The Future of Reading

Imagine reading the morning paper without getting out of bed. Imagine going to school without needing a single textbook. Imagine going into a meeting where all you need is a clipboard sized device that has access to all the documents you need at the touch of a button. The electronic digital paper revolution is here. I know it's been said before, but now it really is only a matter of time before 8.5 x 11" paper really begins to go the way of the dinosaur. According to the EPA, the average US worker uses 10,000 sheets of paper each year^*. That number won't fall to zero any time soon, but players in the pulp and paper and the printing industries need to start looking forward and adapting to avoid becoming extinct, because the future of paper is here.


/The future/

2010 has brought on an array of new devices to the market. The Amazon Kindle has an early lead with 60% of the market share, but with a market that is poised to grow exponentially in the coming years, there are no clear winners yet. All of the 'contenders' below, except for the LCD-based iPad, use E Ink Corporation's patented Electronic Ink technology, which actually uses a fairly straightforward concepts in chemistry and physics to produce a static image that doesn't require continuous power or back-lighting. Ultra-thin devices that can be rolled up and perhaps even folded could become commercial in a matter of years. The file size of an ebook can vary, but considering the cost and size of memory (an 8GB micro SD card can be purchased for $20 or less), it's not hard to imagine having all of the encyclopedia sets ever produced and much more on a device the size of a sheet of paper and only slightly heavier. Not to mention mobile wireless capability, which makes access to text virtually unlimited (3G wireless capability is already standard on many of the first-generation e-readers below).


/The contenders/

Amazon Kindle (Photo: Jon 'ShakataGaNai' Davis under CC license)

The Kindle was one of the first devices to enter the market, and because of it's online store, and focus on title availability. The device itself currently comes in two models: a 6" version and a 10" DX version (priced at US$259 and US$489 respectively). Both are capable of displaying multiple formats including PDF and have limited 3G wireless access (mainly for book downloads).

Proprietary format: AZW (with Digital Rights Management).

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Sony e-reader (Photo: Gdolck)

Until the end of 2009, Sony's e-reader had been the primary competitor to Amazon's Kindle. The device itself comes in multiple versions and prices, including a touchscreen option and 3G wireless. The downside is that the Sony store does not contain as many titles as the Amazon store and some of the top bestsellers are conspicuously absent. The upside is that its ability to read Adobe's EPUB format means that unlike with the Kindle, you have access to the growing list of ebooks available to 'borrow' for free at most major libraries (with a valid library card).

Proprietary format: BBeB (encrypted or unencrypted).

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Barnes & Noble Nook (Photo: Ajai Khattri under CC license)

The Nook is Barnes & Noble's jump into the market of e-readers. The device itself is well-designed and features a six-inch screen with a smaller, 3.5" LCD touchscreen for navigation. The Nook entered the market in the 2009 Christmas shopping season, and although the software has drawn complaints, the hardware is considered robust. Barnes & Noble also features a competitive collection of e-books on its online store. Along with the Kindle and Sony Reader, the Nook rounds out the list of static-image e-readers that dominate the recreational reading market (other devices do exist).

Proprietary format: none, but supports PDB, EPUB and PDF.

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Plastic Logic QUE

The QUE, by Plastic Logic primarily being marketed towards business users for digital documents rather than recreational book readers. It has been in development for over ten years and is likely to have the most advanced display capabilities of any device. It is currently available for pre-ordering and expected to begin shipping in April, 2010. There will be a 4 GB WiFi only version and an 8 GB WiFI + 3G version (retails for US $649 and $799 respectively). Both units are 8.5 x 11" and 1/3" thick with touchscreen controls. The device is also lighter than other e-readers because the screen is made of scratch-resistant plastic rather than glass. It's sure to make its way into quite a few executive boardrooms.

Proprietary format: none, but compatible with PDF, ePUB as well as most image and text formats.

