Notes From Babel

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What Book Publishers Failed to Learn from the Music Industry’s Reluctant Conversion to Digital

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Back in 1999, a start-up company called Napster introduced the world to an unprecedented method of instantly delivering music to consumers via the internet. The peer-to-peer (“P2P”) delivery mechanism Napster innovated inspired a “new attitude”[1] in consumers, who began demanding the availability of more options from the legacy record companies. Instead of adapting this path-breaking new technology to its own model, however, the record industry’s response was simply to start filing lawsuits against Napster and its progeny in order to muscle them out of the picture.  Yet, once they succeeded, the industry never made any earnest attempts of their own to deliver what consumers wanted and had already realized was possible.

A decade after the record industry’s reactionary and ill-fated response to P2P, traditional book publishers are now faced with a technological revolution in its own industry in the form of digital books, or “ebooks,” delivered instantly and inexpensively to ereaders. Although it is still early, it appears the publishers have repeated both of the record industry’s two major tactical failures. First, the publishers, like the record industry before them, failed to initiate the revolution on their own. Instead, the path-breaking innovation came from a challenger when online bookseller Amazon developed the first widely used ereader, the Kindle, along with its ebook delivery service through its online bookstore. Second, the publishers, again imitating the record industry, appear to be doing all they can to resist rather than embrace the new digital model.

If the first failure can be forgiven, the latter is more difficult to account for. When P2P came on the scene, the record industry regarded it as more of a nemesis than an opportunity.[2] “The truth is the music industry has no interest in providing its music digitally . . . . the music industry wants to destroy Napster . . . not work with them.”[3] The principal threat Napster posed to the music industry was not the fact that it competed for its customers, but rather that it challenged the industry’s entrenched business model. While the industry succeeded in leasing a few more years on its model through court victories,[4] it nonetheless failed to transition—even though, ironically, the Napster court relied on the industry’s expert’s testimony to conclude that the “‘record company plaintiffs have already expended considerable funds and efforts to commence Internet sales and licensing for digital downloads,’” and thus Napster was precluded from entering this market.[5]

In fact, record companies benefit from the inefficiencies implicit in legacy delivery mechanisms. The large record companies own the infrastructure for the manufacture, packaging, delivery and marketing of physical media, the costs of which are passed along to the consumer at a premium.[6] New technologies that purport to eliminate several of these points of process, thus lowering the cost to the consumer, inherently deprive the record company of potential profit.

Of course, the industry’s foot-dragging eventually backfired. Perhaps most importantly, it cost them the opportunity to develop and define the way electronic music delivery would work. Instead, computer companies like Apple and its iTunes service, and Microsoft and its Zune service, have rushed to fill the void. These challengers now have a substantial say in how digital music will be packaged and delivered—decisions over which the incumbent record companies might have enjoyed greater hegemony had they responded differently to the digital revolution.

For the incumbent record companies, a key problem with the iTunes model of digital distribution is that it allows consumers to purchase individual songs.  As a result, artists, even those getting heavy airtime, are having trouble selling out venues.  As a further result, there is a shrinking number of “popular” artists, traditionally understood.  The record industry is suffering not just because it failed to transition to digital, but because it failed to account for the other systemic impacts this transition would cause. Total music sales today, including digital, continue to decline from an all-time high in the late ‘90s.[7] This perhaps explains why the average age of today’s touring musician is 46, and climbing.[8]

Judging from the recent criticism of several authors and commentators, book publishers have a similar motive to squelch or slow the advance of ebooks in order to retain their hegemony in the paper model. Novelists Barry Eisler and Joe Konrath, each boasting respectable numbers in both paper and digital sales, discuss how publishers systematically hobble their digital sales for the purpose of preserving paper sales.[9] One way publishers do this is to insist on an unsustainable 75%/25% publishing split in favor of the publisher on ebook sales. After deducting Amazon’s 30% take and agents’ 15%, authors are left with 17.5%—a curiously small fraction of the sale considering it came with virtually none of the costs typically associated with paper sales. Similarly, publishers typically price ebooks well above the $.99 to $4.99 price points where maximum revenues are achieved, and hold back digital releases until the paper release is ready. All of these practices are designed, Eisler and Konrath suspect, to retard the growth of digital and thus protect the publishers’ paper sales.

