E-book piracy may have unexpected benefits for publishers

My CBC tech column this week is all about e-book piracy. A copy is up at cbc.ca/tech, and below, for posterity.

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According to a new report from the American Association of Publishers, electronic books outsold both paperbacks and hardcovers this past February. This, just a few months after online retailer Amazon announced that it now sells more Kindle digital books than paperbacks.

But it’s not just e-book sales that are on the rise. E-book piracy is growing, too.

I first realized the scale and scope of digital book piracy back in 2009 when I heard researcher Gabriella Coleman describe the then-exploding DIY book-scanning scene. She described projects like the BookLiberator, which allow for rapid scanning of analogue books, with or without the permission of copyright holders.

But now, as e-book readers, tablets, and digital bookstores have become more commonplace, some pirates have switched tactics. Rather than manually scan physical books, some pirates download original e-book files from paid sources, then remove the digital locks.

It’s difficult to put hard numbers of the scale of e-book piracy. O’Leary says that while it’s simple to assess the instances of piracy for a given publisher or series of titles, getting accurate numbers for the entire industry is much harder.

Hundreds of thousands of new books are published every year in North America. Tracking them all would be a monumental task. But O’Leary says the overall trend is clear.

“There’s no ambiguity that more book files are available on the internet now than there have been in the past. That’s partly a function of there being more digital book files, and also that there are more e-book readers. But that’s not necessarily synonymous with an impact on the business of publishing.”

O’Leary makes the distinction between the instances of e-book piracy (the number of pirated e-book files available for download) and the impact of e-book piracy (the actual effect on the business of publishing). For O’Leary, the two are related, but different. He says that one way to measure impact is to pick a book, wait for it to be pirated, and then compare sales before and after.

Back in 2009, O’Leary did this for one publisher, O’Reilly Media, which publishes technical books. Surprisingly, he found that sales actually increased after their books showed up on pirate sites. Piracy seems to have boosted sales. O’Leary says people may have been using the pirated editions to sample books before they actually opened up their wallets.

This is just one example, and we shouldn’t extrapolate one publisher’s experience to the whole publishing industry. A technical book is different from a romance novel, which is different than a history textbook. But it goes to show: though e-book piracy is on the rise, it doesn’t necessarily come at the expense of legit e-book sales.

Publishers need more research (and more nuanced research) about the impact of book piracy in order to have a more informed perspective on how to approach it.

People pirate for many reasons. Some do it simply for the love of pirating. Some people amass large collections of movies and music and books that they may never watch, listen to, or read. Others pirate because they feel they simply can’t afford to pay. These types of pirates are probably the hardest to convert into paying customers.

But there are also people who pirate because legit, paid options aren’t available to them. When it comes to books, movies and TV, increasingly, people want what they want when they want it. The lack of a legitimate paid option can turn willing customers towards piracy. According to Brian O’Leary, “Piracy really is the consequence of not meeting consumer demand.”

So, if book publishers want to avoid some of the piracy issues that have plagued the music, movie, and television industries, what should they do?

It seems to me that they need to better understand the real impact of piracy. They need to understand the motivations behind piracy, and they need to address the appetites of underserved customers.

“I think the average consumer cares about getting the content that they want, when they want it, in the format that they want, without a lot of overhead, at a reasonable price,” says Brian O’Leary. “I think that publishers who realize that and organize their work and their publishing strategies to address those needs are going to succeed.”

E-books, both purchased and pirated, are on a serious uptick. The challenges around piracy are huge, but so are the opportunities.

Subscription-ification

My CBC tech column this week is all about Adobe CS, subscription-ification, and the access economy. A copy is up at cbc.ca/tech, and below, for posterity.

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Adobe announced the latest version of its Creative Suite line of software on April 11, including updated versions of Photoshop, Illustrator, and InDesign. But it’s not what Adobe’s selling that caught my interest. Rather, it’s how they’re selling it.

You see, Adobe makes some pretty expensive software. New copies of its flagship image editor Photoshop can cost hundreds of dollars. The various Creative Suite bundles, which include additional design programs, can cost thousands.

But now Adobe plans to add a subscription option with a much lower initial cost. Instead of paying the one-time purchase price, customers will soon have the option to pay for access to software through a monthly subscription fee.

“Essentially it’s a rental,” according to Adobe’s vice-president of Creative Suite design, Dave Burkett. “So you’re subscribing for a period of time, and make either a month-to-month subscription or an annual commitment. When you have made that commitment, you’re free to use the product as long as you’re continuing to subscribe.”

Adobe’s move is just one more example of a trend that I’ve seen a lot lately. I call it “subscription-ification.” Rolls right off the tongue, doesn’t it?

