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Reinventing the library

Lezette Engelbrecht
By Lezette Engelbrecht, ITWeb online features editor
Johannesburg, 19 Sept 2011

There's an old Arabic proverb that reads: “He who lends a book is an idiot. He who returns the book is more of an idiot.” But in a world where reading material is coming from every direction, even long-time book lovers are finding it easier to let go.

Which means Amazon's plan to release an e-book lending service might smack more of genius than idiocy. Based on Netflix's film-rental model, the service could see a profound shift in the book industry, with titles being accessed for a limited period at low cost rather than purchased to keep.

According to a Wall Street Journal report, the e-commerce giant hopes to make a selection of its nearly one million titles available to an estimated five million 'Prime' subscribers.

At present, Prime subscribers pay $79 a year for free two-day shipping of merchandise and access to 5 000 movies and TV shows - and if Amazon's plans go ahead, to thousands of e-books as well. However, only older titles will be available and subscribers would only be able to 'check out' a few titles each month.

Amazon is still in talks with publishers, which are already struggling to cope with disruptions in the book ecosystem. While publishers will be paid a substantial amount for joining the service, many reportedly feel it would lower the value of books if they are rented, rather than being bought.

World Wide Worx MD Arthur Goldstuck says the e-book lending concept fills a huge gap in the market and acknowledges a key aspect of the reader community. “The move from books to e-books may have completely transformed the industry, but the lending and sharing of books has always been part of the culture of reading.

“There's no question that the service will work - a lot of book clubs are starting to read e-books and buy e-readers, and this could support that reader community.”

The release of the Kindle e-reader has resulted in Amazon now selling more e-books than it does physical copies, with subscribers able to download as many books as they like for an annual fee.

Arthur Attwell, founder of Electric Book Works and Paperight, says while the details of Amazon's plan aren't clear yet, similar approaches have paid off in other industries. “It's been very successful for music for a couple of companies, like Spotify, which allows you to stream music without necessarily buying it.

“But it hasn't been successful for every music company, so it's not necessarily that the model works, it really depends on the company executing it - and Amazon rarely fails.”

Mystery ending

The publishing industry has already been rocked by moves like the Google book digitisation project and introduction of the Kindle, and a potential e-book lending service could add to the confusion.

Attwell notes that publishers are struggling as it is, and the effects of the service will ultimately depend on how they negotiate with Amazon. “What Amazon seems to be embracing is high-volumes and low margins, and making the customer's life as easy as possible. But high volumes and low margins is not something book publishers have ever really been good at, mainly because they can't reach the numbers of a company like Amazon.”

Publishers will have a hard time understanding, predicting and gaining confidence in running their business according to a high volume, low cost model, says Attwell, adding that some local publishers are very concerned.

“But there's not much they can do about it; it's going to happen and Amazon will probably be the one to do it.”

Given that publishers haven't yet worked out how to deal with the emergence of e-books, Goldstuck says it could give them an opportunity to gain leverage in the market.

“Publishers will be threatened by this but they should see it as part of the evolving ecosystem in which they can play a constructive role.”

Terry Morris, MD of Pan Macmillan SA, says while it's still too early to say what the effects would be, it's unlikely to be an all-or-nothing outcome. “Part of me thinks it could encourage access to books, although it's obviously also a bit concerning until we know more about the exact pricing structure.”

She adds that Pan Macmillan has recently established a relationship with Amazon, and while the arrangement is new, it seems to be working. Publishers also can't stick doggedly to their models while consumers' lives become increasingly digitised, says Morris.

“That's the reality and we have to operate within what consumers want. The key thing with digital is to make sure the author is still recognised. If royalties continue going to authors, it will encourage them to write more and allow us to continue publishing high-quality books.”

She adds that South African publishers selling local titles could also benefit from the move, by gaining access to international markets.

“What tends to happen with Amazon is that it gets rolled out in the US first, so we'll take our cue from the UK office when it becomes an issue,” says Morris.

The lending and sharing of books has always been part of the culture of reading.

Arthur Goldstuck, MD, WWW

Of course, books hold a deeper and more symbolic meaning than simply the words inside. While publishers have expressed concerns that the service would lower the value of books, Attwell says the word 'value' has become a fairly loose term.

“It's important to distinguish between the value of a book and the price of a book. The value of a book for a reader is determined by how much it touches them, not how much they cost. Amazon recognises the fact that books are always going to be valuable, and is thinking of ways to bring the price down so more people can access that value.”

Attwell says many publishers are worried that dropping the price will somehow lower the value of books, so people won't be willing to pay very much for them anymore. “But they're missing the point - people are not going to be willing to pay much anymore because they cost less, but books will still be an incredibly valuable commodity.”

