The Failure of Print and E-Book Bundling

How many times has this happened to you: you buy a print book, you start to read it, you go on a trip, you forget to take the book, you find the e-book version online, and you chafe at having to pay full price for another version of something you already have?

The music industry has largely solved this problem; the question is why the book publishing industry hasn’t.  Many CD and vinyl albums available on Amazon come with free MP3 versions of the music that you can play on Amazon’s Cloud Player or download to your own device. Indie retailer Bandcamp gives you access to downloads in multiple formats as well as on-demand streaming when you buy a CD or vinyl album.

The news last week that the Vancouver-based startup Shelfie (formerly BitLit) ceased operations has brought the so-called P+E (print plus e-book) bundling problem into focus.  Shelfie was an independent service that enabled users to get e-book versions of their print books at a discount, or in some cases, for free.

Shelfie’s technology was clever and slick.  You took a picture of the books on your shelves with the Shelfie app on your phone or tablet (a “shelfie,” get it?).  Shelfie identified at least some of the books, just as wine apps like Vivino and Delectable identify wines when you take pictures of the labels.  For each title in Shelfie’s catalog, it offered you a deal on the e-book (and/or the audiobook).  You could obtain the e-book through Shelfie’s own store.  About 30% of e-books were free.  Some e-books were DRM-free; some used the Adobe DRM, which is compatible with various reading apps (including Adobe Digital Editions, BlueFire Reader, Kobo, and Nook) that run on a wide variety of devices.

There were four flaws in Shelfie’s scheme that, taken together, turned out to be fatal.  First, in order to claim your discounted or free e-book, you had to sign your name on the copyright page of the print book, then use the app to take a picture of that and send it in.  This, of course, helped ensure that multiple people couldn’t use the same print book to get a cheap/free e-book.  But it also was a hassle and lowered the value of your print book if you were to resell it or donate it to a library.

The second flaw was that Shelfie’s catalog lacked titles from major publishers.  Shelfie had built a fairly large catalog but only got selected e-book titles from two of the “big five”: HarperCollins (typically the most adventurous of the majors in trying new digital business models) and Macmillan.  A Shelfie chart from December 2015 shows that about 16% of “books on an ‘average’ shelf [] are from publishers that [Shelfie] signed a deal with” for e-books.  Note that this is “from publishers that [Shelfie] made a deal with,” not “titles actually available as e-books in Shelfie’s catalog.” Some publishers (like those majors) only licensed limited titles to Shelfie.  (When I tried Shelfie in that same timeframe, it recognized most of my books correctly, but the percentage of my titles available as e-books was more like 10-12%.)

Third, Shelfie’s model did not exactly encourage repeat traffic.  You’d take a shelfie, find that it only had deals available on a small percentage of your books, maybe take advantage of a couple, and move on.  You’d get occasional emails from the company saying that they’ve added more publishers; maybe you’d try again sometime.  You certainly wouldn’t make Shelfie a regular destination for your e-book buying or catalog management, despite the social features built into the app.

Finally, the DRM-protected e-books couldn’t be read on Kindle devices.  (OK, they could be read on Kindle Fires if you knew how to bypass the Amazon app store and install an Adobe-compatible reader.)

But that’s not really the company’s fault.  Shelfie worked tirelessly to sign publisher and distributor deals, and to make the app as user-friendly as possible.  It took the P+E experience as far as it could go on its own.  Just as various independent “cloud music sync” startups (such as Audiogalaxy, DoubleTwist, and Catch Media) suffered when major music retailers started offering the feature, Shelfie’s real problem was that it wasn’t — or wasn’t part of — a major e-book retailer.

Compare the Shelfie experience with that of Amazon’s Kindle MatchBook program, which it started in September 2013… just a few months after Shelfie’s original launch as BitLit.  With Kindle MatchBook, you can buy e-book versions of print books you bought on Amazon.com for $2.99 or less, including eligible titles bought before the program started (going back to Amazon.com’s original launch in 1995). Amazon has a record of each purchase, so there’s no need to take pictures of your print books, sign and photograph the copyright page, or even go to a separate app.  You just click to purchase the e-book, and it appears in your Kindle library.

