WEBVTT - How Electronic Publishing Works 0:00:00.280 --> 0:00:02.840 Brought to you by the reinvented two thousand twelve camera. 0:00:03.160 --> 0:00:06.880 It's ready. Are you hey there, Text Stuff listeners, This 0:00:06.920 --> 0:00:09.200 is Jonathan Strickland and I have got a request for 0:00:09.240 --> 0:00:11.440 all of you. Now, Chris and I have decided that 0:00:11.440 --> 0:00:13.720 we're going to try and experiment. We're doing our first 0:00:13.920 --> 0:00:17.400 crowd sourced episode of tech Stuff and we want to 0:00:17.400 --> 0:00:21.480 know what your pick is for the worst video game 0:00:21.720 --> 0:00:25.600 of all time. Now, nominations you can. You can make 0:00:25.680 --> 0:00:28.479 one nomination. You nominate one game, and you need to 0:00:28.480 --> 0:00:30.639 tell us the name of the game and the platform 0:00:30.760 --> 0:00:32.839 it was on. And it could be any platform. It 0:00:32.840 --> 0:00:37.000 could be an arcade game, it could be a PC, Mac, Xbox, 0:00:37.040 --> 0:00:41.360 PS three, Nintendo handheld console. It can be web based 0:00:41.840 --> 0:00:43.839 if you like. But just you let us know what 0:00:43.840 --> 0:00:45.560 the platform is so we can make sure we count 0:00:45.600 --> 0:00:49.440 that as the votes. So you can nominate your game 0:00:49.600 --> 0:00:53.920 either through email, which is tech Stuff at how stuff 0:00:53.920 --> 0:00:58.320 works dot com, or you can nominate through Twitter or Facebook. 0:00:58.720 --> 0:01:01.600 And we're gonna put a cut off date on this. 0:01:01.680 --> 0:01:03.640 I want to have the episode go up by the 0:01:03.720 --> 0:01:07.720 end of September of eleven. So let's say you need 0:01:07.800 --> 0:01:12.960 to get your nominations in by September eleven, So if 0:01:12.959 --> 0:01:15.880 you get those nominations into us, we will make sure 0:01:15.920 --> 0:01:19.240 we include those in the process, and we will have 0:01:19.280 --> 0:01:22.640 an episode where we give you the worst video games 0:01:22.800 --> 0:01:25.800 of all time based upon the votes of our listeners. 0:01:26.040 --> 0:01:30.840 Thanks a lot. Can't wait to hear from you. Get 0:01:30.840 --> 0:01:34.039 in touch with technology with tech Stuff from how stuff 0:01:34.040 --> 0:01:42.600 works dot com. Hello again, everyone, Welcome to tech stuff. 0:01:42.640 --> 0:01:44.440 My name is Chris Poulette and I'm an editor at 0:01:44.440 --> 0:01:46.800 how stuff works dot com. Sitting across from me, as 0:01:46.880 --> 0:01:49.960 usual is senior writer Jonathan Strickland Butterfly in the Sky 0:01:50.320 --> 0:01:55.440 I can go twice as high. Nice. Thank you. You know, 0:01:55.640 --> 0:01:57.920 originally we were talking about the possibility of doing an 0:01:57.920 --> 0:02:01.600 e books podcast, and then we realized we've done any 0:02:01.760 --> 0:02:04.160 books podcast, but we really haven't talked about a lot 0:02:04.160 --> 0:02:07.760 of the developments in publishing since then. That's right, and uh, 0:02:07.840 --> 0:02:10.720 and we had some listeners on Google Plus. So here's 0:02:10.760 --> 0:02:20.079 a little note from Google Plus. And John and Paul 0:02:20.560 --> 0:02:25.400 very biblical fellows. I suppose us are very beatle fellows. 0:02:25.440 --> 0:02:28.680 Perhaps so, but both John and Paul had asked that 0:02:28.720 --> 0:02:33.160 we talked about the books and e publishing. John was 0:02:33.320 --> 0:02:36.000 very insistent by the way, John, we do have an 0:02:36.000 --> 0:02:39.120 episode on the books, which I had completely forgotten about. Um, 0:02:39.160 --> 0:02:42.440 I believe Christi as well. And just this morning as 0:02:42.480 --> 0:02:44.960 I was as I was looking at my notes, I realized, 0:02:44.960 --> 0:02:47.200 wait a minute, this sounds really familiar, and sure enough 0:02:47.240 --> 0:02:49.320 we have done one. But yeah, we wanted to talk 0:02:49.320 --> 0:02:52.480 about sort of the back end, not from the technological 0:02:52.520 --> 0:02:56.040 perspective so much as from sort of a business perspective 0:02:56.520 --> 