90 percent of Macmillan front list pirated: So much for the ‘protection’ of DRM
Macmillan’s CEO, John Sargent, worries about free content diminishing interest in the paid variety—and about piracy.
“We are at the stage of the music industry just before file-sharing,” PW quotes him about the book-publishing industry.
He says pirates are carrying 90 percent of Macmillan’s front list titles.
Uh, John, might frustration with DRM have a little to do with it? Just shows you can’t stop the bad guys with “protection.” But along the way you will stop lots and lots of law-abiding people from buying e-books.
Related: MediaBistro item. Sargent debated Chris Anderson of Wired over the usefulness of “free.”
Technorati Tags: Macmillan,John Sargent
September 25th, 2009 at 5:40 am
I think Mr. Sargent should be more worried that 10% of Macmillan’s front list titles weren’t worth pirating.
September 25th, 2009 at 7:17 am
Saying “pirates hold 90% of their titles” isn’t the same as saying “90% of our potential customers are getting our books free from pirates.” Just sayin’.
Macmillan ought to be more concerned with producing a value-added product that customers will want to pay for, and not rip off.
September 25th, 2009 at 7:37 am
Personaly I will never buy a Macmillan book again either in hard cover, paperback, trade, or ebook. When they removed all their books from Mobipocket, it put them on my list.
Steve and Bob above pretty much said it all.
The same goes for Hachette for me as they removed all their titles from Mobipocket also.
Amazon is also on my list not to buy from no matter the publisher. I am really sick of hearing about the Kindle. If it won’t fit in my shirt pocket it just isn’t very transportable. I’ll stick to my PDA and my Blackberry Storm.
The publishers that list ebooks at hardover prices when especially the book has been out 10 years is also on my list. Ebooks should be less than the paperback as by the time it hits paperback they should have already made their money. No wonder they are pirated.
September 25th, 2009 at 8:20 am
I’m a publisher bringing out our first book I hope in six weeks from now. See ultra-basic website.
I really don’t see why I should give it away for nothing before costs are covered. Therefore I’m looking at doing a cheaply-priced 6,000 or 7,000 word e-summary of the 50,000 word book, on the assumption it will get copied anyway.
Sounds to me like copying will keep paper books in business. I’m not an encryption specialist, but as far as I can see there is no such thing as uncrackable encryption {and if there is, governments will pass laws reserving it for military use only}, so why should I bother doing an e-version of our book at all?
Mark
September 25th, 2009 at 8:23 am
Interesting article, and discussion: thanks, everyone.
I’d like to know where — which websites — are pirating these books. If it’s Scribd, it’s easy to ask them to take down the copyrighted material. If it’s a link on Pirate Bay, it will be there for a long time.
Should a list of pirating websites be identified and published? … That might encourage more traffic to these sites. Then again, it might help us all to understand the depth of this problem, and then to find a workable solution.
If Macmillan can’t solve the problem, with their vast financial and legal resources, then it is obviously a difficult problem to face.
I agree that one solution is to price the ebooks less than the paperbacks.
Even if that lower price does not stop the piracy, then at least the ebook’s publisher will lose less money on each pirated ebook.
Michael Pastore
50 Benefits of Ebooks
September 25th, 2009 at 8:33 am
Uh, John, might frustration with DRM have a little to do with it?
Macmillan is the parent company of places like St. Martin’s and Tor, who price their ebooks at twice the cost of the mass market ($14.99 ebook for a $7.99 mass market). I would guess that, even more than DRM, THAT is the reason 90% of their books are being pirated. Of course, according to them, that pricing scheme is them “advocating for their authors”.
I do agree, though, that this shows the sheer uselessness of the current DRM in preventing piracy. It was nice of them to prove our point for us.
September 25th, 2009 at 8:45 am
Michael: in the UK the Publishers Association is advising publishers to report digital piracy via their anti-piracy portal. Besides issuing takedown notices, this will also work as a database with information about websites that are making pirated books available.
Re pricing: I agree that eBooks should’t mirror the hardback or paperback prices. Not because they should be necessarily cheaper but simply because the work, technical knowledge and costs involved in producing eBooks is not the same. Publishers are migrating from one medium to another, in some cases, having to pay for conversion in various formats, the cost of setting up digital houses and training staff, among others. Shouldm’t these costs be incorporated in the digital product?