Putting aside the fact that Kindle MatchBook e-books can only be read on Kindle devices or apps, the problem with Kindle MatchBook, once again, is the catalog.  Amazon built the catalog up to about 74,000 titles as it launched the program (compared to Shelfie’s 400,000), and it hasn’t grown since then.  That’s less than 2% of the number of print book titles Amazon sells that are also available as e-books (by my estimate).  Kindle MatchBook also includes limited titles from HarperCollins and Macmillan; the vast majority of titles are from indie publishers, from Amazon’s own imprints such as Montlake Romance, or out of copyright.

Nowadays, Amazon says nothing about the size of the catalog and doesn’t promote MatchBook anymore: there’s no “Kindle MatchBook Eligible” checkbox in Amazon’s book search, and the only way to find out if a book is MatchBook-eligible is to find the far-from-obvious Kindle MatchBook landing page and click the button to get a list of the print books that you already bought which are eligible.

Now compare that with Amazon’s AutoRip program for free MP3s with CD or LP purchases.  Amazon promotes AutoRip actively.  Like MatchBook, it’s retroactive for eligible CDs and LPs purchased back to 1998.  It covers about 240,000 CD and LP titles, which is 7% of the total number of CD and LP titles available on Amazon (again, my estimate) and probably a much higher percentage of CD and LP titles that are also available separately as MP3s.  All of the major labels participate in AutoRip.  Of Amazon’s current top 20 best-selling CDs, all but one are AutoRip-eligible.

Apart from Amazon, P+E bundling deals are few and far between.  The most common source is tech publishers like O’Reilly, which offers bundles for just a few dollars more than the print or e-book prices on selected titles (such as, umm, this one).  To underscore publishers’ lack of enthusiasm for P+E, even former O’Reilly executive Joe Wikert — known as a book publishing innovator — dismissed the idea as something that “will only help erode the perceived value of ebooks.”

Why is this the case?  Certainly part of it is consumers’ preferences for physical vs. digital products, which is currently 78% to 22% in books and almost exactly the opposite in music.  But the root cause is simply that it’s hard for consumers to digitize print books themselves.

Music, even vinyl LPs, is much easier for users to digitize than print books.  Apple brought this issue to the fore (for CDs) with its “Rip, Mix, Burn” ad campaign back in 2001, which sent the music industry into apoplexy and raised the question of whether creating MP3s of your CDs (or vinyl) for personal use was legal.  The answer in Canada and the EU is yes.  In the United States, the RIAA allows that ripping CDs for your own personal use “won’t usually raise concerns“, and lawsuits such as EMI v. MP3Tunes established the legality of storing those MP3s on your personal cloud storage, while in parallel, the major music retailers started offering cloud sync services (with or without licenses from record companies).  Cloud sync for music became a standard feature for major digital music retailers around 2011.

Meanwhile, although there are services that will digitize your books for you, they require you to ship the book to them, then they cut the spine off and throw the paper copy away. There’s no technology equivalent to PC CD drives, USB turntables, iTunes, or Audacity for books.  Accordingly, the publishing industry has only objected legally to book digitization on a large scale, such as in the cases against Google and HathiTrust, and in a previous generation, against Kinko’s copy shops (now Fedex Office) over textbook materials.

Another factor that holds back P+E bundling is the walled gardens that retailers have built using DRM and other mechanisms.  The kind of user-friendly P+E that Amazon offers for books is only possible because Amazon can use records of purchases to establish book ownership — and it’s only worth offering because Amazon is such a large book retailer.  Kindle MatchBook doesn’t apply to books you didn’t buy on Amazon, and the e-books that you get through the program aren’t readable outside of the Kindle ecosystem. P+E bundling is thus yet another way for a retailer to achieve consumer lock-in.

