A while ago, we tried defining ebooks, and figure out what they are, and what they aren't. Now, let's have a look at some success factors, or barriers, business implications and the (un)necessity of DRM.
The Content/Device Separation Barrier
For ebooks to be successful, they absolutely need to be better than paper books, otherwise there wouldn't be a reason to buy them in the first place. This includes that they must be nearly as easy to be picked up, glanced into and read just like their paper cousins.
And here we encounter perhaps the most fundamental difference between traditional paper books and ebook solutions: While the former are always ready to read, the latter are split into some sort of reading device and the actual content: A laptop and a PDF file, an ebook reader and it's EPUB files, a Newton (remember those?) and its ebook packages etc.
This may be acceptable to computer users and geeks, but not to the mass market: The process of buying, downloading and copying a file to some device (not to speak of dealing with DRM software) just to be able to read it is just too cumbersome for ebooks to really become a mass medium. Separating the content from its presentation device may be a technical necessity, but human beings who want to just read a book tend to not care about technicalities: They want to pick it up and read it, otherwise the paper version wins. Period.
Three to Bridge the Gap
Three companies get this: The Amazon Kindle, the B&N; Nook and the Apple iPad try to perfect the ebook user experience by making the process of browsing, buying, storing and presenting ebooks inside the device seamlessly integrated and a pleasure to use. They have effectively eliminated the content/presentation hurdle for their users, making ebooks as easy (or easier) to find, get and read as their dead tree counterparts. Not a big surprise, given that two of them are really book companies, while the third one a user-experience focused one. But this kind of comfort comes at a high price, which we'll discuss later.
The rest of the ebook world (the Sonys, Bookeens, iRexes etc.) simply don't get it. Or can't do much about it: They just try to sell you their devices but expect you to browse the web, download ebook files, install them on your reader, manage your ebook inventory, handle DRM keys, etc.
Granted, this is not much of a problem to a geek or computer literate person, but not quite a recipe for mass market replacement of paper books.
Notable exception: Txtr is setting up a bookshop-plus-wireless-reader-model that is similar to the three companies above, but adds a self-publishing option for authors and other ebook publishers, including you and me and everyone capable of uploading text. Not sure how this will work out, but a very nice approach.
The Visual Experience Barrier
The other fundamental difference between paper and electronic is the way letters (and pictures) are perceived by our eyes. While laptop displays have been constantly improving over the last decades, they still lack the contrast, resolution and natural feel of ink on paper.
Is this an issue? Yes! Everybody who has complained about eye strain after staring into a computer monitor for a long time is not going to accept computer-screen ebooks very easily. And everybody who has tried using a laptop in the full sun at the beach won't be very pleased to go through that experience again, just to read the latest Dan Brown novel. Reading ebooks needs to provide our eyes with a natural visual feel.
Improving this has been the focus of the last few years in ebook technology, mostly driven by the advent of electronic paper technology. Today, most modern ebook readers use some variant of e-ink, which presents a reading experience that is very similar to ink on paper, with the notable exception of the pure software ebook readers (who just assume you want to use a computer or phone as your reading device) and the Apple iPad.
Which is interesting. Either Apple expects us to mold our visual book reading habits around their product (which is not their style) or I'm getting too old and reading stuff on glowing computer screens is the new natural way to read. A third possibility might be that e-ink displays are still not ready for prime-time yet. After all, they're black&white; and very slow (about half a second of refreshing time) and Apple is just accepting regular displays as a non-natural way of reading ebooks until a better solution comes along. And the e-ink industry is evolving fast!
If you haven't seen an e-ink display before, go visit your nearest book store and try to look at one. It's literally a difference like day and night: e-ink displays rely on outside light (the sun, a lamp etc.) to be readable, while computer displays work best without much other light around them.
While technology companies are working on making ebooks easily adoptable by mere humans (and not just the geek crowd), book publishers and retailers try to figure out how to turn this into a profitable business:
A New Business Emerging
Business is good: It feeds people, funds development and contributes to human progress. But sometimes, business tends to step on its own toes, and the ebook market is no exception. And this is where things start to get ugly.
Amazon, being among the first movers, is aggressively creating, expanding and protecting its own ebook ecosystem, which is essentially a walled garden around the Kindle products. They do a great job at delivering a nice consumer experience as many Kindle owners will attest you, and the possibility to browse, buy and download books on the go thanks to wireless connectivity is a great icing on the ebook cake. The price for this kind of comfort is a closed system with monopolistic rules: Less choice and higher prices for consumers, and bad conditions and less royalties for writers. One author recently complained bitterly about deteriorating conditions for both publishers and authors due to Amazon's aggressive world-wide Kindle expansion. Just think of it: If about 40-50% of a regular book's price is its material and the cost of transportation, storage, shipping and handling, which essentially fall to zero in the ebook case, why are ebooks still selling at a similar price?