0:03:00.760 about publishing, what publishers do, and how all that's starting 0:03:00.800 --> 0:03:05.320 to change in the e book era. Yeah, so I 0:03:05.360 --> 0:03:11.560 guess first we should just start talking about what publishers do. Okay, Yeah, 0:03:11.600 --> 0:03:14.720 that that's actually a good question, especially because a lot 0:03:14.760 --> 0:03:18.880 of the discussions I've read recently. Uh. And when I 0:03:18.919 --> 0:03:22.080 say recently, I would guess probably. I think I'm thinking 0:03:22.080 --> 0:03:25.600 about probably the last year, because the books have become 0:03:25.720 --> 0:03:29.720 a lot more popular. Uh. You see uh news reports 0:03:29.720 --> 0:03:32.400 from Amazon that they are out selling paperbacks. Now, I 0:03:32.480 --> 0:03:35.600 think it was like for every one paperbacks Amazon sold, 0:03:35.640 --> 0:03:38.839 they'd sell a hundred and fifteen e books. So it's 0:03:38.880 --> 0:03:44.400 already matched and outpaced the Dead Tree version of of books. Yep. 0:03:44.480 --> 0:03:46.240 But the thing is a lot of in a lot 0:03:46.240 --> 0:03:50.840 of cases, the electronic version of the book costs close to, 0:03:51.160 --> 0:03:53.560 if not as much as, are in some cases more 0:03:53.600 --> 0:03:58.920 than um the price of a paper book or p 0:03:59.120 --> 0:04:02.760 book as I like to call them. UM, And people go, 0:04:03.120 --> 0:04:05.400 what the heck is going on here? If this is 0:04:05.480 --> 0:04:08.480 just bits and bites, it doesn't take up any floor space, 0:04:08.560 --> 0:04:13.480 you don't have to design a special cover for it. Um. 0:04:13.520 --> 0:04:15.600 You know, what are the publishers doing? What is the 0:04:15.640 --> 0:04:18.760 point of this? And then you you have to realize 0:04:19.320 --> 0:04:22.400 that they actually do quite a bit. So let's let's 0:04:22.400 --> 0:04:25.840 look at it from let's let's take electronic publishing out 0:04:25.839 --> 0:04:28.280 of the picture right now and just talk about publishers 0:04:28.279 --> 0:04:31.920 and what they do from a traditional standpoint. So traditionally, 0:04:31.960 --> 0:04:34.359 what a publisher would do is you have you have 0:04:34.440 --> 0:04:37.440 your authors. These are the people who are creating work 0:04:37.880 --> 0:04:41.120 right there. Then you've got editors who are editing the work, 0:04:41.160 --> 0:04:46.760 making sure it it's uh worthy of publication. Now the 0:04:46.839 --> 0:04:50.680 publishers the the entity that takes that work and produces 0:04:50.720 --> 0:04:54.200 it in a mass production uh kind of way. And 0:04:54.240 --> 0:04:57.440 then so that they're into production, they're into distribution, and 0:04:57.520 --> 0:05:03.520 that they find buyers that buy up uh several units 0:05:03.560 --> 0:05:06.719 of books all at once. So bookstores really is what 0:05:06.760 --> 0:05:10.280 we're talking about here. Publishers look for bookstores outlets to 0:05:10.440 --> 0:05:14.600 sell these So the publishers customers are really bookstores. They're 0:05:14.640 --> 0:05:18.840 not really readers like you and I aren't. Aren't a 0:05:18.839 --> 0:05:23.200 typical customer of a publisher, but rather a Barnes and 0:05:23.240 --> 0:05:26.840 Noble or until recently, a Borders would be a customer 0:05:27.000 --> 0:05:31.279 of a publisher. Right. So, Uh, the publisher's job is 0:05:31.320 --> 0:05:36.000 to create, to to produce the physical copies of this work, 0:05:36.400 --> 0:05:39.520 to send it to the various or actually sell it 0:05:39.640 --> 0:05:44.440 to the various bookstores out there vendors out there, um 0:05:44.560 --> 0:05:47.880 for a price that's usually about half of what the 0:05:47.960 --> 0:05:50.760 list prices for the book. Although your min onle age 0:05:50.800 --> 0:05:53.919 may vary. It's going to depend on a lot of conditions. 