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Apple iPad

The iPad isn't really an e-ink device but it can still serve the purpose of an electronic reader. Frequent book readers will complain about shorter battery life and eye-strain due to the backlit LCD that refreshes over 60 times a second. Claims about eye strain in modern LCD devices aren't necessarily proven, however, and the ability to place the screen in a comfortable position certainly make reading easier than on a fixed position monitor. The iPad wasn't designed exclusively for reading but rather as a multi-purpose device including web browsing, video and music capability. While it looks to be a convenient little device, I don't see it as an instant success; at least not when marketed to the recreational reader. It's basically a big-screen iPod touch with 3G capability which probably isn't the same market for readaholics. An organic LED (OLED) display may hold the greatest commercial promise for a future generation of iPads when it comes to reading.

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/The issues/

Price

While the prices of these devices will come down over time, most entry-level e-readers start at over $200 for a relatively small screen (about a five inch diagonal). Readers wanting something to read larger than a pocket Bible will need to spend up to $800 or more. Then will likely still need to pay even more for content, which typically include books as well as magazine and newspaper subscriptions. This is where a smart marketing model could really help the publishers and resellers. Readers should have the option to get a subscription that includes something like 3 books per month for a monthly fee that equates to 30% off the list price of individual purchases. Not all ebooks cost money though, many of the 'classics' have been released into the public domain (usually a period after the author dies or after the work was created depending on the country). In the past, publishers had still made money printing them, but in digital form they can typically be distributed for free. Google has made many of these works available for free download (PDF or EPUB) on its Google Books website. Many works of classical music are available the the public domain and available for free in the form of digital sheet music.


Copyright

This is a huge issue that could turn out to be disastrous to publishers and authors if it isn't handled properly. Publishers have privately been sparring over the selling price of their content with these device distributes. One of such instances became public when Amazon announced it was removing Macmillan e-books from its store. The issue was resolved with Amazon caving in to a price increase but publishers need to be extremely careful with their financial/pricing models. My advice would be for them to apply a really high multiplier or exponent to the cost policy variable to model the impact of illegal copying. Consumers aren't happy to pay the same price for an e-book as for a hardcover or paperback, and it could only be a matter of time before they revolt if the prices are too high. If illegal copying and distribution of digital books did become widespread, it would be virtually impossible to stop, given that the file size of text is much smaller than music and videos.

It's been just under a year since I posted E-Papyrus: Reinventing Paper, and since that time it's clear that this 'new reality' is here and exciting.

Copying right? The Digital Age of Consumer Media

High-speed internet, CD and DVD burners, personal video recorders, high-capacity hard drive, iPods, mp3 players, satellites and receivers made it effortless to transfer, reproduce and store trillions of bits of data at the touch of a button. Few groups, with the exception of the consumer have kept up with the technologies in their rapid state of flux.


Is 'file sharing' really stealing?!?
The entertainment industry put out an advertisement condemning the pirating of intellectual property. Their assertion is that stealing a television is the same as stealing a satellite signal. The list price of the service could be the same as a television, yet there is an important philosophical distinction. While intellectual property has apparent value, it does not have any tangible value. A person stealing a satellite signal only causes lost revenues for the provider if the thief would otherwise have paid for it. This does not make such a theft ethical; by law the violator could face penalties as if he/she stole a tangible good of equal value. It is still stealing, but it does require the distinction from someone who steals a material thing effectively removing a salable product from inventory, thus causing more apparent harm to the rightful owner. Many people continue to have little sympathy for entertainment executives and pop artists and movie stars that continue to earn millions despite the fact that it is the smaller artists that rely the most on record sales for their revenues.

The Law
The legal process is far too slow to keep up with the latest technologies and proved ineffective. By the time Napster was closed by the courts, peer-to-peer networks like Kazaa and BitTorrent were already set to take their place. The industry then went after the individuals that 'shared' the most content. This strategy had minimal success and created a PR mess in the process. Some of the violators were children using their grandparents internet account to do all their illegal downloading. People sympathize with ninety year old grandmothers accused of copyright infringement who don't even know how to write an email. The approach failed to dissuade large masses of people from downloading illegally.

