Nikon's D800 DSLR: A serious digital cinematography option

For DSLR digital cinematography fans, Nikon has been a continual source of frustration: Their DSLRs are superb still cameras, but video has always been an afterthought for the company--more an item on a marketing checklist than a well-implemented feature. However, Nikon's new D800 might change that. EOSHD reports on one of the first D800 video samples, footage shot at a temple in Taiwan. The video is gorgeous--far better than video shot on Nikon's D4, and with much more detail than video from Canon's new 5D Mark III, which has been roundly criticized for the softness of its images.

For its part, DxO Labs tested the D800 and said that its imager is the best that it's ever tested, with a rating of 95 out of 100. It had extremely accurate color rendition, the best dynamic range they've ever measured (14.4 stops) and excellent low-light performance (the ability to go to 2853 ISO without compromising image quality). They said that the D800's imager is about as close as you can get to medium-format performance in a DSLR imager. This performance is especially impressive given the 36.3 MP resolution of the D800's imager. In general, for a given imager size (such as APS-C), the higher an imager's resolution, the worse its low-light performance will be. Nikon has managed to combine excellent low-light performance with very high resolution.

DxO didn't test the D800 in video mode, but the video found by EOSHD suggests that the quality of the D800 is very good. However, Nikon still hasn't figured out a way to do 60P in 1920 x 1280. 60P is only supported at 1280 x 720 resolution; 1920 x 1280 supports 30P and 24P. Also, the D800's very high resolution could result in rolling shutter and moire problems; much more testing of the camera's video mode is needed. In short, I wouldn't rush out and place an order for a D800 yet, but the camera is shaping up to be a serious option for digital cinematography.

Library eBooks: A simple solution to a difficult problem

Whether school and public libraries should have access to eBooks depends on what kind of a publisher you are. If you're a smaller general or specialty publisher, it's not an issue--your company most likely already supplies eBooks to libraries. However, if you're one of the Big 6 trade publishers, there's a 66% chance that you don't offer eBooks to libraries at all. Only HarperCollins and Random House offer their eBook titles to libraries, and both companies apply significant restrictions: HarperCollins titles can only be checked out 26 times before they have to be repurchased, and Random House recently tripled the cost that libraries pay for their eBooks. Penguin, which once sold eBooks to libraries, has pulled out of the market, and Hachette, Macmillan and Simon & Schuster don't sell eBooks to libraries at all.

Publishers that either don't sell to libraries or sell with restrictions argue that library eBook lending cannibalizes potential sales of both eBooks and print. They say that it's as easy to borrow an eBook as it is to purchase one from Amazon or Barnes & Noble. Print books require patrons to visit their local library in order to check-out and return them, and publishers want libraries to implement a similar kind of "friction" when lending eBooks (although publishers generally won't go on the record about which kinds of "friction" would be acceptable.)

A variety of solutions have been suggested, from forcing patrons to physically visit a library in order to check-out eBooks, to slicing and dicing collections and parceling out different pieces at different times to libraries. In my opinion, forcing patrons to visit libraries in order to check-out eBooks completely negates the value of the Internet and online access. It takes the progress of library access back almost 20 years. As for making available different batches of titles at different times, that's likely to become a formula for patron confusion. Consider two titles, published by the same publisher on the same day. One could be available for lending immediately, but the other might not be available for months, if ever. Who will explain that to patrons? Librarians, of course, who have better things to do with their time.

I'd like to suggest a simpler, easier approach to the entire problem for those Big 6 publishers who are afraid of what libraries will do to their businesses: Delay the release of their eBooks to libraries. If your street date for a title is X, release the eBook version to libraries at X plus 90 or 120 days. That enables the retail channel to absorb the initial demand, and those consumers who have to read the title right away will buy it. The technical name for this approach is windowing, and it's been done by the motion picture industry for decades. In the movie business, there are many windows (for theaters, pay-per-view, DVD/Blu-Ray, streaming, pay cable, free cable/broadcast, airlines, etc.), but a single window for library eBooks would be much simpler to understand and explain.

If publishers are serious about supporting libraries and aren't looking for ways to discourage eBook borrowing by making it as difficult and confusing as possible, a single library eBook window would be the best way to protect publishers' financial interests (at least until eBooks become the primary book format) while providing library access to all eBooks in a reasonable amount of time.

"This American Life" and the Daisey affair

You may have heard that the public radio program "This American Life" retracted an entire episode that it aired last January based on portions of Mike Daisey's one-man show "The Agony and Ecstasy of Steve Jobs". The radio program focused on a visit by Daisey to Chinese plants that manufacture Apple's iPhone and iPad, and the allegedly bad work conditions he found. I won't rehash the entire story, but Daisey lied about a number of key events that he either witnessed or participated in during his trip to China.

After the "This American Life" episode aired, Rob Schmitz, the China correspondent for the public radio show "Marketplace", became suspicious about the story. He tracked down and interviewed Daisey's interpreter, who said that many of the things that Daisey told "This American Life" and said in his one-man show were partial or complete fabrications. For his part, Daisey lied to the host and a producer at "This American Life" about the name of the translator, and said that he could no longer reach her mobile phone number.

Here's an incomplete list of Daisey's alleged or acknowledged fabrications:

• Daisey said that the guards at the entrance to the Foxconn plant were armed; both Schmitz and Daisey's interpreter said that only the military and police are allowed to carry guns in China, not security guards. Daisey's interpreter said that the guards were unarmed.
• Daisey claimed that he spoke with a Foxconn worker who admitted that she was underage--13 years old--and that other workers he spoke to at the same time were 12 years old. The interpreter said that some of the workers who Daisey interviewed might have looked young, but that none of them were underage or admitted that they were underage. For his part, Daisey sticks by his story, but in his defense, he said that one or more of the workers spoke fluent English to him, a statement that his translator denies and that Rob Schmitz found to be extremely unlikely.
• Daisey claimed that he spoke with a group of workers who had been exposed to n-hexane, and that every person in the group was shaking from nerve damage. His interpreter said that the meeting never happened, and Daisey admitted under questioning that he fabricated the entire incident.
• Daisey said that he spoke with a man who was so injured by repetitive work building iPads that his hand had become claw-like. His interpreter said that Daisey met the man, but the man had never worked building iPads, and the entire episode where Daisey showed him a working iPad for the first time never happened.
• Daisey said that he visited Foxconn worker dormitories and saw bunk beds stacked nearly to the ceiling and security cameras inside dormitory rooms. His interpreter says that Daisey never visited dormitory rooms. Daisey claims that he did visit the dorms without his interpreter, but that the security cameras were in the halls, not in the dormitory rooms. Given that Daisey doesn't speak Chinese and, as discussed above, it's extremely unlikely that the workers Daisey encountered spoke English, how could Daisey have visited the dormitories without his interpreter?
• Daisey claimed that he was told by a group of workers protesting working conditions at Foxconn that they met at Starbucks to discuss their strategy; Schmitz said that was as likely as a group of United Auto Workers organizers in Detroit meeting at a Chinese tea room.
• Daisey also said that he was shown a government "blacklist" of people who would not be hired by Shenzhen manufacturers because they had protested working conditions; his interpreter said that the document didn't have any government stamps or seals, and was most likely a fake.

