Seth Godin has published at least a dozen best-selling books on the post-industrial marketplace, ideas, social media and consulted with many Fortune 500 companies. His insights make following his blog a must for anyone trying to make their way in any marketplace.
Part of his genius is being able to put into a few words, great thoughts. Most of his blog posts are simply great. Occasionally, they are mindbending, not because they are novel but, in fact, because they state clearly something we already know. His latest post, titled The Free Market, is one such post. I encourage you to read it before continuing to read here. It won’t take you long.
The gist of Seth’s point is that:
1) Free markets are great and will generate good results if they are not usurped by those trying to benefit from it.
2) Those trying to benefit will attempt to make the market un-Free in any way that gives them leverage in that market.
3) Without checks and balances against those using their leverage, the free market will suffer and be less free.
We all know that what Seth says is true. But do we talk and act like we do? Look at the debates about the need (or not) of government regulation of business as just one example that suggests we’ve lost sight of this basic logic.
But I’m not here to talk politics. Seth’s post caused me to to think about the book industry. I think that often our discussions about what’s going on in the book industry right now center on the more trivial issues rather than the big ones. For instance,
DRM: is it good or bad?
DRM (digital locks on our eBooks) is touted as a “copyright protection” mechanism. It’s argued that it’s needed to prevent piracy. To counter that there are those who worry about being able to lend their eBooks or to be able to sell them.
Truth is, DRM has little to do with copyright and it certainly isn’t actual copyright protection as this comes from the legal ramifications of copyright law. DRM is, first and foremost, a way for particular hardware manufacturers to control their consumer base – to disrupt of the level playing field if you will. The best evidence for that is the fact that there isn’t a single eBook format or DRM scheme. Each hardware manufacturer has and uses their own. If both industry and consumers would understand this, the debates would change and we’d more often find publishers and consumers on the same side of the debate.
Agency Pricing Model
This is debated, on the one hand, as a way for publishers to retain the perceived value of their product (low price de-value books). Others say that it is counter to traditional manufacturer/retailer models where manufacturers set their selling price and let retailers determine what they’re going to sell the product for. In point of fact, this is how hardcover street prices are determined, with retailers regularly discounting them from their publisher retail price. Why not for eBooks?
The ‘why not’ is best understood from history. The Agency model came about because Apple knew they couldn’t compete with established booksellers like Barnes & Noble and Amazon so they told the publishers, “We’re going to help you out, publishers. Put your higher-priced books in our iBookstore. We’ll let you do this if you’ll to agree to enforce those prices across the industry.” And by doing this, Apple disrupted the free-market pricing model, to its advantage. Random House held out until recently but even they succumbed as they wanted Apple as an outlet for their products.
There are other examples of how various entities in the book industry are attempting to disrupt the free market conditions of the market but there is one unavoidable conclusion. The tail is wagging the dog. Consumers, authors AND publishers are being manipulated by hardware manufacturers. They are trying to create circumstances tha lock consumers into a ‘system’ that favors their sales and limits the abilities of consumers to buy from other vendors. Until publishers and authors insist on open and easily convertable eBooks, they will continue to do so.