The Lawmakers
The lawmakers (politicians) are part of an older generation that generally does not use or understand the technologies being used in potential copyright infringements. In 1998, President Clinton signed the Digital Millennium Copyright Act into law. Despite a modern-sounding name, the act did not provide the protections the record industry had hoped for. Less than a year later, Shawn Fanning released the original Napster that popularized 'file sharing'. Canada has yet to pass it's own version of copyright reform for the new millennium, but proposals have been tabled. A version of Bill C-61 will likely get re-introduced since the bill did not get passed before the 39th session of parliament was dissolved. The law will likely not have no more success at curbing illegal and/or unethical copying than it's American counterpart did.

While Canadian copyright laws have yet to be overhauled, the Canadian Private Copying Collective (CPCC) was created by the Federal Government in 1998 to collect and distribute royalties on blank media on behalf of music rights holders hurt by illegal copying. The tariff amounts are based on statistical data of music downloads. The table below shows current levy rates being charged to all blank CD's purchased in Canada. The proposed tax on music-based digital storage media and devices (such as iPods) was struck down by the Canadian Federal Court of Appeal on the basis that the CPCC does not have the legal authority to impose such a tariff (link). Others argue that it's unconstitutional because it is based on the presumption that consumers are not paying for the media on their digital devices. Some even argue the tariff encourages 'file sharing' because it compensates artists. It's certainly hard to believe that someone buying a digital camera should have to pay up to $10 to the record industry for their flash memory card.

	Tariff
Audio cassettes of 40 minutes or more	29¢
CD-R or CD-RW	29¢
CD-R Audio, CD-RW Audio or MiniDisc	29¢
Removable electronic memory cards over 256 MB (MMC, SD, Compact Flash, etc.)
no more than 1 GB	$2
more than 1 GB and no more than 4 GB	$5
more than 4 GB	$10
Digital Audio Recorders (iPods, mp3 players)
No more than 1 GB	$5
more than 1 GB and no more than 10 GB	$25
more than 10 GB and no more than 30 GB	$50
more than 30 GB	$75

Source: CPCC Tariff Backgrounder

The Enforcers
Without entering into the offices and living rooms of millions of private citizens, it's very difficult and in some cases impossible to monitor the massive amounts of data that gets transferred between electronic devices. In some cases, it's virtually impossible to determine who downloaded or uploaded something using an unsecured wireless network from a laptop that leaves little to no trace of itself. Recently, several police agencies complained that Blackberry's (made in Canada by RIM) are too secure--they can't intercept and monitor drug dealers who are using them. The trouble is that if security holes are deliberately built in to the devices, they become more susceptible to hackers. This extremely reliable security of the device was likely the only reason President Obama was allowed by the secret service to be the only standing president with a mobile communications device.

Asleep At The Switch
The CRTC is the "Independent public authority in charge of regulating and supervising Canadian broadcasting and telecommunications." Radio waves and satellite communications typically prove to be a very difficult thing to regulate since they pass through Canadian airspace whether the CRTC wants them to or not. Broadcast radio was not too difficult to control in urban settings because U.S. broadcast frequencies could simply be overpowered by stronger signals on the Canadian side of the border. Satellite radio did not have the same overwriting capability. During the first three years of the service, satellite radio was not officially available in Canada. Still, many Canadians were using the American service 'illegally' by registering 90210 as their zip code since the signal could be picked up even in northern parts of the country.

Another example is Pandora internet radio. The US-based service provides 'radio' stations customized to the users individual tastes. The CRTC forced the Music Genome Project (Pandora) to block its content for Canadian IP addresses in 2007. This did not stop some Canadian internet users from circumventing the block. In other cases, the blocking algorithms on the site simply do not work allowing Canadian IP addresses to access Pandora content freely (albeit violating the terms of use of the site).

It seems clear to me that everyone from lawmakers to enforcers, record industry execs to artists have a long way to go when it comes to adapting and bringing themselves into the twenty first century. The neo-luddites will lose the war against the Digital Revolution just as their counterparts lost their fight against the Industrial Revolution.