I was pitched headfirst into the world of e-books in 2002 when I took a job with Palm Digital Media. The company, originally called Peanut Press, was founded in 1998 with a simple plan: publish books in electronic form. As it turns out, that simple plan leads directly into a technological, economic, and political hornet’s nest. But thanks to some good initial decisions (more on those later), little Peanut Press did pretty well for itself in those first few years, eventually having a legitimate claim to its self-declared title of “the world’s largest e-book store.”

Unfortunately, despite starting the company near the peak of the original dot-com bubble, the founders of Peanut Press lost control of the company very early on. In retrospect, this signaled an important truth that persists to this day: people don’t get e-books.

A succession of increasingly disengaged and (later) incompetent owners effectively killed Peanut Press, first flattening its growth curve, then abandoning all of the original employees by moving the company several hundred miles away. In January of 2008, what remained of the once-proud e-book store (now called eReader.com) was scraped up off the floor and acquired by a competitor, Fictionwise.com.

Unlike previous owners, Fictionwise has some actual knowledge of and interest in e-books. But though the “world’s largest e-book store” appellation still adorns the eReader.com website, larger fish have long since entered the pond.

And so, a sad end for the eReader that I knew (née Palm Digital Media, née Peanut Press). But this story is not just about them, or me. Notice that I used the present tense earlier: “people don’t get e-books.” This is as true today as it was ten years ago. Venture capitalists didn’t get it then, nor did the series of owners that killed Peanut Press, nor do many of the players in the e-book market today. And then there are the consumers, their own notions about e-books left to solidify in the absence of any clear vision from the industry.

The sentiment seeping through the paragraphs above should seem familiar to most Ars Technica readers. Do you detect a faint whiff of OS/2? Amiga, perhaps? Or, more likely, the overwhelming miasma of “Mac user, circa 1996.” That’s right, it’s the defiance and bitterness of the marginalized: those who feel that their particular passion has been unjustly shunned by the ignorant masses.

Usually, this sentiment marks the tail end of a movement, or a product in decline. But sometimes it’s just a sign of a slow start. I believe this is the case with e-books. The pace of the e-book market over the past decade has been excruciatingly—and yes, you guessed it, unjustly—slow. My frustration is much like that of the Mac users of old. Here’s an awesome, obvious, inevitable idea, seemingly thwarted at every turn by widespread consumer misunderstanding and an endemic lack of will among the big players.

I don’t pretend to be able to move corporate mountains, but I do have a lot of e-book related things to get off my chest. And so, this will be part editorial, part polemic, part rant, but also, I hope, somewhat educational. As for Apple, that connection will be clear by the end, if it isn’t already. Buckle up.

A book by any other name

Part of the problem is right there in the name: e-book. In the print world, the word “book” is used to refer to both the content and the medium. In the digital realm, “e-book” refers to the content only—or rather, that’s the intention. Unfortunately, the conflation of these two concepts in the nomenclature of print naturally carries over to the digital terminology, much to the confusion of all.

This is not the case with music, for example, where the medium and the content are separate. The medium changes—vinyl, 8-track, cassette, CD, MP3—but music is still music. Music is the product. Music is what you’re buying. The medium is just a vessel, and that vessel changes ruthlessly. When a better, cheaper, faster, or more convenient medium appears, the music follows—with or without the content owners.

But books…there’s a lot of baggage attached to that name. Giant tomes, portable paperbacks, or standard hardcovers, they’re all recognizable as books. In the modern era, there have been no discontinuities of form on par with the those in the music industry to emphasize the separation of content and medium for the written word.

The popular objections to e-books are legion. Perhaps surprisingly, technology enthusiasts are among the worst offenders.

Certain genres in particular have clung stubbornly to the word and the medium of books: novels, biography, history. “I’m writing a book.” “Bring a book with you on your trip.” “I work in a bookstore.” Though much of the content at Ars Technica could conceivably appear in a book, that’s probably not the kind of thing you are thinking of when you read the the word “book” in the three previous sentences. Like I said, a lot of baggage.

Lest you think I’m belaboring the nomenclature point, you’ll see its ugly little face peeking out from behind some of the most common complaints about e-books.

Paper tigers

The popular objections to e-books are legion. Perhaps surprisingly, technology enthusiasts (i.e., most of the people reading this) are among the worst offenders. Here are some of the greatest hits.

The screen

“I can’t read an entire novel off a screen!” “I’ll stick to paper with its vastly superior contrast ratio.” “Eye strain! Eye strain!” “Yawn. Wake me up when we have 1200dpi displays.”

With very few exceptions, all the unfavorable comparisons of bitmapped displays to print on paper are technically accurate. I’m here to tell you that they don’t matter.

The amount of time people in the industrialized world spend reading text off a screen has long since nullified this complaint. Literally billions of people have proven that they’re willing and able to read huge volumes of text off absolutely horrible screens. Think of text messaging on pagers and early cell phones, for example. Text messages are short, you say? I’m willing to bet that the average American will read substantially more text off his or her cell phone screen this year than from a book.