As Eisler explains, “it’s extremely hard for an industry to start cannibalizing current profits for future gains. So the music companies, for example, failed to create an online digital store, instead fighting digital with lawsuits, until Apple—a computer company!—became the world’s biggest music retailer.”[10] Invoking Upton Sinclair, Konrath summarizes: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

Despite the best efforts of the entrenched legacy interests, however, artists continue to find ways to employ the new technology to reach growing numbers of consumers. The Ninth Circuit Court of Appeals observed that the alt-rock band Wilco, after being dropped from recording giant Warner/Reprise as having “no commercial potential,”[11] purchased their unreleased album from Warner and proceeded to release it on the internet. Despite the media giant’s bleak predictions, the album was a hit, and Wilco’s record was subsequently picked up by an independent label and released on the traditional market.[12]

On the book publishing front, more and more authors are finding the self-publication alternative not only viable, but superior. Eisler shocked industry insiders and commentators when he recently turned down a $500,000 deal with St. Martin’s Press in favor of going it alone. Eisler breaks down the numbers supporting his decision:

But to understand what the number really represents, you have to break it down. Start by taking out your agent’s commission: your $500,000 is now $425,000. Then divide that $425,000 over the anticipated life of the contract, which is three years (execution, first hardback publication, second hardback publication, second paperback publication). That’s about $142,000 a year.  This is a more realistic way of looking at that $500,000.

But there’s more. Some people have mistakenly argued that, for my move to make financial sense, I’ll have to earn $142,000 a year for three years. But this is one time when you don’t want to be comparing apples to apples. Because the question isn’t whether I can make $425,000 in three years in self-publishing; the question is what happens regardless of when I hit that number. What happens whenever I hit that point is that I’ll have “beaten” the contract, and then I’ll go on beating it for the rest of my life. If I don’t earn out the legacy contract, the only money I’ll ever see from it is $142,000 per year for three years. Even if I do earn out, I’ll only see 14.9% of each digital sale thereafter. But once I beat the contract in digital, even if it takes longer than three years, I go on earning 70% of each digital sale forever thereafter. And, as my friend Joe Konrath likes to point out, forever is a long time.

. . . . So if I’m right about all this, and I’m pretty sure I am, I should be able to beat the contract about halfway through the fourth year. And again, all of that ignores the continued growth of digital, the way low-priced digital books reinforce sales of other such books, etc.[13]

This model not only works for established authors like Eisler, but for many unknowns writing novels and short stories in their spare time. Among those is the no-longer-unknown Amanda Hocking, whose 9 self-published books, targeted at the young adult audience in the vein of the Twilight series, have generated more than 100,000 digital sales each month.[14] Perhaps trying out a new strategy following its inability to pen a deal with Eisler, St. Martin’s Press recently struck a four-book deal with Hocking. St. Martin’s declined to disclose the deal points, though Hocking reportedly will receive a seven figure advance.[15]

Nonetheless, Eisler and Konrath maintain that, by and large, it simply “isn’t a good idea for most authors to sign a legacy deal anymore.” Other authors are also convinced that “by 2012 everything we have thought about traditional publishing will be history.”[16]

Eisler is probably correct that industries cannot be expected to “cannibalize” present profits for future ones, and thus, path-breaking innovations like P2P and digital books can only come from challengers to industry incumbents. These innovations represent more than a mere modification to the business model or an addition to an existing menu of consumer options: Digital delivery of music and books have changed, and continue to change, the very nature of the content being produced, having removed many of the economic barriers to entry, and many of the “quality control” functions served by legacy content providers. In the examples of the record and book publishing industries, that is, the value added by technology is the tail wagging the dog.

[1] Napster, 114 F. Supp. 2d. at 910. As another Ninth Circuit court acknowledged, the peer-to-peer technology that Napster popularized “significantly reduc[es] the distribution costs of public domain and permissively shared art and speech, as well as reducing the centralized control of that distribution.” MGM Studios, Inc. v. Grokster Ltd., 380 F.3d 1154, 1164 (2004).