No one denies the work conditions at Foxconn and other manufacturers--they've been widely reported and have been documented by Apple's own audits. However, the most interesting parts of Daisey's allegations--that he actually spoke to underage workers, to workers injured by exposure to n-hexane, and with a man so injured by repetitive work building iPads that his hand had become claw-like--were all acknowledged or likely fabrications.

Ira Glass, the host of "This American Life", has repeately said that when Daisey told him and his producer that his interpreter could not be found, he should have killed the story. However, so much of the story checked out that they believed Daisey. When the story aired, Glass went out of his way to say that the story had been extensively fact-checked by "This American Life" before it was aired, which raises the question: Why did Glass stand behind the story when the interpreter, the only independent witness to everything that Daisey claimed happened, had "disappeared"?

Rob Schmitz of "Marketplace" said that it was very easy to find Daisey's interpreter--he simply entered the name that Daisey used for the interpreter during the radio show (Cathy Lee), and the words "interpreter" and "Shenzhen", into Google, and she came up as the first link. Couldn't the "This American Life" team have done the same thing? Finally, the authenticity of some of Daisey's monologues has been questioned in the past, including by the New York Times. Shouldn't that have raised "red flags" with the "This American Life" team?

Even though the theater where he's performing his one-man show says that the show will continue, Mike Daisey's credibility has been destroyed. The question now is, given how many errors got into this "This American Life" story, how many other bogus stories have gotten on the air?

Sony's new A57 brings high-end features to low-end DSLRs

Sony's new Alpha SLT-A57 is Sony's most important entry-level DSLR (yes, it's actually an EVIL design, but in a DSLR-like body) to date. Here's some of the new camera's features:

• A 1.44 megapixel LCD viewfinder
• 10 fps continuous shooting mode with autofocus
• Autofocus built into the body rather than the lenses
• 1920 x 1080 video at 60P or 24P (50P and 25P in Europe), with AVCHD 2.0 compression
• A bigger battery, the same as the A65 and A77

The A57, with a kit 18-55mm F3.5-5.6 lens, will have a suggested list price of $799. The body alone will cost $699. As Digital Photography Review points out, the A57 is a slightly feature-reduced version of the A65 with a 16 MP imager instead of the 24.3 MP imager in the A65, for $300 less. It's going to be a serious alternative to Canon's T3i and Nikon's D5100, especially for videographers. It's also a better value for the money than Sony's own NEX cameras, although it's considerably larger.

Digital Photography Review has a site where you can compare images from the A57 with those from a variety of other cameras side-by-side. Click here to visit their site.

What would you rather have: A monopoly or price-fixing?

Last week, The Wall Street Journal reported that the U.S. Justice Department has warned Apple and five of the "Big 6" trade publishers (Macmillan, Penguin, Hachette, HarperCollins and Simon & Schuster) that it's planning to file suit against them for price-fixing as a result of their implementation of agency pricing for eBooks. Here's a brief overview (and a disclaimer: I'm not a lawyer, and this isn't legal advice):

Until 2009, virtually all publishers in the U.S. sold their books (both print and eBooks) to resellers under the wholesale model. Typically, books would be sold by publishers to resellers at 50% of their suggested list prices--the prices printed on the book covers. Resellers were then free to resell the books at any price they desired. This was the model (along with co-op payments for display locations at the front of bookstores and preferred positions on bookshelves) that Barnes & Noble and Borders used to drive hundreds, if not thousands, of independent booksellers out of business with discounting. In many cases, the "big box" booksellers sold books for less than the price that independent booksellers paid to buy them.

Amazon used the same model to launch its entry into the eBooks business. Amazon's strategy was to sell all its eBooks for $9.99 or less, even if that meant selling them below the wholesale price. Amazon quickly controlled as much as 90% of the U.S. eBook market.

In 2009, as part of its entry into the eBook business, Apple proposed a different model to the Big 6 publishers (all of the companies under investigation plus Random House), which became known as agency pricing. Under agency pricing, booksellers don't actually purchase the books that they sell to customers--instead, they act as "agents" for the publishers and take a commission on each sale, which Apple set at 30%. Since the booksellers don't own (take title of) the books, the publishers can set the prices, and the booksellers are obligated to sell the books at that price. Five of the Big 6 publishers implemented agency pricing for their eBooks (Random House waited a year before it implemented agency pricing, which is why it's not under investigation.)

The five participating publishers went to their resellers at approximately the same time, and told them that, regardless of when their existing distribution contracts were to expire, their contracts would be immediately amended to require agency pricing of eBooks. Any reseller who refused would have their supply of eBooks cut off. The first skirmish was between Amazon and Macmillan--Macmillan implemented agency pricing and Amazon briefly stopped sales of all Macmillan titles, but soon relented. That opened the floodgates, and Amazon agreed to agency terms from the four other publishers (although it has refused to accept agency terms from any additional publishers except for Random House).

So far as consumers are concerned, the net result of agency pricing is that prices of eBooks from the Big 6 publishers have gone up substantially, from $9.99 to as much as $16.99. eBooks from the Big 6 were once less expensive than paperbacks; now, in many cases, they're more expensive. In some cases, eBooks are even more expensive than the discounted price of hardcovers.

Both the U.S. Justice Department and the European Union are investigating Apple and the five publishers for price-fixing. The external evidence is that all five publishers implemented the same pricing policies at the same time, and all five threatened to cut off supply to any reseller who refused to agree to the new terms. In Walter Isaacson's biography of Steve Jobs, Jobs is quoted as saying:

"We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway.' 

Jobs continued, "They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books."

That certainly gives the appearance of an organized effort to raise prices, orchestrated by Apple and executed by the five publishers. Publishers and their defenders argue that agency pricing is necessary to prevent Amazon from getting a monopoly in the eBook market, which, while only 20% or so of the "Big 6" publishers' sales, is likely to become 50% or more in a few years. A monopoly would give Amazon control over pricing. Advocates of the government's position say that the actions of Apple and the five publishers have substantially increased consumer prices for eBooks, and that it's hypocritical for companies like Barnes & Noble to support agency pricing when they used wholesale pricing to wipe out their independent competitors.

One of the most important things to understand about U.S. antitrust enforcement is that it's illegal to be a monopolist, but it's not illegal to have the potential of becoming a monopolist. At the time that Amazon had a 90% eBook market share, the eBook market was new ("nascent") and both small in units sold and dollar volume.  The Justice Department almost never goes after a monopoly in a nascent market. Today, Amazon has between 60% and 65% of the U.S. eBook market--a big share to be sure, but not a monopoly. If agency pricing went away tomorrow and Amazon went back to its old pricing strategy, it's very unlikely that the millions of people who own Nooks and eBooks from Barnes & Noble, Apple and other resellers would throw away their eReaders, tablets and eBook collections and start buying from Amazon. So, Amazon didn't have a monopoly, doesn't have a monopoly now and isn't likely to have one in the future.