But cell phones are only the tip of the iceberg—an iceberg called “the web.” How many words of text on web pages do you think will be read this year in the US and other first-world countries with similar Internet penetration? How do you think that compares with the number of words that will be read from books in the same time period by those same people?

People are clearly willing to read text off screens. Plain, old, often awful screens with tiny, ugly text and large pixels. Vast amounts of text, read over extended periods of time. Up to 40 hours a week at work alone, in the case of most office workers who sit in front of a computer all day. And more at home for pleasure. Hell, you’re likely doing it right now (unless you printed the PDF version of this article or are being paid to read it).

I’ll say it again: people will read text off screens. The optical superiority of paper is still very real, but also irrelevant. The minimum quality threshold for extended reading was passed a long, long time ago.

Now then, does that mean people are inclined to read novels and other traditional “books” off screens? Not necessarily. My sole point in this section is to get the screen technology argument off the table once and for all.

I’m not going to tell you that you really do want to read a novel off a screen. I am going to tell you that your reluctance to do so has absolutely nothing to do with the state of screen technology, despite your fervent protestations to the contrary. (…where “you” is a statistically average fuzz of an individual, obviously. Some people have legitimate physical issues with prolonged reading from emissive screens—and paper, for that matter. They are in the statistical noise, however.)

I think people understand this, intellectually. Yet the unwillingness to even consider reading a “book” on something that’s not a book is very real. The mind cries out for a logical explanation, particularly the geek mind, thus the bogus rationalizations about screen technology, the limitations of which technology enthusiasts know all too well.

The device

Ah, first cousin to the venerable screen technology complaint: dissatisfaction with the reading device. “It’s too big.” “It’s too small.” “I can’t roll it up.” “I’m afraid of breaking it.” “The battery never runs out on a real book.”

Mention the term e-book to someone who has never heard it before and it’s their natural inclination to think first of some sort of vaguely book-shaped electronic device. The fact that devices like this exist and are marketed without much regard for the difference between an “e-book reader” and an “e-book” solidifies this association even among consumers with some knowledge of e-books.

Indeed, the physical book connection is usually embraced wholeheartedly by the industry, resulting in devices with book-like proportions, technology names like “e-ink,” and even vestigial bindings and cover flaps. All of this conspires to cement the connection between the device and the content. Therefore, dissatisfaction with the device translates into dissatisfaction with e-books in general.

And most of the time, there’s plenty to be dissatisfied about. The screen is usually the first target of criticism. We’ve already covered issues of appearance, but screen proportions and durability also come under fire, not to mention the screen’s influence on battery life. It’s also difficult to get the size, weight, and price of the device as a whole all exactly right in a single product. And if any one of those things is off, it can sour the customer on the idea of e-books.

Clearly, there are devices, both portable and stationary, from which people have proven that they are willing and able to read large volumes of text and (in the case of portables) carry with them nearly every waking moment. And yet, when it comes time to consider investing in something called “e-books,” there is an immediate context switch in the minds of customers and they begin fretting over the real or imagined failings of the dedicated devices that purport to embody this concept.

The hardware hard sell

The public’s insistence on thinking of e-books in physical terms—books with batteries and a screen—rather than in terms of their content has a direct analogue in the business world. Businesses, after all, are composed of members of the public.

To both consumers and businesses, dedicated reading devices seem to be the obvious answer to the e-book question. During the early days of e-books (i.e., the 1990s, not 2006, as many seem to believe these days), a steady stream of purpose-built e-book reading devices were launched, in many shapes and sizes, using many different technologies, and at many different price points. Today, even those in the business are hard-pressed to remember all their names.

Ironically, the very thing that motivated the creation of all those book-like dedicated reading devices is the same the thing that kept customers from buying them.

Dedicated readers were actually a bit of a running joke back at Peanut Press. Especially in a nascent market like e-books circa 2000, it’s difficult to get people to shell out $100 or more for a device that then requires them to pay again for each e-book they plan to read on it. The Peanut Press guys saw this from the start and wisely decided to concentrate on creating e-book reader software for devices that people already owned.

Back then, PDAs were the richest target, and Palm PDAs in particular. No other device had a better combination of computing power, size, weight, screen technology, and most importantly, market penetration.

Compared to contemporary e-book devices, the Palm PDA seems like a woefully inadequate reading platform. Early Palm PDAs were tiny, and the screen resolution was, from today’s perspective, inconceivably low: 160 pixels square. Even when using very small text (itself a problem) it was hard to fit more than a few sentences onto the screen.

And yet, while the technically and optically superior dedicated e-book reading devices came and went, the few companies that had wisely chosen to ride the hardware wave of PDAs (and, eventually, cell phones) were the ones that came out on top.