[2] Music’s Brighter Future, The Economist, Oct. 28, 2004, available at (“Historically, the majors have controlled physical distribution of CDs.”).

[3] Jason Calcanis, LETTERS: Free Napster (or why Judge Patel has started the revolution, not ended it), indieWIRE: Biz, available at

[4] For example, the court decision in the MGM Studios, Inc. v. Grokster, Ltd. lawsuit scared off LimeWire, other another peer-to-peer music delivery service:

Fearing lawsuits similar to MGM v. Grokster, Mark Gorton, the chief executive officer of the firm that produces LimeWire, has said that he plans to stop distributing his file sharing program. He explained this by saying

“Some people are saying that as long as I don’t actively induce infringement, I’m O.K. I don’t think it will work out that way…[the Court] has handed a tool to judges that they can declare inducement whenever they want to.”

See Wikipedia, MGM Studios, Inc. v. Grokster, Ltd.,, available at,_Inc._v._Grokster,_Ltd.

[5] A&M Records v. Napster, 239 F.3d 1004, 1017 (9th Cir. 2001); A&M Records v. Napster, 114 F. Supp. 2d 896, 908 (N.D. Cal. 2000) (“The record company plaintiffs have invested substantial time, effort, and funds in actual or planned entry into the digital downloading market.”).

[6] See Music’s Brighter Future, The Economist, Oct. 28, 2004, available at (“Historically, the majors have controlled physical distribution of CDs.”). It is also suggested that other strangle-holds on the marketplace (such as bribing radio stations) that contribute to the majors’ domination will collapse on the Internet. Id.

[7] Jay Yarow, Business Insider (Feb. 16, 2011), at

[8] Paul Resnikoff, Digital Music News (Nov. 29, 2010), at

[9] Barry Eisler, Ebooks and Self-Publishing: A Conversation Between Authors Barry Eisler and Joe Konrath (Mar. 19, 2011), at

[10] Id.

[11] MGM Studios v. Grokster, 380 F.3d 1154, 1161 (9th Cir. 2004).

[12] Wilco’s case study indicates the flaw in Napster’s reasoning: major record labels are not interested in markets that may be attainable through the internet, when they are operating quite comfortably under their own model. Wilco illustrated that, while the internet may not guarantee as much profit as traditional content delivery, it may be an effective alternative for challengers.

[13] Jason Pinter, Why I’m Self-Publishing (Mar. 24, 2011), at

[14] Eli James, The Very Rich Indie Writer (Feb. 27, 2011), at

[15] Tara Bannow, Huffington Post, Amanda Hocking Signs Four-Book Deal with St. Martin’s Press (Mar. 24, 2011), at

[16] Terrill Lee Lankford, Maybe the Mayans Were Right…But They Were Talking About the Publishing Industry (Feb. 4, 2011), at


Written by Tim Kowal

March 28, 2011 at 7:58 pm

Multiculturalism and the moral order

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This story reminds that there is a great potential friendship between conservatives and Muslims when it comes to instilling positive values in our children, and resisting the trend to secularism.  Here’s an excerpt, though I recommend reading the whole piece:

Then I looked across the school playground and saw a Muslim mother, the mother of my daughter’s best friend, holding her headscarf in place with her hands as the wind blew about restlessly. I caught her eye for a moment and we smiled at each other. Before this moment, I had never thought that my situation in any shape or form was similar to that of a Muslim mother. And I had never thought seriously about talking to a Muslim mother about issues of faith or raising children in our community. But now I was beginning to reconsider. Perhaps our Muslim fellow citizens, especially those who are spiritually and intellectually confident in their ways of life, can challenge and inspire us to reflect more deeply on our own faith and morality, and perhaps in the process we might discover that we share some of the same moral principles and hopes and dreams for our children.