On the other hand, price-fixing is illegal, and it doesn't even require a formal agreement among the parties to prove that price-fixing exists. There's no question that agency pricing has raised priced for consumers, at least for titles from the "Big 6". (Statistics rolled out by some defenders of agency pricing that show that eBook prices have dropped also include titles from self-publishing authors, some of whom sell their eBooks for as little as $0.99.)

Publishers argue that Amazon is a very difficult company to do business with, and all the evidence I've seen supports them. However, tough bargainers are a fact of life: Wal-Mart has made the lives of vendors miserable for years while pursuing an "Always the Lowest Price" strategy, but vendors have learned to live with it. Taking illegal action to prevent a company from becoming a monopoly is still illegal.

Staples calculates how fast you read

For whatever reason, Staples has put a reading and comprehension speed test on its website. Click below to take the test:

Source: Staples eReader Department

Boom goes the dynamite: It's "The Klemfarb Report"

My consulting company just launched a new free weekly newsletter called The Klemfarb Report, covering the week's most important eBook industry announcements and most interesting analysis articles. I'll be editing the Report, but it won't replace The Feldman File, which I'll continue writing. If you'd like to see a sample of The Klemfarb Report, click here. You can subscribe directly from the newsletter page, or you can click here to subscribe.

There's always a compromise

Andrew Chen has written a great blog post about a recent visit he made to Pixar's Emeryville headquarters. Matt Silas of Pixar invited him to tour the facility, and at the end of the tour, Chen asked Silas what his favorite Pixar film is. Here's how Silas replied:

“This is such a tough question, because they are all good. And yet at the same time, it can be hard to watch one that you’ve worked on, because you spend so many hours on it. You know all the little choices you made, and all the shortcuts that were taken. And you remember the riskier things you could have tried but ended up not, because you couldn’t risk the schedule. And so when you are watching the movie, you can see all the flaws, and it isn’t until you see the faces of your friends and family that you start to forget them.”

The lesson that Chen drew is that developers will always think that their product is s**t, no matter how good it actually is. The lesson I take is that every product, every service, every work of art, is a compromise. Pixar is arguably the most successful movie studio of the last 30 years--with the exception of the recent "Cars 2", Pixar has had a nearly unbroken streak of both critically and financially successful motion pictures, starting with the original "Toy Story". And yet, even Pixar has to compromise in the production of its films. Team members sometimes have to take shortcuts and avoid changes that might have improved the films in order to stay on schedule.

"Supercar" manufacturers like Ferrari, Lamborghini, Rolls-Royce and Bentley like to say that they build "no compromise" automobiles, yet of course there are compromises: Their cars can cost upwards of $300,000 and get eight miles to the gallon. The compromise for their "no compromises" cars is to spend a huge amount of money when you buy, drive and service them (not to mention buy insurance for them). Buyers and reviewers regularly complain about the compromises made in the design of DSLRs and camcorders: Why is the imager's resolution so low (or so high)? Why doesn't it have a 1080P/60 mode? Why does it have a limited slow-motion capability (or none at all)? Why did they use a HDMI interface instead of SDI?

Every manufacturer has to make compromises in its products. Some are made because they have to keep the price of the product under a certain amount. Some are made to protect the profits from other product lines. (For example, if a new $10,000 camcorder is just as good and does everything that the company's $30,000 camcorder does, customers would be crazy to buy the $30,000 model.) And some impose compromises on the buyer: For example, if you want a true cinema lens, you'll need to spend several times as much for it as for a lens designed for still photography.

Product developers know that there's never enough time or money to make their products perfect. They work to make their products the best they can under the constraints that they have to live with. Even with software and services that can be continuously modified, they have to ship at some point. They may ship with a minimum viable product and then improve it from there, but they have to ship. That's why there are always compromises.

There are more important things than getting press

Yesterday, TechCrunch reported that ProFounder, a fundraising platform for startups, has shut down. According to the company's founders, securities regulations prohibited them from offering all the services that they wanted to, and led in large part to the company's failure. However, I don't want to dwell on the reasons for the company's failure, and instead examine the importance of one particular factor: Getting press.

If you look at the ProFounder home page (or the former home page, if it's no longer there), you'll see this near the bottom:




ProFounder, like many startups, worked hard to get press coverage; they believed that the press gave them credibility with customers and investors, and to an extent, that was true. However, startups often go to ridiculous lengths to get press coverage...even when their website is nothing more than a placeholder.

Press coverage can motivate people to visit your website...once. If you're not ready for the traffic or you can't do anything productive with it, getting press coverage is not only a waste of your time, it's actually counterproductive. Consider some of the mistakes commonly made by startups: Using your home page primarily to collect email addresses usually results in a low-quality mailing list. Collecting email addresses but not doing anything with them for months results in frustrated visitors. if your website is poorly designed, most visitors won't take the time to figure it out--they'll simply leave. If it's hard to sign up for your service, or either the sign up process or your service itself doesn't work, they'll leave. Even worse, once they leave they probably won't come back.

Press coverage that comes as a result of running a successful business is far more valuable than coverage pursued in the hopes that it will make your business successful. And, you have much more leverage over how your story is reported when the press is pursuing you, rather than the reverse. In the earliest stages of your business, social media is far more effective than press coverage for reaching potential customers.

Inkling and Vook: Is B-to-C to B-to-B really B-to D(isaster)?

Let me explain that title: If a company moves from selling to consumers (B-to-C) to selling to businesses (B-to-B), are they setting themselves up for failure? Recently, a couple of well-known electronic publishing names have changed their focuses from selling eBooks to consumers to selling eBook creation tools to writers and publishers. Vook had a highly-publicized launch in 2009 as a publisher of enhanced eBooks, which included audio and video along with text. In the second half of last year, the company changed direction ("pivoted", in the current vernacular), and focused on selling its enhanced eBook production tools to other publishers. Vook's toolset remains in beta, but the company is hinting about "major announcements soon", suggesting that they're getting close to general availability for their software.

Earlier this week, Inkling, an eTextbook publisher focusing on the iPad, announced a similar shift in strategy. Even though Inkling has been in business for about 18 months and has deals to reformat textbooks from a number of major publishers, it's only released about 200 titles so far, just a tiny fraction of the number needed to be truly competitive in the eTextbook market. In order to stimulate production of additional titles, Inkling announced that it would 1) Deliver its eTextbooks in HTML5 format that will work in many browsers, and 2) Release an eBook authoring and production service called Habitat. Habitat, which is in an early closed beta, will be licensed to publishers at no cost.

