Monday, April 4, 2011

Truths for publishers are for retailers too

Last week the Teleread blog had a posting entitled, Three truths that publishers should try to understand about readers. The posting starts with the following observation:
The big shift that ebooks are bringing to the market is not necessarily the paper to pixels one—it’s the shift between the bookstore as customer and the reader as customer. The problem many print publishers seem to have today is that they don’t really understand who the reader is and what they want out of a purchasing experience.
An interesting statement -- for booksellers as much as publishers. The article goes on to discuss three truths for publishers. I will paraphrase those here, and recast for booksellers.

TRUTH 1: READERS DON’T REALLY CARE HOW PUBLISHING WORKS This is true, and the bookstore corollary is that the reader does not really care how the bookstore works either. Whether it is financial return which covers their financial aid, a book that is out-of-stock because the faculty member ordered it the day before class began, or a shortage of used texts because the publisher changed editions -- student consumers often do not care about your problems. They want their problem solved -- getting course materials required for a course in a usable format at the lowest cost. They do not want explanations or to be educated on difficulties with DRM, or publisher pricing models. To quote another passage:

When you find yourself seeing a reader comment and thinking ‘but there is actually a really good explanation for that!’ your response, publishers, should not be to try and educate this customer on why this baffling situation is actually just and right. It should be to recognize that you have a customer giving you input on what you need to fix in order to get their money.
That last line is particularly true of student consumers.


We have yet to settle on what is a fair price for digital, and this is particularly true in the textbook space. Is it half the cost of new? Is it the same price as print? Are you buying the book, or just "digitally renting" it for a semester (publishers call this a subscription). Reader perception is that the digital should be much less than print because they believe the cost is in the paper and distribution, not in the content creation, editing, formatting, storage, etc.

Whereas education on what they are buying is mostly unnecessary with print books, with digital books the purchase is less clearly an easy option. Differing DRM which changes from one publisher, book, or platform to the next creates confusion. Differing definitions of what you can do with your digital book purchase can also vary, particularly with digital textbooks. What was once a simple purchase where you knew what you could do with the book, is now a complicated and often inferior acquisition experience from the point of the consumer.

With expectations set for a lower price and the experience being less than optimal, who would blame students for expecting ebooks to cost less?


Again, a quote from the article is helpful here:

I get that piracy is an issue for you guys. Loss prevention is something that every business deals with. I understand trying to keep such losses minimal—you will always have a margin for this because every business does. But the best way to minimize these losses is to solve the problems that are causing actual, potential customers to turn away. And in that respect, DRM has become a bit of a red herring.
As the Teleread article goes on to note, there are other factors that are impacting sales of digital more than piracy, but publishers are so focused on illegal downloading that they miss the big picture. This is one of the big errors that the music industry made. They were so caught up in trying to define the business to consumers, that consumers turned to piracy to get what they wanted that the music industry was not providing. In the same way, by making DRM cumbersome, but not conquerable by those who really want to pirate content, they are driving students not to adopt digital options -- and in likely encouraging the piracy they hope to prevent.

Many years ago I was involved with a project where we observed that a number of individuals were more likely to break a particular law and pay the fine than adhere to the requirement. This is because adhering to the law was so complicated and costly. We used technology to make it easier and more cost effective for indviduals to comply, and surprise, surprise, legal compliance went way up.

The same is true with DRM -- if it is too difficult for students to acquire and use the content legally, then they will find other options from the legal (e.g., choosing not to purchase, going with print, etc.) to the illegal (e.g., piracy). Ignoring the problems with DRM drives away good customers who are willing to pay, and fosters more digital theft. It also encourages more faculty to consider open source solutions, which can have a price tag, yet still be DRM free. It is time we rethink content protection and business models, and retailers have as much stake in that outcome as publishers do.

Some final guiding thoughts... The truths and lessons for Publishers in the TeleRead piece have implications for retailers too. I have said it before, but do we really know what business we are in? Beyond that, do we know what our customers really want? Successful businesses solve problems for their customers. Do we know what our customers problems are, and are we trying to solve those problems? How could we solve those problems more efficiently or effectively? If we fail to do so, someone else will, and at that point it is not really fair on our part to complain about the competition. If the competition is viable, it is because they are providing something that the customer values, and their value proposition is greater than the one we offer. Just something to think about.

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