Whether publishers support the book-lending service or not, they will have to adapt to an increasingly unpredictable environment, says Attwell. “Publishers are going to have to change and downsize, you simply cannot preserve a company of highly skilled literary people without any technical skills to deal with the real competition - which is technology.”

Tablet hopes

If Amazon's plans go ahead, the online book-lending service is also likely to increase the appeal of the Kindle, and its upcoming tablet, planned for release in November.

Goldstuck says the tablet explosion will likely result in a greater conversion of devices, and more people downloading rich media.

“Amazon's tablet will be a rival to everyone in the market,” says Goldstuck, given its huge content base and strong brand.

“Not only will it have a major impact on the market, it will also allow Amazon to package, market and distribute its applications and products in a way that it wants to be positioned - not how other manufacturers allow it to be positioned.”

He adds that locally, the popularity of tablets has bolstered the emerging e-book market, along with Kalahari.net releasing its e-book reader late last year.

However, Attwell believes the service will appeal chiefly to those who are already avid readers - and who will be more likely to purchase the Kindle. “I think people are going to buy tablets for a huge number of reasons, only one of which is books. Amazon is trying to broaden its product offering in the hope of selling more of its videos and music down the line.

“The book reading experience is nice on a tablet but there's something about a dedicated device that's very appealing.”

He says it's difficult to give a reliable figure for the number of e-book customers in SA, but that he's heard estimates ranging from 5 000 to 100 000. “My sense is that it's probably closer to 100 000 - and that's just the devices. More people are buying e-books for their tablets and iPads as well.”

“We're definitely seeing more adoption of devices like the iPad and Kindle, with the latter now being available at places like Makro. Local titles are also being released as e-books, and sales are starting to pick up,” says Morris.

It's going to happen and Amazon will probably be the one to do it.

Arthur Attwell

Earlier this year, the International Publishers Association gathered data on developing e-book markets, released via FutureBook, which shows the market in SA is estimated to be less than 1.5% (or R344 million). According to the Publishers Association of SA, every major trade book publisher has a digital publishing strategist in place. “There are positive developments in the retail sector where major electronic book retailers such as Exclusive, Loot and Kalahari are increasing their e-book offering,” it reported.

While local retailers are seeing growth, Attwell notes that none of them are getting really excited about e-book sales yet, in what has been a very tough year.

“South African customers who used to buy physical books locally are now buying directly through Amazon, which cuts out local distributors,” explains Attwell. “The main risk is that the local industry uses international sales to co-subsidise local publishing. If Amazon cuts out their distribution of international titles, the publishers lose revenue, causing local offerings to suffer.”

Predictions realised

The competition

While Amazon's planned book-rental service is not the first, it has the clout to see the model gain widespread adoption.
Barnes & Noble's Nook e-reader also allows lending, although consumers first have to buy the book before they can lend it for free to a friend. For free rather than loaned books, Google Books has made millions of public-domain books available to read on various e-devices.
Project Gutenberg is one of the oldest digital libraries, consisting of a voluntary effort to digitise and archive mostly public domain books. In June, it reported having 36 000 books in its collection. It's also affiliated with various learning and literary organisations.
3M Library System has also introduced an e-book lending service for libraries, with a selection of e-books from publishers including Random House and Independent Publishers Group.

In terms of increasing sales and catering for a wider market, Attwell says e-books aren't necessarily a silver bullet. “Part of it is a technical skills issue, because the publishing production process gets faster, easier and cheaper when technical skills have been improved.

“But there are also practical constraints. “The real work of finding, editing and producing top-quality books takes the manual effort of a small team of people, and it's always going to take them as long as it takes. So there aren't a lot of economies of scale there.”

Nonetheless, e-books seem to be gaining favour both globally and on home soil. Digital books are estimated to total 2.2 billion in 2014, according to PricewaterhouseCoopers, growing at a 15.7% compound annual rate.

In SA, it's a similar story. “My sense is that in terms of the core book buying market, e-book adoption has already happened,” says Attwell. “I give it six months to a year and all the regular book buyers in SA will be exposed to e-books and half will have Kindles.

“Five-and-half years ago it was all about prediction. Now it's here and if a publisher hasn't started preparing by now it's too late.”

Morris believes that while e-books will definitely make huge strides in future, there will always be a place for traditional books. “My gut feel is that it will eventually balance out and reach a happy medium, with around 50% traditional books and 50% e-books.

“Books have great value for people. It's a solitary form of pleasure and very much an expression of oneself to have and be seen to have books. There's a deeper role to books in keeping something that's valuable to you.”

Morris' view echoes what readers have known ever since words were printed and bound; something which won't change even as newer models make content disposable. It's a truth about the appreciation of books eloquently summed up by Francis Bacon nearly 400 years ago: “Some books are to be tasted, others to be swallowed, and some few to be chewed and digested.”

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