Who benefits from e-books?

It’s holiday time and the world divides into those who download all their reading onto an electronic device and those who cart piles of books around in their suitcase. I’m one of the latter, although getting better about leaving paperbacks I’ve read behind in hotels and cottages. However, I have downloaded onto my iPad the articles from the latest issue of the Journal of Economic Perspectives (free to read & always excellent.)

Among this issue’s essays is a symposium on technology, the labour market and growth, which looks terrific. There’s also a very interesting article by Richard Gilbert on ebooks and publishing, which concludes the outlook is not great for traditional publishers:

“The e-book story shows how the traditional players in the book industry are struggling to achieve a new market equilibrium in a time where their industry is facing severe technological disruption and illustrates the hazards they face in attempting to manage the transition to that new equilibrium.”
My gloss would be that not all publishers are the same. As The Guardian noted recently, university presses are doing well – I agree with Sam Leith here that the big conglomerates are too ‘me too’ in their approach; and as a small publisher myself with LPP I’m optimistic for new entrants. On the whole, innovation in the book world has so far probably been good for readers as there is a proliferation of new titles and formats.

Read more (e-)books!

There were some new figures from the Association of American Publishers that seemed to indicate e-book sales growth picked up in 2014 after a dip but the trend has slowed; and that paperback sales growth was strong while sales at retail stores increased modestly after some years of decline. Total sales revenues were up about 4.5% and unit sales 3.5%.

I’ve often written about how innovative publishers have been in their response to digital, compared to the music industry – okay, not a high hurdle, but still. It has certainly been a tough environment for the business but how encouraging it is to see more words (and pictures) being read in more formats than ever.

Another of my perennial themes is that people assume new technologies or formats are pure substitutes for pre-existing ones. Often with communications technologies (although not always – bye-bye fax machines and telegrams) they are complements, or start out as substitutes but the older technology then finds a stable and complementary niche.

Of course there is a binding constraint that ensures some substitutions have to occur, and that is time to spend on the various leisure pursuits. Looking on the bright side, if the robots do all the work, we’ll all have more time for reading.

Books, glorious books

Book sales have been flattish in the past 12 months, according to various figures reported in the FT. Physical books, that is. The rate of growth of sales of e-books seems to have declined, and e-readers too. Encouragingly, the article reports:

“A recent survey by Nielsen found teenagers prefer print books, with fewer of those aged 13 to 17 buying ebooks than their older peers. It suggested that parents’ preference, or teens’ lack of credit cards for online shopping, could be responsible. “But another explanation may be teens’ penchant for borrowing and sharing books rather than purchasing them, which is easier to do in print,” Nielsen said.”

A better bellwether could be Mark Zuckerberg declaring 2015 the year of the book, sending sales of his first choice, Moses Naim’s [amazon_link id=”0465065694″ target=”_blank” ]The End of Power[/amazon_link], rocketing. His comment on his Facebook page says, as if he’s only just noticed: “Books allow you to fully explore a topic and immerse yourself in a deeper way than most media today.” The book club page has nearly a quarter of a million likes. One hopes they all read most of the titles Zuckerberg chooses – it will be 26 altogether, “with an emphasis on learning about different cultures, beliefs, histories and technologies.”

[amazon_image id=”B00IXQQ6GU” link=”true” target=”_blank” size=”medium” ]The End of Power[/amazon_image]

Gillian Tett says in her column this weekend that 5 million Americans belong to book clubs, and there are 50,000 book clubs in the UK. As I’ve banged on about before, I think publishing has adapted better to the challenge of new technologies than some of the other affected ‘content’ industries, by innovating far more in response to customer demand. There are issues about the supply side of the market. Some entry barriers are clearly lower because of digital technologies, but there is a question about the market power of Amazon and the big publishers (Joshua Gans is the go-to economist on this – here’s his most recent post); and the health (or lack of) of book stores; and also about long-term prospects for earning money as an author – although I’m not sure there was ever a golden age for writers.

Still, the demand side is more than encouraging. The demand for books, in whatever format, is a sign of the desire for understanding in our disordered times. There is a huge demand for understanding, evident in attendance at economics festivals and public lectures and debates, the vitality of online magazines and blogs, and even the appetite to read serious, non-fiction books. Richard Overy’s wonderful book about the 1930s, [amazon_link id=”0141003251″ target=”_blank” ]The Morbid Age[/amazon_link], noted the same phenomenon then.

[amazon_image id=”0141003251″ link=”true” target=”_blank” size=”medium” ]The Morbid Age: Britain and the Crisis of Civilisation, 1919 – 1939[/amazon_image]

Some light holiday reading

The past week I was in West Wales with next to no connectivity, so it was a good week for reading but not for blogging. One of the books I read was the new paperback of Eric Schlosser’s [amazon_link id=”0141037911″ target=”_blank” ]Command and Control[/amazon_link].

[amazon_image id=”0141037911″ link=”true” target=”_blank” size=”medium” ]Command and Control[/amazon_image]

It’s the story of America’s nuclear weapons; not so much the diplomacy and strategy of the Cold War, although there’s a bit of that for background, but rather how many accidents there have been. It’s a terrifying book because of the sheer number of explosions and leaks, and it seems only luck that has prevented there being a more serious disaster. And then it’s doubly terrifying when you close it and realise that this was the US only, and there are plenty of other countries with nukes, including a number with far less sophisticated scientists and management systems. Heaven only knows how many accidents there have been involving warheads in the USSR or North Korea, or what’s rattling around the FSU countries now. Still, as Schlosser points out, of the 70,000 nuclear warheads (70,000!!!) built by the US since 1945, none has detonated by accident or without proper authorization. “The technological and administrative controls on those weapons have worked.”