0:05:54.520 --> 0:05:58.240 So let's say like the price that's actually on the 0:05:58.279 --> 0:06:02.320 cover of the book. We're oversimplifying here, but in general, 0:06:02.360 --> 0:06:05.279 the wholesale price that the publisher sells to the bookstore 0:06:05.360 --> 0:06:09.840 is about that and then uh, a certain percentage of 0:06:09.880 --> 0:06:13.160 that goes to overhead, some of it goes to uh 0:06:13.279 --> 0:06:16.640 covering the cost of paying the advance to the author. 0:06:17.120 --> 0:06:19.159 And also you have to keep in mind that bookstores 0:06:19.200 --> 0:06:22.719 don't sell every single copy of every book, right, So 0:06:22.880 --> 0:06:26.360 occasionally bookstores have to send back copies of books they 0:06:26.360 --> 0:06:29.760 don't sell to the publisher um, in order to make 0:06:29.839 --> 0:06:34.240 up room for new books. So that means that not 0:06:34.360 --> 0:06:37.280 everything a publisher sends out is actually gonna get sold. 0:06:37.279 --> 0:06:39.200 Some of it's gonna come back. So there are a 0:06:39.240 --> 0:06:42.080 lot of costs here, and also it publishers other job 0:06:42.240 --> 0:06:45.680 is to market the authors, to get the word out 0:06:45.760 --> 0:06:49.800 about authors, and to drive up interest about authors. So 0:06:50.240 --> 0:06:53.240 that's one of the things publishers theoretically will do for 0:06:53.360 --> 0:06:56.400 their for the people who write for them in a way. 0:06:56.400 --> 0:06:59.680 In that way, I would say, um, when you said 0:06:59.680 --> 0:07:03.719 a few minutes ago that that the uh reader is 0:07:03.760 --> 0:07:06.799 not the end customer the publisher, I would say that's 0:07:07.320 --> 0:07:09.560 that's mostly the case, but in in some ways, I mean, 0:07:09.560 --> 0:07:11.320 it is their responsibility to do a lot of the 0:07:11.360 --> 0:07:14.320 marketing work, and so you know that, Yeah, they are 0:07:14.360 --> 0:07:16.840 in touch with the reader and they do that as 0:07:16.840 --> 0:07:19.600 a small portion of that, but they're really trying to 0:07:19.600 --> 0:07:23.040 help the bookstore sell books so that both the bookstore 0:07:23.040 --> 0:07:25.520 and the publisher went out and you can buy the books. 0:07:25.560 --> 0:07:28.320 You can buy books directly from the publisher, but in general, 0:07:28.400 --> 0:07:31.040 that tends to be a very small number of sales 0:07:31.080 --> 0:07:36.880 compared to book sales through stores. And so you also 0:07:36.960 --> 0:07:40.320 have another responsibility of publishers which is kind of interesting, 0:07:40.360 --> 0:07:43.080 and this is an important one that is going to 0:07:43.160 --> 0:07:47.400 be have a pretty big impact with the electronic publishing 0:07:47.520 --> 0:07:53.520 UH era as well, and that is that publishers are 0:07:53.760 --> 0:07:58.360 responsible for finding new talent. Right. That's kind of like 0:07:58.400 --> 0:08:00.480 the music industry when you think of like a music 0:08:00.560 --> 0:08:04.240 label going out and look, going to local venues and 0:08:04.400 --> 0:08:07.120 scouting out bands and saying, you know, this band actually 0:08:07.120 --> 0:08:09.080 has some promise, and they might not make it big 0:08:09.120 --> 0:08:11.640 for an album or two, but I really see something 0:08:11.720 --> 0:08:14.400 in them. Publishers do the same thing with authors. Now, 0:08:15.080 --> 0:08:19.040 when an author writes a book UH the author generally 0:08:19.120 --> 0:08:21.640 gets an advance on that book, and that advance is 0:08:21.800 --> 0:08:25.600 a royalties advance. It's it's actually counted against whatever royalties 0:08:25.640 --> 0:08:28.800 that author would make through book sales. Well, a lot 0:08:28.840 --> 0:08:33.160 of authors, especially first time authors, will not make that 0:08:33.240 --> 0:08:36.840 money back through book sales. They just aren't well known enough, 0:08:36.880 --> 0:08:40.320 so they won't get enough books sold to pay off 0:08:40.360 --> 0:08:43.320 that advance. So a lot of publishers are essentially paying 0:08:43.440 --> 0:08:47.079 authors at a loss um lots of new authors at 0:08:47.080 --> 0:08:50.800 a loss, but they're doing it by their betting. What 0:08:50.800 --> 0:08:52.560 they're betting is that some of those authors are