Books, Berkeley and Brazil--even after 500 years, it is still all about distribution:

Let’s begin at the risk of being trite—modern copyright began with the invention of the printing press and the ability to make multiple copies of a single work. Sometimes, however, we forget that mere mass production of content was not enough to transform the book into a commercial proposition. In addition to production, the book had to be distributed in some manner. Without effective distribution, the printing press and its aftermath would have been of little commercial importance. It is popularly observed that the digital online environment has brought together production (or at least reproduction of content) with distribution, whereby content can be reproduced and then digitally distributed in a seamlessly connected manner. While this is of course true, there is an element of over-simplicity in viewing digital online distribution in such a stripped down fashion. The reality is often more nuanced, as evidenced in two recent news items, the first about distributing science research contents and the second about the commencement of the sale of Kindle readers in Brazil. Let’s look at each in greater detail.

“The way scientific journals are run” was the focus of an article, entitled “What’s wrong with Science”, that appeared in the December 14, 2013 issue of The Economist, here. The gist of the piece is that Professor Randy Schekman, of the University of California, Berkeley, and a co-winner of the 2013 Nobel Prize in Medicine, here, has announced that he will henceforth “boycott” what he terms “luxury journals”, such as Cell, Nature and Science. Sheckman’s dissatisfaction with these journals is two-fold. First, he claims that they ‘artificially” limit the number of papers that they accept for publication in order to stoke demand by creating false scarcity, à la “limited-edition handbags”.

In so doing, this false scarcity serves the interests of the journals by enhancing journal subscriptions, but at the social cost of not necessarily publishing the best current research. Second, these journals help distort the enterprise of science by perpetuating the “tyranny of the ‘impact factor’ ”, which is a value that purports to show how “important” a given journal is (emphasizing “hype and faddishness”, and rewarding “who is first” rather than “who is thorough”).

It has to be noted that Schekman also edits eLife, here, an open-access journal (which means inter alia that readers are not charged) that seeks to compete with the glitzy likes of Cell, Nature and Science. The eLife journal is being supported by a number of established science charities. The premise of the journal is that scarcity of publication space is no longer limited by the number of pages in a physical copy. Freed from commercial distortions, it is claimed, eLife can better serve the scientific community by making available more quality research papers.

The second item appeared on February 7, 2014, on Reuters.com. Entitled “Amazon tests Brazil’s retail jungle with its Kindle”, here, the article describes how Amazon has begun to sell Kindle e-readers online. Note carefully, we are not speaking about the contents of the Kindle e-reader, which continue to be delivered digitally online, nor bricks and mortar stores, where a customer can purchase a Kindle reader. Rather, what Amazon seeks to do is take online orders for the sale and distribution of the device itself. This means that Amazon must find a way of delivering the e-reader to customers throughout the vast territory of Brazil, 200 million residents strong. Interestingly, shipment of the Kindle will be free and customers will be able to pay off the e-reader in up to 12 instalment payments (though the mark-up, if any, in paying for the device on an instalment basis was not specified). In so doing, Amazon is taking head-on the challenges posed by the well-known logistical and transportation problems in Brazil, not to mention high labour costs and rigid labour law provisions as well as an oppressive tax regime. Indeed, unlike in the U.S., where Amazon relies on its own distribution network and warehouses, in Brazil, Amazon will rely on distribution of Kindle devices through what are described as “external partners”. No further details were provided about the identity of these external partners.

So what do we make of these items? As for Professor Schekman and the eLife journal, we see an attempt to break the alleged privileged position of the elite science journals and the false scarcity that they allegedly create in publishing science research, while at the same time “democratizing” the distribution of worthy scientific research. Lurking behind this effort, however, is really a tale of trade marks and goodwill. The “impact factor” is both a cause and result of the goodwill enjoyed by the elite commercial journals. The challenge of Schekman and his associates is to neutralize the goodwill enjoyed by these journals, or at least to create sufficient goodwill in the eLife journal so that it can effectively compete. Aiding this effort is the reputation that Schekman enjoys by virtue of his Nobel Prize award. Seen in this light, what appears to be a matter of finding a better way to distribute the contents of scientific research becomes a battle over establishing viable goodwill in the online publishing project.

