If only there lived a mighty wizard with literary inclinations, readers today could use existing technology to download and read, either on an electronic screen or in a paperbound volume, any book or other text ever written.* Scholars could instantly find their sources within a vast, multilingual virtual library, while even now some college students are reading textbooks on line, with audio-visual enhancements, interactively with their professors if they choose.
Today it is widely assumed that digitized books and other texts will be read mainly on computer screens or on hand-held reading devices such as Palm Pilots or Gemstar readers. But a significant market for books read on screens has not yet emerged, and in my opinion this may never become the major mode of distribution for books on line. The more likely prospect, I believe, is that most digital files will be printed and bound on demand at point of sale by machines—now in prototype—which within minutes will inexpensively make single copies that are indistinguishable from books made in factories.
These neighborhood machines for making paperbound books can, like ATMs, be placed wherever electricity and supplies of paper exist—whether in Kinko’s, Starbucks, or high school and university libraries and residence halls, to name only a few possible sites. With them readers nearly everywhere with access to a computer screen may eventually search a practically limitless digital catalog linked to innumerable databases where digital files are stored; retrieve and browse the titles that interest them; and transmit the files they select to a nearby printing machine which will notify them when their books are ready to be picked up or delivered. From the time the reader makes a selection, the entire transaction can be completed within minutes. Given the durability and convenience of books printed on paper as well as the sacred status granted them by most cultures, readers may prefer—especially for books of permanent value—a volume printed and bound on these machines to transient images on an electronic screen. The exception will be dictionaries, atlases, encyclopedias, directories, and so on, which must be continuously updated. Their current data will probably be read on screens as needed.
The convergence of the Internet with the instantaneous transmission and retrieval of digital text is an epochal event, comparable to the impact of movable type on European civilization half a millennium ago, but with worldwide implications. In the digital future groups of writers, editors, publicists, and Web site managers anywhere in the world will combine to form their own Web-based publishing companies and sell their books directly to readers. Some may contract with specialist firms to manufacture and distribute physical books to traditional retailers which will coexist with their digital competitors as theaters, cinemas, videotapes, and DVDs all coexist today, and as today’s physical bookstores coexist with on-line competitition. Though factory-made paperbacks sold in bookstores at retail markups will be at a competitive disadvantage compared with paperbacks printed on demand and sold directly to readers, not everyone will prefer to order books on line. The stock in trade of bookstores in the digital future is hard to foresee, but it is likely that shops offering carefully chosen inventories of new and used titles, especially books in hard covers, art books, and many kinds of childrens’ books which cannot economically be printed on demand will become neighborhood meeting places, while outlets that specialize in hardcover commercial best sellers will continue to do so. But many readers who may not have access to a well-stocked bookstore will depend on digital catalogs and neighborhood book machines for books they cannot otherwise find, as such readers now turn to Amazon and other on-line retailers. Point-of-sale book machines will be especially useful in developing countries where bookstores are scarce and shipping costs for single copies are high.
Even in today’s rudimentary digital marketplace some authors have linked their Web sites to sites of related interest, hoping to create their own expanding communities of loyal readers with each new book they write. Minor technological modifications will soon enable writers to sell their books to readers throughout the world directly from these Web networks, bypassing publishers who may have rejected their work, while established writers may choose to forego the security of a publisher’s royalty guarantee in exchange for keeping the entire revenue from the sale of their books. In today’s tightly structured publishing environment manuscript submissions are largely winnowed first by agents and then by publishers and booksellers before readers make the final decision. For readers accustomed to an orderly literary marketplace the much less disciplined digital future may seem as threatening as widespread literacy seemed to the priests of the fifteenth century. But the human capacity to discriminate what is readable from what is not, and over time to discriminate what is truly valuable from what is merely readable, is no more likely to be overwhelmed in a marketplace where anyone can claim to be a writer than the critical faculty was defeated by the torrential energies released when the secularization of literacy swept across Europe five hundred years ago.
Since digitized books occupy no shelf space they can remain in print and in stock as long as digital storage devices survive. And because digital texts can be transmitted directly to consumers, they can be sold for much less than books that are shipped physically from printers in Illinois or China to publishers’ warehouses in Maryland or Ohio and from there to regional chain store depots or wholesalers’ warehouses and finally to thousands of retail bookstores from which, after a few months, unsold copies are returned to their publishers and destroyed. Because books published digitally involve no physical inventory and will cost their publishers virtually nothing per unit to produce and deliver, authors will contribute relatively more value to the final product than publishers and can claim a larger share of proceeds than from books sold in today’s overconcentrated and inefficient literary marketplace dominated by book chains rooted in the five-hundred-year-old Gutenberg system of centralized manufacture and physical distribution.