Like Apple's iBooks Author application for OS X, eBooks created with Habitat can be distributed anywhere for free. However, eBooks created with Habitat for sale must be offered through Inkling's own website and iPad app. In the case of sales through the website, Inkling takes a 30% commission. They also take a 30% commission from sales through their iPad app, but Apple takes another 30%, leaving only 40% for the publisher. Unlike Apple, which limits sales of titles created with iBooks Author to its own iBookstore, Inkling allows Habitat-based eBooks to be sold through other outlets. However, publishers have to plan for the probability that most of the sales will go through Inkling's own channel, with as little as 40% of the sales price coming back to the publisher.

Both Vook and Inkling are moving from B-to-C to B-to-B. In Inkling's case, it's using Habitat in part to increase the number of titles available in its format, but Vook is now out of the B-to-C business. Both companies are hoping to find a successful business model, but history suggests that this kind of pivot is rarely successful. In the early days of online video, many companies launched advertising-supported streaming video sites. Other than YouTube, only a handful of those sites have been successful, and a good number of the unsuccessful ones pivoted to sell the technology they had developed for running their sites to other businesses. In some cases, they sold what's now termed  "white-label online video platforms" for uploading, compressing, storing and displaying video content, while other startups sold technology for video ads. Most of the companies that pivoted to B-to-B were no more successful than they were when they were focusing on consumers. One of the few that pivoted successfully was Brightcove, which just went public today. However, even though they launched in 2004, the company has never been profitable.

Selling to businesses is very different than selling to consumers:

• You actually have to collect revenue from your customers when you sell to businesses, which means that your product or service has to have real value and be positively differentiated from competitors.
• You need a sales force, whether in-house or reps, to call on potential customers.
• The sales cycle (the amount of time needed to close a sale) can be very long, and many people are likely to have input into the purchasing decision. It may take six months or more for the customer to evaluate your solution and decide whether or not to purchase.
• Business customers demand a high level of customer and technical support. You may need to have support engineers available on call 24/7.

I've seen startups use this pivot enough times that it often seems more like a desperation move than a successful strategy. If a company wasn't successful using its tools, why is it likely that anyone else is going to be more successful using those same tools? The tools might solve a problem that doesn't exist, or provide features that the vast majority of customers don't want or need. They might be too difficult to use or too slow, which will lead businesses to try and then abandon them. Or, they might not be differentiated from other products and services already in the market.

I'm not saying that Vook's or Inkling's tools are bad, or that the companies' efforts to pivot will fail. (I've not been able to test either Vook's or Inkling's software.) However, both companies have a steep uphill climb, as does any company that tries a B-to-C to B-to-B pivot.

Aereo: Another "cable killer"?

Companies have been trying for years to offer cable television-like services over the Internet, without having to either get permission from broadcasters or pay them to retransmit their shows. FilmOn and Ivi are two companies that tried last year, but are both currently "off the air" as the result of court injunctions. Aereo, a New York-based company, is the latest to try. The company launched its service today in New York City. According to the company, Aereo is designed specifically to get around the legal limitations that shut both FilmOn and Ivi down.

Aereo will stream the signals from 20 New York City-area broadcast stations to its subscribers for $12/month, and will include a network-based DVR service that was upheld as legal by the U.S. Supreme Court last year in a case against Cablevision. All the major broadcast networks, including ABC, CBS, Fox, NBC and PBS, will be included, but cable-only networks such as USA, TNT and CNN won't be. That's one big difference between Aereo's service and those of FilmOn and Ivi, both of which offered a selection of basic cable networks. In addition, Aereo will initially only be available in New York City, and Aereo will only carry signals from local television stations--another difference from its predecessors, which made signals from stations in Los Angeles and New York available to subscribers around the U.S.

Aereo is doing one more thing that it hopes will make its service ligitation-proof: For every subscriber, Aereo will install a tiny, thumb-sized antenna in an undisclosed location in New York City. (Correction, February 15, 2012: Aereo is going to allocate each subscriber their own antenna from a pool of antennas while they're using the service, not install a dedicated antenna for every subscriber.) The idea is that each subscriber will receive the signal from their own antenna, not from a "community" antenna, and therefore, Aereo isn't a cable system and isn't bound by cable retransmission rules. It's an interesting way to try to get around the regulations, but whether the courts will agree is an open question.

Aereo has one more card to play: One of its investors is IAC, and company Chairman Barry Diller will join Aereo's Board of Directors. Diller is a former VP of development at ABC Television, former Chairman and CEO of Paramount Pictures and former Chairman and CEO of Fox, where he founded the Fox Television Network. At one time he owned USA Network. Diller is one of the best-connected executives in the media industry, and he has the experience in running and working with television networks and movie studios that neither FilmOn nor Ivi had. However, it's unclear if that's going to be of any help if the New York television stations go to court against Aereo.

Update, March 1, 2012: The Hollywood Reporter reports that not one, but two, lawsuits were filed against Aereo today to stop it from launching on March 14th. The first lawsuit, asking for a permanent injunction and statutory damages, was filed by Fox, Telemundo and PBS and their New York affiliates. The second lawsuit, asking for pretty much the same thing, was filed by CBS, NBC and ABC and their local affiliates. The Hollywood Reporter says that the two lawsuits are likely to be consolidated.

If you live in New York, have poor television reception and don't care about cable networks (or can get what you want from Netflix), it may be worth considering Aereo as an alternative to cable. If you live outside New York, don't hold your breath--Aereo's unlikely to spread to other cities until the courts determine whether or not its service is legal.

Signs of the iPadcalypse: $70 discount on iPad 2s at Meijer

Parts are flying off the iPad rumor mill. According to All Things D, the iPad 3, or 2S, or HD, will be announced by Apple at an event in San Francisco the first week of March. However, for all the sources that ATD said that it had for the story, it's still a rumor. Yesterday, however, I got another possible confirmation. While shopping at a Meijer store outside Chicago, I learned that the store is selling iPad 2s for $70 off. iPads are rarely discounted unless they're refurbished, so a significant discount at retail suggests that Meijer is trying to sell off excess inventory ahead of a new product announcement.

Meijer might not have any solid information, and may simply be doing this to keep from being stuck with inventory in case Apple discontinues the iPad 2. However, it does suggest that there's a new iPad coming from Apple soon.

Attention Joe Clayton: Can you call off your comment spammers?

Anyone who's followed the consumer electronics industry knows Joe Clayton. He was a vice-president at RCA in Indianapolis for years, helped to set up and then ran DirecTV, moved into the telecom industry to run Frontier and Global Crossing, came back into media as the head of XM Satellite Radio, and was appointed the president and CEO of DISH Network last June. Joe's very well respected in the industry, but something that DISH is doing is causing me to lose respect for the company, and he can stop it with a single email.

