(those of you interested in digital books may also be interested in JamieGottliebThirdPaper.)

Selling Google Books

The Google Books Settlement grants Google the right to distribute copyrighted, out-of-print works online in return for giving the rightsholder part of the profits. This essay will assess the potential impact of consumers' preference for hard-copy books and the availability of free digital books online on Google's prospects for commercial success.

Digital books as a compliment to books

Book Browsing

Speculation abounds as to whether eReaders will replace books, but one study finds that book sales increase after pirated versions become available online (1:17), suggesting the possibility of a more complimentary relationship. For these books, digital books provide a service to the reader without actually replacing the hard copy. Digital books provide immediate access to a broad range of ideas, whereas books are well suited to sustained engagement with a single work.

A similar dynamic is emerging in the music industry, where vinyl sales doubled last year even as music sales continued to drop. The trend suggests that listeners value different media for different ways of listening. In this specialized market, CDs have ceased to perform any particular function well enough to stay viable in this newly-specialized industry, but digital music and vinyl each have distinct roles to play: convenience and quality. The more obvious differences between books and digital books could give rise to an even more complimentary relationship.

Academics

Digital books will become the medium of choice for academic study because there is no need to overcome readers' emotional attachments to the hard copy. “Studying” evokes images of a night hunched over a laptop rather than the cozy fireplace and hardcover that “reading” brings to mind. And full text word search functionality significantly increases the efficiency of studying. As my little sister recently told me while studying for her AP English exam with an online copy of the Great Gatsby, “it's easier online.”

How to sell free books

Google might be able to carve out a niche for itself if its only competition were hard-copy books, but unlicensed digital books pose a different set of challenges. Grassroots scanning and on-demand publishing are making digital books increasingly common. Publishers' are beginning to feel threatened, and Google Books appears to be selling access to a good that is already freely available. To succeed, they might consider an industry that has mastered the trick: bottled water.

Convenience

Bottled water's chief advantage over tap is convenience. The music industry has recently demonstrated that convenience can trump price to some extent in the sale of digital media as well. In Japan, the music industry grew last year, largely on the strength of mobile music sales. In the first half of the decade, however, when the Japanese mobile internet connection fees made downloading directly to the phone impractical, music piracy was driven primarily by ripping albums from CD rental stores (14). The switch from cheap piracy to legitimate purchase can be explained by convenience; ripping rented CDs is more complicated than downloading to phone. The increasing willingness to purchase music by phone suggests that Japanese listeners are willing to pay for music when it is made conveniently available for purchase.

Similarly, American online music sales are rising. iTunes replaced Walmart as America's top-selling music store last year. It is simply easier for many people to sit at their computer and download a song than borrow music from a friend.

The sustainability of the music industry's current model remains doubtful, but it has demonstrated that listeners will pay for convenience. If Google is going to make any money selling access to digital books, then, it will have to be more convenient than the competition.

Luxury

Like bottled water, Google can succeed by casting its inherently wasteful business as a conspicuous display of the user's wealth.

Google's prospects

Individual purchase

Unlicensed digital books will increasingly replace Google's sales of individual purchases as new titles become available for free. Unlicensed digital books are free and equally convenient to access. Google Books will probably serve as a backup for users who cannot find the book they are looking for online.

Google similarly will be unable to market its service as a luxury good for individual purchase. For readers searching for books online, the digital book is a means, not an end, and they are therefore unlikely to spend money on it. Conspicuous consumption only works as such when one's peers can see it, and accessing a website on one's own computer probably will not have much of an effect.

Institutional Subscriptions

Schools and perhaps companies will probably pay for Google's institutional subscription service. As a practical matter, universities cannot flout existing copyright law by relying on unlicensed digital books in their official capacity. It is one thing for a student sitting in their dorm room to download a book, but quite another for a University to replace course packets with Google Books. Such institutions will therefore be willing to pay to access these texts without incurring liability.

Even beyond practical considerations, though, an institutional subscription to Google Books Service would be exactly the kind of conspicuous display of wealth that an institution such as an elite or private university would pay for. Whereas individual users do not have the opportunity to show off their Google Books subscription, a Google Books subscription effectively conveys the University's elite status to its current, former, and prospective students. Small advantages in functionality and presentation will amplify this effect.

Conclusion

Several factors remain to be considered. To name a few:

Whether unlicensed scanning will impact Google's out-of-print, relatively obscure product as much as it does current bestsellers.

Whether privacy concerns incentivize readers use unlicensed digital books instead of Google.

Whether readers hold the law in higher regard than the college students who led the digital music revolution.

One thing is clear, however: advising copyright owners on their legal relationship with Google in light of the settlement requires attention to developments in our society's relationship with books, beyond the nuances of copyright law.

-- MichaelDreibelbis - 22 May 2009