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How TeleRead Could Help Good Publishers Financially and in Other Ways

TeleRead in a Nutshell

--A well-stocked national digital library with fair compensation for content-providers. As many books as possible would be free to the public. Perhaps a subscription plan could help drive down the costs of accessing the others.

--A national program to promote the spread of multi-use, e-book-friendly machines--driving down costs.

--Cost-justification of the ebrary by encouraging the use of electronic forms on the same convenient, tablet-style computers.

--Similar programs in other countries--not just to grow the market for U.S. books and other items but also help people outside the States preserve their own cultures, especially in the Third World.

Click here for more of the basics of the TeleRead idea.

NIST E-Book ConferenceTeleRead would help good publishers, not just readers, writers and libraries. It would grow the market for superior books and adjust business models to the realities of the new technology.

Not surprisingly, many publishers fear the future. "The Last Book" isn't just the name of a Via ArtTodaydevice that uses electronic ink to display an unlimited number of e-book on flippable pages. It is also the worst nightmare of publishing executives in the United States and elsewhere. What if the political climate and the copyright laws NIST E-Book Conferencechanged? And then what if libraries could buy just one copy of each e-book and reproduce it endlessly? Or what if readers could Napsterize to their heart's content? If the publishing industry truly cares about its sustainability, however, it will work out compromises with librarians and others rather than depending so much on the political and legal clout of the moment.

As the U.S. Defense Department has shown U.S. Department of Defensewith its increasingly friendly attitude toward file-sharing technology, the interests of Hollywood and Publisher's Row might eventually take a back seat to a different set of priorities. What's more, American laws might eventually change some years from now if Washington grew less business-oriented--hardly an impossibility, given past ideological transitions such as the dramatic changes that unfolded in the United States during the 1930s.

Image via ArtTodayThe best choice, then, is for book publishers and others in information and entertainment to rely less on sheer power and more on a TeleRead-style approach to adapt to the new technology. Along the way, publishers might find that profits actually increased, just as they mushroomed in Hollywood after the coming of the video tape recorder.

The Laudable Experiment

To befriend the new technology, publishers should experiment with innovative forms of distribution, copy protection and rights management.

Or at least the industry should allow others to do so with proper safeguards in place.

In this vein, the Association of American Publishers has broken new ground in letting distribute free books to the visually disabled.

The latter group is using volunteers to digitize books for the disabled to share.

Current copyright laws allow this for the blind and others with print-related disabilities. And AAP and Bookshare have worked out specific technological and legal procedures to safeguard intellectual property.'s protection schemes are rather awkward compared to those that TeleRead would eventually offer. But at least they are a start and should be developed further.

Here's a chance to refine property protection while trying to keep the reading experience as enjoyable as possible.

Besides, it isn't as if publishing right now is the healthiest of industries. Even in the paper era, trade publishing is a nasty, brutal business, with just a tiny Association of American Publishersfraction of titles earning serious money. Margins are typically small. Revenues can fluctuate horrendously since publishing houses are at the mercy of readers' tastes. Within the U.S. trade-book category, industry sales declined 3.7 percent in 2000 compared to 1999, and adult hardbacks fell off 11.6 percent, according to the Association of American Publishers. The industry's $25 billion in total U.S. sales included a 3.4-percent increase, but this happened in part because of the Harry Potter phenomenon and still-favorable demographics of the juvenile and K-12 markets. Even outside the trade area, publishing today is not for the weak-stomached. How can good publishers remain profitable and friendly to words, ideas and stories? Is there a way to exploit the efficiencies of e-books beyond reducing the waste of returns and all the fees paid to distributors and other intermediaries?

TeleRead is hardly an instant or complete solution, but it could help good publishing houses that added value through editorial selection and intelligent marketing. First, it would increase total revenue. Second, the plan would more efficiently reward editorial quality. Brute-force marketing would matter less; good books, more. Third, via a comprehensive catalogue, quality-oriented librarians and other content experts, sophisticated search engines, permanent archives and a truly reliable linking system, TeleRead would increase the usefulness, longevity and seriousness of e-books.