Having nuclear weapons involves one central dilemma, Schlosser explains. There is an engineering trade-off between making them ultra-safe to store and transport, and making them work every time if they need to be fired – because the whole logic of deterrence depends on there not being any dud ICBMs. The complexity of the weapons and the safety procedures developed around them – albeit often ignored by maintenance teams – also militates against the strict command and control hierarchy of the military. You can see why the top brass insisted that all instructions in case of accident had to come from them. After all, it seems mad to allow any improvisation where nuclear warheads are concerned. However, in a fast-moving, confused, uncertain environment when a serious accident is under way and an explosion could detonate a warhead, it also seems mad not to allow the men on the ground to make their own decisions – especially in the pre-web, pre-mobile days when communications from command posts were slow, and easily disrupted. Nuclear weaponry is really the opposite of the kind of engineering project described in Tim Harford’s [amazon_link id=”0349121516″ target=”_blank” ]Adapt[/amazon_link]. He argues that freedom to fail is a vital part of successful innovation. You don’t want freedom to fail when it comes to the H-bomb.

[amazon_link id=”0141037911″ target=”_blank” ]Command and Control[/amazon_link] has lots of fascinating detail. One bit I enjoyed was that the underground bunker created in Britain (described in Peter Hennessey’s [amazon_link id=”0141044691″ target=”_blank” ]The Secret State[/amazon_link] as well) had accommodation, a gold vault for the Bank of England’s reserves, a BBC studio – and a pub called the Rose and Crown. I will certainly follow up the reference to an article by Langdon Winner, ‘Do Artifacts Have Politics?’, which apparently asks whether certain technologies can only operate in specific political contexts:

“I shall offer outlines and illustrations of two ways in which artifacts can contain political properties. First are instances in which the invention, design, or arrangement of a specific technical device or system becomes a way of settling an issue in a particular community. Seen in the proper light, examples of this kind are fairly straightforward and easily understood. Second are cases of what can be called inherently political technologies, man-made systems that appear to require, or to be strongly compatible with, particular kinds of political relationships.”

[amazon_image id=”B00IO95SS8″ link=”true” target=”_blank” size=”medium” ]The Secret State: Preparing For The Worst 1945 – 2010[/amazon_image]

So, overall, C&C is a gripping read, but I want to carp as well. Schlosser is a terrific writer, but this book really needed an editor. No character, no matter how minor, is introduced without his cv. There is so much technical detail that it derails the story. Most bizarrely, there is one particular accident that starts and ends the book, such an edge-of-the-seat tale that I’m sure Hollywood is already working on the film – but rather than simply presenting it as the opening and closing chapters, framing the meat of the book, it is woven in throughout the other chapters, and pops up at seemingly random points.

Still, well worth reading, and go and see the movie when it’s out, too.

Clash of the titans

John Kay’s column in the Financial Times (Authors should back Amazon in dispute with Hachette) today criticises the authors who have written a letter to Amazon siding with Hachette (and potentially other big publishers) in their dispute over e-book terms. The authors wrote: “Without taking sides on the contractual dispute between Hachette and Amazon, we encourage Amazon in the strongest possible terms to stop harming the livelihood of the authors on whom it has built its business. None of us, neither readers nor authors, benefit when books are taken hostage.”

John says in effect that the authors are naive, and that the big publishing conglomerates are not serving writers (or readers) well: “The large conglomerates that have come to dominate publishing are run by people who love money more than they love books. These support activities have been cut back in the interest of maximising the revenue, from control of access to distribution. Today’s bestseller lists are filled with imitations of books that have already been successful; footballer’s memoirs, celebrity chefs, vampires and female-oriented erotic literature.”

He’s forgotten the crossover categories in this list – the chefs’ memoirs, sporting cookbooks, and vampire-oriented erotic literature – but the point is clear. However, although I agree that one should have no sympathy for Mega-Publisher Corp Inc, I am not as sanguine as he appears to be here about Amazon’s market power. The Amazon-Hachette dispute is a good old-fashioned clash of the titans as they fight over the distribution of producer surplus, and it’s hard to see obvious benefit for writers and readers either way.

Actually, I think the publishing business has responded to new technologies in a far nimbler and more innovative way than the music industry did, in contrast to John’s argument. But the innovation is largely coming from outside the Mega-Publishers and is at the mercy of Amazon for distribution. Amazon does not treat small fry benignly, as Brad Stone’s [amazon_link id=”0316219282″ target=”_blank” ]The Everything Store [/amazon_link]describes.

[amazon_image id=”0316219282″ link=”true” target=”_blank” size=”medium” ]The Everything Store: Jeff Bezos and the Age of Amazon[/amazon_image]

There are some unanswered questions about the Amazon-Hachette dispute. Here are  Amazon’s and Hachette’s own statements, and here are some very good questions from Joshua Gans, who is the go-to economist on this issue.

I should add, as always when writing about Amazon, that the links on here go to Amazon because of the associates programme, which covers for me the marginal cost of the blog. If another retailer would introduce a similar programme, I’d switch.