Why the Trade Publishing Industry Did Not Crumble When the Music Industry Did
The following piece is an example of contemporary research in the publishing industry. It received the F. Ward Deny’s prize at Washington University in St. Louis in May of 2023.
As the contemporary world grows increasingly digital, several culture industries have shifted their business models. The music industry is one example that has become completely restructured. In response, many critics have warned book publishers taking on new digital concerns to look to the lessons learned from recording studios. However, these critics often fail to point out the inherent differences between the industries. In the early 2000s, the website Napster ignited a flame which overturned the entire music industry. Three main factors allowed for publishing to remain in steady operation at the same time that the music industry’s business model was completely overturned. Clear court decisions regarding copyright maintained authorial ownership of written work, helping prevent piracy of e-books. Physical books never lost significant value in the way CDs and Cassettes did. And generational differences between the consumer base of the publishing world and the consumer base of the music industry limited incentives for piracy. Nevertheless, certain comparisons between the industries can be made when observing the specific field of scholarly publishing and when attempting to predict the future; large ethical and legal decisions in the publishing world regarding online access and digital book distribution—in contention with the Internet Archive—remain ongoing, leaving room for speculation about the direction in which the industry is headed.
In the 1990s, the world was hit with an information revolution; personal computers became widely available, the World Wide Web was developed, and communication via electronic mail became easily accessible. In congruence with this technological wave was also the rise of the black market and the creation of easily downloadable MP3 files. The first MP3 players, which were released in 1997, allowed for an entirely new experience in listening to music, condensing audio into small digital files which could be transferred electronically. Just two years later, Shawn Fanning and Sean Parker launched Napster, a black market site where users could illegally download and share music. Almost instantly, this site took off and changed the music industry. As Elliott Obermaier points out in their Indiana University research paper, “Napster: The Black Market that Publicly Dominated the Music Industry,” just one year following the launch of this website, total recording sales decreased by 33%. In the 2001 ruling, Metallica v. Napster, precedent was set that musical artists maintain the same rights online, and Napster was enjoined to stop sharing music created by all artists who did not provide consent. In the same year, in A&M Records, Inc. v. Napster, the US Court of Appeals found that Napster had violated fair use copyright laws. Even after Napster’s demise, the consumer base they created of listeners demanding free digital access to music was too bold to ignore. SoundCloud was created, followed by the popularly used Spotify, Pandora, and Apple Music, well-curated and accessible streaming platforms which capitalized off of the same consumer base and took away the incentive for illegal pirating. For years, scholars have looked to this cultural shift caused by Napster as a cautionary tale for the publishing world, making the argument that digital content can be easily shared and distributed online, and publishers should switch their business model before the consumer culture revolutionizes it for them. In February of 2001, Jennifer O’Neill’s article, “Book Industry Takes Lessons from Napster,” headlined on CNN. In 2018, Publisher’s Weekly posted the article “What Can Book Publishers Learn from the Music Industry?” by Bill Rosenblatt. And in 2020, the same topic resurfaced in Publisher’s Weekly with Shannon Bex’s “What the Book Biz Can Learn from Napster.” Over twenty years have passed, yet critics continue to warn book publishers about the lessons recording labels learned in the beginning of the Twenty-first Century. However, while similarities can surely be drawn, many of these warnings ignore the large differences between these industries.
Early actions taken to protect copyright infringement helped set the publishing industry apart from the music industry. In the early 2000s, when the music industry was being upended, the publishing industry was facing challenges of its own. In 2001, Random House, Inc. sued Rosetta Books, LLC for obtaining e-book rights from a number of prominent authors and illegally selling their work as digital products. In Random House v. Rosetta Books, the Court ruled that e-books are not covered by all rights “in book form,” and therefore, Rosetta Books had not participated in any illegal operations. Observing this case in parallel with the judicial decisions made regarding Napster, the law seems to view e-books differently than MP3 files. Napster was severely reprimanded for making music available online, while Rosetta Books was given lawful jurisdiction to continue selling e-books. The verdicts made relied on the idea that music can only be consumed in audio form, with clear copyright over the work, while a book can be published in many different formats, with more complicated copyright policies.
Although Random House lost the case against Rosetta Books, the underlying reasoning in the jurisdiction points to an important fact when comparing the publishing world to the music industry: e-books are a completely separate form of books. While copyright ownership of MP3 files was truly unknown to many, providing justification for anybody to download and share them, it was made clear in law—before any mass black market schemes could become popularized—that e-books were copyrighted material. Additionally, publishers became wise and installed DRM (Digital Rights Management) protections. DRM could be costly, but it encrypted files so that they could not be shared with outside users. Many music industry services used DRM encoded files for a short period of time after the fall of Napster, but once Spotify rose into the public sphere, the idea of music ownership changed altogether again. Fortunately, the publishing world began using DRM before any similar radical change in the public conception of e-book ownership could occur (before readers could be trained into thinking of books as something that ought to be free). Some may argue that publishers narrowly avoided the same fate as recording labels, and others may say it was thoughtful strategy on the part of leaders of the industry that kept books in business; whatever the case, through actions taken to prevent violations of copyright law, the publishing industry proved to stay strong at the same time that the traditional music industry began to crumble.
Apart from copyright management, another reason that books stayed in business was due to the continued value of their physical form. While CDs, Cassettes, and LPs quickly went out of fashion with the rise of MP3s, paperback and hardcover books never saw as drastic of a downfall during the rise of e-books. Jennifer O’Neil begins her 2001 Publisher’s Weekly article with a prediction: “an easily read, portable e-book that puts a whole library's worth of reading at your fingertips—even on a crowded subway—may be the future of publishing.” In the early 2000s, many people like her assumed that e-book sales would one day completely outnumber print sales. What actually happened was quite different. Reporter from Vox, Constance Grady, shares in a 2019 article, “The 2010s Were Supposed to Bring the Ebook Revolution. It Never Quite Came,” that although analysts in 2010 were confident of e-books decreasing in price and taking over the industry, “at the other end of the decade, ebook sales seem to have stabilized at around 20 percent of total book sales, with print sales making up the remaining 80 percent.” As Library Journal reported in 2021, these numbers changed during the Covid-19 pandemic when e-books became a more standard go-to option for those isolated at home; however, post-pandemic e-book sales have remained in the 20% range. Looking back, many analysts misinterpreted predictions for the future of the publishing industry.
One reason for this misinterpretation was that e-books never quite dropped in price the way many predicted they would. In the early 2000s, Apple negotiated with the Big Six publishers (now Big Five, after the consolidation of Penguin and Random House) over what to set e-book prices at. The publishers had been frustrated with Amazon, which was dominating e-book sales. They were selling e-books at a low price point of $9.99, which the Big Six publishers believed was devaluing the culturally accepted price of a book. The publishers agreed to give Apple rights to sell their work through the iPads and iBookstore they were planning on launching. However, in the 2012 ruling United States v. Apple, Apple was accused of violating antitrust law by conspiring with publishers in a form of horizontal price-fixing: forming a monopoly of corporate powers across the same industry. Grady of Vox writes that although the Department of Justice won its case in court, “the pricing model that Apple and the publishers created together would continue to dominate the industry, creating unintended ripple effects.” Instead of prices continuing to fall lower than $9.99, most e-books would be priced higher to maintain the higher value business of selling books. Actions taken to adjust e-book prices, ensuring they never reached too low, maintained the value of the traditionally sold print book.
One other reason for inaccurate predictions of the fate of the publishing world was that people incorrectly identified publishers’ consumer base. Music listeners and book readers are very different consumer groups. Generally, readers enjoy an intimate experience with a book, while listeners enjoy a shared experience with an artist or group; readers are more likely to value the physical book for their personal enjoyment. Adding on, the fear caused by Millennials flocking to the online site Napster, leaving many to believe that younger generations would soon take over the online e-book world as well, was misled. In fact, as Grady mentions in their article, the 20% of readers contributing to e-book sales has actually been from older generations who make use of the easy accessibility features like increased font sizes and access to a library at their fingertips. And younger generations, accustomed to instant gratification through social media and rapid information through Google and YouTube, have actually shown to read fewer books overall. The consumer base of most publishers is made up of those in between: middle-aged readers who continue to appreciate the experience of reading a physical book. Because of this, there has not been an incentive for young people to dominate the world of e-books in the same way they dominated the world of MP3 file sharing, because they do not have the same overall interest in the industry, and therefore, book piracy has been much less common than audio piracy. A consumer base with a continued demand for print books and a low incentive for mass pirating of digital trade books has contributed to a clear purpose for publishing companies to stay in business while the music industry has had to restructure its business model.
It is evident that many differences between the histories of the publishing and music industries in the late Twentieth Century and early Twenty-first Century exist, explaining their contrasting fates. However, switching gears and focusing on one unique section of the publishing world—scholarly publishing—actually provides room for an entirely different analysis. As released by the White House in August of 2022, President Biden recently announced that all federal, tax-payer funded scientific research would be required to exist as open access for anyone in the general public. This huge governmental step in academic publishing is reflective of a similar corporate shift. While Millennials and Generation Z have not dominated the world of digital trade books, they have certainly dominated the world of pirated textbooks and scholarly articles. The two most prominent digital piracy platforms have been Z-Library and LibGen, essentially serving as the Napster for books. These so-called “shadow libraries” have operated illegally, without copyright of materials distributed, but have been arguably beneficial to society (in theory, they work to distribute knowledge to everyone, especially those who are otherwise restricted from accessing it). In a way similar to how Napster overturned the music industry, these shadow libraries have highlighted new consumer demands and are working to revolutionize how academic knowledge is shared (though Z-Library was recently shut down by the federal government). In part, illegal sites like these have thrived because of how exclusionary the two main traditional models for scholarly journals currently are. As noted in the research paper, “Can scholarly pirate libraries bridge the knowledge access gap? An empirical study on the structural conditions of book piracy in global and European academia,” either “publishers sell steeply priced subscriptions to journals, books to libraries, and textbooks to students,” or they operate by “charging article processing fees to authors in exchange for free open access to their published articles.” With a modern online revolution against these traditional models, many academic publishers have begun signing transformative agreements: “those contracts negotiated between institutions (libraries, national and regional consortia) and publishers that transform the business model underlying scholarly journal publishing, moving from one based on toll access (subscription) to one in which publishers are remunerated a fair price for their open access publishing services” (University of California, Office of Scholarly Communication). This model is actually very similar to the agreements record labels have made with streaming services which pay them royalties for their music. This example of scholarly publishing shows that when there is a demand, consumers will find a way to pirate and distribute materials and disrupt existing business models. The clear parallels between scholarly publishing and the music industry work to show that the rest of the publishing industry is fundamentally different in some way. This fundamental difference again lies in the consumer population. Young people overpower the digital world, and if they have a vested interest (as listeners or students), they will fuel pirating schemes; they simply do not have an equally vested interest in other forms of book publishing.
Nonetheless, while illegal black markets have not ruined most of the publishing world, one main digital library has frustrated publishers in similar ways: the Internet Archive. The Internet Archive has existed since the beginning years of the internet, providing access to millions of articles, movies, recordings, images, and other digital files. Traditionally, the Internet Archive would lend book materials to users who requested them through controlled digital lending (sending scanned images), operating in the same way real world libraries do, with legal authority to do so through the first-sale doctrine. During the Covid-19 pandemic, the Internet Archive released a “National Emergency Library,” getting rid of its lending limits, essentially providing unlimited open access to all works it carried. In response, a group of publishers sued the San Francisco based Internet Archive for copyright infringement veiled as library lending, arguing that the excessive lending was in no way typical and overstepped the authority of a library service. They argued that in order to share work on such a scale, the website would have to obtain proper copyright ownership from the publishers. Both parties have filed arguments with the Court, and soon the filing of papers will likely cease, and the Court will decide whether or not it would like to hear from them in person through oral argumentation. This case is ongoing and poses contemporary questions for the future of the publishing industry. If the Internet Archive wins, will the future of all publishing resemble open access streaming, similar to the music industry? Or, given the continued value of print books, would it really not make any substantial, industry-changing difference? And if the publishers win, will this protect their industry and sales? Or will it simply move the same lending practices the Internet Archive is doing to an illegal black market, creating more problems for the future? Publishers have avoided the same fate of the music industry due to a number of key differences between these industries in the early 2000s. However, in the contemporary world, they are faced with similar challenges. Perhaps there is a continued difference between these industries that will maintain the power of publishing. Or maybe contemporary times have changed consumers, and now is the time to make parallels to the music world. Odds are, the industry will remain okay.
This is largely speculative, but from the provided research, the near future of publishing does seem to be safe from a complete upheaval (acknowledging, of course, that the far future—anything beyond the next several decades—is impossible to predict accurately). There is little reason to believe that the Internet Archive will completely change reader’s habits. Even if the Internet Archive is permitted to grow as an online library, readers will likely continue to value physical books, as they have continuously done in the past. That said, there are things for publishers to look out for in the increasingly digital age, most notably changing consumer habits in the larger entertainment industry. Readers are a unique group of consumers, but they do fall under a larger group, which can be generally classified as consumers of entertainment. Recently, not only have Spotify and Pandora taken off in the music and podcast industry, but Netflix, Disney+, Hulu, HBO Max, and more, have also taken off in the television and movie industry. The fact that these are all streaming platforms is no coincidence. Each of these industries saw piracy since the start of the internet, and each of them responded by providing their own accessible streaming services. Across the board, consumers have gravitated towards subscription based services which provide open access to content. To tap into this overarching subscription economy, more publishers can consider areas in which subscription programs can help with sales: perhaps a subscription to their own e-book collections and online bonus content, or an option for a book-a-month model, where readers pay a yearly fee for books to be sent to them every month. While the internet did not destroy the traditional publishing world, it did change the larger entertainment industry, and subsequently, the habits of modern consumers.
The publishing industry did not crumble when the music industry did, because it is fundamentally different in many ways: copyright operates differently, physical products are highly valued, and the consumers are different groups of people with less incentive to pirate e-books. The one area where a comparison can be made is in the world of scholarly publishing, where publishers have had to switch models and sign transformative agreements in order to accommodate for the vast amount of pirated titles. The rest of the publishing industry has not witnessed a similar upheaval, but ongoing lawsuits between publishers and the Internet Archive have posed similarly interesting debates regarding the future of open access book distribution. Regardless of the outcome of these court decisions, it is unlikely that publishers will have to radically shift their business model any time soon. However, publishers can take a few steps to stay up to speed in this increasingly digital world. The future remains unknown, but a thorough understanding of the history and context of the literary publishing world, and its unique qualities, allows for the possibility of more accurate predictions.