going 0:08:52.600 --> 0:08:55.120 to make it to the big time, and those authors 0:08:55.160 --> 0:08:57.160 are going to sell lots and lots and lots of books, 0:08:57.600 --> 0:09:01.080 and that will help offset the cost of paying all 0:09:01.120 --> 0:09:03.720 these other low level authors who may not go anywhere 0:09:04.120 --> 0:09:08.600 that advance. So in a way, publishers are responsible for 0:09:08.800 --> 0:09:13.480 encouraging and and sustaining authors who are trying to really 0:09:13.520 --> 0:09:16.240 make it in the publishing world and trying to actually 0:09:16.240 --> 0:09:21.440 become published authors. UH. Without them, then you would have 0:09:22.040 --> 0:09:25.080 you know, you wouldn't have that that incentive really for 0:09:25.160 --> 0:09:27.800 authors to try and create. So when you think about 0:09:27.920 --> 0:09:30.160 things like, oh, well, Stephen king Man, he gets so 0:09:30.240 --> 0:09:33.360 much money for a book, you know, you could have 0:09:33.520 --> 0:09:37.120 some envy there. Perhaps you might question whether or not 0:09:37.240 --> 0:09:41.000 it's the work he does is worth the amount of 0:09:41.000 --> 0:09:44.120 money he makes. But at the same time, because Stephen 0:09:44.200 --> 0:09:48.280 king novels sell so well, that's part of what funds 0:09:48.840 --> 0:09:52.680 the publisher to uh, to encourage other authors to write. 0:09:53.400 --> 0:09:55.960 So it's it's kind of it's a really big ecosystem 0:09:56.000 --> 0:09:59.560 and it's actually pretty complex. I mean, The actual complexity 0:09:59.600 --> 0:10:01.960 of how much money comes back to the publisher and 0:10:02.000 --> 0:10:05.240 where that money goes is probably too complex for the 0:10:05.280 --> 0:10:07.679 purposes of this podcast, but I thought that it was 0:10:07.720 --> 0:10:09.800 important that we talked about that, and then we talked 0:10:09.800 --> 0:10:12.200 about how E publishing is kind of shaking things up 0:10:12.200 --> 0:10:15.880 a bit more than a bit in some cases. Well, 0:10:15.920 --> 0:10:19.440 you talked about the music industry and how how things 0:10:19.440 --> 0:10:23.920 have changed significantly, how the the music industry has been 0:10:24.120 --> 0:10:27.520 nervous because, uh, you know, for one, on on the 0:10:27.520 --> 0:10:31.160 one hand, they're concerned about things like piracy, but they're 0:10:31.160 --> 0:10:36.040 also concerned because um, people are able to create their 0:10:36.040 --> 0:10:39.079 own home studios and record their own music and post 0:10:39.120 --> 0:10:40.920 it for sale on their own website because they don't 0:10:40.920 --> 0:10:45.160 have to worry about, um, the costs of pressing c 0:10:45.360 --> 0:10:49.200 d s or vinyl anymore, although a lot of them do. UM. 0:10:50.040 --> 0:10:54.040 And uh, you know, the distribution is less of an 0:10:54.040 --> 0:10:57.520 issue now because you know, once the marketing has gone 0:10:57.520 --> 0:11:02.000 out online, Uh, rather than having to put up posters 0:11:02.000 --> 0:11:06.120 and stores and do you know, uh different events and 0:11:06.160 --> 0:11:09.880 things like that. You know, those are important, but uh, 0:11:09.960 --> 0:11:11.400 a lot of bands can do a lot of that 0:11:11.480 --> 0:11:14.559 work themselves, and so you know, this has already been 0:11:14.559 --> 0:11:17.840 going on in the music industry. But um, you know, 0:11:17.920 --> 0:11:20.599 this hasn't been so much of an issue for publishers 0:11:20.720 --> 0:11:24.360 until just recently. Um, you know, and I didn't I 0:11:24.360 --> 0:11:26.080 don't think we even touched on this when we talked 0:11:26.120 --> 0:11:28.440 about e readers before. I don't even think about the 0:11:28.440 --> 0:11:30.839 e books world going back that far. But it does 0:11:30.880 --> 0:11:35.160 go back to around one UM when Michael Hart started 0:11:35.160 --> 0:11:39.439 Project Guttenberg. And uh, you know, they the first person 0:11:39.480 --> 0:11:41.960 who got an I S b N. That's an international 0:11:42.000 --> 0:11:45.400 standard book number. It's a unique number assigned to every book. 0:11:46.040 --> 0:11:51.960 Um was Kim blagg um around So these some people 0:11:52.040 --> 0:11:55.960 have been publishing electronically for a while. I mean Random 0:11:55.960 --> 0:11:59.800 House and HarperCollins, who are too big, Uh, regular publishers, 0:11:59.800 --> 0:12:03.040 P E and E. Um. You know, they were starting 0:12:03.080 --> 0:12:05.960 to sell digital in two thousand two. Um, and that 0:12:06.040 --> 0:12:08.480 was all before the Kindle hit in two thousand seven. 