Ironically, the very thing that motivated the creation of all those book-like dedicated reading devices is the same the thing that kept customers from buying them. Businesses couldn’t see past the physical connotations of the word “book,” leading them to produce book-like hardware devices. And customers, when presented with said devices, compared their value proposition to the obvious physical analog, paper books, and decided that they sure as hell were not going to pay triple-digit prices for such a thing when they could get a paperback for less than $10.

(I know many of you are probably already thinking of the Kindle, but remember that, thus far, I’ve been talking about the past, not the present or future. We’ll get there eventually, I promise.)

The inevitable e-book

The straightforward application of logic and reasoning to the actions of large groups of people is a futile exercise. All of the previous arguments about screen quality and medium/content separation crumble to dust in the face of these inconvenient truths: broadly speaking, people aren’t buying e-books; people don’t want e-books; people do not want to read book-length texts off of a screen. Or, to paraphrase a long-forgotten but nevertheless surprisingly applicable movie from the 90s, people love their books.

But the truth is, these things always turn out the same way. And I have some bad news for the bibliophiles. The beloved, less technically sophisticated information conveyance with the pedigreed history doesn’t win.

Time and again this happens, and it can happen without changing a single person’s mind. To put it bluntly, people die. Indeed, death is arguably the single most important driver for all human progress. Even in a community as reason-based as science, it’s often necessary to wait for one generation of scientists to die off before a new theory gains mainstream acceptance. It’s a bit much to hold consumers’ text-based media preferences to a higher standard.

So, death and the passage of time—hardly romantic. It doesn’t have to be that way, of course. Plenty of new technologies gain widespread adoption without the aid of a generational turnover. But so far, books have held their ground. The message here is simply that, on the long graph, the result will be the same.

The next generation, though influenced by the prejudices of their parents, are nevertheless more likely to judge new technologies on their merits, and so on for each new generation. And in the case of e-books, the merits are there, as plain as day. In fact, they’re some of the same merits that have driven other successful media transitions.

Convenience: One thousand songs in your pocket? One million books in your pocket. Carry your entire reading list with you at all times. No loose bookmarks. No dog-eared pages. No rips, tears, or smudges. No shelf space required. No trip to the store. Purchase and start reading in seconds. Read anywhere, any time, using only one hand. Stop reading at a moment’s notice without fear of losing your place.

Power: Search the text instantly. Look up the definition of any word with a single tap or click. Add and remove highlighting an infinite number of times without degrading the text. Annotate without being constrained by the size of the margins. Create multiple bookmarks and links from one part of the text to another.

Potential: Consume, share, and remix all of the above with anyone, an unlimited number of times.

Fine. Great. But is that really enough? Are these things so important that they’re going to inevitably foment a media transition? That seems like a pretty dubious claim. To gain a better perspective, think about some of the other media transitions that have happened in your lifetime.

What advantages did CDs have that allowed them to replace vinyl records and cassette tapes? The geeks are surely thinking about audio quality (although vinyl fans may debate that) and the possibility of digital copies. But digital copying was not mainstream when CDs first burst onto the scene, and increased audio quality doesn’t exactly have mass-market appeal (as we’ll see in a moment).

The CD’s most important characteristics were much more mundane. CDs were more durable and smaller than vinyl, and you didn’t have to fast-forward, rewind, or flip them over to play a certain song. (Oh, and record companies couldn’t wait to have everyone re-purchase all their music, but that’s true of every media transition, so it cancels out.) The audio quality and futuristic shiny appearance were just icing. And the digital copying, well, even most geeks weren’t thinking about that in the days when CDs first arrived (when computers still had RAM measured in kilobytes and CD burners did not yet exist).

Speaking of which, let’s consider another transition, from CDs to digital downloads. We’re in the midst of that one right now. What advantages do AACs and MP3s have over CDs? Time for some more extremely boring features. You can purchase a digital download without leaving your house, and you can start listening to it immediately. The physical storage space for each album is also eliminated. That’s about it.

What about the audio quality? That’s actually gotten worse during this transition. Consumers also gave up lyrics and liner notes, and accepted decreased fidelity for the album art. This is an upgrade? In the eyes of consumers, the answer is a resounding “yes.” Behold, the power of convenience and instant gratification!

Now look again at the virtues of e-books listed above. I hope you’ll agree that they’re more than sufficient. Still not budging? Okay, time to go to the nuclear option…

Horses for courses

If you remain unconvinced, here’s one final exercise, in the grand tradition of a particular family of Internet analogies. Take all of your arguments against the inevitability of e-books and substitute the word “horse” for “book” and the word “car” for “e-book.” Here are a few examples to whet your appetite for the (really) inevitable debate in the discussion section at the end of this article.

“Books will never go away.” True! Horses have not gone away either.

“Books have advantages over e-books that will never be overcome.” True! Horses can travel over rough terrain that no car can navigate. Paved roads don’t go everywhere, nor should they.

“Books provide sensory/sentimental/sensual experiences that e-books can’t match.” True! Cars just can’t match the experience of caring for and riding a horse: the smells, the textures, the sensations, the companionship with another living being.