Whenever I post a story about any player in the home video business, such as Netflix, Redbox or Blockbuster, I get comments on the post that are very similar in tone and style, although they're always posted by different people, or at least, people using different identities. My most recent post, on Redbox's latest announcements, got this reply, from someone named "gman":

I agree that “they” have a lot to do in the meantime, but they seem confident that it can be accomplished in the next 6-10 months. Critics aren’t as confident they will be as successful compared to Netflix who has been butting heads with people like HBO and Starz. I do not intend to cut the cord anytime soon, mostly because I get my programming from my employer, Dish, but now that I get the Blockbuster @Home for $10 a month with my TV service AND it includes over 100,000 titles streaming and for disc rental I know that I have something special. The combining of these services is what pleases the distribution companies and I benefit from current TV programs, so win-win.

Notice how the comment starts as a legitimate input but turns into an ad for Blockbuster @Home. Notice also the mention of DISH as the commenter's employer. All of the suspect comments say that the commenter works for DISH, which as you may know, owns Blockbuster. However, the comments never directly acknowledge that DISH and Blockbuster are the same company. Given the similar wording and contents of the comments, there's no way that they're not being written either by DISH or by contractors working for DISH.

If DISH wants to buy advertising space on this blog, I'd be happy to sell it to them, but they'd rather get it for free. I review every comment before it's posted, and I've caught and deleted all of the promotional DISH comments before they've gone live. I'll continue to do so. As far as I'm concerned, it's cheap and sleazy, and puts DISH at the same level as spammers selling fake Viagra. None of DISH's competitors do the same thing, at least to my blog.

Update, February 12, 2012: Apparently, this post really pissed off the DISH spammers who I called out. They didn't have the courage to actually respond to my charges, but they rated the post "one star", hoping that it would deflect potential readers. So, I touched a nerve. I expect to touch a few more in the coming weeks.

Redbox partners with Verizon for video streaming, buys NCR's video rental kiosk business

Coinstar, the owner of the Redbox service that operates 29,000 video rental kiosks in retail locations in the U.S. and Canada, made two big announcements today:

• A joint venture with Verizon to enter the video streaming market, and
• A deal with NCR to acquire its video rental kiosk business

First, the joint venture with Verizon to enter the streaming video market. This deal has been rumored for months, but Verizon and Coinstar made it official today. Verizon will own 65% of the business, and Coinstar will own the remaining 35%. The service will compete directly with Netflix, and will launch in the U.S. in the second half of 2012. Coinstar and Verizon offered very few details about the service, but it will be available to all consumers with broadband Internet service, not just Verizon's subscribers.

Next, Coinstar will pay up to $100 million to acquire NCR's entertainment business, as well as pay NCR $25 million for goods and services over the next five years. NCR's entertainment business primarily consists of video rental kiosks operated under the Blockbuster Express brand; NCR licensed the brand name from Blockbuster. It's not clear whether Coinstar will convert the NCR kiosks to the Redbox brand, or will replace the NCR kiosks with its own devices.

How does all of this add up? Redbox was already the top video renter in the U.S. with 30 million customers, and the acquisition of NCR's business will both give the company even more locations and eliminate a competitor. The net result is that Redbox's video rental business, which is profitable and growing, will get even bigger and be better positioned to take business away from Netflix.

As for the streaming service, Coinstar's approach appears be the reverse of Netflix's, which is deemphasizing its video rental business in favor of streaming. Redbox appears to be betting that its kiosk rental business will remain strong while using Verizon's capital and infrastructure to stake a position in the streaming business. Verizon and Coinstar have released no details about their new service, so it's currently the equivalent of a "Watch This Space" sign. However, they have a lot of work to do before they launch, including:

• Signing licensing and distribution deals with content providers
• Building infrastructure to support video streaming across the U.S., not just on Verizon's own network
• Writing video clients for PCs, Macintoshes, iPhones, iPads, Android devices, Roku, Google TV, etc.

We'll know far more about how competitive the Verizon/Redbox service will be in the next six months.

Update, February 22, 2011: I just noticed that those pesky DISH spammers voted this post "one star" as well. If you're going to "p---" on the people who cover your industry because they refuse to give you free advertising, it most definitely will come back to bite you. At the very least, it opens questions about the financial condition of a company that has to rely on spammers instead of paying for advertising. But, I understand that DISH may be cash-poor after being forced by the courts to pay TiVo $500 million for stealing its technology.

The problem(s) with eTextbooks

The eBook market is growing dramatically, especially in the U.S., but eTextbook usage in colleges and universities is growing at a much slower pace. There are no good statistics on eTextbooks' share of overall textbook usage, so surveys and anecdotal reports are taking the place of hard facts. Kno, a distributor of eTextbooks, released a survey last week that said that, of 400 students at four California community colleges who used the Kno eTextbook application with an open source textbook, 95% found it very useful and plan to use it again. However, an article yesterday in the University of Rochester's Campus Times quoted the manager of the school's bookstore as saying that in most cases, students rent or purchase eTextbooks only when the bookstore is sold out of the print versions. (The bookstore has sold eTextbooks since 2004.)

The Kno study focused on a pilot program that used a free textbook, so as much as they may like Kno's app, it's impossible to draw any conclusions as to whether or not students would be willing to purchase eTextbooks from Kno. The Campus Times article says nothing about students who use and like eTextbooks--and there have to be some out there. There have been other stories and surveys, with equally conflicting results.

Given what I've seen in the market, I believe that there are two fundamental reasons why eTextbooks haven't taken off: Price and selection. In general, eTextbooks are priced much less than new print textbooks when purchased, but they're more expensive than used textbooks. What's more, eTextbooks can't be resold, so the student can't recover any of the purchase price. eTextbooks are also more expensive to rent than used print textbooks. Students are very price-conscious, and any usability advantages of eTextbooks (such as the ability to keep an entire semester's worth on a single tablet) are outweighed by their increased cost.

Selection is the other issue. The number of available eTextbooks is increasing all the time, but many print textbooks are still unavailable in eTextbook versions. If the textbooks required for a course aren't available in digital versions, students have no choice but to buy or rent them in print.

The Campus Times article also points out another potential roadblock: Some vendors only make their eTextbooks available for use on personal computers, while many students prefer to use them on tablets. For example, Barnes & Noble's Nook Study eReader software, which is designed specifically for eTextbooks, only works on PCs and Macs. Since most vendors either use proprietary formats or attach DRM that makes it impossible to use their eTextbooks in other eReaders, students are limited to the capabilities provided by the vendor's software.

Apple's eTextbook initiative addresses the price issue, with all textbooks priced at $14.99, but as of this writing there are only ten titles available, and they're all for K-12 students, not college students. No one has managed to address both the price and selection problems, but it's not clear that the publishers, which control both price and availability, really care. Publishers are primarily interested in using eTextbooks to kill the used textbook business, which has been a thorn in their sides for decades. However, they're not willing to accept lower profit margins over the course of several years in order to do so. eTextbook resellers don't want to take the margin hit either, so it's likely that eTextbooks will remain a niche business for the indefinite future.

eyeIO: New compression technology company signs up Netflix as its first customer

It's not unusual for developers to claim that they've improved the efficiency of video compression algorithms, but they usually result in one of two outcomes:

1. The changes result in a new compression scheme that's not accepted as a standard, or
2. The changes don't result in the savings claimed by the developers.