How to Grow Industry Revenue

In a $10-trillion economy, the $25-billion industry figure is a pathetic showing. Just one computer-maker, Dell, has enjoyed sales of at least $32 billion in twelve months--or more than ten times those of the so-far profitless

Some publishers hope that electronic books will broaden the tiny audience that books enjoy today, but despite the success of Riding the Bullet, the typical e-book probably sells in the hundreds, if that much. Carl Melcher Goes to Vietnam, a nonfiction book, sold all of eight copies before reaching the finals in the Frankfurt eBook awards. As e-book hardware improves and the technology grows more popular, total industry sales will increase, but even then there are serious challenges ahead. The question isn't just one of the costs of each book. In this era of so many distractions, it is also how much time Americans are willing to spend reading books, whether they are plain-vanilla text on pulped wood or multimedia wonders on the Web.

TeleRead would help the publishing industry enjoy higher revenues by making books easier to find and also by introducing new funding sources to the system. Some of the money might actually come from taxes if publishers and librarians put aside their fights and redirected their lobbying to focus less on means and more on ends--notably, better accessibility of books for library users and better odds for good publishers. The underlying justification for the TeleRead plan is that books have a special place because of their ability to encourage sustained thought among readers, a way to strengthen a democratic society. What's more, the public library can indeed be a poor man's university just as Carnegie said; and one result can be a smarter workforce. That is why we pay taxes for libraries, and why books and magazines have cost less to send through the U.S. mail than toasters or Silly Putty. It is also why we need to update the Carnegie vision with TeleRead and at the same time strengthen the publishing industry.

So how could TeleRead grow the industry's total revenue?

Revenue-Grower Number One: TeleRead would help popularize e-books by making them more of a part of life inside and outside the U.S.. Via tax incentives or in other ways, the sellers of e-book readers would be encouraged to make their wares available to libraries and schools for free or at much lower costs than otherwise. Children could grow up with e-book technology. By lending the hardware to the public for free, libraries and schools would help whet interest in e-books and reading and seed the market for private purchases of both technology and content. In the end hardly any of the computers would be publicly owned. As technologists at Microsoft and elsewhere can verify, we are headed toward an era of throwaway computers for reading e-books and for other tasks such as email, Web-browsing, e-commerce or word-processing. Benefiting e-commerce and allowing greater use of e-forms in government, TeleReaders would help the program cost-justify itself. In effect some resources would be directed from bureaucracy to books and learning.

Cost of a TeleReader should eventually sink to $50 or less if past trends in computer technology hold up. That's the price of economy models of ink jet printers, which years ago would have sold for thousands. Are $50 TeleReaders immediately around the bend? Not quite. The Microsoft-envisioned TabletPC now costs at least in the four digits. Still, it is very much akin to the machine predicted in a 1992 description of TeleRead, which, just like PC hardware, has evolved considerably. The TabletPC offers a tablet shape in various sizes, the ability to work with a sharp screen and extensive multi-use and multimedia capabilities. What TeleRead would do is speed up the popularity of the TabletPC and similar machines from many vendors--and thus help drive down costs through the efficiencies of mass production. And, yes, to answer one question, TeleReaders could rely on different operating systems, just as the servers could, a wise precaution, given all the OS-specific viruses in circulation.

Revenue-Grower Number Two: TeleRead's all-inclusive database would enable readers to find their exact choices more easily--either normal commercial books or library books. Search engines could be more powerful and more intelligent in a well-integrated system that included both the library business model and the bookstore model. And readers seeking library books might instead end up purchasing titles that were still being sold by publishers at the usual prices.

In a common scenario, books might start off as commercial and then evolve into TeleRead library books as their popularity dwindled and publishers and authors turned to TeleRead for revenue. Keep in mind the broad reach that the online approach could bring. Just a fraction of the Wall Street Journal's online subscribers also choose to receive the print edition. No matter where they live, Manhattan or Oslo, they want the content now. Similarly, TeleRead would allow U.S. publishers to find new markets in both the States and abroad. In fact, the plan could even encourage the development of TeleReads in other countries--with compatible technical standards and pay-per-read and subscription options for people overseas who wanted to read American books. At the same time, these libraries abroad could also help preserve and promote local cultures. Some of this foreign content might find its way back to the States, and sophisticated American publishers could more easily undercover the best talent abroad.

The Subscription Model

Keeping all library books free is the best scenario and most in line with the Carnegie vision. However, other options exist. A TeleRead library could limit itself to the best and most useful books. This is the most likely occurrence. But what if TeleRead included all books? Just what would the revenue models and the costs be?