0:12:08.600 --> 0:12:10.440 Well yeah, and if you think about it, you know, 0:12:10.800 --> 0:12:12.360 there are a lot of computers you would buy that 0:12:12.400 --> 0:12:15.040 would come with a n Incard c D. Yeah. Well 0:12:15.040 --> 0:12:18.560 that's that's a digital encyclopedia. Yes, you know, that's you know, 0:12:18.760 --> 0:12:21.400 just because it comes on a solid form of medium 0:12:21.400 --> 0:12:25.120 media rather that that that doesn't mean that it's not digital. 0:12:25.120 --> 0:12:27.079 It is digital. It's just that it's digital store and 0:12:27.160 --> 0:12:32.480 on a disk. Well, the the e publishing world is 0:12:32.480 --> 0:12:34.680 is starting to shake up now. I mean it's no 0:12:34.800 --> 0:12:38.520 secret that publishing has been having problems in the last 0:12:38.559 --> 0:12:42.200 few years anyway, especially with the economic downturn. UM. I've 0:12:42.200 --> 0:12:44.640 read that the closing of Borders stores here in the 0:12:44.679 --> 0:12:47.920 United States. UM, that's going to create problems for traditional 0:12:48.000 --> 0:12:51.880 publishing too, because they can no longer count on the 0:12:51.920 --> 0:12:55.520 sales to come from the store. It's UM, if you're 0:12:55.600 --> 0:12:59.600 unfamiliar with this, the situation here, UM Barnes and Noble 0:12:59.720 --> 0:13:03.040 and Borders, and you know some of the other major 0:13:03.120 --> 0:13:08.199 public UM sorry booksellers like Books a Million, UM basically 0:13:08.480 --> 0:13:13.640 were UM credited with, I hate to say credited with 0:13:14.120 --> 0:13:18.480 them the closing of a lot of local bookshops across 0:13:18.480 --> 0:13:20.280 the United States over the past what would you say, 0:13:20.280 --> 0:13:23.520 probably twenty years or so. I think something like like 0:13:23.559 --> 0:13:25.840 the I had the number in front of me at 0:13:25.880 --> 0:13:28.720 one point, but it was, you know, the the number 0:13:28.760 --> 0:13:33.439 of of independent little bookstores had decreased dramatically, like by 0:13:33.440 --> 0:13:38.440 more than fifty percent, because partially at least due to 0:13:38.640 --> 0:13:44.800 these these big, big bookstores that could just take away 0:13:44.840 --> 0:13:47.160 their business. Yeah. I mean there's some that are big enough, 0:13:47.160 --> 0:13:50.600 people like Powells in Portland, Oregon, and the Strand up 0:13:50.600 --> 0:13:54.360 in the New York City area, UM that are that 0:13:54.440 --> 0:13:57.040 are big enough to hold their own. But a lot 0:13:57.120 --> 0:13:59.600 of the smaller stores had had dropped out of the 0:13:59.600 --> 0:14:02.920 the uh picture there for a while. Yeah, I've got 0:14:02.920 --> 0:14:06.839 the number now. So according to a an article in 0:14:06.880 --> 0:14:10.760 the New Yorker, UM, actually, the American Booksellers Association said 0:14:10.760 --> 0:14:14.080 the number of independent booksellers declined from three thousand, two 0:14:14.160 --> 0:14:20.120 hundred fifty to fourteen hundred since n Okay. Then, so 0:14:20.200 --> 0:14:23.320 that's more than And I read an article about the 0:14:23.360 --> 0:14:25.800 closing of borders that said that publishers are going to 0:14:25.840 --> 0:14:28.520 have to cut their print runs because they no longer 0:14:28.600 --> 0:14:34.920 have border stores to help them distribute their books to readers. Um. 0:14:35.040 --> 0:14:40.640 And that's causing more turmoil. And now with the popularity 0:14:40.720 --> 0:14:44.040 of e readers surging and the ability of