A Palo Alto-based startup is claiming that its new compression algorithms result in bandwidth savings of 20 to 50 percent with better quality, and that the output is 100% compatible with H.264, meaning that it can be supported without changes by tens of millions of existing devices. The correct response to such an announcement would usually be "I'll believe it when I see it", but the company, eyeIO, has signed up Netflix as its first customer.

FierceOnlineVideo reports that Rodolfo Vargas, Microsoft's former Senior Program Manager for Video, CTO of three startups and the former co-chair of Video Streaming and Internet Interactivity at the DVD Forum, approached Netflix with a rough version of the algorithms in September 2010. Netflix tested the prototype with a variety of content, and suggested that Vargas start a company to develop the technology. EyeIO started working with Netflix formally last June, but the companies' partnership was only announced today.

Vargas brought in Charles Steinberg, who's well-known in broadcasting electronics circles from his time as CEO of Ampex and President of Sony's Business and Professional Product division, and Robert Hagerty, the former Chairman and CEO of Polycom, to partner with him. EyeIO's market targets are fairly obvious from the backgrounds of the founders: PC and mobile video, broadcasting and videoconferencing. In addition, there's likely to be strong interest from cable and IPTV operators; eyeIO claims that a single 1TB 7200rpm hard disk can serve more than 400 simultaneous 1080p streams, which would have a big impact on VOD systems.

Netflix won't disclose how much content it has compressed using eyeIO; Vargas will only say that it's "a humongous amount". For its part, eyeIO didn't announce any products or services today, so it's not clear how the company plans to distribute its technology. Will it license its algorithms to hardware and software video compressor vendors, or will it sell its own hardware and software? Will it license its technology to cloud compression service providers? All of that remains to be seen.

I'm very curious to see how well eyeIO's technology actually works in third-party testing, which may come in a few months. For now, all we have is the fact that Netflix is using it--but given that company's bandwidth and storage demands, Netflix's endorsement carries a lot of weight.

Moonbot Studios: Prototype for the "New Hollywood"?

Unless you're an iPad user, you probably haven't heard of Moonbot Studios, but you're likely to hear much more about them over the next few weeks. Moonbot develops interactive children's books for the iPad; its first project, The Fantastic Flying Books of Mr. Morris Lessmore, started as a short film that's been nominated for an Academy Award for Best Animated Short. Update, February 26, 2012: The Fantastic Flying Books of Mr. Morris Lessmore won the Academy Award for Best Animated Short. Moonbot isn't an animation studio, publisher or app developer--it's all of those things.

Moonbot was founded in 2009 by William Joyce, Brandon Oldenburg and Lampton Enochs. Joyce is an illustrator, graphic designer, writer and animator who's written and illustrated more than 50 children's books, created Rolie Polie Olie, one of the first computer-animated children's television shows (for which he received three Emmys), created character concepts for Pixar's Toy Story and A Bug's Life, and co-created and produced Blue Sky's Robots.

Moonbot's creations, Morris Lessmore and the new The Numberlys, which was released for the iPad earlier this month, are what the company calls "story apps". They combine elements of animated films, children's books, and videogames, but they're unique enough not to be classifiable as any of those things. It's that uniqueness that makes Moonbot's story apps early examples of a new medium, not just an extension of eBooks or films.

According to Fast Company, Moonbot stumbled onto its approach when working on Morris Lessmore, which was originally planned to be a short film and printed children's book. The iPad was released while the film was in production, and Joyce realized that it would enable Moonbot to do things that simply weren't possible previously...what he calls "a third way of expression".

If Moonbot is pioneering a new medium, what's its potential? It's too early to say how big the market size is, but if it develops like the video game industry, it'll both be big and largely independent of legacy media. Digi-Capital estimated that global video game industry revenues for 2011, including online and mobile games, were $87 billion, about twice the size of the global theatrical motion picture business.

The video game industry only tangentially depends on legacy media companies like movie studios and broadcasters--in fact, few video games based on movie characters have been successful. Moonbot isn't dependent on legacy media companies at all: It creates its own characters, writes its own stories, produces its own animation, builds its own apps and distributes its own works. It does all of that in Shreveport, Louisiana, a city not known as either a technology or media center, with only 35 employees.

The story app concept is no way limited to children--Moonbot's creations are as compelling to adults as they are to kids. It's still in its infancy; imagine how we'll be able to interact with these apps when we have Siri-style voice interaction and Kinect-style 3D motion detection to go along with touch gestures.

Could The Fantastic Flying Books of Mr. Morris Lessmore be this new medium's The Great Train Robbery? I wouldn't bet against it.

Somewhere between wishful thinking and delusion: Can Barnes & Noble save print books?

There's an article in today's New York Times about Barnes & Noble titled "The Bookstore's Last Stand". The central premise of the article is that publishers are depending on Barnes & Noble to keep the print book alive. The tone of the article, or at least the quotes from publishers, is somewhere between wishful thinking and delusion. Here's an example:

Carolyn Reidy, president and chief executive of Simon & Schuster, says the biggest challenge is to give people a reason to step into Barnes & Noble stores in the first place. “They have figured out how to use the store to sell e-books," she said of the company. "Now, hopefully, we can figure out how to make that go full circle and see how the e-books can sell the print books.”

"...we can figure out...how the e-books can sell the print books"? That's like saying that if we wish hard enough, we can use calculators to sell abacuses. There's an incredible denial of reality going on here: Print still represents a majority of book sales, but it's been declining for years, while eBooks' share of book sales has been growing. If you're fixated on maintaining your print book sales, you're guaranteeing that your business will be marginalized over time.

If trends continue, eBooks will represent more than 50% of trade book sales within the next two years. Textbooks and specialty titles will take longer, but they'll likely reach or exceed the 50% point before the end of this decade. Denial of reality is only going to make the transition more painful. Publishers can survive in a majority-eBook market, so long as they manage their businesses to do so.

So, what can publishers do? They can consolidate their warehouses and get rid of excess capacity. They can move to a "digital first" model where eBooks, not print, drive the editorial and production process. They can anticipate smaller print runs and start implementing print-on-demand production. If they don't do these things, they'll have no one to blame but themselves when their companies fail.

As for Barnes & Noble, it too has to manage for a future when eBooks comprise most book sales. It has to be prepared to shrink the size of its stores, dramatically decrease the amount of display space dedicated to print books, and use electronic displays to replace physical shelves. It should already be privately prototyping and testing these new-generation stores, so that it's ready to start rolling them out in the next few years. It can't go forward by staring in a rear-view mirror.

The handwriting is so clearly on the wall that any publishing or bookselling executive who ignores it is guilty of willful ignorance.

What's more important to authors: Royalties or advances?