Lather, rinse, repeat. Did you ride a horse to work today? I didn’t. I’m sure plenty of people swore they would never ride in or operate a “horseless carriage”—and they never did! And then they died.

The final boss

If it seems like I’ve spent an inordinate number of words vainly chastising the book-reading public for its stubbornly illogical tastes, rest assured that I believe the bulk of the blame lies elsewhere. It’s just that the guilty party’s actions follow a formula that is familiar to the point of cliché.

Stop me if you’ve heard this one before.

A group of media owners with a comfortable, well-established business model is faced with new digital technology that threatens to change the landscape of the market. At first, the media owners ignore the new technology. Long after it has become apparent that this is an untenable strategy, the media owners reluctantly submit to the long-standing chorus of requests to provide their content in digital form. However, all digital distribution is contingent upon the most draconian digital rights management scheme that the media owners can shove down the distributors’ collective throats.

While this DRM is intended to protect the media owners’ rights and prevent the illegal distribution of perfect digital copies of their content, it actually has no effect on piracy. Every piece of digital media that is in demand is supplied for free, whether by cracking the DRM, copying an unprotected digital source, or synthesizing a new digital copy from an unprotected analog source. What the DRM does do is frustrate legitimate users and stifle the fledgeling market for digital distribution.

DRM: a refresher course

To most people who follow the technology sector, this kind of story is old news. But just in case you find yourself faced with the task of explaining the futility of DRM to a layperson, let me briefly summarize one of the best techniques I’ve seen. (I believe I first saw it in a video of a lecture delivered by a guest speaker at Microsoft, though I could be mistaken. Update: It was Cory Doctorow in 2004.)

In academic circles, the fictional characters Alice and Bob are often used to explain various methods of communication. Alice needs to get some message to Bob, but there is some sort of enemy—often named Eve, which is short for eavesdropper—that wants to intercept the message.

To use this technique, you should do the traditional Alice and Bob setup, then proceed to explain the various forms of cryptography: Alice and Bob could share a secret piece of information before separating from each other, thus allowing them, and not Eve, to encrypt and decrypt their messages; or they could use a form of public key cryptography which allows Alice and Bob to have their own, private secrets that do not need to be coordinated and shared; and so on. Explain these concepts to a depth that you and your audience are comfortable.

By this point, a layperson’s head is usually spinning thanks to all the technical jargon, but they should be thoroughly convinced that there are some very powerful tools for protecting information. You should now bring the subject back around to DRM and digital media distribution. This is when you land the killing blow.

Your audience now understands that the purpose of DRM is to prevent consumers from making illegal copies of the media that they have purchased. It is only natural for them to assume, after the long explanation of cryptography featuring Alice and Bob, that the law-breaking consumer fills the role of the devious Eve, and is thus faced with daunting task of overcoming all that clever math to get at the protected information. But that’s not the full story.

The consumer is also Bob. He is the intended recipient of the “message,” whether it be a song or a video or text. He must be given all the tools required to decrypt and consume the information!

At this point, the hope is that clouds will part and the layperson will finally grasp the inherent paradox of DRM.

Now, a technically savvy person may try to emphasize the subtle distinction between the device-as-recipient and the human being, but in this case, the layperson’s instincts are correct. That distinction is significant only insofar as it slightly delays the discovery of the decryption key and mechanism. But this information is always in the consumer’s possession. All of the mathematical and algorithmic strength of cryptography goes out the window when that is the case. What remains is merely security through obscurity. (Please save your always-network-connected DRM dystopias for the comments section; I’m confining this discussion to the present and near-future.)

Nuances aside, the big picture remains the same: DRM for digital media distribution to consumers is a mathematically, technologically, and intellectually bankrupt exercise. It fails utterly to deliver its intended benefit: the prevention of piracy. Its disadvantages, however, are provided in full force: limiting what consumers can legally do with content they have legitimately purchased, under threat of civil penalties or criminal prosecution.

Live and don’t learn

Publishers saw what happened to the music business and they were shaken to the core.

Back to our content owners. For music, there are record labels; for movies, there are studios; for books and printed media of all kinds, there are publishers, and they make the music and movie folks seem positively progressive.

You’d think that publishers would have learned from the travails of the music and movie folks, and they did, in a way. Unfortunately, what they learned was fear. Early on, publishers saw what happened to the music business when Napster arrived on the scene, and they were shaken to the core. In fact, some of the very same executives, casualties of the the digital music wars, ended up at publishing houses, arriving with the digital equivalent of PTSD and harrowing tales of a business model’s collapse. And so, the order of the days was “DRM everywhere,” or, just as likely, “no digital distribution at all.”

This position is even more insane once you understand how the traditional, non-digital publishing business works. As in the music and movie industries, there’s the usual, shockingly small cut given to the actual content creators, plus the physical mechanism of manufacturing and distributing the products. In the case of books, there’s an extra dose of nonsense layered on top. Here’s an excerpt from a Salon.com article on the topic.