Subscription-ification seems to be booming. Netflix is a good example. Instead of buying a DVD box set of my favourite TV show, I could pay $7.99 per month for access to the same programming. Another example is Rdio. I recently became a paid subscriber its service, which lets me stream as much music as I like for a flat monthly fee. With Netflix or Rdio, I don’t own any of the music, movies, or TV shows. I’m simply paying for access to them. If I let my subscriptions lapse, no more TV, movies, or music.

Subscription-ification happens outside of the digital media world, too. Car-sharing services like ZipCar and Autoshare let you pay a membership fee in exchange for access to vehicles. BIXI allows its subscribers in Montreal (and soon Toronto) to share a fleet of bicycles. These are all examples of what Ron J. Williams calls the access economy, which emphasizes access to products and services, without ownership.

So what do companies like Adobe stand to gain from subscription-ification? According to pricing expert Andrew Gregson, subscription-based services can help businesses stabilize cash flow.

Andrew told me that when businesses sell products on a one-off basis (say, a $700 software program), they get an injection of cash up front. But that also means businesses are constantly chasing new customers. With a subscription model, a business’s cash flow becomes more regular and predicable. Companies can worry less about finding new customers, and focus more on keeping existing subscribers subscribed.

“From a business point of view, if you can smooth out the lumps in demand and supply, you can make more money and you can reduce your costs,” Gregson said. “Lots of people will take on a subscription and never ever end it.”

For the customer, price seems to be a major selling point for these subscription offerings. With yearly-commitment prices ranging from $35 US a month (for Photoshop) to $129 US a month (for the CS5.5 Master Collection), subscriptions certainly offer a less expensive entry point for consumers.

That lower entry point may also help persuade people using pirated versions of Adobe’s software to pay for legit copies. According to Adobe V.P. Dave Burkett, “Piracy is certainly always a factor. This certainly provides a lower cost of entry and so will have some aspect of dealing with that problem, for sure.”

Subscriptions have been successful at curbing piracy in the video game business, too. World of Warcraft and Microsoft’s Xbox Live are good examples.

Adobe’s subscription model also ensures that customers have access to the most up-to-date versions of its software, without additional upgrade costs.

Flexibility is another consideration. If you only need a piece of software for two months out of the year, it’s much cheaper to rent it for those two months than paying hundreds for a full version.

But the subscription-ification of software isn’t without its potential downsides.

For instance, Adobe’s subscription-ified software is tied to the internet. The software has to “dial home” at least once every 30 days, otherwise it stops working.

Also, you don’t really “own” the software in the traditional sense. By subscribing, you’re entering into an ongoing relationship with a company that could change its policies or pricing at any time. The subscription terms clearly state: “Adobe may at any time, upon notice required by applicable law, change the price of your subscription or any part thereof, or institute new charges or fees.”

If I bought Photoshop in a box 10 years ago it would still keep working, even if Adobe went out of business. Not so with these new subscription-based software licences. And, if I wanted to sell my 10-year old copy of Photoshop on eBay, I could. A clear secondary market exists for used software. Again, not so with subscriptions.

So, it’s a trade-off. What subscription-based software offers customers in price, flexibility and freshness, it takes back in access and control.

So, when when does it make sense to subscribe to a software, music, or bicycle service, and when does it make sense to buy outright? Obviously, the decision has a lot to do with the type of subscription and your own personal habits, but I think there are a few good questions you can ask yourself when deciding:

1. What’s the real difference in price between a subscription and buying outright?
2. How much or how often will I actually use the product or service?
3. What will I do if the terms of my subscription change? Do I have a fallback plan?

As the access economy continues to grow, I think we’ll be asking these questions more and more often.

Andrew Gregson thinks we’ll continue to see businesses experiment with subscription model. “Just let your mind roam through the yellow pages and say, ‘Yup, that could be done by subscription… that could be done by subscription.’ Virtually anything could be.”

Personally, I’m waiting for a hamburger subscription.

Vote for the Internet

My CBC tech column this week was all about OpenMedia.ca’s “Vote for the Internet” campaign. A copy is up at cbc.ca/tech, and archived below for posterity.

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Remember all that ruckus earlier this year about usage-based billing? Remember how a bunch of Canadians were really upset about how we pay for internet service in this country? I know, it seems like forever ago, so let me refresh your memory (and mine).

The focal point of much of the UBB debate was a petition called “Stop the Meter,” organized by OpenMedia.ca. Since its launch in November 2010, more than 470,000 Canadians have signed the petition. Originally started as a response to proposed usage-based billing schemes, the petition became a sort of catch-all for Canadians’ telecom frustrations, from restrictive cellphone contracts, to mobile data rates, to rural broadband access.

The anti-UBB movement in Canada seems have won a few victories. The CRTC decided to review its UBB decision. Tony Clement vowed to intervene if the CRTC didn’t reverse its decision. And Bell Canada changed its UBB tune, replacing it with another confusing acronym: AVP, or aggregated volume pricing.