people to 0:14:44.120 --> 0:14:47.800 do things to publish on their own, this is going 0:14:47.920 --> 0:14:51.520 to to cause things to shake up even further. And 0:14:52.440 --> 0:14:56.240 um lion the new version of the Apple operating system, 0:14:56.280 --> 0:14:57.880 some of you've written in that you want to a 0:14:57.960 --> 0:15:00.560 podcast on it. We need to talk about the possibility 0:15:00.600 --> 0:15:03.640 of doing that and possibly Windows eight. The Lion offers 0:15:03.680 --> 0:15:09.040 people the ability to publish the pub documents um you know, 0:15:09.240 --> 0:15:13.680 from different Lion documents, so you know it's not it's 0:15:13.720 --> 0:15:16.120 built into the operating system. I wouldn't be surprised to 0:15:16.120 --> 0:15:19.560 see that coming to other operating systems to in the future, 0:15:19.560 --> 0:15:22.080 which just makes it that much easier to publish your 0:15:22.120 --> 0:15:25.440 own e books, which can create another problem that we'll 0:15:25.440 --> 0:15:27.560 get into in a little bit. But before we do that, 0:15:27.600 --> 0:15:29.400 I wanted to talk a little more about some of 0:15:29.440 --> 0:15:32.200 the other problems that the publishing industry faces, which is 0:15:32.240 --> 0:15:35.520 that you've got some major, major companies that have not 0:15:35.680 --> 0:15:39.720 traditionally been publishers getting into the publishing game. And one 0:15:39.760 --> 0:15:43.760 of the biggest is Amazon. So you know Amazon and 0:15:43.840 --> 0:15:47.760 e readers that those two terms go very well together 0:15:47.800 --> 0:15:50.080 because we are all familiar with the Amazon Kindle, which 0:15:50.200 --> 0:15:54.360 revolutionized the electronic publishing industry. Yeah, there were a couple 0:15:54.400 --> 0:15:58.360 of e book readers before UM. I first became acquainted 0:15:58.400 --> 0:16:02.840 with the Rocket e book and saw book back around UM, 0:16:02.880 --> 0:16:05.000 but they were really expensive and there just weren't a 0:16:05.040 --> 0:16:09.040 lot of books at the time, right, Amazon's plan was 0:16:09.120 --> 0:16:13.280 to create this electronic book reader, and also the company 0:16:13.360 --> 0:16:18.640 was incredibly intelligent in that they created apps for various 0:16:18.720 --> 0:16:23.400 other platforms that could also read the electronic book format 0:16:23.440 --> 0:16:27.600 that the Kindle uses. Um That's another thing to point 0:16:27.600 --> 0:16:31.680 out is that we don't have a single standard for 0:16:31.760 --> 0:16:36.160 electronic books. There are several different electronic book formats out 0:16:36.200 --> 0:16:38.800 in the wild, and one of the really popular ones 0:16:38.880 --> 0:16:42.360 is the Kindle format. Yes, um at, and I think 0:16:42.400 --> 0:16:45.640 a lot of people like that format simply because since 0:16:45.840 --> 0:16:49.040 they have apps on various other platforms and they can 0:16:49.080 --> 0:16:50.520 read it on a computer, they can read it on 0:16:50.520 --> 0:16:54.280 the smartphone, they can read it on their Kindle. Um 0:16:54.320 --> 0:16:58.640 that sort of of utility is a very high selling point, 0:16:58.680 --> 0:17:01.880 although some other companies like Apple have done a lot 0:17:01.920 --> 0:17:04.880 to try and undermine that in some ways with their 0:17:04.880 --> 0:17:07.399 own policies. We'll get into that as well, because that 0:17:07.520 --> 0:17:10.480 also plays a role in publishing. So what makes publishers 0:17:10.720 --> 0:17:13.720 a little nervous or really a little nervous is being 0:17:14.000 --> 0:17:17.960 kind really scared of Amazon. One of the things was 0:17:18.000 --> 0:17:21.600 that Amazon, for a while was really adamant about dictating 0:17:21.640 --> 0:17:24.680 what the price was going to be for an electronic book, 0:17:25.400 --> 0:17:28.000 and Amazon's decision was that it was going to be 0:17:29.280 --> 0:17:34.280 for a new release, which publishers were not thrilled about. 