Brian O’Leary of Magellan Media has kindly offered to talk to me later today (3pm EDT) about his BookExpo America presentation ‘Impact of Piracy & Free on Booksales’. For a powerpoint presentation of his talk at BEA, see here.
I blogged last week about the Publishers Weekly article entitled ‘BookExpo America 2009: Study Calls E-book Piracy ‘Overstated’ and I compared this to author Pamela Clare’s personal experience of being the victim of piracy. Brian left a comment today which I’ll quote here:
I’m going to be talking to Sarah later today. In the meantime, a few thoughts:
- the comment about piracy being “overstated” referred to the number of titles available on BitTorrent sites (estimates are a few thousand to about 10,000 of the 2 million-plus books in print)
- we looked at the impact on sales of O’Reilly front list titles for titles first published in 2008. All of the titles were published in both print and digital form, and we tracked total sales across all formats
- the study did not endorse piracy; in fact, one of the first slides says that we feel that intellectual property should be protected. We hypothesize, though, that at least some titles may benefit from being made available on BitTorrent sites, and we set about to find out if that was true and for which titles
- content is given away free every day by book publishers (just look at how many tons of galleys and ARCs were handed out at BEA). We looked at piracy through the lens of marketing and promotion to better understand what is happening
The presentation can be found at our web site, under the “presentations” tab.
Please feel free to leave your thoughts and questions for Brian.
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Welcome, Brian. Thanks so much for stopping by.
Judging by the comments you made earlier, you don’t believe piracy is “overstated” in all cases, which was what I understood from the Publishers Weekly article. You say that relatively few books in print are currently available for illegal download, but I’d imagine this will only increase.
Which titles in your study benefited from BitTorrent sites? Do you think the surge in sales is akin to a customer buying a book secondhand, then purchasing a new copy or other books by the same author.
We looked only at O’Reilly titles first published in 2008. Of about 65 front-list titles, 21 have been uploaded to one or more BitTorrent sites, and about 19 weeks on average passed between initial on-sale and pirated content being uploaded, or seeded.
I think the better parallel, at least for what we are seeing, may be galleys or ARCs. Content is “discovered” online and, after sampling, the reader buys the book. That’s how ARCs are expected to work, as well.
Given how nervous publishers and authors are about piracy, I’m surprised they continue to produce ARCs. Do the potential benefits of ARCs outweigh the risks?
While we haven’t studied ARC use as part of this specific research, we have looked at it for another client. These ARCs are considered good marketing tools to promote early discovery, and most publishers feel that they can control piracy because the ARCs are usually printed, not digital. However, even printed ARCs can be and have been resold. It’s what we call a “gray market” for content distribution – you get some sales lift, but you also risk piracy. We think that BitTorrent sites may act in a similar way.
In that case, I’d imagine publishers are unlikely to go the way of digital ARCs, which is what many bloggers would like them to do.
The digital ARCs that are available through services like NetGalley are typically in closed systems. It is possible to “lock” these copies to limit how many times they are read or how long they are available. Generally, that strikes us as unnecessary for most books, but it might help publishers feel better about distributing digital content.
Speaking of digital content, did your study look at any books which are exclusively epubbed? Authors who are exclusively e-published feel particularly vulnerable. As their books are not available in a paper format, it’s hard to see how they could benefit from a surge in sales after appearing on a BitTorrent site.
All of the titles that we have studied to date have been published in both print and digital forms – what O’Reilly calls their “digital bundle” (EPUB, Kindle and PDF). O’reilly sells a lot of its content in digital form: they recently announced that 65% of their web-site sales are digital files, not print. I think certain types of books may be more likely to be pirated if available digitally, but that’s not what we have found so far looking at the O’Reilly sales data.
Do O’Reilly use DRM to protect their ebooks? So many customers (myself included) hate DRM. What other solutions are there?
O’Reilly does not use DRM. In fact, they negotiated with Amazon to forego DRM on Kindle titles. Amazon has generally added DRM without exception.
DRM is certainly not something readers ask for, and there is debate about how good it is at reducing piracy. We hope our research will help publishers understand what types of content are most likely to be pirated, and among those titles, which books are more likely to be hurt by it. If we can look at enough titles to draw some conclusions, it may be possible for publishers to be more selective in using DRM.
You also looked at the publisher Random House, who gave away “free” content. Was this an experiment to combat piracy? If so, how did it work out for them?
Actually, the Random experiments were deliberate tests to see how effective the publisher could be in promoting paid sales using free digital content. It wasn’t specific to piracy, but we included the results because they provide data on the use of digital content to promote paid sales. We see piracy as part of a continuum of possible ways to help readers discover and try content, hopefully as a path toward purchasing it. The Random House tests were (in effect) deliberate releases of free content; the O’Reilly tests involved involuntary release of free content. It’s interesting to put the two sample sets side-by-side and see similar results.
OK, one final question:
Some authors see every downloaded copy of their books as a potential lost sale. In reality, it’s impossible to know how many of those who downloaded the book would have purchased a legitimate copy had it not been available for free. Do publishers make estimates of much money they lose through illegal downloads? If so, how do they go about this?
You’re touching upon the central question for our research. We don’t feel that the mere presence of a title on a BitTorrent site is the same as a lost sale. It’s possible that the readers who download those titles would have been unlikely to have bought copies, and it’s also possible that more people will sample and eventually buy paid copies of titles they first encounter on a pirate site.
We can’t really “prove” that either of these is true, but the approach we have taken, in which we compare paid sales before and after piracy occurs, gives us at least a window into whether piracy had an immediate impact on paid sales. What we saw with the O’Reilly titles is an increase in paid sales after piracy occurs. It’s not uniform, but on average sales increase.
That doesn’t make this true for all titles or even any other titles – we have to research them to say what happens. I do think that the estimates of the cost of piracy that the AAP and others have made may be high – they see each instance of pirated content as indicative of multiple lost sales totaling millions of dollars annually. That may ultimately be true, but we have not seen evidence that pirated content is the same as a lost sale.
Brian, thanks for taking the time to answer my questions. Best of luck with your research!
Thanks for the opportunity!
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