Books are sold to retailers in a process that resembles consignment. Bookstores pay for the books they order, but they are able to return any unsold books for a full refund (though they usually have to pay shipping). This practice began during the Depression, when publishers wanted to keep selling books in bad economic times, and it continues today despite frequent calls for its abolition.

This means that if a publisher ships 100 copies of a book to a bookstore and only 50 sell, the remaining books are shipped back and the bookseller is given credit for them. (The returned books are sometimes destroyed, although increasingly they are sold to “remainders” dealers who in turn supply retailers with reduced-price sale books.) The estimated cost of these returns is also figured into the price of a book.

“When you’re buying a book, you’re not only paying for that book, but you’re also paying for the book that will be returned and destroyed,” explains Jason Epstein, former editorial director at Random House.

For an even more sobering look at the brass tacks of this business, read this complete example with actual numbers. It’ll surely seem byzantine to an outsider, but that’s the point. Really try to power through the whole thing if you want a clear picture of the pre-digital status quo in the publishing business.

Now imagine an e-book entrepreneur coming to a publisher and offering to sell digital copies of the publisher’s books at retail. His proposition is simple. The publisher will provide a digital representation of a book. The e-book entrepreneur will format it for reading on one or more devices and sell it through a web site (or, in the very early, pre-Internet-penetration days, a physical kiosk in a store somewhere). For each e-book sold, the e-book entrepreneur will pay the publisher a royalty, traditionally about half of the list price.

(Note that the list price is not the price the book was sold for, which is typically much lower. For example, a book sold for $12.99 may have a list price of $20.00. With a 50% royalty, that means $10.00 of the $12.99 sale goes to the publisher, leaving $2.99 for the e-book seller. Some royalties are based on the sale price instead (with or without tax), and some are even fixed amounts on specific books, but the “percentage of list price” royalty deal is extremely common, and imposes a clear lower bound on the sale price of an e-book.)

What are the publisher’s costs for this deal? Well, there may be a one-time, fixed cost to prepare a digital incarnation of the book to hand over to the e-book seller. But the publisher probably already has such a thing, e.g., for use in the editing process prior to traditional print publishing. In fact, these days, most authors produce the original work in digital form to begin with.

Let’s see, what else? Um, that’s it. The publisher hands over a file. Then, every month, a check arrives from the e-book seller. There is no additional cost to the publisher per unit sold. There are no printing costs, no warehousing, no trucks or planes to deliver merchandise. There’s no forecast of demand, with the accompanying dire consequences of unsold inventory or unrealized income if the predictions are wrong one direction or the other. There’s no tracking of and accounting for unsold books, no retailers cutting the covers off of paperbacks and shipping them back to the publisher as proof of their destruction. (These days, an affidavit is accepted as proof of the books’ destruction, which is only slightly less wasteful and absurd.)

In short, the terms are unbelievably favorable for publishers. It essentially moves them from print publishing margins to software publishing margins: pay once for the creation of the content, sell an infinite number of times with no additional per-unit cost.

And the downside? “Piracy!” the publishers cry. “This is exactly what happened to the music business!” This is a good place to point out yet another reality not recognized by this panic over digital distribution. Whether or not publishers choose to sell e-books, digital versions of their content are already available online thanks to OCR (etc.) and, in the case of the most popular books, collaborative transcription. (For example, when photographs depicting all 759 pages of the final Harry Potter book were leaked, the entire book was transcribed before the official release date of the printed book.)

To sum up, e-books have an incredible upside for publishers and little to no downside, since all the things publishers fear will happen as a consequence of selling e-books have already happened, and will continue to happen with or without the widespread sale of e-books.

I can’t stand it, I know you planned it

So, how did publishers actually respond to content requests from e-book vendors? When e-book vendors weren’t ignored entirely, they were usually met with one hard and fast rule: “You will not get our content unless you protect it with DRM!” In the case of Peanut Press, one publisher actually commissioned an expensive, defense-level security analysis of Peanut’s DRM technology. Only if it was given a passing grade would this publisher supply Peanut Press with any of its content. (It passed…with the caveat that brute-force attacks would likely become feasible in a decade or so.)

And even when a deal for content was struck, the very best content was often withheld, if not outright, then effectively, through the use of financial barriers. For the e-book rights to certain popular novels, publishers sometimes wanted a large sum of money up front. Other e-book rights, such as those for the Harry Potter novels, were unavailable at any price. (Believe me, we asked.)

Along similar lines, most publishers dictated list prices for e-books that were based on the prices of the printed versions. When a book was available only as a hardcover, the list price of the e-book version was the hardcover list price. Later, when the book became available as a paperback, the e-book list price was reduced to match the paperback price. This, despite the fact that the e-book version remained unchanged during this time. Pricing based on cost and demand is all well and good, but it should be the cost and demand of the actual product for sale, not another product with entirely different costs and demand!