0:17:34.359 --> 0:17:37.359 They did not like the idea of and a vendor 0:17:37.440 --> 0:17:40.399 being able to say that this is what the price 0:17:40.440 --> 0:17:42.879 of e books needs to be, because it meant that 0:17:42.960 --> 0:17:46.240 if that got into the minds of the consumers, that 0:17:46.400 --> 0:17:49.800 people would expect all electronic books from that point forward 0:17:50.400 --> 0:17:54.040 to cost that much. You know, so it's reasonable, right right. 0:17:54.080 --> 0:17:56.040 It's like just like if you were to get something 0:17:56.080 --> 0:17:59.040 for free for several years and then find out that 0:17:59.080 --> 0:18:01.080 you have to pay for it, there's gonna be that 0:18:01.119 --> 0:18:04.639 reaction of wait, what just last week I got this 0:18:04.680 --> 0:18:06.440 for free? Why are you making me pay for it now? 0:18:07.160 --> 0:18:09.600 Same sort of things like, wait what, I just bought 0:18:09.640 --> 0:18:11.560 that book for ten bucks last week? Why are you 0:18:11.600 --> 0:18:14.720 asking for sixteen bucks now? I'm sorry? I was seeing 0:18:14.720 --> 0:18:18.240 pictures at the New York Times in my head. Yeah, So, 0:18:18.240 --> 0:18:21.439 so what Amazon was doing was actually pretty interesting. It 0:18:21.480 --> 0:18:26.680 was it was kind of Amazon does some pretty risky moves, 0:18:26.920 --> 0:18:28.879 and what this move. What Amazon was doing was they 0:18:28.880 --> 0:18:32.800 were the company was buying books just like any other bookstore, 0:18:33.119 --> 0:18:35.760 like even digital copies. That was buying digital copies of 0:18:35.800 --> 0:18:39.160 books just like in the other bookstore, paying the the 0:18:39.160 --> 0:18:42.320 the wholesale amount to the publisher, and then that wholesale 0:18:42.320 --> 0:18:45.160 amount might actually be more than nine dollars nine cents, 0:18:45.200 --> 0:18:47.280 but Amazon would just turn around and sell it for 0:18:47.359 --> 0:18:49.680 nine dollars nine nine cents, meaning that they're taking a 0:18:49.720 --> 0:18:52.640 loss on the sale, but they're doing it in order 0:18:52.680 --> 0:18:57.160 to build up that market share, to to attract consumers 0:18:57.240 --> 0:19:00.720 to using the Kindle platform and purchasing books through the 0:19:00.760 --> 0:19:04.639 Amazon Electronic Bookstore. And if they could hook enough people 0:19:04.680 --> 0:19:07.720 doing that, and they do it by selling books cheaper 0:19:07.760 --> 0:19:09.880 than any other vendor is going to sell it, because 0:19:10.240 --> 0:19:14.280 most other vendors can't afford to cut the the price 0:19:14.320 --> 0:19:16.639 that much and take a loss in every single unit sold. 0:19:17.119 --> 0:19:21.120 Amazon can. But the idea was that maybe Amazon could 0:19:21.119 --> 0:19:24.760 eventually get what effectively would amount to a monopoly on 0:19:24.840 --> 0:19:30.600 the electronic books market. And uh, you know, the publishers 0:19:31.320 --> 0:19:33.640 did not like this at all, And in fact, we 0:19:33.680 --> 0:19:36.760 really saw this come to a head when Steve Jobs 0:19:36.800 --> 0:19:40.359 announced the iPad and eyebooks, because then you saw five 0:19:40.400 --> 0:19:44.000 out of the six major publishers sign on immediately with 0:19:44.040 --> 0:19:48.360 Apple to provide books to the Eye Books Library, and 0:19:48.800 --> 0:19:52.320 the price was no longer limited to nine dollars nine cents. However, 0:19:52.359 --> 0:19:55.080 Steve Jobs was very firm and that it would not 0:19:55.200 --> 0:20:00.640 go over I think it was. Yeah. They they it's 0:20:00.640 --> 0:20:04.119 a different pricing model and the publishers are getting a 0:20:04.119 --> 0:20:08.119 bigger cut. Um. And there's an agency fee that that 0:20:08.240 --> 0:20:13.960 Apple gets out of it. Yes, um yeah about actually 0:20:14.400 --> 0:20:18.760 um so uh the thing is with all of this 0:20:19.000 --> 0:20:22.360 that uh you may be saying, well, you know, so 0:20:22.400 --> 0:20:24.560 what is all this this price? It goes to all 0:20:24.600 --> 0:20:29.199 those people we were talking about before, the editors, the publicists. Um, 0:20:29.240 --> 0:20:33.000 