September 25th, 2009 at 9:19 am
Max: No, the costs shouldn’t be incorporated into the digital product. Why not? Because the market will not tolerate them. Prices are not set by the the amount of effort it takes to produce a product, but by the value that is perceived by the customers. For example, if we look at mass market paperback versus hardback we will see that it is not unusual for the hardback to cost as much as $15 more. That $15 does not represent an increased cost to the author, publisher, distributor or seller (well maybe $2-$4 of it does), it is mostly added profit; a premium that customers are usually willing to pay because of the fact that hardbacks are seen as more durable and are frequently available months before the mass market edition.
Publishers, however, have not produced ebooks with a higher perceived value than paper books. Indeed, by their efforts to limit fair use, and by the very nature of electronic data, they are selling a product that customers see less value in. If 99% of your customers believe you are charging too much for a product, you probably are. Your options at that point are to get the costs down, improve the value of the product (Thus justifying the higher cost) or get out of the market.
Ultimately, any publisher who wishes to remain a publisher is going to see that if they don’t offer ebooks, then people will simply get them through pirate sites. So getting out of the market is not an option. I am still trying to figure out what sort of extras they could add to an ebook to make it worth as much as the hardback… but we will see. The most desirable option (to me at least) is that the cost be dropped. Five dollars would seem like a smart price point to shoot for. Note, they could price on a time scale (This might be the smartest option); Charge the hard back price for early adopters (even charge a bit more for Advance copies), then reduce the price when sales start to drop, reaching the mass market price when the paper back comes out and then drop the price again a few months later. Value shoppers can wait a year or so for the book if they want it at a cheap price, but those who really have to read it now can pay the extra cost.
Ultimately, massive piracy is a sign that you are either not providing what some people want (ebooks free of DRM) or you are charging too much for it.
September 25th, 2009 at 9:24 am
New York, 25 Sept. 2009: “MacMillan announced today that their ever-more-diligent fight against ebook piracy had reached the first stage goal of 10% effectiveness. Spokesmen looked forward to taking the fight to the pirates to achive next year’s 20% goal.”
Regards,
Jack Tingle
September 25th, 2009 at 9:53 am
Thank you Max, for the information about an anti-piracy portal in the UK. That’s an excellent thing; there should be a portal in the USA, and these portals should all be linked together, since piracy is an international issue.
About pricing: what works for me, might not work for everyone. I manage a small independent press. Anything that I can do in the realm of publishing, I assume that a big company can do as well — and probably faster and easier than me.
From an InDesign file for the print editions of my books, I can click a few keystrokes, and in approximately 10 seconds, my PDF ebook is created and ready for sale. If the book is very large and has illustrations, then it might take a full 30 seconds to make the PDF; but a novel with no illustrations is converted to PDF in less than 5 seconds. The cover of my ebook is usually the front cover (not back and spine) of my paperback, with the word “EPUB” or “PDF” added. Converting the print cover to the ebook cover requires less than 5 minutes of work, using Adobe Photoshop Elements.
Similarly, in less time than it takes to eat an apple, I can create an EPUB file. The EPUB does not come out “push-button valid”, and I need to make a few tweaks from the InDesign export. Tweaking is not a problem, it’s actually enjoyable: after you’ve made one EPUB by hand coding, and passed the validation, then the subsequent EPUB ebooks are quite simple.
In good conscience, I can’t justify a high price for my ebooks, when creating them from print pre-press files is so easy and so fast. Rather than increasing my profits per ebook, I choose to pass that savings to my readers.
I’m surprised that big publishers don’t try this approach. They might sell more copies; experience less pirating; and create a better — more friendly and collaborative — relationship between their customers and potential pirates. It might also help to transform the blockbuster mentality that is harming publishing: the big publishers might be able to sell more of their lesser-known titles, if they priced them “aggressively” (meaning low) instead of right up there with the paper editions.
Michael Pastore
50 Benefits of Ebooks
September 25th, 2009 at 10:50 am
“No, the costs shouldn’t be incorporated into the digital product. Why not? Because the market will not tolerate them”.
Bill: Sorry, I don’t understand the concept of producing something and selling it at a loss. I don’t think many companies can afford that.
I didn’t say that the formula should be: printed book price + eBook extra costs = eBook price. I just said that these costs need to be in the P&L and eBook price calculation. And don’t forget that in the eBook world publishers are still giving an average of 50% discount to distributors/retailers.
What sort of extras publishers could add to the eBooks? Animations, author interviews, films, music… just to name a few. eBooks shouldn’t be a (sometimes poorer) mere electronic version of the printed book, that’s the beauty of digital media.
Michael: thank you for the insight on your eBook production process. Sounds like you are not having the problems lots of publishers have been facing when converting to ePub. You can consider yourself very lucky! I know of publishers who have spent weeks dealing with conversion houses until they finally got ePub files that were ok to be used by the e-retailers.