The movie industry already thought about this issue and came up with UltraViolet as a solution.  Hollywood studios wanted to promote competition among video services by diminishing their ability to lock consumers into their platforms.  UltraViolet achieved this not by eliminating DRM (which all Hollywood consumer digital video products use in some form) but through a DRM interoperability scheme.  For example, if you bought an UltraViolet-approved movie from one retailer (say, on DVD or Blu-ray), then you can get it as a digital download or stream from the same or another UltraViolet-participating retailer.  The system requires that all products use one of several approved DRMs, and the rights locker stores a decryption key that any UltraViolet-approved DRM can use.

Yet UltraViolet hasn’t been a great success, in part because the diminished lock-in opportunities don’t make it attractive to retailers.  Not all of the major Hollywood studios support it (Disney has a competing system called Disney Movies Anywhere).  The only big-name service that supports it is Walmart’s VUDU, although some physical video products that are available at any retailer, such as this Blu-ray set, come with UltraViolet digital redemption coupons in the package.

The obvious alternative to a complex scheme like UltraViolet in promoting cross-retailer interoperability is to eliminate DRM altogether.  This might make it logistically easier and cheaper for retailers to offer P+E bundling (and would be good for users, of course) but it would also reduce retailer incentives.

As for Shelfie, the obvious exit path for the company was to be acquired by a major book retailer.  Why this didn’t happen is a mystery.  Barnes & Noble leaps to mind: it could have offered an equivalent to Kindle MatchBook for books purchased at its many bookstores over a long period of time, and extended it via the Shelfie technology to books that users didn’t buy there.  This would have been a real competitive advantage over Amazon.

It’s possible that Shelfie approached B&N and couldn’t reach agreement on terms, but it’s just as possible that B&N didn’t see enough opportunity in offering a feature that publishers wouldn’t support.  The cost and effort for consumers to digitize their own books is a barrier that seems insurmountable.  As long as there’s no “Rip, Mix, Burn” for books, P+E has a limited future.

16 comments

  1. On the one hand this type of bundling has been shown to almost double sales in participating bookstores, an outcome which trad pubs want. On the other hand, widespread adoption of bundling would boost Amazon’s sales, and used book sales,

    I would have found that appealing.

  2. Where was it shown to almost double sales, and how many years ago? I might believe this for a tech published like O’Reilly, otherwise color me skeptical.

  3. I blogged about it last year when Shelfie announced a trial with Harvard Book Store.
    http://the-digital-reader.com/2016/05/03/bookstores-can-double-their-sales-by-offering-printebook-bundles/

    I also mentioned it when I reported on the Shelfie closure last week. Admittedly, it is only a single anecdotal example.

    P.S. And drat, I left out part of my first comment. I meant to qualify the approval better.

  4. What a comprehensive description of the P+E situation!

    I see this the continuing disdain that big 5 publishers have for ebooks. Why make them more usable, more valuable, when you wish they’d just go away? But, at a time where print sales have essentially leveled off (or are in a modest decline), how foolish not to make books, generally, more valuable via a (relatively) straightforward change in business practices.

    If you believe Kevin Kelly there’s an inevitability to a future with P+E. In his latest book, “The Inevitable” (www.kk.org/books/the-inevitable/), in a chapter called Flowing, he talks about the forces propelling the digitization and cloud distribution of formerly analog content. These include Immediacy, Personalization, Interpretation, Authenticity and Discoverability. At the same time, describing Embodiment, he recognizes the value of also having access to finely-produced analog copies of digital content.

    I can’t imagine we’ll settle on P+E as a standard any time soon. Publishing is far too conservative an industry for that. But, over time… ?

  5. Nice analysis of another example of consumer-hostile practices. More fairness in pricing would generate much needed goodwill.