there's not the cost of printing or distribution. Um. I 0:20:33.000 --> 0:20:36.479 mean yeah, this completely falls under and it's you know, 0:20:36.640 --> 0:20:38.680 we use this a lot, the long tail that Chris 0:20:38.720 --> 0:20:41.720 Anderson talked about, because um books never have e books 0:20:41.720 --> 0:20:44.080 never have to go out of print, but they can 0:20:44.119 --> 0:20:46.880 be there, you know, taking up whatever space they're taking 0:20:46.920 --> 0:20:49.479 up a hard brilliant Yeah, as long as you have 0:20:49.640 --> 0:20:53.960 a a a good program that can take a master 0:20:54.119 --> 0:20:57.359 copy and create a user copy from that master copy, 0:20:57.440 --> 0:20:59.760 that makes that user copy unique in some way. Because 0:21:00.200 --> 0:21:06.080 almost every single form of of of e book file 0:21:06.160 --> 0:21:08.560 format that the major publishers want to use will have 0:21:08.600 --> 0:21:11.720 some form of DRM on it. Yeah, to try and 0:21:11.760 --> 0:21:15.600 prevent piracy. Yes, As a matter of fact, when the 0:21:15.600 --> 0:21:19.000 the books sale goes through, UM, there's a little bit 0:21:19.000 --> 0:21:21.639 of metadata that's encoded in that file that keys it 0:21:21.720 --> 0:21:25.879 to you. So you know it's That's how people know 0:21:26.359 --> 0:21:29.159 on some digital files that they have been corrupted, is 0:21:29.200 --> 0:21:31.840 because that information is still embedded in there some way, 0:21:32.000 --> 0:21:34.760 and that you know they've been cracked, and uh, it 0:21:34.840 --> 0:21:37.520 is possible, but you know they they That's how if 0:21:37.560 --> 0:21:39.920 you opened a book on your e reader. Um. Yeah, 0:21:39.920 --> 0:21:42.159 we were talking about the different readers. We didn't talk 0:21:42.160 --> 0:21:44.080 about the Nook. That was one of the features of 0:21:44.080 --> 0:21:46.480 the Nook was you were able to lend a book 0:21:46.520 --> 0:21:52.000 to a friend with another Nook. So, um, the DRM says, well, hey, 0:21:52.040 --> 0:21:55.960 this is uh, this is Jonathan's file. Um, and Jonathan, 0:21:56.040 --> 0:21:58.360 you know, allows me to read it and I get 0:21:58.400 --> 0:22:00.600 the three weeks I believe it is on the Nook. 0:22:00.840 --> 0:22:04.200 Was it? I thought was too? Well, however long it is. Yeah, 0:22:04.240 --> 0:22:09.239 it's authorized for a specific set period and after that period, uh, 0:22:09.480 --> 0:22:13.040 the book is no longer available on the other device. 0:22:13.400 --> 0:22:16.520 And also I think during that time the owner of 0:22:16.520 --> 0:22:20.040 the book cannot read the book right right, So it's 0:22:20.080 --> 0:22:21.879 almost like it's a physical book in the sense that 0:22:21.920 --> 0:22:24.240 if I lent Chris a physical copy of a book 0:22:24.240 --> 0:22:26.560 I have, I could not read that physical copy unless 0:22:26.560 --> 0:22:28.199 I came over to Chris's house and stood behind him 0:22:28.200 --> 0:22:30.880 and looked over his shoulder. And trust me, he hates that. 0:22:31.560 --> 0:22:35.800 So and ever again, knock all. I'm saying, you get 0:22:35.800 --> 0:22:37.760 stabbed in the thigh once with a fork, and you 0:22:37.840 --> 0:22:41.080 do not need to tell me twice. Mr. So, yeah, 0:22:41.080 --> 0:22:43.359 that's all done through d r M. And and so 0:22:43.800 --> 0:22:46.320 you know they're their costs associated with doing this, and 0:22:47.080 --> 0:22:49.680 you know that's why they're they're trying to recoup those costs, 0:22:49.680 --> 0:22:51.159 are trying to make a profit because a lot of 0:22:51.200 --> 0:22:54.240 these are public companies, and also their business was built 0:22:54.280 --> 0:22:57.600 around a different model, and to completely shift everything over, 0:22:57.800 --> 0:23:00.520 you could argue that the electronic model is much more efficient, 0:23:00.560 --> 0:23:04.960 and therefore your costs would decrease dramatically, and therefore you 0:23:05.000 --> 0:23:08.160 would be able to make UH as good or better 0:23:08.280 --> 0:23:10.600