This makes absolutely no sense until you look at it not as a way to sell e-books, but rather, as a way to ensure that e-book sales do not eat into hardcover sales. That, in turn, makes even less sense, given the comparative profit margins of hardcover books and e-books, but, well, there you have it.

The unchanged nature of an e-book during the hardcover-to-paperback transition of the physical book brings up another issue. The digital text supplied to e-book vendors was often rife with typos. And the kicker: e-book vendors were not allowed to correct these typos. This fell under the contract clause that forbade all modifications to the text. The only recourse an e-book vendor had was to inform the publisher of the error and request a corrected copy. Some publishers proved “less than responsive,” let us say, to such requests.

All of this is to say that the publishers effectively sabotaged the e-book market from day one. The DRM, the pricing, the general treatment as second-class citizens, it all added up to an insurmountable drag on a budding industry. Without some minimum level of buy-in from content owners, there was simply no way to break through to the mainstream, no way to ever sell enough copies of those popular novels to recoup a large up-front fee, and no way to persuade content owners to allow the most desirable best-sellers to be sold in e-book form.

Low-hanging fruit

Back at Peanut Press, we were incredibly frustrated by publishers’ unwillingness to work with us to grow the market. Withholding their best content and dictating print-like prices for e-books through their royalty structures effectively tied our hands.

We were always looking for some way to break through. Something needed to give, and if it wasn’t going to be the publishers, then it would have to come from the other direction. If we could somehow rack up enough sales, even without the best content and with an unattractive pricing structure, then perhaps we would have enough clout to alter the balance of power in negotiations with publishers.

Things were not looking good, however. Aside from the publishers, there were problems on the hardware side. PDA sales were falling off, and while cell phones looked like the next mass-market reading platform, their hardware specs were far below that of PDAs. The so-called “smart phone” was not yet a force in the market.

This was around the same time that the iPod started to gain some momentum. Most of the Peanut Press software developers were longtime Mac users, and so, of course, we all had iPods already. But the iPod only started to become interesting as a reading platform once it began to sell in much greater numbers, and to non-Mac users.

In 2003, Apple started selling music for the iPod through its iTunes music store. Apple sold audio books as well, through a partnership with Audible. Perhaps unknowingly, Apple had just positioned itself perfectly for e-book domination.

It was all happening right before our eyes. First the device, already far past the minimum threshold for screen size and legibility, and rapidly gaining market penetration. Then the digital distribution channel, accessed via a desktop application used by every iPod owner. Then the deals with content owners—not just the independent labels or the scraps from the big table, but all the top record labels, and for their most popular content.

These were the dark times for the e-book market, akin to the five years during which Internet Explorer 6 had over 90% market share and received no major updates.

We Mac guys at Peanut Press saw the future as clear as day. Indeed, it seemed that Apple, and Apple alone, had the complete package: a mass-market reading device to target—one that they owned, no less; an online store with millions of customers who’d proven their willingness to buy things from that store; unmatched experience negotiating with “digitally unsophisticated” (to put it charitably) content owners. One by one, the dominoes had fallen. It all seemed so inevitable.

The e-book market was Apple’s for the taking.

And then a funny thing happened: Apple never took it. Peanut Press and the other early e-book innovators stagnated or faded away. The iPod sold in numbers that made the PDA phenomenon look quaint. And still Apple didn’t move. No one moved. The entire e-book market was stalled.

These were the dark times for the e-book market, akin to the five years during which Internet Explorer 6 had over 90% market share and received no major updates. Here was this technology that had so much potential but was not making any substantial progress in the market because the players who were motivated to drive it forward had failed or been rendered powerless by larger forces.

What was Apple’s problem? Surely the company could see how neatly e-books would fit into its business. This passage from a recent New York Times article on Steve Jobs provides a pretty clear answer.

[Jobs] had a wide range of observations on the industry, including the Amazon Kindle book reader, which he said would go nowhere largely because Americans have stopped reading.

“It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore,” he said. “Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.”

It’s hard not to view this as merely another incarnation of the Apple product cycle, variation 2 (stage 4, specifically). And indeed, with the advent of the Kindle (which I will get to soon, I swear) and the (relative) resurgence of e-books in the past year or so, I think that’s an apt analysis.

But taking the statement at face value also explains why Apple ignored the e-book market for so many years in the past. Put simply, it was just too small to care about. Hell, Apple couldn’t even be bothered to buy Audible, which remains the source for audio books in the iTunes store to this day. That’s an entirely un-Apple-like move; it’s as if Apple had let Pixo make the iPhone OS.

All the early e-book companies were at the bottom looking up at the book market, which appeared to them vast and plentiful. Apple, in contrast, was looking down from its perch atop the music market. To Apple, the entire world of print publishing was but a molehill.

And so, the heir apparent to the e-book throne looked away. But the power vacuum in the e-book market would not last forever.

Modern times

The current e-book market is like a “re-imagining” (as the movie and TV folks put it) of the old e-book market. Some things have changed drastically, but it’s still basically the same story.