  6. One other thing that is, I think, just as key to publisher reluctance to embrace bundling is publishers’ fixation on editions. Perhaps they fell into that mindset through their history with print, making the print book available in hardcover and paperback and trade paperback and omnibus volumes and (etc.).

    When it came to ebooks, they fell into the same trap of thinking as each distinct ebook format as a separate edition. Back in the day, when the Pendergrasts were running Fictionwise, they offered DRM-free titles in “multi-format” bundles: if you bought one format, you could download it in any format. But the publishers wouldn’t let them do this for DRM-locked formats. The Pendergrasts mentioned to the ebook community mailing list at the time that they had tried to convince publishers to add DRM-locked titles to multiformat, but the publishers insisted that each different format was a different edition and had to be paid for separately.

    You saw the same thing with Stephen King, old-school-publishing mainstay, when he tried his serialized ebook experiment, The Plant. He insisted that he needed to receive a matching separate donation for each separate ebook format download. Needless to say, he didn’t get it, and the experiment fizzled.

    The publishers (and King) would analogize this by saying that you didn’t expect to get a free paperback book when you bought a hardcover, so you shouldn’t expect to get a free MOBI edition when you bought the eReader version either. Of course, this missed the whole point of ebooks’ zero-marginal-cost nature, but the publishers didn’t care. A book was a book, an edition was an edition, and offering more than one edition for the same price was madness. Madness.

    I think you’re seeing the same mindset at play in publishers’ reluctance to embrace bundling, even at a discounted price to add the ebook. They believe they should be entitled to get full price for both editions, same as always.

    (And it’s possible there may also be a side-order of not wanting to “devalue” ebooks—the rationale behind their imposition of agency pricing to keep Amazon from chopping ebook prices. Ebook prices should always stay high to protect paper sales.)

  7. Chris,

    This is pretty much what Hollywood was trying to do with UltraViolet. The analogy of “you shouldn’t expect to get a free MOBI edition when you bought the eReader version” to “you d[o]n’t expect to get a free paperback book when you b[uy] a hardcover” is just a bad analogy. UltraViolet offers interoperability among releases in the same window but not in different windows. Hollywood expects you to pay for the DVD after paying to watch the movie in a theater or on LodgeNet in a hotel room, but not to pay (or only have to pay a buck or two) for the standard def digital download after you’ve bought the DVD, or the HD digital download after you’ve bought the Blu-ray.

    What UltraViolet was really designed to do was not to collapse release windows but to level the playing field among retailers so that certain ones were less able to run away with the market like they did for music, particularly certain ones headquartered in Cupertino. In that respect, it’s also a failure.

    What publishers should do, if they want to learn from both UltraViolet and the music industry experience, is this: buy up the Shelfie assets and IP into a joint venture where they offer anyone who can show that they bought the hardcover (from anywhere) a token that they can use to buy the e-book in the format of their choice for a couple of bucks, which they could subsidize for a while until the market starts growing. Then, they have two choices: keep DRM and try to create a DRM interoperability scheme that will attract all retailers, or at least all retailers that aren’t headquartered in Seattle (which is sort of what Readium LCP was supposed to do); or do what the music industry did: give up on DRM and get full interoperability that way.

    If you ignore antitrust law and author contracts, this all seems perfectly possible, doesn’t it 🙂 ?

  8. You don’t have to tell me it’s a bad analogy. I was saying that back when Stephen King was determinedly driving his own serial ebook project into failure. (Why make it so easy for haters to torpedo you that all they have to do is set up an auto-downloading script to repeatedly download without paying?)

    But the publishers do whatever the hell they feel like, as usual. And I think they’re way too fixated on getting paid in full for each separate “edition” to give up that potential revenue stream.