One of the strongest arguments for writers to self-publish their works is the potential to earn much higher royalties: Major publishers typically pay 10% to 15% royalties on the suggested list price of hardcover books, and 20% to 25% of their net revenue (wholesale price, or agency price minus 30%) for other formats. Self-publishers, on the other hand, can get as much as 70% of the sale price from Amazon and Barnes & Noble if they comply with those companies' restrictions. However, these numbers don't take into consideration the advances paid by publishers.

At the Digital Book World Conference that ended this week, Publishers Lunch Deluxe reported on a session on "Changing Author-Publisher Relationships" that shed some light on the question of advances vs. royalties. Madeline McIntosh, Random House's President of Sales, Operations and Digital said that over the last five years, for fiction titles, the company has paid 45% to 65% of its sales revenue to authors. Little, Brown Publisher Michael Pietsch said that, across all of Hachette Book Group's titles over the past 15 years, the share of the company's revenues that has gone to authors has risen from 30% to 40%.

Both companies' payouts are substantially higher than any standard royalty rate, suggesting that many, if not most, books fail to earn back their advances. The result is the same as a higher royalty on the actual number of copies sold. On the other hand, self-published books don't get advances, and the authors have to pay editorial, design and conversion costs themselves. As a result, self-published books start out much further in the hole financially, at least so far as the author is concerned.

The question for authors then becomes: Is it better to work with a publisher or to self-publish? If you know with absolute certainty that your book will sell more than it needs to in order to earn back any potential advance, you might make more money by self-publishing. However, if a publisher could sell at least two to three times as many copies as you could sell yourself, you're better off working with a publisher, since the increased volume will compensate for the lower royalty.

But what if you have no idea how many copies your book will sell? In that case, you probably should work with a publisher, because you'll get your advance no matter how many copies of the book are sold. However, there are two risks:

1. If the book earns out its royalty but doesn't sell many copies beyond that point, you might have made more money if you'd self-published it.
2. If your book doesn't sell well at all, the publisher will be much less likely to offer to publish your next book, and if it does, the advance will be substantially lower.

As a practical matter, the "publisher vs. self-publishing" question is often a moot point: If a book is rejected by multiple publishers, self-publishing may be the only option available. But, for those authors who can get a publishing contract, the decision may well come down to your confidence in the publisher vs. yourself.

Kill Hollywood? Here's a better approach

Last week, partially in reaction to the SOPA/PIPA debacle, Paul Graham of Y Combinator issued a "Request for Startups" under the title "Kill Hollywood". Graham argued that the fact that entertainment companies are relying on legislation rather than competition and innovation is a sign that they can be displaced. Graham's right about the industry's ham-handed reliance on legislation, but segments of the entertainment industry have gone through extinction-level crises many times in the past. Here are a few examples:

• The music industry was threatened by radio starting in the 1920s, but radio stations eventually chose to play recorded music because it was cheaper than producing original shows. Radio became the primary mechanism for promoting records for decades, until MTV.
• An entire generation of movie distributors and studios, most of which were affiliated with Edison's patent pool, went out of business in the first two decades of the 20th Century. Companies such as Essanay, Kalem, Selig Polyscope, Mutual and Biograph disappeared and were replaced with the progenitors of the movie studios we know today.
• In the 1950s, movie studios were forced to divest themselves of ownership of theaters in the U.S., but independent theaters quickly picked up the slack.
• Television also threatened the movie industry in the 1950s, but the major studios started producing television shows and licensed their movies to television stations and networks.
• Some movie studios went bankrupt or experienced painful reorganizations in the 1960s and 1970s, thanks to massive cost overruns on unpopular films. The industry was saved by the "independent movement", which was where many of today's most successful directors began their careers.
• File sharing and digital distribution has led to consolidation of the biggest record companies. For example, who would have believed that RCA Victor and Columbia, once the world's two largest record companies and fierce competitors, would eventually both come to be owned by Sony?

It's really hard to "kill Hollywood", even when Hollywood seemed to be dead set on killing itself. Industries die when they become obsolete or are replaced by something better. Movie theater attendance is declining, as are DVD sales, but the movie business itself isn't obsolete. The record industry has been struggling, but it's still surviving. The commercial television networks' audiences are declining, but cable networks have been growing for years.

What's needed is a two-part approach:

1. First, take on the entertainment companies head-to-head with lobbying. As distasteful as lobbying is to most technology companies, they can't let their opponents have the battlefield to themselves. A strong, coordinated approach to lobbying would counter the efforts of the entertainment companies, which are certainly vulnerable, especially in the "Red States".
2. Second, invest in technologies and content that appeal to consumers during their leisure time. Don't worry about what the effect will be on entertainment companies; if consumers like it and are willing to pay for it, that's all that matters.

SOPA and PIPA: Dead? Well, maybe...

Wednesday's Internet blackout by Wikipedia, Reddit and many other sites was the last straw in a battle of wills between the entertainment and technology industries. As of now, the technology companies have won: Mashable reports that Texas Representative Lamar Smith, the chief sponsor of the Stop Internet Piracy Act (SOPA) in the U.S. House of Representatives, has at least temporarily tabled the bill, as has Senate Majority Leader Harry Reid with the PROTECT-IP Act (PIPA), the U.S. Senate's version of the bill. Of course, in Hollywood terms, we can't be sure that SOPA and PIPA are dead unless someone has hammered a stake into their hearts, and they've turned to ash. (That doesn't stop the studios from reviving them as SOPA II, Son of PIPA, etc.)

In Thursday's New York Times, MPAA Chairman Christopher Dodd is quoted as saying that he wants to meet with Silicon Valley executives to draft an anti-piracy bill that both industries can agree to. Of course, we don't know if the Senator Dodd who would fly to Northern California would be the conciliatory one interviewed on Thursday, or the one quoted by the MPAA on Tuesday saying "...some technology business interests are resorting to stunts that punish their users or turn them into their corporate pawns..." and "It is an irresponsible response and a disservice to people who rely on them for information and use their services. It is also an abuse of power given the freedoms these companies enjoy in the marketplace today. It’s a dangerous and troubling development when the platforms that serve as gateways to information intentionally skew the facts to incite their users in order to further their corporate interests." I suspect that it will be the latter, and I'm not sure that Senator Dodd and his employers have learned anything from this debacle.

Update, January 21st, 2012: The Hill reports that last Thursday, Senator Dodd said the following on Fox News: "Those who count on quote 'Hollywood' for support need to understand that this industry is watching very carefully who's going to stand up for them when their job is at stake. Don't ask me to write a check for you when you think your job is at risk and then don't pay any attention to me when my job is at stake." It's even more clear to me that nothing has changed and no lessons have been learned.

In the New York Times article, Dodd admitted that he was responsible for the legislative strategy that introduced both bills into the House and Senate, with the objective of ramming them through before technology companies had any chance to respond. He didn't admit that he proposed, but was almost assuredly responsible for, Representative Smith's decision not to allow any opponents of the bills to testify in front of the House. The MPAA and its allies did everything they could to prevent any opponents of the bill from making their positions known. Even on the last day before the blackout, Senator Dodd was trying to intimidate Internet sites into dropping their blackouts.

