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10/16/2001
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Industry Comment: Whither The Electronic Book?

Columnist Bob Rubin is cynical about the future of E-books. Gadgets are great, he says, but their staying power depends on value, not hype.

New technology is fun. If an innovative product on the market is sufficiently good, after a while we wonder how we ever did without it. However, when we first see the new gadget, frequently neither we, nor its manufacturer, understand what will make it compelling.

While Sony's Betamax videocassette recorders were technically superior to the VHS units from Matsushita and others, they were destined to be vanquished in the battle for the consumer dollar. Why? I think the major reason was because the original units did not have timers and could not record for two hours--the length of a television movie. You see, the designers thought people would use the recorders to save what they were watching. Instead, purchasers used the machines to tape something they wanted to see later, especially movies. Time-shifting, not archival viewing, was the key motivator for the VCR's market acceptance. Sony lost, and the VHS consortium won, because utility was more important than technical sophistication.

That makes me wonder about the ultimate fate of the electronic book. Some people seem to think it will replace the printed page. Others believe E-books will fade into oblivion as a useless relic of a technologically-obsessed era, joining the electric carving knife and the CB radio in lonely abandonment on a shelf in the back of a dusty storage closet.

I'm not sure if the E-book is destined to be an overwhelming success or a blatant failure. It definitely has the opportunity, though, to make a significant change in how we learn and entertain ourselves. To do so, its technology has to improve, the pricing models must change, and the market has to be more clearly defined.

The present technology is cumbersome. While the form factor of the contenders has gotten better, the E-book readers are still bulky and eat batteries too lustily. No one wants to stop, while reading a novel, to charge a unit or change a battery. Perhaps more important, we read books under varying lighting conditions--in bright sunlight and under the dim glow of an airplane-seat lamp. It is not a real problem to design a unit that will work well under either condition. It is a challenge, however, to build one that can do both satisfactorily.

The existing pricing models for E-books are ludicrous. They are predicated, I suppose, on the assumption that the consumer is getting the same material by downloading a book as he or she would be by purchasing a printed copy in a bookstore. Therefore, the logic goes, the price should be essentially the same. All of the cost of printing, distribution, and stocking (not to mention remaindering--the return of unsold copies) is avoided by electronic distribution, yet it has not occurred to anyone in the industry to share some of these savings with the consumer.

An even more insidious obstacle to the adoption of the E-book format is the licensing arrangement. After I've read a book, I can pass it along to anyone in my family or to a friend. I can donate the book to my local library or even sell it. Not so with an electronic book. Sure, the publishers should not be in a situation where their intellectual property can be ripped off and distributed free, or sold at a massive discount by someone who did not pay for the rights; but neither should there be more regulations on the disposition of an electronic copy of a novel than on the print version.

The virtues of E-books are several. An E-book reader can hold an entire vacation's worth of novels and non-fiction works. Want to change the font or its size for easier reading? Press a button. There is also the potential convenience of being able to download rapidly a novel from your digital-subscriber-line or cable-modem Internet link (but because of concerns about illegal copying, most current E-book readers download via a telephone line directly to a secure server rather than over the Internet). Perhaps the greatest advantage of an E-book is your ability to search for specific information or to hyperlink to a footnote or a dictionary.

However, if electronic books are to be viable in the marketplace, the manufacturers of the E-book readers and the content publishers have to rethink their marketing methods. E-books will not replace the printed page--at least not in the foreseeable future. Instead, they will find a place in our lives, just as paperbacks fill a niche, coexisting with hardback books. The question will be whether the people who expect to make money from this new technology are smart enough to understand what is needed to entice the public to embrace enthusiastically the electronic book. One thing is certain: they aren't doing that now.


Downloaded any good books lately? Share your perspective about E-books or previous columns in Bob Rubin's new discussion forum.

Robert M. Rubin is CEO of Valley Management Consultants, a firm specializing in E-business and information technology strategy, organizational design, and evaluation. Prior to joining VMC, he was senior vice president and CIO for Elf Atochem North America, a $2 billion diversified chemical company. The recipient of multiple industry awards, he is a contributing editor to InformationWeek and a member of its advisory board. He can be reached at valleymc@home.com.

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