  9. For the record, the Harvard Book Store pilot was a brick-and-mortar bookstore advertising free or cheap (it’s not clear which) e-books with print book titles — a small number of them from the bookstore’s Boston neighbor Houghton Mifflin Harcourt. This is a pretty different offering from that of an online bookstore, and it’s not hard to see why customers would find it attractive, especially since the same titles could be had at other physical bookstores, such as the unrelated Harvard Coop four blocks away (or, ahem, online) without the bundled e-books.

    This is yet another reason why a Shelfie acquisition by B&N would have made sense strategically.

  10. Bill, it may not be strictly relevant, but it might be…there is one big difference between digital books and digital movies or books you didn’t mention. The consumption experience changes. You listen to music or watch a TV show or movie precisely the same way whether the content got to the device by hard copy or by digital means. But reading an ebook is quite different from reading a printed book. So while there would be 100 percent “acceptability” from a consumption standpoint in the other media — digital delivery is just an easier way to get the content — there would be something less than that level of interest for book consumers going in either direction. That, combined with the fact that only two retailers really sell both print and digital formats, means this bundling is less attractive to consumers than in other media AND that there are very few points of consumer contact that can take advantage of it.

  11. Mike,

    Thanks — a couple of things. First, I think comparing the user experiences of print and digital in books vs music is something of an apples and oranges situation. For music, first of all you have so-called noninteractive services where the user doesn’t pick exactly what she’s going to hear – Pandora, Spotify Radio, iTunes Radio, TuneIn, etc., not to mention certain forms of good old broadcast radio. There is no analog in books (that I can think of). On the other hand, vinyl is a nontrivial part of the music industry now, and you’d have to agree that the consumption experience is pretty different from digital. Vinyl is now about 6% of the industry in reported revenue, but I’d argue it’s actually considerably higher because of unreported used vinyl sales.

    Second, I’m not sure I what the fact that there’s only two retailers that sell both print and digital book formats has to do with interest in bundling. Look at what the movie studios did with UltraViolet: it’s possible (for example) to buy a DVD at Target that contains a coupon for a digital download for free or cheap, which you can redeem at (let’s say) Flixster (Warner Bros. own online retailer). Analogously, book publishers could offer e-book coupons along with print books and fulfill the e-books in a way that totally bypasses the retailer from which the book was sold.

    But if your point is that it’s risky to draw too many parallels between books and music, then sure, I agree.

  12. I’d argue that vinyl doesn’t meaningfully change the consumption experience. You still listen through the same speakers or headphones. Yes, there is a difference in the audio itself that will be more perceptible to some people than to others, but you’d have to “discern” that difference. You don’t have to “discern” the difference between reading a print book versus an ebook. It is a physical, tactile difference that affects everything from how much light you need to how heavy will be what you hold in your hand to the type size and leading to the difference in the ways things like footnotes would be handled. Not subtly different. Blatantly different. You tip to other differences between the media because you’re certainly right that people will accept having their music programmed for them in ways they’d never stand for with reading. But I’m talking about the physical interaction between the consumer and the content. Digital books change it. Digital music or video doesn’t.

  13. Mike,

    Have you ever witnessed today’s young people interacting with vinyl? Not people our age, and not vinyl-snob audiophiles, all of which make up a small percentage of vinyl purchases nowadays. Totally different social experience. Has little or nothing to do with sound quality. It’s as different from sharing iPod earbuds as sharing iPod earbuds is from listening on a boom box.

    – Bill.

  14. I guess if you’re talking playing it backwards or manually creating different sounds than the recording intended, you’d be right. And no, I haven’t witnessed it. But my point is that whether it were iPod earbuds or a boom box, which would definitely be different experiences, how the music GOT to the iPod or earbuds would be irrelevant.

  15. […] to LG O’Connor, and print and ebook bundling doesn’t always work out, according to Copyright and Technology. It can also be hard to find the right price for your book, as Gene Doucette points […]

  16. […] to LG O’Connor, and print and ebook bundling doesn’t always work out, according to Copyright and Technology. It can also be hard to find the right price for your book, as Gene Doucette points […]

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