Had Senator Dodd and his allies simply opened the process to full discussion from the beginning, there would have been no need for the technology companies and individuals to take the action that they did. It also would have saved the entertainment industry a lot of time and money, as well as its reputation. There's no opposition to stopping piracy from international sites, so long as due process is accorded to all parties and domestic sites aren't under a continuous threat of being shut down due to actions that they didn't instigate or encourage.

I would suggest that Senator Dodd sold the MPAA's board a bill of goods: He most likely told his bosses that he could get legislation through that would allow them to take down any website they wanted, at little or no cost, and with virtually no recourse. "Trust me", he likely said: "I got through the Dodd/Frank Bill". Yes, he did, in a greatly watered-down form, when the House, Senate and White House were all controlled by the Democrats, and when the American public was strongly in favor of increased legislation of the financial industry.  That's a little like being appointed a General for the Allies after the Germans had already been pushed back behind the Rhine. Your tactical skill was probably not what won the War.

It's time for the entertainment and technology industries to negotiate as equal partners in order to craft an anti-piracy bill that helps to stop piracy without killing off legitimate businesses. Personally, I wouldn't trust Senator Dodd to be part of those negotiations, but I'm not going to be making that decision.

Apple's eTextbook announcements: Far from a slam dunk

This morning, Apple announced:

• A new version of iBooks that supports eTextbooks.
• Distribution agreements with five textbook publishers (Pearson, McGraw-Hill, Houghton Mifflin Harcourt, DK and the E.O. Wilson foundation) covering 90% of the high school market.
• eTextbooks priced at $14.99 (U.S.) or less.
• A free eTextbook editing application for OS X called iBooks Author.
• A revamped version of iTunes U for higher education, with a dedicated iOS app.

Apple's announcements could be very important, but the company has a long way to go, for several reasons:

• Apple's focusing on the high school market, not colleges and universities, and it's trying to convince parents and students to purchase eTextbooks directly from Apple. In most U.S. schools and districts, students get their textbooks from the school, either at no charge or as part of an activities fee. Why would parents who don't have to pay for textbooks now or get them automatically start paying for them? Thus, Apple's plan only impacts those parents and students who have to pay for their textbooks now.
• Parents also have to be willing to buy an iPad for their child. That cuts out low-income and many middle-income families.
• There are currently only eight titles in Apple's eTextbook collection--not even enough to be called a good start.
• Although iBooks Author creates eBooks that are based on EPUB 2.0, it uses Apple's proprietary extensions for supporting multimedia, animation and JavaScript-based new features. Thus, titles created with iBooks Author can only be used in iBooks. (This might change in the future, when Apple fully implements EPUB 3 in both iBooks and iBooks Author.)
• If you use iBooks Author and create eBooks that you intend to sell, according to the EULA for the software, you are prohibited from selling the eBooks anywhere except through Apple.

Apple's decision to focus on high school textbooks before going after the college market is questionable: College students pay far more for textbooks than do high schoolers, and parents are far more likely to purchase a tablet for a new college student than for a high school student. However, that's not the most important reason why I believe that Apple will have an uphill battle. When Apple launched the iBookstore initially, with the support of five of the "Big 6" trade publishers and the agency pricing model to eliminate Amazon's price advantage, it looked as though Apple would eventually become as dominant in eBooks as it already was in music. The results, however, have been far from what Apple and its boosters expected.

Even today, Apple has a minuscule share of the U.S. eBook market, far below those of Amazon and Barnes & Noble. Apple's eBooks can only be used on Apple's devices, while Amazon's and Barnes & Noble's eBooks can be be used on those companies' popular eReaders and tablets, as well as with software eReaders on PCs, tablets and smartphones. Amazon in particular has set up an effective self-publishing program for authors, while Apple is just taking the first tentative steps today.

In short, Apple's new eTextbook initiative could make a big difference eventually, but it's far from a slam dunk.

Stop SOPA

Many websites, including Wikipedia, BoingBoing, Mozilla, WordPress.org and Reddit, are going to go black tomorrow to protest the Stop Online Piracy Act (SOPA) under consideration in the U.S. House of Representatives, and the Protect Intellectual Property Act (PIPA) that's being considered by the U.S. Senate. Mashable has posted an excellent summary of SOPA, and rather than rehash those arguments, I've linked to it for your reference.

The stated purpose of SOPA is to cripple non-U.S. websites that distribute unlicensed copyrighted content, and to prevent U.S.-based sites from hosting, or even linking to, unlicensed content. The problem with SOPA is that it imposes a "death sentence" on websites that haven't been proven to have done any infringement whatsoever. SOPA front-loads the prosecution and punishment of copyright infringement cases. In the case of foreign websites, the U. S. Justice Department can request a court order to seize their domain name(s), order advertising networks and financial processing services to stop doing business with them, order search engines such as Google and Bing to drop them from their indices, and order Internet Service Providers to stop connecting to them. All of this is supposed to take place within five days after the court gives the order, and most importantly, without any notice given to the website. In short, the website can be put out of business before it has any opportunity to defend itself.

SOPA gives content owners the power to do the same things to domestic websites that encourage or facilitate copyright infringement. The Justice Department doesn't need to be involved at all. This part of the bill imposes the same "death penalty" on domestic websites, and doesn't require them to be informed until the penalty has been imposed. Even worse, the owner or operator of the site isn't required to have been the one who posted the infringing content. Infringing content could be in the form of a comment or an uploaded video posted to a user-generated content site like YouTube. It could even be a link to another website that posts infringing content.

SOPA means that every website that allows any kind of third-party content or comments would have to review everything before it's posted. It would make a service such as YouTube, which receives 24 hours of uploaded content every minute, impossible to operate. (Correction, January 23, 2012: According to its blog, YouTube is actually receiving 60 hours of video every minute.) Content providers would no longer need to give notice of infringement as required under the Digital Millennium Copyright Act, and websites would no longer be protected by the law's "safe harbor" provision if they don't knowingly encourage or participate in copyright infringement.

Let me be clear: I defend content companies' right to protect their property. However, SOPA effectively eliminates due process for website operators and creates a poisonous climate of prior restraint, where every post has to be considered infringing unless proven otherwise. An analogy would be if I, believing that a movie used some of my intellectual property, could get a court order seizing every copy of the movie from every theater playing it, or from every store and service distributing it, without giving notice to the film's distributor. By the time the studio answered the charges and got the movie back into theaters and stores, the financial damage would be incalculable.

SOPA would be fair if it required the Justice Department and content owners to give notice to the website operator before any action was taken. It would be fair if it allowed website operators to remedy the infringement, if it exists, without court action. It would be fair if it allowed website operators to defend themselves in open court before they lost their income, domain name and audience. As written, SOPA tilts the playing field decisively in favor of the content providers, most of which already have a massive advantage in legal and financial resources over website operators.