Some changes are obvious. With iTunes as the number one music retailer in the US, the viability of digital media sales is no longer in question. Content owners are starting to show some signs of cluefulness when it comes to DRM. “Smart phones” are getting ever closer to being just “phones,” and one phone in particular is bringing the mobile digital marketplace beyond its timid ringtone roots. But from the perspective of someone who was a part of it the first time around, the most notable aspect of the “new” e-book market is how much it echoes the old.

When faced with the e-book question, the “obvious answer” of a dedicated reading device is just as popular as it was the 1990s. The Amazon Kindle is today’s Rocketbook, with the huge difference that it’s backed by one of the most powerful retailers in the world that just so happens to sell exclusively over the internet. (I know most readers have never even heard of the Rocketbook, but that’s kind of the point.) And just like in the 90s, there are other players placing their bets on “the device people already own.”

Everything is set for another run at this e-book thing.

As a wizened veteran of the first e-book wars, and having just retold of the ill fortunes of dedicated reading devices at that time, you might expect me to predict the same outcome this time around: doom for the likes of the Kindle and Sony Reader, and triumph for the phone and/or iPod.

I do still believe that dedicated readers are more appropriate for a mature e-book market, when consumers can more easily justify the cost of such a specialized device. But that doesn’t mean a dedicated reader can’t succeed. The Kindle is the best example, hitching itself to the star of Amazon’s existing retail store. Maybe Amazon will haul the ungainly Kindle right across the critical mass threshold and it will become “the iPod of e-books.” Then again, maybe Apple will finally figure out that the iPod (and, yes, the iPhone) is “the iPod of e-books.” Amazon’s efforts are handicapped by the hurdle of that separate hardware purchase, so the door is still open for a strong competitor targeting an existing reader-capable hardware platform, whether it be Apple or someone else.

Popular attitudes towards e-books haven’t changed much. In fact, they may even be worse than the first time around. Many consumers have learned just enough about e-books during the past ten years to have cemented their unfavorable opinions. And don’t forget the horse riders, filling their role as enthusiastic opponents of technological progress unto their dying breath.

Overall, there’s definitely an “all of this has happened before” vibe, perhaps even with a hint of “all of this will happen again,” if I’m feeling pessimistic. It’s almost as if those first attempts to get the e-book market off the ground never happened.

On a more personal level, it’s like Peanut Press never happened, which partially explains the defiance and resentment with which I began this article. For those of us who were ground up in the unforgiving gears of the market during that first, hopeful go at getting e-books into the hands of the masses, seeing it all unfold again, in much the same way, and with no apparent understanding of the past, is bittersweet at best. It’s not so much that we’re morbidly dwelling on what might have been, but rather, we’re disappointed that so few have learned from our mistakes. After all, you have to be aware of history before you can learn from it.

Finally, there are the publishers, the notable constants in this struggle. Have they learned anything? I sometimes feel like they’re disappointed that e-books didn’t just go away. But times have been tough for publishers, and they’re only getting tougher. There’s an air of desperation about the recent, sweeping deals between big publishers and some relatively obscure electronic publishing companies. These deals could have been market-shattering five years ago, but today they hardly make a ripple because they don’t involve Apple, Amazon, or one of the other established digital media kingpins.

Everything is set for another run at this e-book thing. Will Apple wake from its apparent slumber and pull the sword from the stone—the sword that’s currently taped to its hand and sheathed in a teflon-lined crevice? That’d certainly be the shortest path between the present and the inevitable e-book future.

Failing that, Amazon is a strong contender that’s already using its retail clout to put significant downward price pressure on publishers. Kindle’s “hardcover” (ugh) e-book prices are around $10, versus $15 to $18 elsewhere. But I fear that the dedicated reader strategy will result in a long, shallow ramp before e-books hit that “hockey-stick moment.” That leaves a big opening for another player to cut in.

Meanwhile, on the platform closest to my heart, it seems like e-book confusion reigns. We’ve got a fantastic-looking reader serving up public domain text only, a blight of applications-posing-as-books that seems like it will only get worse, and widespread misunderstanding of how e-books can and should work on a mobile platform. It’s the e-book equivalent of a dog humping a tree. I admire the enthusiasm, but it is perhaps not the most productive course of action.

And hey, even Peanut Press lives on, in a fashion. The eReader (née Palm Reader, née Peanut Reader) software is still available on a wide variety of platforms, and there are still plenty of best-sellers for sale…even if those Harry Potter e-book rights are still only a dream. And yes, the DRM is still there. Publishers have a long way to go to match even the minimal enlightenment of the record labels. (On the other hand, at least publishers didn’t file 35,000 lawsuits against their customers over the past five years.)

Still, if you want to see a good approximation of the e-book market as I envisioned it many years ago, install eReader or Stanza on your iPhone or iPod (both are free), purchase and download a book, and start reading. You can do this all wirelessly (WiFi, EDGE, or 3G) from a small, thin, lightweight device that has a sharp, high-resolution color screen, lots of solid-state storage, and oh, by the way, is also a phone, digital music player, application platform, web browser, and game machine.