To the extent that unmediated electronic distribution of books printed on demand at point of sale with its greater efficiency and low costs replaces this archaic system, today’s book publishers will either devolve over time into decentralized teams of writers, editors, publicists, and Web site managers or be replaced by such groups. Thus book publishing may revert to the cottage industry that it had been before today’s homogenized retail marketplace, dependent on a steady supply of promotional titles, imposed a corresponding obligation on the publishing industry.
But there is no wizard to create with a wave of the hand this digital future. There are only mortals finding their way, by the slow, indirect, and uncertain means by which human beings have exploited previous paradigm shifts. To expect a practical business plan for unmediated electronic publishing to arise full blown from the existing industry would be to disregard the waywardness of human endeavor, the complexity of the emerging digital future, and the understandable, if quixotic, wish of today’s publishers to enter the digital future in approximately their present form. But to assume on the other hand that a reasonable business plan may not sooner or later emerge would be to ignore the persistence and ingenuity with which human beings have invented their world so far.
This is not to say that every powerful new technology necessarily becomes a viable business. The SST and high-speed rail travel in the United States may never overcome competition from cheaper or more convenient choices, while genetically altered and irradiated food are shunned by many consumers. No such obstacles confront the unmediated transmission of digital files whose cost per unit is minimal compared with the cost of distributing physical inventory, while the convenience of transmitting words electronically is evident to anyone who downloads e-mail attachments or receives faxes or has already bought a digital book. From the consumer’s point of view the experience of ordering a digital book selected from an on-screen catalog and printed at a nearby site will differ from buying a factory-made copy of the same book from an Internet retailer only in being nearly instantaneous, less likely to result in frustration if the physical book is out of print, and at a price that includes only a fraction of the retailer’s markup.
Because the obstacles to an unmediated digital future are not technological but institutional and emotional, the inevitable transformation will be contentious as new forms of production challenge old assumptions and practices. For example, the relatively greater value contributed by authors to digitized texts has already been noted by literary agents, who will expect authors’ future earnings from digital editions to be adjusted accordingly. But to increase the author’s share of revenues in keeping with the publisher’s minimized cost of digital production and distribution will, as digital publishing supersedes the conventional model, diminish publishers’ revenues, though not necessarily their net profits. To sustain profits, however, publishers must reduce or liquidate redundant facilities related to previous technologies, especially in the areas of marketing, sales, warehousing, and production. Book publishers, especially those dominated by their sales and marketing operations, will react defensively to such challenges to their boundaries. Meanwhile agents are coiled and waiting to strike.
Authors’ royalties traditionally represent between 10 and 15 percent of retail prices, or between 20 and 30 percent of publishers’ net revenues. Another 40 percent or so of revenue is absorbed by executive and other administrative costs and by the costs of printing, selling, and distributing physical books, costs which are irrelevant to digital publication. Therefore agents demanding 70 percent or more of digital revenues for their authors will open the bidding for new titles to upstart firms with no embedded customs or infrastructure to maintain. Under this competitive pressure traditional publishers will reduce their redundant functions in order to accommodate higher royalty payments or they will lose their authors, who, in today’s aggressive literary marketplace, are no more loyal to their publishers than their publishers are to them. Such adjustments are typical of the interregnum between a departing economic model and its successor and may help explain why today’s publishing conglomerates have approached the digital future with caution.
The revolutionary function of the Internet as a commercial medium is the revival by electronic means of face-to-face commerce as it existed before today’s obsolescent middleman’s marketplace evolved from the replacement of primitive trading by centralized manufacture and distribution. Had publishers taken advantage of the Internet a decade ago by forming a consortium, open to all publishers on equal terms, to create a universal catalog and a combined warehouse from which to sell books directly to readers they would have taken a crucial first step toward the future face-to-face digital marketplace. But with imperfect vision, the press of day-to-day business, and deference to the book chains, and perhaps also solicitude for the remaining independent retailers—the last survivors of publishing’s glorious past—publishers missed this opportunity. Similar inertia deters these firms today from exploiting the infant electronic marketplace by creating in digital form the joint catalog which they failed to create in conventional form ten years ago.
Dell, the upstart firm that pioneered the direct selling of personal computers, bypassing traditional retailers, provides the model for the unmediated sale of digital books which, like Dell’s computers, exist only in utero until customers order them. For electronic publishing, however, the obstacles to entry will be harder to overcome than they had been for Dell, whose customers need only an electrical outlet to enjoy their purchases. The marketplace for digital books printed on demand requires that thousands of book machines be maintained at remote locations. This will not happen on the desired scale until a critical mass of salable digital content has been assembled.
Since the mid-1990s nearly all books published in nearly all countries have been typeset from digital files which, with minor technical adjustments, can be transmitted worldwide and downloaded in readable form on screens or as books printed on demand. Moreover, many older titles, some of them long out of print and with expired copyrights, as well as scholarly and scientific journals, conference papers, economic reports, and so on have now been digitized. If publishers of general fiction and nonfiction were now to digitize their proprietary backlists as well and offer them along with their current digital titles directly to consumers on line, a rudimentary but adequate multilingual digital catalog could be assembled today from these components. It would be large enough to justify the external infrastructure without which the digital marketplace cannot function. That infrastructure would include both innumerable databases of individual publishers linked to a comprehensive catalog and many hand-held readers and point-of-sale bookmaking machines. But publishers have been slow to digitize their backlists, and the reasons why are worth examining closely.
