October 16, 2009 / 8:32 AM / 8 years ago

Book trade can avoid music labels' mistakes

5 Min Read

FRANKFURT (Reuters) - Book publishers are better equipped to ride the digital revolution than the music industry was a decade ago, using options for selling and enhancing their products that their counterparts at record labels lacked.

The book trade is on the brink of a sharp increase in demand for electronic books, driven by devices like Amazon's (AMZN.O) Kindle and online distribution from Google (GOOG.O) -- and it dreads following the music industry into years of decline.

But the different ways music and books are enjoyed, as well as the different stages the two industries have reached in their development, mean parallels are not necessarily useful.

At the Frankfurt Book Fair this week, representatives of both industries berated themselves for not acting faster and more decisively to defend their copyright and exploit new opportunities offered by the Internet.

"We have to act at once. We can't afford to observe, analyze, observe again," said Alexander Skipis, chief executive of Germany's book trade association, during a panel discussion entitled 'Learning from the Music Industry'.

The book-publishing industry certainly fears a spread of the digital piracy that some blame for the music labels' woes, with most consumers by now believing Web content equals free content.

But, by comparison, the book industry is far ahead of where the music industry was when online music-sharing site Napster burst onto the scene 10 years ago, paving the way for a multitude of illegal MP3 file-sharing sites.

At that time, Apple's (AAPL.O) iTunes online music store -- still the world's most popular way for legally buying music online -- was still two years away, but the market was already ripe for music distribution via the Web.

By contrast, legal marketplaces for e-books are fast establishing themselves today, with 3 million e-readers expected to be sold in the United States this year.

On Thursday, Google (GOOG.O) announced it was entering the fray with an online store for e-books accessible from any device with a Web browser.


Music industry revenues have been in decline in Europe since 2001 and are not expected to start growing again until 2011. According to Forrester, file-sharing is nearly four times more widespread than paid downloading among Europeans aged 16 to 19.

The European recorded-music market is now worth about 7 billion euros ($10 billion) a year, compared with almost 12 billion euros in 2001.

By contrast, book publisher revenues rose 1 percent in the United States last year to $40.3 billion, according to Book Industry Trends 2009.

In Frankfurt, at the world's biggest book fair, the mood is muted this year, with visitor and exhibitor numbers slightly down and many events -- including the Random House party that was the show's social highlight -- canceled.

But electronic book distribution does present opportunities -- such as allowing for reader feedback, selling advertising alongside texts, extras like author interviews, or releasing chapters of books, serial-style -- that print books do not.


Even piracy, probably the industry's greatest fear as it gingerly moves online, may not be the threat it is made out to be, a study by Magellan Media consultancy presented at the book fair shows.

The study followed sales of 66 titles from publisher O'Reilly -- whose bestsellers include "iPhone, The Missing Manual" and "The Twitter Book" -- to monitor the effects of piracy on sales of physical and digital versions of those titles over a year.

It found that legal sales of the 21 titles that were pirated peaked after the piracy began -- suggesting that for certain niches of the market may actually benefit from piracy as a kind of free marketing.

Magellan concedes the sample size is too small for firm conclusions, and is seeking partners for a much bigger experiment.

"If it's helping you, or not hurting you, spending money on enforcement is an unnecessary cost," Brian O'Leary, a principal consultant at Magellan, told Reuters.

He added he considered comparisons with the music industry to be false. "There's a world of difference between a 15-hour commitment to reading a book and a 30-second song clip."

Consumer Wins

In the end, the consumer may not care.

The music industry in its day stoked fears that piracy would destroy the quality of recorded music: If the music labels did not earn enough revenue, they would not be able to nurture the talent enjoyed by so many, the argument ran.

Ten years on, music is enjoyed by many more people more cheaply than before, without a noticeable deterioration in quality -- despite threats by artists including British pop singer Lily Allen to quit because it is too hard to make money.

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