September 25th, 2009 at 11:32 am
When it comes to book “piracy” it is pretty clear there are 3 classes of players:
1- Hoarders who grab/troll for free stuff just because it is free and more often than not will never actually consume what they accumulate. Even if they read a fraction of what they “pirate” they would never actually buy the stuff if it were legally available. A nuisance at most. Online equivalent of shoplifters.
2- Explorers who frequent the “pirate” sites out of curiosity, to sample content/genres/authors they otherwise wouldn’t. Unlike the music business, there is no radio-equivalent for books and review sites are of linited use. These are people who *would* be buying content *if* they could find it. Blame the publishers who have abdicated their promotional duties to retailers and reviewers and have failed to use modern technolofy to help customers find their product, as if word-of-mouth and Newspaper columns are the only way to promote their products. If publishers actually delivered properly priced ebooks and properly used web sites and web-ads this entire category of “pirates” would vanish overnight; they are under-served customers.
3- True believers. These are the dangerous ones. They are tech savvy enough and committed enough to actively scan-ocr-proof print books and then offer them up for others to download. Not a trivial undertaking. These are people who passionately believe in ebooks as a technology and have a strong idea of what the market should be like and are dedicated to promoting ebooks by making content readily available and are not about to let legalities or copyrights get in their way. They are hydra-like and dangerous to both the print and ebook industries. If their ethics should become mainstreamed, the way the music industry allowed Napster to get mainstreamed around the turn of the millennium, things could get very nasty for everybody. This sub-culture has been around since forever and likely will endure even if all publishers were to miraculously be as “enlightened” as Baen (whose content is not actively “attacked”) or, at least Harlequin. But as long as it *remains* a sub-culture their activities will be of minimal impact. The thing is it is fairly easy for anybody to plug in to the ebook distribution channels. The quality of product is spotty but occasionally *better* than the legal ebooks and often there is no legal alternative. (Just as in the early days of digital music-hint!)
The best solution to the problem of book “piracy” is to offer a competitive legal product that offers a good balance of price and value, quality, and accessibility, with fully defined terms of purchase. Way too much effort is being expended on secondary issues like file formats and DRM when first-order issues like terms of purchase (what is the customer buying? a file? a creative work? reading rights? resale rights? conversion rights?) and accessibility (where to find ebooks? how to tell what is good and what isn’t?).
This isn’t brain surgery; there are at least three ways to go about creating economically viable ebook ecosystems. It is being done by Baen, Amazon, and to a lesser extent, Fictionwise (multi-format sales). Others probably exist but instead of facing the music (sic) and realizing their business model is broken, most publishers are petulantly declaring war on their biggest retailer and their customers instead of realizing that it is *their* retrograde publishing, marketing and pricing policies that make piracy viable at all.
Memo to Macmillan: Whining about piracy achieves nothing.
September 25th, 2009 at 12:42 pm
Max: I think you missed my point. I am not saying that publishers should sell ebooks at a loss — that certainly is a formula for failure. But ultimately the price for ebooks, like most products will be set by what consumers are willing to pay. What makes it more critical here is this, ebooks have the potential to become a significant fraction (maybe the dominant fraction) of future book sales. However, if the price of ebooks is too high, publishers will fail to sell either paper or electronic copies of their work. People will turn more and more to the pirates, and the publishing industry will whither. Publishers have to either get the price of ebooks down where people are willing to pay for them or get the perceived value up to the point where people are willing to pay their current prices. The actual cost to the publisher of the ebook is irrelevant.
To put it in simple terms, publishers need to figure out a product that will sell at the price they want to sell it at, and then figure a way to get the production and distribution costs down to a level that will make them a profit.
As for extras — I am and remain a skeptic. Readers want to read; I personally would find animations or video inside my book to be distracting. As for author interviews: maybe, but then again, doesn’t an author forward or afterwards serve the same purpose? I think of it in terms of DVD extras — yes some will want them, but most of us just want to watch the movie (maybe see the deleted scenes).
In any case, I ultimately agree with Felix here… As the music industry learned when Apple brought out iTunes, the best defense against piracy, is to provide what the public wants at the price they are willing to pay.
September 25th, 2009 at 2:01 pm
Just a few thoughts.
I think that there is sometimes an over emphasis regarding price and piracy (free as in stealing) when there are other important factors in why pirating ebooks occurs.
The first is availability – the classic example is Harry Potter where there is no legal ebook versions period. Well, Harry Potter has been pirated, formatted, and proofed to such an extreme (likely hundreds of pirate hours) that they appear better in ebook form than most legal ebooks produced these days.
