September 2003

From: Scott Matthews
Subject: E-Books and P2P

Hey Tim,

I'm engaged in a debate that compares the book publishing industry to music.

Some obvious constraints shield books from P2P (you can't "rip" a book, so to speak; and people don't really want to read e-books anyway). However, it seems to me that your books would be the first to succeed as e-books.

As I understand it, you consider P2P beneficial to the music business, but you avoid it by not offering your books as unbundled paid downloads. (I'm aware of Safari.)

I'm a small software developer (Andromeda), and I consider P2P to be a threat. I've also bought a number of your books over the years, and so I'm a little troubled by a stance that seems to reinforce a culture of disregarding copyrights of authors like me.

I'd love to know what you think.

Scott Matthews


Well, I'm a qualified proponent of P2P. My argument is that if the music industry worked to establish a business model that gave customers what they want at a price they are willing to pay, they wouldn't be competing with free "pirated" services. That's what we're trying to do with Safari and other online publishing initiatives.

I do have concerns about economic disruption during the transition to new business models for online content, and navigating the transition is non-trivial. But publishers have a choice of clinging to the past or embracing the future, and trying to make the transition as gracefully as possible.

So you have to separate my position as a publisher (experimenting with a number of business approaches to see which works best) from my position as an industry commentator (seeing the shape of the future and being clear about the direction we need to go, even if I don't yet know all the details of what's going to get us there).

I'm not at all in support of people disregarding copyright. By the way, many of our books are available on CD, in a form that makes them fairly easy to rip to P2P networks. We face considerable illicit copying, and we regularly ask people to take copies off the net--and very often, they respect our requests. But when they don't, we don't argue for copy protection or stronger laws; we just accept it as a cost of doing business during a transitional period in which we haven't figured out the rules for the next generation of technologies.

However, I also try to tell publishers (of both music and books) that giving away free copies can be a strategic marketing tool, especially for fungible works. A lot of O'Reilly products aren't fungible; if there's only one good book on a topic, and potential customers are highly networked so they will learn about it, giving it away for free reduces the total market. If, on the other hand, you have a product (say fiction--see Baen Books as an example) where there are lots of authors trying to get noticed, free copies can increase your readership. There's no single answer.

I also argue that even on the free services, eventually business models will evolve that will require someone to take over the ecological niche we call publisher. Publishers have evolved on the free content web, because in a flat namespace with huge amounts of content, no one can find anything. So pretending that new technology changes the rules in a fundamental way, rather than just threatening your current business model, is disingenuous. That's the whole point of my Piracy is Progressive Taxation paper.

Tim


Hey Tim, thanks for taking the time. However, I'm afraid that perhaps I wasn't clear enough.

You must know that lots of people like me would prefer to purchase single e-books to keep and read offline. It appears that you're concerned that filesharing (of one sort or another) might have an adverse impact on your legitimate hardcopy/e-book/Safari-service sales. Is that why you don't offer your books as unbundled, pay-for downloads?

I hear a lot about the benefits of P2P. But in the name of moving the dialog forward, it seems only fair to acknowledge the downsides, too.

I also think that coders are traditionally concerned with and respectful of copyright. All too often this issue is cast as an epic struggle between "freedom" and "the RIAA," but we're vulnerable to P2P, too. . . .

Scott


Actually, that's not why we don't do it. It's based on my beliefs about the ultimate failure of the stand-alone e-book model. (Well, maybe not "ultimate." If we ever get a really good e-book device, perhaps epaper, then stand-alone e-books might work.)

There are two reasons why I think stand-alone e-books aren't the way to go:

  1. Cable television shows us that subscription packages are a better business model than pay per view. The current Internet is the equivalent of basic cable, and the premium packages (the movie package, the sports package, etc.) are just starting to be defined. We designed Safari as one of those premium packages--not just one book, but a library of books. We ultimately hope it will become "the technical information library" for the Internet.

    That doesn't mean that we won't ultimately do PPV as well, but we want to put most of our effort behind what we think is the superior business model. A service like Safari takes advantage of some of the benefits of the new medium. In particular, you can search across a large database for possible answers, and pay when you are convinced that you have found what you want and are ready to drill down.

    From what I know of people who have experimented with a lot of downloadable e-books (and from our own experiments on Amazon), Safari revenues and revenue growth are far ahead of what we would see from downloadable books.

  2. I've always believed that a new medium causes content to morph. E-books are a bit like early movies, which were just filmed plays. Only later were many of the techniques that we take for granted in movies perfected and adopted.

    In this sense, Safari is still flawed, since it still emulates the printed book too closely. But as an XML database now containing thousands of the best technical books in print, it's much more amenable to powerful future applications than encrypted PDFs or other stand-alone e-book formats.

We're extremely interested in starting to build services that use the Safari database as a back-end. In short, we believe we're starting down a more interesting evolutionary path.

Tim

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