Business models: a question of honour?

There's a story in Purple Cow that caught my eye about two restaurants. The first, Brock's Restaurant in Stamford, Connecticut, has a sign up above their salad bar: "Sorry - No Sharing". There is an explanation that this rule is necessary so that the restaurant can continue to provide good value. In other words "please help us protect our profit margins".

Compare this to the wine policy at a restaurant called Frontiere. The owner puts an open bottle of wine on every table. At the end of the meal you tell the waiter how many glasses you have drunk. An honour system.

The brilliance of this idea is that two glasses of wine pay for the whole bottle at wholesale price.

Isn't the salad bar just like the media business? In this case the sign might read "Don't share music" or "Don't photocopy books". The underlying message is the same: "please help us protect our profit margins".

What if we were more like Frontiere? What if there was an honour system?

In journal publishing that is exactly what does happen. Journal articles have no DRM. Fair use allows for copying and sharing of articles. Publishers trust librarians to honour fair use. Librarian respect that trust. Articles are shared widely and everyone benefits.

Freeware has a similar business model. Download for free but make a contribution if you use it and like it. You might find it surprising but many people do.

So what might an honour system for books look like?

Suppose we make books available online by chapter. The student pays for one chapter but has access to all. If they download more we ask them to tell us and pay.

Just as in the wine example, pricing will be key. I'm certain that the low price for a single chapter will attract a larger number of customers. I doubt it would be enough to protect the margins. The success of the model will likely depend on how many customers pay for a second or third chapter. The other thing to remember is that the printed book will of course still sell although likely in smaller numbers. And they would be other derivative versions, such as the complete eBook, or the eBook as part of a collection or library, and for a textbook an online course.

I'm sure this sounds like a crazy idea to you. Maybe it wouldn't work. But maybe it just might. In any event, I would love to see someone experiment with new business models like this for books. I think everyone would benefit.

What publishers could learn from Build-a-Bear Workshop

My kids loved the Build-a-Bear Workshops when we lived in the USA. There was a special Workshop at Citizens Bank Park, home of the Philadephia Phillies baseball team. The team mascot is the Phillie Phanatic and you can build a one for yourself. There is always a huge queue outside the shop on game night.

This is how it works. You pick up a half-stuffed Bear (or Phillie Phanatic) and then choose which clothes, shoes, and other accessories you want. You can pick a voicebox to embed in the stuffed toy. You take it all to the assistant who inserts a "heart" and adds more stuffing, sews it up and dresses it. A Bear is born. It is a simple concept but a huge hit with kids. It turns the buying of a teddy bear into an event to remember.

The remarkable part of Build-a-Bear Workshops is not the customization. It is the half-stuffed bear that you start with. These are all exactly the same! And yet every child leaves their store believing that the bear they created is unique to them (it most likely is since the variations are almost endless). What Build-a-Bear Workshops have done is to figure out how to build a customization business that is profitable AND that delights the customers, in this case kids.

Isn't this what publishers have been searching for? A way to build a customizable experience that delights individual customers but doesn't kill any hope of profit. What if publishing could be more like Build-a-Bear?

Take textbooks and teachers. What would be the "half-stuffed" text that teachers could use to add features and content to build their own text? What is it about a great textbook that makes it great? Perhaps the didactic flow, perhaps the content, or the way of engaging the student. Whatever it is, what if we could distill that into the half-stuffed text and let the teacher build the rest?

This model is of course well established in some areas with services such as netvibes using RSS feeds. There are also sites that offer course materials. As far as I know there is no-one that offers an easy-to-use build-a-textbook service for teachers.

What publishers can learn from urban planners

Vikram Savkar, Publishing Director of Nature Education, made a terrific point in a recent meeting organized by Patty Seybold. He said that modern urban planners try to bring different groups of people together when designing a city because it stimulates innovation. His insight was that perhaps information is like people in a city: bringing different types of information together in a single place could stimulate innovation.

Perhaps Publishers could learn something from urban planners in designing information environments that help users to come up with new ideas. Could we design places for information to "meet" other apparently unrelated information? A kind of information singles-bar, with Publishers as the matchmakers.

What I have learned from iPhone applications

My boss gave me an iTouch for Christmas and I absolutely love it. And I am not alone. There have been almost 1 billion downloads of i-applications since the launch of the system in July 2008, and more than 35,000 applications have been created (see here) Aside from the joy of using it, I have learned a great deal from the way the system works.

It is the best example I can think of for what I call the easy principle: the easier you make something the more likely it is that people will do it. The quicker and easier you make it for people to buy, the more they will buy. It is just so easy to buy an i-app, just a couple of clicks and $2 is debited from your credit card. Easy.

The easy principle encourages impulse buying. I was with someone the other day who all of a sudden wanted to record the sound of waves onto her iPhone. She thought it would make a fun alarm to wake up to. There and then she found a recording app, bought it, and made a recording, all in a few minutes. Easy.

There is no try-before-you-buy for i-apps, although some do offer Lite versions, so i find myself relying on the reviews and stars to guide me as to the value of an i-app that I am considering downloading. Interestingly if you delete a Lite version it will often ask you to rate the application just before you remove it. Easy.