We always hear so much about the things that separate Muslims from Christians (and no doubt there are things that do separate us), and often these differences are expressed in negative and prejudiced ways. I wonder if our misunderstandings and misconceptions prevent some of us from trusting and forming spiritual bonds and friendships with those who are confronting some of the very same challenges that we confront. I live in a community where many of my moral views about sexuality, marriage, and the family are in the minority. Sometimes they are challenged (respectfully and disrespectfully), and every now and again someone agrees with them, but often they are simply dismissed. Like my daughter, I’m comforted to know that there is someone else with whom I share similar experiences (and perhaps a moral view or two).

There is, perhaps, a different brand of multiculturalism that underscores rather than undermines the moral order.  It’s a shame that many conservatives have written off American Muslims because of disagreements on certain narrow political or foreign policy views, when we really have so much to agree on.

Written by Tim Kowal

March 18, 2011 at 12:58 am

The “death of the music industry”

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Matt Yglesias shares the following chart illustrating the “death of the music industry”:

Apparently, I gave up on the music biz—and sold out to become a lawyer—just in time.

However, I don’t think Yglesias is right when he says this:

This is one reason why I would discourage bands from trying to underprice tickets at their own shows as a reward to fans. Since digital copies of recordings are non-rival and basically free to make, any non-zero sale price entails some deadweight loss. And since concert tickets are necessarily scarce, any sub-market price entails some deadweight loss. The optimal strategy for a popular band that wants to do something nice is market pricing for concert tickets, plus free recordings. Or even better, you could release your records into the public domain.

Part of the problem with the iTunes model of digital distribution is it allows consumers to purchase only the songs they heard on the radio or over the store audio system at Target.  As a result, artists, even the ones getting heavy airtime, are having trouble selling out venues.  Maybe Yglesias is right in a very narrow sense when he revers to “popular bands”—it’s just that there is a shrinking number of popular bands anymore.  The average age of a touring musician is currently 46, and getting older.  With this in mind, look at the where the graph above tops out, and it’s not hard to understand that album sales and ticket sales are closely linked.

Written by Tim Kowal

February 19, 2011 at 3:42 pm


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Despite what seems to be a fairly strict built-in limitation of its subject matter, this show continues to be very funny.  I’ve liked Fred Armisen since seeing him in the Wilco documentary several years ago. Also, Carrie Brownstein took guitar lessons from Jeremy Enigk.



“Did you read?”

Written by Tim Kowal

February 13, 2011 at 5:22 pm

Posted in Culture

Saturday Music Video

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A bunch of weird colored glassware and a door that keeps swinging open and shut.  Ah, when videos were simple. 

I’ve read Teenage Fanclub was supposed to be the next big thing in the early ‘90s, right before Nirvana trumped them with their sad-man goth-rock. 

Written by Tim Kowal

February 5, 2011 at 2:03 pm

Posted in Music

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The Conservative Contribution to Progressivism, Part 2

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This is the follow up to my first post describing the historical and social underpinnings of the progressive movement of the late 19th and early 20th century, drawing largely from Michael McGerr’s A Fierce Discontent: The Rise and Fall of the Progressive Movement in America, 1870-1920.  The thesis, arrived at in this post, is that while conservative values may have played a role in progressivism’s initial volley, the ultimate goals of progressive movement were anything but conservative.

* * *

The new standard of living being conceived in the minds of Americans at the end of the 19th century put individualism in the crosshairs.  At the beginning of the 19th century, individualism was a hard lot, but a seemingly fair one.  A fledgling national government, a nigh-nonexistent system of roads, and a still sparsely populated nation rendered individual sustainability difficult but relatively predictable.  By the end of the 19th century, however, the vagaries of national macroeconomics were already beginning to render markets less predictable; the vast expansion of federal power rendered economic activity an increasingly political affair; and the maturing American economy, fortified by extensive rail and telegraph networks, saw industries becoming dominated by big firms.  All the while, increasing numbers of common working Americans were funneling into urban factory life.  While farms seldom provided more than subsistence living, Americans felt relatively proud and fulfilled.  They had a markedly different experience in the new American factories, however.  All this made working class Americans increasingly discontent—all they needed was a reason to impugn the individualism that sustained the unhappy state of affairs.

Conservative activists were all too eager to supply such reasons.  The expansion of pleasure-seeking to the middle-class worsened the problem of vice and had weakened the family structure.  The Social Gospel leader, Washington Gladden, for example, traced prostitution to middle- and upper-class affluence, as young men increasingly began to put off marriage “until they are able to support a wife in good style.”

