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BISG Panel Explores E-business Models Paul Hilts -- 10/2/00
Representatives of five of the newer companies in e-publishing described trends in the market and their firms' plans for profitability. Jonathan Hahn of Versaware, which has done much of the conversion of titles for many publishers, led off with a discussion of industry standards and the interoperability necessary to promote the growth of the industry. Interoperability within a standard, such as programs working together in a Macintosh operating system, is not enough, Hahn said; "What is needed is interoperability between standards--like when I can play a CD on a player made by any manufacturer." The infant e-book market still has both duplications and ellipses, Hahn pointed out; there are too many e-commerce and user identification schemes, and not enough "trusted channels," intermediary guarantors of easy, secure payment and text delivery. Tammy Deuster, CEO of Bookface, a Silicon Valley-based book lovers' portal, asserted that winning models would combine services and technology to provide readers the most convenience at the lowest price. Thus, Bookface's display-only technology is ad-supported, allowing "unlimited shelf space" and free browsing of whole texts. Each page of text is fed to the reader as needed, then discarded, so there is no long-term storage needed or copying possible. "Ad revenues are treated by publishers like 'serial licenses,' and thus are shared with authors," Deuster explained. "The idea is to help readers get access to books, but revenue is produced even if they never buy the book." Demographic data is collected across markets and made available to publishers and advertisers, while individual users remain anonymous. Scott Searle of LockStream described two levels of protection the DRM (digital rights management) producer provides. First, the text is encrypted; second, self-destruct codes embedded in the encryption "will degrade copies of the original into unusability," he explained. Each user identification is tied to a credit-card number, so even if the user's computer is destroyed, a LockStream server can rebuild his or her library, while preventing copying. No Profits--Yet While several speakers quoted Andersen Consulting's projection of $2.4 billion in e-publishing revenue by 2004, only Sean Devine, v-p of business development for ibooks.com, mentioned that Forrester sees $45 million in losses by e-publishers by 2005. "The winning business models for e-books haven't been invented yet," Devine claimed. Ibooks.com helps professional reference publishers expand their markets through Web access, so Devine has a different perspective. He lays most of the blame for the lack of profits on the varying requirements for trade and reference markets. Trade books are almost always sold as single units, while reference works are more often sold as part of a collection, such as an encyclopedia or set of biographies. Reference readers almost always want to browse large sections of text before buying, while in fiction at least, this is rarely the case. The answer, according to Devine, is to get the right model--either micropayments for looking at small parts of books, or "macropayments," which sounded a lot like subscriptions, for greater access to large collections. Agreeing that subcriptions may be the best model for lots of access was the final speaker, Troy Williams, CEO of Questia, a Houston-based research service aimed at helping undergrads prepare term papers. Prospective users can browse chapter heads for free, but access to texts requires a subscription, which also includes the ability to cut-and-paste text into a term paper, and automatic citation of quoted text, in University of Chicago style. Questia's final prices are not set yet, Williams said; "We won't officially launch until January.We want to have full texts of 50,000 titles when we open the doors; but we expect the price to be in the same range as AOL or cable TV service. We'll also likely have service available by the day, month and year." | |||
BISG Panel Explores E-business Models
Oct 02, 2000
A version of this article appeared in the 10/02/2000 issue of Publishers Weekly under the headline:
