Whether or not piracy hurts book sales is hotly debated in some circles. For publishers, this is a no-brainer, but the evidence for this is not always clear. I have been sifting through the arguments about this for some time now and have concluded that at least in one area, college textbooks, piracy hurts sales. I am not yet persuaded that this is the case for other areas, trade books in particular, and would like to learn more about the circumstances of piracy for those segments.
So what’s this got to do with hamsters? “Hamster” is the English equivalent of the name of a file-sharing service operating in a certain non-English-speaking country. I am not going to provide any URLs here, as the last thing I want to do is to help pirate sites get more traffic. I recently spent some time in that country and spoke to several publishing people about the service. I was also provided with some hard sales data. Hamster is used for, among other things, the piracy of college textbooks. Among those other things is the sharing, whether authorized or not, of movies and music. Presumably some of the text-based files on the service are there legitimately as well. I am not a copyright expert, but I do know how to analyze sales figures. Hamster is a real problem.
So some numbers. With Hamster operating in this one market, college textbook publishers have seen sales drop by 50 percent. Two publishers have gone out of business; all the others are under strain. The number of new college textbooks is beginning to drop as publishers pull back from the marketplace. And that’s the really significant issue: investment in IP is declining because of the challenges to monetize college texts.
Hamster works as a simple file-sharing and Cloud storage service. For a small monthly fee, the equivalent of a dollar or two, subscribers get to upload files to the service, where they can be accessed and shared by others. The operators of the service do none of the file sharing themselves. For that reason, under the law in that country, the service is legal: a criminal case against Hamster failed in the courts. Presumably the individuals who share copyrighted material could be prosecuted, but chasing individuals with lawyers is not practical, as there are so many of them and the situation is really like (changing rodent metaphors) Whac-a-Mole: you get rid of one instance of infringement, and dozens of others spring up.
One publisher told me about a college text that sold about 3,000 copies. This is a translation of the English-language original, which is #1 in the field. (This publisher has a strategy to translate the #1 book for each discipline, making its list a congregation of Nobel Laureates and other superheroes of academic publishing.) The number of unauthorized copies found on Hamster for that title was several hundred thousand. Clearly, it is easy for these files to proliferate.
Now, it’s worth thinking about those numbers. That particular textbook is for a field where the number of students in that country is under 20,000 in any single year. Even including adjacent fields, the total market for that title is not more than 40,000 a year and is probably half that. So why are there hundreds of thousands of copies on Hamster? Because it is easy to do and why the heck not? Most of those pirated copies will never be read; their piracy cannot be said to take away sales. So we have a real problem with piracy (the market has dropped by half) and a mythical one (all pirated copies represent lost sales). Publishers make a mistake when they focus on that bigger number, as it just makes them look ridiculous. There is nothing to be gained from fighting criminality with stupidity.
Some publishers reading this post are probably saying, “This guy just now figured out that piracy hurts sales?” Actually, I have long thought that piracy is a problem in every segment, but I am impressed with some of the analyses that I have seen on this. There is the argument I cited above, that not all instances of piracy represent lost sales. There is the question of how to count the number of unauthorized copies. There is the problem of identifying and subtracting authorized copies (advocates of fair use, including many courts, make this point). There is the matter of not making materials available in easy-to-find-and-purchase digital editions, which prompts some people to turn to online file-sharing sites. (J.K. Rowling is, or was, the extreme illustration of this point. For years she prohibited the Harry Potter novels to be published as ebooks out of a fear of piracy. Her books went on to become the most pirated of all. Now they are all being formally and successfully published in electronic form.) And, finally, there is the promotional value of free copies, as their rapid circulation can evoke a broader conversation about a work. Publishers who have not already done so should immediately turn to Tim O’Reilly’s classic on piracy, “Piracy is Progressive Taxation.” O’Reilly, himself a publisher, has a sane view of all this, which may be a model for publishing policy just about everywhere.
But with textbooks, no, the offsetting arguments simply don’t carry enough weight. Part of this is the largely lawless character of college students everywhere, an international brigade of Mario Savios, who challenge authority wherever they stumble on it. An even bigger part is the fundamental economics of textbook publishing, where the high one-time cost of creating a work must be amortized over a tiny market. This forces up prices for texts far beyond those for trade books, and that gap tempts a would-be thief.
Publishers and publishing will not sit still while textbooks are shared without compensation. Litigation will continue; it will take new and ingenious forms and may actually stem the tide for a bit — Napster, after all, was sued out of its original incarnation. Publishers will also resort to DRM, a counterproductive practice, in my opinion, because DRM can be too easily broken; and once a single unfettered copy gets onto Hamster, anyone can access the work. Publishers will seek to make their texts more dynamic and hence resistant to simply copying. Publishers will also develop features of their work that invoke the participation of the instructor, making it such that an unauthorized copy denies a student access to the teacher’s contribution. One interesting venture I examined is a forthcoming Netflix for college texts, which provides a basket of titles for one monthly price and a handsome toolset to invite students to pay for what they would otherwise steal.
In the meantime, publishers will invest less, publish less. Until the problem of a revenue model is worked out, the textbooks available in this particular market will drop in number. It cannot be otherwise, as no company will make an investment without a promise of a return.