they must adapt or they will Die. My prediction that in a few years there will not be a big music industry as several of the big players will have collapsed and the remnants will have adapted to the reality of the internet.

The smaller publishers will have a lot less infrastructure and make there money selling services to the artists and taking a small cut from each sale they make. Like I-tunes, I think the first company that does that for e-book will have huge advantage, Amazon did it with the kindle, but made two mistakes.

First they limited service to North America, and second they don't allow you to upload your own books and docks to there device.
When I am traveling I upload all my flight information to my reader, then I have the entire trip and itinerary, flight number, phone number on one page that is easy to read.

Merry Monteleone said...

Honestly, I think the whole, "I pirate music, because they're obviously screwing us" is an excuse people use to justify their own actions. Lets be honest, the lower the cost the more theft - people have a habit of attributing worth to price, so the lower the price the more worthless it is and therefore, what's the big deal if I take one? Who's it going to hurt?

That's a whole different argument anyway. Stealing it means you're stealing from the author or creator, period. you can argue the percentage the actual writer/artist got out of the final sale price til the cows come home, but that's basically between the artist and the publisher/recording company, etc... and stealing it still means you're not paying the artist.

I know e-books will be gaining momentum as e-readers improve... and yes it cuts out more people in the printing end of things (loss of jobs isn't really a thing to celebrate here - it makes me a bit sad)... still the worth of the item is not its resale value, it's the story/artwork itself... reselling a book or cd is just a side perk to buying it. The artist doesn't make any money off of that either.

Word Verification: premium (ha)

pjd said...

I'm with Merry on her first point--that the "they're screwing us" tack is simply an excuse to justify bad behavior. I paid very close attention to the DMCA and the music industry's response. I watched a similar thing with the packaged software industry in the 1980s.

An interesting thing in this whole discussion is the idea that the pricing of a product is some sort of democracy, that consumers are entitled to a "fair price" for a product. Not true. This is the wonder of our market system and why I think the questions of piracy--all the questions around piracy--are really red herrings.

First, let's deal with the technology: as soon as an anti-piracy technology is unveiled, someone hacks it. People who are really interested in getting around digital safeguards will be able to. DRM is essentially an attempt at making copying more difficult in order to artificially inflate the lifetime value of the product to the same margins achieved through hardcopy distribution. If it's harder to copy, it's harder to acquire without purchasing, so you can charge a higher price. Simple as that.

I think also the "cost of development" argument is another red herring. To say that it still takes the same number of hours of editing, cover design, advertising, etc. for an ebook as it does for a hardcopy book is irrelevant in determining a sales price for the ultimate ebook. Why? Because people will pay what they will pay regardless of how much you spend to make the thing. This is true in all products. If you can't make it for the price people will pay, then you shouldn't make it. You can't force people to pay more simply because it costs you more to make it.

The question that will be answered over the next five years is not, "What should ebooks cost," but "What will 'publishing' become?" The packaged software industry barely exists today, just 12 years removed from the first mainstream recognition of the existence of the world wide web (as we called it in ancient times). The software industry, however, had the benefit of building the new distribution model for the new type of product. Publishers do not have that luxury, as musicians and record labels also did not.

What does this mean? Hell if I know. But neither pricing debates nor DRM technologies will determine what the future looks like. Ten years ago software geeks were wondering why the music industry didn't just charge a nominal fee for each song. Now we have iTunes. As much as I hate the idea as a writer, I think publishing will go a similar direction. Content is more and more temporal, less and less permanent. The pricing will reflect that, with smaller payments for smaller, less permanent experiences.

I'm not saying I like it; I'm just saying that with distribution changes will come fundamental changes to what is created and how it is priced. Trying to map future pricing from old models is like trying to win a machine-gun war using sabers.

jjdebenedictis said...

Hey, Sarf, Merry and PJD--great comments, and thank you for them!

Sorry I haven't been here to answer in depth, but it's been one of those kinda weeks at work. Yeek.

Stephe said...