So my question is, now that we’re in the middle of a federal election, what will OpenMedia do with its legion almost half a million angry Canadian telecom customers?

The answer: a new campaign, set to launch this week, called “Vote for the Internet.”

And as much as I like the idea of planting a campaign sign in my lawn that simply reads “Internet,” that’s not what we’re talking about.

Steve Anderson is the executive director of OpenMedia, and he told me the first part of the campaign is an online tool that will allow Canadians to e-mail their local candidates. “The letter pretty much just asks them, are they committed to working towards an open and accessible internet when they go to parliament?”

The idea here is to crowdsource on-the-record commitments from candidates about their digital policies.

“We just want to help people who care about the internet and the role it plays in society to make an informed decision when they vote,” Anderson said.

Through the website, OpenMedia will also invite candidates to sign on as “pro-internet.”

OpenMedia plans to send a more detailed survey to all the parties, asking them specific questions about their digital policies on issues like structural separation, reforming the CRTC, investment in broadband, net neutrality, and transparency in internet service. Anderson said his organization will simply report the results of the survey, and won’t endorse parties or candidates.

“We’re non-partisan. The only candidate we’ll endorse is the internet,” Anderson said, laughing.

The real goal here seems to be to raise the profile of digital issues in the current election debate. OpenMedia isn’t not alone in this aim. In a recent column, Michael Geist, who holds the Canada Research Chair in Internet and E-commerce Law, listed a number of questions that he thinks Canadians should ask candidates about digital issues in this country — issues like usage-based billing, the transition to digital television, and copyright.

I have to wonder though, do enough people really care about the policy decisions behind broadband pricing and infrastructure to make this a viable election issue? Can such a geeky topic once again break through to the mainstream in the same way Stop The Meter did?

For his take, I called up Dennis Pilon, a political science professor at the University of Victoria. I wanted to get a better sense of how exactly election issues become election issues. Is OpenMedia’s half-million e-mail addresses enough?

Pilon told me there are a number of factors that influence what becomes an election issue. He told me that issues need to touch people, to affect them personally, and to make them unhappy. Voters also need to have a clear channel for action.

Clearly, usage-based billing has touched a nerve with Canadians, and the number of signatures on the Stop The Meter petition reflects that. With its “Vote for the Internet” campaign, OpenMedia has made the channel for action apparent: send a form letter to your local candidates, and report back.

But Pilon also told me that there’s another very important factor when it comes to making issues into election issues: personal contact.

There’s a reason politicians make telephone calls and pound the pavement knocking on doors. Pilon says e-mail campaigns and political advertising aren’t nearly as effective as personal human contact. And for me, that’s the piece that seems to be missing from the planned “Vote for the Internet” campaign.

In their official party platform, the Liberals make mention of several digital policy issues. There aren’t a ton of details, but the Liberal policy does address things like wholesale internet services, competition for ISPs, and the principle of net neutrality.

Conservative candidate Tony Clement tweeted about the Liberals’ digital policies, saying “Liberal Platform ‘borrows’ key elements of my Investment & Digital Strategies.” But so far, no official strategy from the Conservatives or others.

So, will digital policy have a place in this election? We’ll see.

In the meantime, I’ll be outside, hammering a hand-made “Internet” campaign sign into my lawn.

Thou shalt not share

Earlier this year, I wrote about sharing WiFi with my neighbours through a small mesh network, and how glad I was that Teksavvy’s Customer Agreement & Internet Usage Policy doesn’t explicitly forbid sharing or redistribution. Well, that’s about to change.

Effective May 1, 2011, Teksavvy’s instituting new “Terms and Conditions of Service” that (among other things) states:

2.4 You shall not in any way resell, license or allow any third party to use the Service without receiving our prior written consent. You may not share or transfer your Services without our express written consent.

A real bummer to see our little mesh network outlawed. Other changes to Teksavvy’s policies are being discussed over at DSLR. Thanks for the heads-up, Karen.

Update: A ray of hope on the DSLR forums (again, heads-up from Karen).

Ess Ess Dee

The first time I heard the virtues of solid-state drives extolled was on One Thing Well. Then, Gruber and Dan Benjamin kept mentioning them on The Talk Show. My pal Thomas started swearing by SSDs. And when Khoi Vinh blogged about his SSD experience, I finally broke down and ordered a Mercury Extreme Pro SSD from OWC.

Holy smokes.

I’m now a believer. Our family’s mid-2007 MacBook got a serious kick in the pants. As Khoi said, “It really is like getting a brand new computer.” For a couple hundred bucks, an SSD breathed new life into our four-year old laptop. Now it seems just as snappy (if not moreso) than the flashy new MacBook Airs we play with at the mall.

If you’re considering swapping out your HDD for an SSD, do it now.