The second factor is ease of use – pirated books come in basic formats – txt, rtf, and html. Thus, they can be read on or transferred to ANY electronic device you own or will own in the future.
A smaller factor is speed. It takes less than 5 seconds to search hundreds of gigabytes of pirated libraries to find the ebook. Compare this to googling the availability of a legal ebook, then comparing prices on several sites, then reading the small print regarding DRM and future availability of the ebook for transfering to another device and it becomes clear why some individuals pirate ebooks.
In looking at ebook publishing and retailing, those companies doing well are those that are mitigating these factors better than those companies that aren’t doing so well. Fictionwise encourages multiformat as an option in purchasing, allowing transfer to any device you might have. These files also don’t have DRM, ensuring that you have access to them as long as you keep them. Further, Fictionwise has a bookshelf which allows you to download the books again without worrying about limited access to the book in the future (this isn’t totally foolproof since fictionwise had a fallout with one of the ebook suppliers in which they lost access to a small portion of their ebooks last year). Baen does different but equally effective things – no DRM, universal file formats that work anywhere, reasonable cost, easy access to back prints and other books related to the book you want.
September 25th, 2009 at 2:07 pm
Time for a dose of contrarianism. This circular congratulations squad needs one.
Steve Jordan has it right. Saying that 90% of their titles are available in pirated editions tells us nothing about what percentage of downloads are pirated downloads.
Dave Jenkins’s policy of boycotting publishers’ works because of their overall pricing and ebook policies will shortly make him the best customer small publishers ever had. But every once in a while, those big guys might publish something you’d really want to read…
It takes great hubris (although it is VERY widespread) to take an authoritative “I told you so” position about pricing and DRM policies. Nobody knows what percentage of the downloads are pirated versus not. Nobody knows what they WOULD be if the pricing and DRM policies were different. Nobody is offering to replace the revenues that authors get from these major publishers and their sneered-at business models (or saying how lower prices or eliminated DRM would do so). And nobody knows how much piracy is actually discouraged by DRM.
The only thing people seem to know for sure is that big publishers are stupid and would make more money if they did the things that publishers who aren’t making any money do.
I’m not saying I know that DRM protects sales and I’m not saying I know the “right” price point. I am saying nobody else does either. I think a little humility in pondering these unknowns would not only be gracious, it would be smart.
September 25th, 2009 at 6:02 pm
While I have my own issues with DRM, saying that DRM doesn’t stop piracy is a little like saying bicycle locks don’t stop bicycle theft. It’s a true statement, but it really doesn’t have anything to do with whether you should lock your bike.
While I’m sure there are authors who are happy to have their books pirated on theories of exposure, every author I deal with on a daily basis is concerned about piracy. Sure DRM has problems, but pretending that there isn’t a problem with piracy makes rational discussions about DRM hard. Piracy is a problem. DRM is a flawed solution. Social DRM, as advocated by David, might be a superior (though flawed) solution. I’d love to see more suggestions for solutions rather than just nit-picking the one (flawed) solution the big boys have hit on.
Rob Preece
Publisher
September 25th, 2009 at 10:08 pm
Rob Preece, BooksForABuck.com Says: ” Piracy is a problem. DRM is a flawed solution.”
—————
True, to a point…
How about if we consider that book Piracy doesn’t exist in a vacuum? That it isn’t a disease unto itself but rather a sympthom of the real disease?
Piracy, of all kinds of content, is a complicated issue, a blend of unmet needs, technological enablers, and human nature. Focusing on the technology issues alone solves nothing; it just leads to open warfare. Human nature? That isn’t changing any time soon. The options there are perforce limited.
But unmet needs? Those can be addressed. And properly addressed, they can mitigate the impact of piracy by limiting its spread.
DRM is a flawed solution simply because it is a band-aid; a one-size-fits-all attempt to pretend there are no underlying problems with our 19th century publishing industry.
There are products/services for which DRM is necessary and not just social or non-intrusive DRM but the hardest of the hard; hardware-based lock-down.
Therecare also products/services where any use of DRM is notbonly overkill but counterproductive. And there are situations where DRM is simply irrelevant; more of a distraction than a real issue.
Any rational debate about book piracy or DRM really needs to start by asking: why?
Why resort to piracy?
Why resort to DRM?
And whatever the answer, it needs thorough backing; not just myths and urban legends and analogies with markets that bear little resemblance to the book industry.
Because any industry preparing to go to war with its customers would be well advised to carefully consider the rationale and the consequences of such a course of action.
Its the 21st century out there and customers have alternatives, both legal and not. They don’t have to take it or leave it.
Ultimately, that is what “piracy” is about; refusal to submit.