So far so cool, but what could it mean for publishers?

Consider this scenario:

Suppose journal articles were available for download to a handheld device with a similar easy payment system. I am in the train on my way to the university, browsing my alerts that I have set up to keep me posted on publications in my field of research. I see something that looks interesting. Before I decide to purchase the article, I read the reviews from other scientists. Is it worth downloading? I decide that it is and go ahead. While reading the article there are links out to other articles. On an impulse I follow a few and download some more articles that look interesting. By the time I reach the university I have a small library in my hand.

The Dark Matter of the Information World

"Books are the dark matter of the information world". For that quote alone it is worth reading this article by Steven Johnson in the Wall Street Journal.

I would recommend though that you take the time to read the entire article. Steven believes that with the coming of the Kindle the rules have changed forever. He says "....the book's migration to the digital realm would not be a simple matter of trading ink for pixels, but would likely change the way we read, write and sell books in profound ways". He then goes on to speculate what these changes might be.

Recommended reading for all, compulsory reading for publishers

and while I am on the subject of DRM....

Stephen Fry made a great point on DRM in his talk at the Apple Store in London last month (download podcast from iTunes here)*

"People who think that if it can be got for free, no-one going to pay for it..... don't understand the fuzziness of the human mind"

Piracy was a grey area. You are not either a pirate or a good citizen. We have all pirated something in our lives whether it was copying a cassette tape for a school friend or photocopying a chapter of a book or some software. And yet along the way we have bought a hell of a lot of stuff. Our houses are full of CD's and DVD's and books that we have bought legally.

"If the creative industry gets too snotty about pirates and criminalizes and tries to create too much of this "you're a thief" business. People will go <expletive deleted>. They are going to say I've seen you in your Rolls Royce and your house in Barbados, don't come to me moaning like this."

"(The creative industry) have to use their human imagination to find a way to sort this out in such a way there will still be an incentive to own copyrights but also there will be a way of disseminating it around that isn't so locked in in zones and codes and things"

Stephen had artists, writers and singers in mind when he said this, but I think this applies to the whole media business including publishing. Some call our sector "creative and media". It is high time for us to be creative!

*The whole podcast is worth listening to, but if you just want to hear the DRM bit then fast forward the podcast to 44.55 minutes

Is the death of DRM the indicator of real change in the publishing business?

I have been thinking about the future of publishing. It seems to me that above all else DRM represents the old, traditional mindset of publishing. In this mindset it is all about the content. And if content is the asset, it makes perfect sense to protect it with DRM. Let's turn this around, if content is not the asset but something else is instead, then it makes no sense to protect the content with DRM right? By DRM here I mean everything from a simple license enforcing copyright to multi-layered encryption. Rights protection in its broadest sense.

The new mindset is that it is all about what the content does or what it allows you to do. It is about delivering the content in multiple ways, at different times to all sorts of people. It is about embedding content in devices that do something. In other words, the asset is in the use of the content. No DRM needed here.

My theory would indicate that as publishers move from the old to the new mindset, DRM should disappear. At the very least we should see a struggle around DRM as the old guard and the new wave fight it out.

There is perhaps some evidence for this theory. Apple will remove DRM on iTunes on April 7th. There was a huge row recently over the Kindle text-to-voice capability .

Does anyone have more evidence? Examples of publishers moving away from DRM, easing the rights protection, choosing creative commons over copyright? Please let me know.

So what is holding back publishers you might ask? Well I suspect most of them have simply been unable to build products that would allow them to release control over their content. Workflow solutions is the buzzword I hear most often and everyone claims to be doing it. I have seen very few examples from any publisher though.

My gut feeling is that Apple are showing us the way. They have shown us how important the device is. As Chris Arkenberg noted today: "Apple has fundamentally rewritten this paradigm by dematerializing the content - music & movies - and connected it directly with the player".

My top tip for today is to watch any publisher that is partnering with device providers or any publisher that is experimenting with i-apps. I think this is the future.

Publishing is Pants

Life has been a trifle hectic recently what with the move back to the Netherlands from Philadelphia and working midweek in the UK. Not only am I behind with my blog posts I have a mountain of Guardian Weekly's to catch up on too. That's why an article from the July 20th edition has only just caught my eye.

The success of the printing press in 1476 was made possibly by the ready supply of cheap paper upon which to print. But where did the cheap paper come from? From underpants according to Dr Marco Mostert of Utrecht University.

Until the 13th century books were produced on expensive parchment. The breakthrough came when a way was found to manufacture cheap paper from the rags of old underwear. Marco's research has shown that the use of underwear increased dramatically in Europe after 1200, as more people moved into towns (rural folk apparently preferred to go without). More underwear in use meant an increased supply of rags, which in turn led to more paper being available to print on.

I find it fascinating that the development of the publishing industry and with it the spread of learning, depended on something so mundane. It is also interesting to note how these two breakthroughs came together. Caxton made it easy to publish, underpants made it cheap.