There’s still a big piece of the puzzle missing, however: a trusted online store with a loyal, established customer base of millions through which to sell the actual e-books. Not to belittle the e-book stores attached to eReader and Stanza, but let’s be frank: neither of them have 50 million credit-card-bearing customers and several billion digital media sales under their belt. And let me reiterate, the App Store is not the place to sell e-books, nor is it the equivalent, in any measure, of Apple itself selling e-books alongside its existing music and video offerings in the (yes, increasingly inappropriately named) iTunes store.

All of that said, there are plenty of reasons to be optimistic about the business side of the e-book equation. There are now some powerful players making moves, with others that seem poised to do so. And if the publishers have still not come to their senses, then at least they seem desperate enough to entertain offers that they would have snubbed in the past.

A winner is you

That leaves you, dear reader, the consumer—the final unaddressed barrier to the e-book future. This is another area where Apple is uniquely qualified to help. What other company has so successfully convinced consumers, en masse, to purchase devices they never thought they needed and use them to do things they’ve never done before? An Apple product launch and associated marketing campaign could get the world reading e-books faster than anything else I can imagine. Short of that, it looks like it’s going to be up to individuals to make it happen, albeit on a much longer timeline.

I’ll bet you’re expecting me to describe some kind of eureka moment when I saw the light of e-books and was changed forever.

Let me end with my own personal e-book origin story. Before I started at Peanut Press, I’d never even heard the word “e-book.” I remember Jeff, one of the company’s founders, showing me the book he was currently reading on his Palm PDA during my interview. It was clear that he expected me to be impressed, but all I could see was miniscule text on a small, dim, low-resolution screen. But hey, I was going to be developing the web store anyway. What was actually sold and downloaded by customers wasn’t foremost on my mind.

I’ll bet you’re expecting me to describe some kind of eureka moment, maybe after the first month or two working there, when I saw the light of e-books and was changed forever. But it didn’t happen like that. I was pretty much head-down, working on the web store and e-book production back-end, learning the details of the business as needed, but mostly from the vendor’s perspective.

Still, that fact that literally every other developer in the company had a Palm PDA and used it to read e-books did not go unnoticed. Soon, I had one too—the company bought one for all developers since it was necessary to close the loop on the whole production/sale/download process. What was I going to do with the thing besides try reading an e-book on it? (Well, that and play Vexed.)

I honestly can’t remember the first e-book I read on its 160×160-pixel screen. Like I said, there was no blinding flash, no instant conversion. What happened instead is that I just put another e-book on it when I finished with the first. Because, again, what else was I going to do with it? (Yes, I know, it does other things!)

At a certain point, I realized I’d read my last five or six books on this thing. Without noticing, I’d gone off paper books entirely. Only then did I take the time to examine what had happened. Why was reading off of this tiny PDA not just tolerable, but (apparently) satisfying enough to keep me from returning to paper books?

Here’s what I came up with. First, I was more likely to have my Palm with me than a book. When I had an opportunity to read during the day, my Palm was there, and a paper book, had I been in the middle of one, would not have been. (Incidentally, this also lead to a vast expansion of the definition of “an opportunity to read.”) Second, I could read in the dark next to my sleeping wife without disturbing her with bright lights and page-turning noises. (The tan-on-black reader color theme was affectionately known as “wife mode” at Peanut Press.) Third, I was loathe to give up the ability to tap any word I didn’t understand and get its dictionary definition.

That’s pretty much it. Of all the virtues of e-books, these were the ones that sealed the deal for me, personally. Your list may be different. Or maybe you’ll never be satisfied by reading anything other than a paper book. All I ask is that you give it an honest try.

That’s harder to do than you might think. I essentially tricked myself into auditioning e-books without even understanding that was what I was doing. And had I been introduced to e-books through, say, the Kindle, I would very likely have rejected them. The Kindle is too big to carry with me all the time, and the screen is not backlit, eliminating two out of the three things that sold me on e-books.

Does that mean the Kindle is a poor e-book reader and the Palm m505 is a good one? Hardly. It just hammers home, once again, the distinction between the device and the content. If you don’t like a particular reader or business model or purchase experience, don’t write off e-books entirely. Your needs may yet be filled by some other vendor. Remember, the e-book is the text, not the device. But I repeat myself…

Let me leave you with a quote from another Peanut Press founder, one which reflects his not-entirely unfounded optimism about the subtle seduction of e-books: “You know what we call people who finally try e-books after they’ve sworn they could never read on a handheld device? ‘Customers.'”

It happened to me; it could happen to you. I hope it does, because the future of e-books has been a long time coming. I just hope it gets here soon.

by – Feb 1 2009, 11:30pm CST (http://arstechnica.com/business/2009/02/the-once-and-future-e-book/)


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