“[A]nd as the wealth of the land increases and their neighbors live more and more luxuriously, the phrase ‘in good style’ is constantly undergoing changes of meaning. Young women become accustomed in their parental homes to a certain amount of comfort and of leisure, and they do not relish the thought of beginning to live more plainly and more laboriously in a home of their own.” When these people postponed marriage, Gladden affirmed, “one of the inevitable consequences is the increase of social immorality”: young men, single for too long, would seek sexual satisfaction with prostitutes. The attack on the brothel, then, might not get at the real problem that threatened the home. “I do not believe that there is any remedy for this social disease but the restoration of a more wholesome sentiment concerning this whole subject of family life,” Gladden concluded. “The morality of what we call our respectable classes needs toning up all along this line.”

(Emphasis added.)

It is this sentiment—that “morality . . . needs toning up”—that represents the conservative contribution to progressivism:  as new social, political, and economic forces began to disrupt cultural and moral values, many conservatives sought to push back in kind not merely to curtail those effects, but to counteract them.  Man and his moral character were no longer something to be left to the sole province of himself and his community; they must be “toned up” and remade through the law.  Under the progressive construction of man’s moral predicament, man was no longer accountable for his own actions.  Because people were malleable and defined by their environment, criminals were not wholly to blame, since their crimes owed in part to the sins of society.  “What we have got to have,” said Gladden, “is a different kind of men and women.”

Thus, a renewed vigor for morals legislation ensued, directed at card playing, gambling, horse racing, Sabbath breaking, pornography, dance halls, contraception, and, most famously, liquor.  Liquor, more than all other vices, was seen as the root of man’s moral decline—particularly, the breakup of the family and the degradation of women.  In this respect, McGerr recounts Carry Nation’s attack of a nude painting in the bar of the Carey Hotel in Wichita:

“It is very significant that the pictures of naked women are in saloons,” she explained. “Women are stripped of everything by them. Her husband is torn from her, she is robbed of her sons, her home, her food and her virtue, and then they strip her clothes off and hang her up bare in these dens of robbery and murder. Well does a saloon make a woman bare of all things!”

Yet, progressives quickly realized that prohibition of vices was not enough:  remaking man could not be achieved by negative campaign alone—it required an affirmative component.  Progressives would have to find “substitutes for the saloon.”

Alcohol free clubs and dance halls were needed to fulfill people’s desire to meet and socialize; libraries and gymnasiums were needed to fulfill the desire for stimulation. In short, the transformation of individuals required a more sweeping transformation of their environment.

With the progressives’ transition from a prohibitory campaign to more affirmative attempts to reshape mankind came the end of any partnership with conservatism.  Progressives moved beyond their “conservative” agenda to restore Victorian values, and instead began to explore a more radical, activist agenda.  Progressives began to remake rather than merely preserve society.  Law was not merely an anchor; it could serve as a sail.

This aspect of the progressive agenda was clear by the time of Woodrow Wilson’s presidency, who stated:  “Our problem is not merely to help the students to adjust themselves to world life. . . . Our problem is to make them as unlike their fathers as we can.”  Progressivism had by this time become a different thing entirely than the post-Victorian conservatism it set out as.  Indeed, it could be said the project never was truly conservative in the first place, and that the lament of the decline of Victorian values was merely lip service to justify the brewing radicalist urges.  Thus, perhaps even the prescriptive components of the early progressive agenda were less about preserving Victorian values than preliminary efforts at remaking all of society—the symbols of Victorianism simply served as a convenient cover of authenticity for an otherwise radical movement.

Whatever their original intentions, progressives eventually settled on an agenda that harmed conservative values:

Ironically, reform could destroy what it was intended to preserve. Crusading in the name of the home, reformers were supplanting the very thing they wanted to protect. As outside agencies supervised children in and out of school, ordered the material environment of tenements and parks, and regulated adult behavior, the family and the home became less important. “As in the human organism, when one organ fails, its functions are often undertaken and more or less imperfectly performed by some other organ,” Josiah Strong noted; “so in the great social organism of the city, when the home fails, the church sometimes undertakes the functions of the home.” A host of other “organs”—settlements, playgrounds, Boys’ Clubs, schools, courts, municipalities, state governments, the federal government—were undertaking those functions as well. But even the most reflective progressive activists appeared oblivious to the actual impact of their reforms on many homes.