The other factor that makes the ebook business ugly is the lack of an adequate business model. You can't apply the same business rules to ebooks than for physical ones, because they are very different in nature. Yet, book publishers and stores are trying desperately to bend the rules of digital information by insisting on DRM (which is inherently broken) and pretending that ebooks are the same as paper books which they definitely aren't.
And the third, and most important factor in this game is simple: Thanks to the Internet, there's no need for the middle men. Authors can just sell their ebooks directly to their readers. It's that simple. There really is no need to have multiple entities between authors and readers, maybe a search engine makes sense, so that both find each other more easily, but that's it.
Tim Bray recently wrote a great discussion about the Pricing Drama in the ebook industry, a very good read.
I just wish the major book companies would learn faster than the music ones, and indeed there's true hope: O'Reilly has a truly modern, open, flexible and customer-friendly ebook policy. Their ebooks are reasonably priced, they offer paper/ebook bundles, ebooks are DRM-free and can be downloaded in a variety of formats (as often as you wish) that run on essentially any device (from mobile phones, to ebook readers, to Kindles to PCs and Macs) and you get free updates, including email notifications, to your purchased books.
In addition and as an extension of the traditional book sales model, you can sign up for a pay-as-you browse model through their Safari Books Online service. My puny and limiting writing skills can hardly describe how laudable, innovative, customer-friendly and truly embracing this approach is!
A Word About DRM
To conclude the "ugly" part of the ebook business observation, here are a few reasons why DRM for books is a bad idea:
DRM simply does not work: Hiding the encryption key for a DRM'ed book from the user, but making it easily available to the application so it can show the book to the same user are mutually exclusive goals from a technical point of view. Hence, DRM schemes are easily broken by merely observing how the reader application works, and thereby figuring out how and where it hides the key. In fact, all major ebook DRM schemes have been hacked so far, and Apple's new scheme for the iPad's iBooks are going to be the next victim.
DRM inside black boxes doesn't work either: Putting everything into the same hardware box may conceal the mechanism for a limited time, but all major closed platforms have been successfully hacked, including TPM modules, so this is just a way to delay the obvious, not a solution.
DRM makes the book-reading experience more difficult for the user: The extra layer of DRM between an ebook and its reader adds complexity to the process, which is bad for the user experience. As an example, in order to be able to read DRM'ed books on my Sony reader, I had to install an Adobe application (Adobe Digital Editions), register for an Adobe account on their homepage (including the confirmation email and link dance), register my computer with Adobe's servers and then my ebook reader with Adobe's servers. Oh and that was just the theory. Since the ebook reader registration process doesn't work on the Mac, I had to set up a virtual machine with VirtualBox and a trial Windows installation inside as a workaround. Back to business: The last thing you want when you try to create a new market is a technology that keeps your customers away from you. And that is what DRM does.
DRM has a bad reputation among geeks: So who are the first to adopt a new technology? Right, the geeks. And how do they react to DRM? Either they laugh at it (if you're lucky) or they hate it (with varying degrees of opposition). Not a good situation to build that initial group of advocates for your shiny new ebook technology, don't you think?
DRM costs money: For DRM to work, you either need to set up your own DRM infrastructure (including developers, back-end datacenters, etc.), which is what Apple, B&N; and Amazon are doing or you have to partner with someone to do the DRM stuff for you (which is what Adobe is trying to make money of). Either way: Slapping DRM onto a book costs money and work. That makes your ebooks more expensive and eats away your profits.
The list goes on and on, but I think these are the major points why DRM is flawed in the first place. The music industry has learned this lesson, finally, now it's time for the ebook industry to do the same!
There's a growing number of publishers how chose to go DRM-free (and that saves some licensing and processing fees with DRM providers as well!), in fact there are whole lists, if you dig deeply enough. Bravo! I hope they'll reach critical mass soon!
The road to widespread ebook adoption is a bumpy one. 2010 may become the year of the ebook breakthrough if technology manages to bridge the usability gap (cheap ebook readers and Apple's focus on usability may help the most), but the bigger adoption hurdles lie in the way business evolves around this new market, and the delays that the collateral damages of ebook and traditional book companies battling against each other induce.
While I'm accepting DRM as a necessary evil for now (knowing that it'll go away sooner or later), I don't want to take part in a closed system where the retailer, infrastructure and device manufacturer is the same company, which limits competition, damages authors and publishers and increases prices. That's why I bought an "independent" ebook reader (which ironically comes from a company that is used to acting in a rather monopolistic way), accepting the extra work of having to buy, manage and load books on my own (which is made nicely simple through the open-source Calibre app).
Let's hope that the O'Reilly's and the other innovative ebook companies grow fast enough to show that there's a viable and successful business opportunity in offering open, DRM-free and truely electronic ebooks, as opposed to pretending that ebooks are just an extension to the scarcity that paper books rely on.
P.S.: If you understand German, check out the current episode of the POFACS podcast "ebook reader", featuring an interview on ebook technologies with yours truly :).