As for the sale of the Kindle online in Brazil, the focus is not directly on the distribution of the contents per se, but the distribution of the device necessary to read online content that is accessed and stored on the e-reader. The centrality of the device in the distribution of literary content can be seen, in some sense, as an extension of the home computer (and later the laptop and the tablet). However, none of these devices, being general purpose computer machines of various kinds, is solely dedicated to accessing stored literary contents. Moreover, the special challenge of distributing content digitally is joined with the long-standing problem of physically distributing the e-reader to far-flung customers Seen in this way, Kindle’s initiative in Brazil constitutes a new form of distribution of content, reaching back to the dawn of the age of the printing press and the challenge then, and now, of how to get this content into the hands of readers.

Cinema Economics and the Changing Fortunes of the Movie Theatre "Experience"

These are not the best of times to be in the movie theatre business. True, movie theatres are not (at least yet) going the way of the buggy whip, but the movie screening business has certainly seen better days. For instance, Americans and Canadians are reported to have reduced their average movie outings from five times to four times per annum over the past decade (when is the last time you went, dear reader?). How is the industry seeking to cope?

First, a bit of history: copyright laws came into existence when it became technically feasible to reproduce and distribute a work in a commercially valuable manner (a.k.a. the printing press). The legal challenge was how to provide adequate protection for both the author of the work and the new kid on the block, the publisher, whom together with the book retailers became the intermediating party between the author and the market of end users (a.k.a. the reader). This paradigm of the tripartite relationship between and among the author, the publisher and the reader still holds true to this very day (though online self-publishing suggests that some change is on the way, at least for certain kinds of content).

However, the paradigm is not apt in all of its particulars for all forms of copyright-protected content. Perhaps the best example of this is the commercial rise of the movie. Here the production house, unlike the lone author, served as the creator in the aggregate of the movie. Until the 1970s, the primary form of distribution was the movie theatre (which may have also been related to the movie production house itself, unless local competition laws stepped in). The movie theatre differed from the book publisher primarily because it not merely distributed the movie by screening it to patrons, but it also provided a certain kind of viewer experience in doing so. The attraction of the viewer experience enabled the theatre also to reap attractive margins from the sale of concessions to the captive patrons.

Since the 1970s, however, we have seen this commercial paradigm break down in part. First, the rise of the videocassette market enabled the viewer to replace the movie theatre with the comforts of his own home. In a cost-benefit analysis, the viewer was sometimes prepared to forego the movie theatre experience for the reduced expense of renting (or even owning) a copy of a movie, once the viewer made the initial outlay of the video player itself, especially if the entire family was gathered around to watch the movie. During the past decade, online distribution of movies to various home display devices has come to challenge the video player. But whether the video player, the computer screen, or the tablet, the result is the same for the cinema owner, namely he is being totally bypassed in the distribution function.

What is the movie theatre to do? An article in November 30, 2013 issue of The Economist (“Cinema economics: Bigger on the Inside”), here, discusses some of the industry’s most recent efforts. In the main, the industry is trying to improve the viewer experience since, at the end of the day, this is its major competitive advantage over home or other personal viewing. They are seeking to do this in two ways. First, movie houses are seeking to go beyond traditional movie screening, to create what is described as “event cinema”. For instance, the article describes how the 50th-anniversary episode of the BBC’s “Doctor Who” series was being shown at the same time on 800 wide screens in 20 countries, replete with 3D theatre-seat functionality. Event cinema experiences are being extended to sporting and musical events, such as grand opera, as well as even museum exhibitions that are no longer showing at the museum itself. Even more far afield is the proposal that theatres make themselves available during off-hours to enable video-game players to show their wares on a full-sized cinema screen (this seeking to make use of cinema down-time suggests the motivation that led companies such as Amazon to rent out its unused computer capabilities, fuelling the rise of the computer cloud industry ). As observed, “We are not trying to display contents on the big screen. All we are trying to do is make better use of the assets we have.”

Second, they are seeking to improve the physical setting at the cinema itself. Thus one chain is offering plush, reclining seats, which may in the aggregate decrease the number of seats in the theatre by up to two-thirds, but may well increase the occupancy rate by a significant percentage and increase overall revenues by charging commensurately higher prices. Others are seeking to augment the traditional fare of popcorn and a soft drink with liquor (if permitted) and full, fancy meals. Leveraging the viewer experience is a galaxy away from the early days of book publishing. Even in our own time, the efforts of the neighbourhood book store, and even the book chains, to translate the bookstore experience into a commercially viable strategy has not in the main succeeded. But the consumer experience with respect to traditional book-buying was never as central to the business model as it has been to the cinema industry. How well the industry succeeds in creating a commercially viable 21st century cinema experience may well determine the long-term viability of the industry.