With the advent of books in digital form, publishers have demanded, and authors have generally granted them, the right to publish digital editions under contracts signed since the mid-nineties. Thus publishers tacitly admit that the right to publish a digital edition, like the right to publish a paperback, foreign, or audio edition, constitutes a so-called subsidiary right for which appropriate royalty terms must be negotiated separately. But publishers have not yet attempted to acquire digital rights and negotiate separate royalties for backlist titles published before the mid-Nineties. Instead Random House has simply offered a royalty of 50 percent of net proceeds for all digital titles whether new or old, as if its right to impose a nonnegotiated royalty as well as its ownership of digital rights to its backlist are self-evident, unlike the case of titles published since the mid-Nineties. This anomaly might be explained by the daunting cost of acquiring digital rights to tens of thousands of backlist titles, which publishers have always considered their own property, and then digitizing them at further expense, before a market for them exists.
Reasoning from this inertia that digital rights to backlist titles are therefore at the disposal of their authors, an upstart digital distributor calling itself Rosetta Books has recently bought from important authors, including William Styron and Kurt Vonnegut, exclusive digital rights to one hundred titles published before 1995 and plans to buy as many as two thousand more. The standard language included in all publishers’ contracts, from which Rosetta’s strategy derives, is that rights not granted the publisher are retained by the author. Claiming therefore that the publishers’ basic right to print, publish, and sell in book form does not include the right to publish a digital edition to be read on line, Rosetta is now open for business.
Random House, three of whose authors are on Rosetta’s list and which has recently announced its own plans to begin digitizing its backlist, feels that Rosetta has taken its property and the issue is now in federal court. Meanwhile Rosetta dismisses as irrelevant other standard contractual language which prevents authors from publishing or permitting to be published editions of their work that compete with the publishers’ edition, language which on its face seems to prevent authors from selling their digital rights to anyone but their own publishers. To add to the confusion, Rosetta has disabled the printing function on its e-book software, limiting its customers to reading books on screens, an apparent admission that books transmitted digitally but printed on demand are indisputably the property of the publisher. Though the issues in Random v. Rosetta are being litigated, they might, as several observers have suggested, be debated instead by philosophers arguing whether the weightlessness of books read on line makes them contractually different from books printed on demand.
Though there is no telling how the courts will rule, to the extent that books transmitted digitally and printed on demand prove more popular than books read on screens, the issues in Random v. Rosetta may be moot, for even Rosetta agrees that the publisher has the exclusive right to sell printed copies. A more urgent question is the appropriate authors’ share of revenues from digital books no matter in what form they are read or whether they were published before or after 1995, an issue that will be decided over time in the competitive market for literary property. It is on the outcome of these negotiations that the future configuration of the book publishing industry depends.
Whatever the outcome of the Rosetta litigation, the digital marketplace will sooner or later emerge, even without a wizard’s help or the cooperation of publishers. Many scholarly, technical, and scientific books as well as scientific papers, journals, corporate documents, publications of nongovernmental organizations, and government documents can now be delivered electronically and printed on site as needed. The advantage of distributing such texts digitally, to be printed locally on demand rather than printing them centrally and shipping small quantities to distant regions, is obvious and will justify investment in book machines at numerous regional sites. Once these machines are in place and worldwide databases are linked to form a catalog, a rudimentary digital network will exist, awaiting only publishers’ lists of general fiction and nonfiction to complete the transformation. (I am involved in efforts to achieve such a network.)
In the meantime writers and readers might as well be patient as they await the birth struggle of what promises to be a historic paradigm shift, one which will not erase the past but will exploit some of its unrealized possibilities. Nor will this transformation be an unmixed good but only a reflection of what people make of it. Therefore a caveat: Sumerian clay tablets can still be read but the long-term survival of digital texts cannot be taken for granted. Libraries and other depositories must not think of digital storage, as they once thought of microfilm, as an answer to the problem of shelf space but as an adjunct to their traditional activities. The transition to digital books will be unsettling enough. It should not be a pretext for pruning the legacy of the Gutenberg era.
July 5, 2001
Editors’ note: In the 1950s Jason Epstein created Anchor Books, the first American series of so-called quality paperbacks. In the 1960s he helped found The New York Review of Books. In the 1980s he created the Library of America and the Reader’s Catalog, the precursor to on-line retailing. He is the first recipient of the National Book Award for Distinguished Contribution to American Letters and also received the Curtis Benjamin Award of the American Association of Publishers for inventing new kinds of editing and publishing. ↩