I think NO e-book should cost more than the hardcopy book (of the same story), and that's a completely personal reaction on my part, I admit. Hardcopy books, to me, are like treasures. It's not that a file has less value, but that a book has so MUCH and is so timeless. I'm not sure why I feel this way.

I am just so in love with a cover and the printed page in my hands, difficult as they are to afford.

Sepiru Chris said...

I agree with PJD.

To me, the cost of production is irrelevant. The market will charge what the market will bear. If a product is not cost-effective, then it won't be offered.

Of course, I am a positivist here, but that is how markets work.

My gut feeling is that I would never pay more for an e-book than a real book. I like the weight and the feel and the smell or what I associate with the realness of a book.

Of course, I haven't used a kindle yet.

I don't like reading off the screen of a computer; I edit and read print outs. Yes, I know that a kindle is different in the way your eyes focus, I understand it is more "book" like.

Which means it can be wrapped in Cordoba leather, have a thin sheet of metal for heft, and it might make me very happy.

I converted all three or four thousand cds to mp3 files. It is great for living abroad and moving. It is fantastic for travelin. And I do put my Ipod on Shuffle.

But I miss my cds.

I miss reading the flaps. I miss taking the cd out of the shelf and refiling it. Not because I like filing, but while I forget the names of the artists, I remember their 2D location on the shelves, generally.

And I would rather listen to music by the CD than by shuffle, which leads me to to think that I would still prefer books. But I likely will buy a kindle and there will be many applications, I am sure, where it turns out to be far superior to have a kindle. Think of all the reference books I could take when traveling...

But the price I pay will be determined by what every aggregated buyer wants to pay and what the aggregated sellers want to sell.

Side note. You state that people have to be careful of their spelling when they submit. i agree.

Maybe, though, there will be no copy editors in the future.

Maybe readers won't care, as they didn't a few hundred years ago, or maybe authors will have to take more care, or pay for that service themselves. No idea on my side.

Sarf's Travels. said...

Sepiru Chris

Just a note, the Kindel doesn't work out side of north America. It uses a cell network that has been removed from the rest of the world. So you will not be able to buy books from Europe on it. Since the Kindel doesn't allow you lo load books from your computer you would be stuck out side of the US/Canada.

When I was buying my E-Book I went with the Sony one. While loading books on your PC is not as convenient it works here in Iceland :)

It also allows me to get books from other sources other than amazon. there are some great small publishers out there.

jjdebenedictis said...

I feel the same about E-Book, if
I can buy the e-book from the author directly. Then I will, and I support artist commons that produce there own content and help each other promote and publish there works. I think it would be possible for authors to do this also. Have authors get what they give, exchange books for editing purposes. Then share the E-publishing and advertising expense. Web servers can be incredibly cheap to set up, and banner advertising with Google and others is cheap to set up.

There's one problem with that model: People who write badly and don't know it.

Publishing used to be quite DIY for anyone who had money; it you owned a press, you could publish any book you wanted. This meant a lot of bad novels got published because one person (often the author) thought they were good.

The reason the publishing industry arose was because readers wanted quality books, and were sick of trying to sort the wheat from the chaff. The publishing houses did that for them, and it turned out to be a profitable service to offer.

So I'm always a bit queasy about authors trying to find some version of self-publishing that works for them just to by-pass the publishing industry; we used to have that system, and it didn't work.

Maybe, though, there will be no copy editors in the future.

Maybe readers won't care, as they didn't a few hundred years ago, or maybe authors will have to take more care, or pay for that service themselves.

I think it's wrong to say people didn't care about spelling in a novel several hundred years ago; it was more that spelling wasn't standardized yet. Printing presses brought that in.

Also, as per my comments to Sarf, having the authors in charge of quality control didn't work well back when presses were first invented, and it doesn't work now, really. The majority of self-published novels are simply bad books--typo-ridden, poorly plotted, full of clunky prose and unnecessary scenes. Poddy Mouth used to review P.O.D. books, and it was rare she found something she thought was really good.

Having authors in charge of deciding whether a book is good enough to be published just passes the headache of screening for quality from the publishing house to the customer, and that could only hurt book sales.

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