According to E.A. Ross, progressivism eroded man’s moral fiber:  “Too much consideration for moral weakness would fill the world with moral weaklings,” he insisted. “To abolish temptation is to deprive the self-controlled of their natural right to outlive and outnumber those who have a cotton string for a backbone.”

“Once work was so constant that married women did not realize their loneliness or the want of appreciation which befell them,” Kate Gannett Wells contended in an essay titled “Why More Girls Do Not Marry”: Now society and the middle class have leisure to examine their states of mental solitude, and to see just where husbands are wanting. Fifty years ago the woman was too busy to stop for the morning kiss as her husband went to work.  Now she has time to think about the absence or infrequency of the greeting for half an hour before she reads the morning paper, in which she finds some fresh instance of man’s wickedness.

Thus conceived, progressivism cannot be sustained as a practical tool put in the service of conservatism—it is a wholly new conception of man, society, and government.

Law, Society, and Shame

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My hometown of Huntington Beach is ranked top in the state of California for alcohol-related traffic deaths.  Recently, the city council considered putting repeat offenders on the HBPD’s Facebook site with the apparent hope of shaming them into sobriety.  (The council voted down the proposal last night.)  Though I was and still am ambivalent about the idea,* I was surprised by the hostility many expressed toward the proposal.  Several folks expressed the sentiment that the punishment for drunk driving, or any crime for that matter, is dictated by the penal code, and cities may not add more than what the law already provides.  This article sums up the objections nicely:

Dwyer may have the best of intentions, but his proposal clearly goes too far. Yes, drunk driving is morally reprehensible, and those who do it should be punished according to the law. But they should also be given the opportunity to learn from their mistakes, change their ways, and become contributing members of society. If their face is immortalized in Facebook infamy, that recovery process would become significantly more challenging. Dwyer shouldn’t let the court of public opinion interfere with the court of law, because, as Lt. Reinhart said, “Law enforcement is not about public shaming.”

The suggestion that the proposal would “interfere with the court of law” is hyperbole.  But the sentiment that “the court of public opinion” should count for nothing radically misconceives the relationship between law and society.  Criminal laws and punishments are based on values held by society.  But activities prohibited by law are not the only ones a society might condemn, and criminal punishments are not the only ones society might elect to mete out.  Shame, for example, is important because it reinforces the notion that actions are not merely wrong because they result in a deprivation of liberty due to criminal punishment, but because they are evil and antisocial.  Likewise, enduring a criminal sentence is not the only mode of redemption; communities can offer acceptance and forgiveness and opportunity to rehabilitated individuals who have proven their good character.

Engaging in certain wrongful behavior is antisocial, and the function of shame in society is to root out and eliminate such behavior.  Indeed, the behavior that we choose to criminalize tends to be the behavior that is the most harmful, the most antisocial.  It is absurd to suggest that, by criminalizing such behavior, society loses its moral right to characterize the behavior as shameful.  It would be just as absurd as suggesting that, by defining and enforcing a criminal penalty against a convict, society loses its moral right to later characterize the convict as rehabilitated and forgiven.

I’d be willing to bet that most of the folks who are against the Huntington Beach proposal are also the sort who believe that government should stay out of the business of legislating morals.  The oddity, assuming I’m right, is that if it is supposed that law ought not deal in the sphere of morality and shame, and if it is also supposed that communities ought not deal in shame where the law provides a punishment, then the result is to have removed shame from our society altogether.  This, I think, would be a very bad thing.

* My thought is such a law obviously must be confined to those convicted of, not merely arrested for or charged with, DUIs, and that it must also be confined to repeated convictions, probably at least three, or perhaps two within an 18 or 24 month period.

Written by Tim Kowal

January 19, 2011 at 11:23 pm