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October 11, 2009

Book Industry Prepares For New Business Models

The world's book trade meets in Frankfurt, Germany this week as the industry stands on the cusp of a long-feared transformation for which many are unprepared.

Electronic readers such as Amazon's kindle, book-sized screens that grab and display text from the Internet, are set to enter the mass market with a huge surge in sales this holiday shopping season.

The shift has book publishers facing declining revenues as sales of discs, papers and books are replaced by less costly or free digitally distributed content.  The phenomenon is similar to what the music and newspaper industries have experienced in recent years.

However, "publishers are distracting themselves by fretting over the price of eBooks, withholding eBook releases so as not to cannibalize hardcover book sales, and watching helplessly as their businesses erode," Reuters quoted Forrester analyst Sarah Rotman Epps as saying this week.

Forrester estimates 3 million e-readers will be sold in the U.S. this year, with the number doubling next year for a total of 10 million sold by the end of 2010.

But some are welcoming the digital transition.

Bookseller Barnes & Noble, the nation's top bookstore chain with the world's largest online bookstore, is set to launch its own e-reader, which is expected to strongly rival the Kindle and Sony's e-reader.

Similar to Amazon, Barnesandnoble.com sells most of its new releases as e-books for $9.99 "“ a price far cheaper than the physical books. When it was launched in July, Barnesandnoble.com had more than 700,000 titles, readable on a variety of devices, including Apple Inc.'s iPhone.

"We believe readers should have access to books in their digital library from any device, anywhere and any time," Reuters quoted a spokeswoman as saying.

Most of Barnes & Noble's e-titles at launch were out-of-copyright books in the public domain supplied by Google Inc.

The Internet search giant has a project to scan all the world's books and make them available online. So far, Google has scanned 10 million books through agreements with various libraries and publishers, but the company has amassed some enemies by scanning library books without always receiving permission from the rights holders.

Google appears to be close to a final settlement to a lawsuit with U.S. publishers, with a final court hearing scheduled for November 9.  The agreement calls for Google to help to set up a books registry to track and compensate rights holders.

But other nations, Germany and France in particular, remain suspicious of Google.  The company is sending its top lawyer to Frankfurt to re-engage with the industry.

Google claims it can help publishers and authors by enabling readers to find their works online, particularly out of print publications. For books still in copyright, Google displays text clips in its search results, and includes details about retailers.

"Books that were previously out of print will come back to life," said Santiago de la Mora, Google's head of European print partnerships, in an interview with Reuters.

"There are 1.8 billion Internet users. I'm pretty sure you can find readers for everything."

But the growing amount of digital content also opens the door for easier piracy.  Indeed, the practice is a mounting threat from China, this year's guest of honor at the Frankfurt Book Fair.

China has been a difficult market for global media firms to penetrate due to strict limitations on activities and widespread content piracy.

Speaking at a forum in Beijing on Friday, media mogul Rupert Murdoch urged China to open its tightly controlled media market and crackdown on piracy.

"There should be a price paid for quality content and yet large media organizations have been submissive in the face of the flat-earthers who insisted that all content should be free all the time," Murdoch said.

But organizers of this year's book fair, which runs from Wednesday through Sunday, must proceed cautiously with Chinese authorities, whom they have already displeased by inviting dissident authors Dai Qing and Lei Ling to a pre-fair symposium.  The dissidents' appearance led to a walkout by some of the Chinese delegation.

"Democracy and freedom of expression always involve friction and the scandal over the weekend was only the beginning of a democratic dispute that lies ahead for Guest of Honor China," wrote Juergen Boos, director of the fair, in an open letter.

Last year's fair attracted 300,000 visitors and more than 3,000 exhibitors from some 100 countries.