One way to obtain revenue for an all-inclusive TeleRead-style library system would be to charge modest subscription fees based on family income. The fees might even be paid via tax-form check-offs. And poor families might enjoy the service for free.

So how much would fees be for a book-only subscription arrangement that focused on text? Figures from the Book Industry Study Group show how much money goes for books in the U.S. right now. Divide 2001's approximately $33.3 billion in consumer sales by 105 million, the approximate number of U.S. households, and the amount ends up around $317 per household per year. That would be a bit over $26 a month. It includes markups from stores, distributors and wholesalers, however. Plus the costs of the cardboard and ink and transportation in the Real World Today.

So actually TeleRead's hypothetical subscription fee would be far lower--maybe even just $15-$20, or in NetFlix territory. Yes, there would be the cost of the library system, but the figure for consumers might still be under $20 because TeleRead librarians would be performing similar tasks for existing libraries.

$15-$20 monthly for access to thousands of books--and easy purchase of multimedia material to augment basic text? Not such a bad bargain, especially if, in return for the subscription approach, the publishing industry let the library system include the most recent titles. Moreover, powerful search capabilities and easy hyperlinking among titles could be used to add to the value of library.

Once again, keep in mind that the above scenario assumes that TeleRead would cover the costs of all books--not the most likely scenario. Better a trimmed-down TeleRead than none at all. Either way, readers would win with books more easily available; and writers and publishers would enjoy new sources of revenue.

Meanwhile thanks to Daniel Akst, a sharp-eyed visitor to this site, for catching some glitches in earlier figures posted here. A great example of the glories of sharing information! Further corrections welcomed. (Changes made Jan. 22, 2003.)

Revenue-Grower Number Three: Via a mix of public and private funding, TeleRead would allow thousands of good books to go online for free to the public--but with publishers and writers paid from a national digital library fund. Accesses could be tracked and content providers rewarded by popularity of individual titles. The providers' participation in the royalty system would be voluntary, although the short lives of most books might well encourage publishers and writers to take part.

To avoid having just a few titles bankrupt the library fund, royalties per book would actually decrease as the accesses grew, and publishers would have to gamble money up front to qualify for huge advances later on. Money from lost bets would go to midlist books, academic books and others that could be worthwhile but not the biggest money makers. Needless to say, publishers would have additional incentive to gamble on books that they concluded would never make the best-seller list. The delightful irony is that by being bolder, the industry might find itself with some surprise best-sellers on its hands.

Meanwhile keep in mind the voluntary nature of TeleRead's royalty system and the fact that a highly structured digital library system with true permanence would be more likely to attract money from philanthropists and appropriations from politicians.

To keep generating revenue for libraries to pass on to publishers, one other possibility is that even in the States TeleRead could charge modest subscription fees based on family income. See the subscription proposal at right. While the free Carnegie model is a good one, it might be modified to allow for small fees, which the lowest-income Americans would not even have to pay.

More Efficiently Rewarding Editorial Quality

Most books appear with little publicity and never reach mainstream distribution. TeleRead would make it easier for librarians and other subject experts to identify the best books and spread the word. Librarians acquiring books for TeleRead and otherwise managing the collection would be in many locations. Geography might matter less than expertise. An expert on books on antebellum architecture, for example, might work at a university in South Carolina or Mississippi.

Readers could conduct searches that were restricted to books favored by a certain library system or--within a specialized niche--by a specific librarian. Librarians would no longer have to be so anonymous. In addition to public librarians, readers could subscribe to private services that rated books. What's more, libraries as well as private corporations could gather and edit intelligent readers' comments on individual titles, just like and other online booksellers, which themselves could contribute valuable expertise to TeleRead and offer enhanced versions of the library-developed database.

In addition, TeleRead could reward editorial quality or at least commercial acumen by making it easier for friends, classmates and colleagues to share books and discuss them. Books could be transmitted over the Net or beamed to friends via infrared, and at regular times downloads could be reported to the National Digital Library Fund--perhaps via intermediaries or through other means to assure privacy for the typical user (in this era of terrorism, privacy questions exist even with the libraries of the present). Napster-style sharing of files might be especially helpful if combined with tracking of intellectual property.

Simply put, TeleRead would help the marketplace more efficiently reward good books and punish bad ones--through the use of comments from both experts and ordinary readers. What's more, readers could use refined versions of devices to scour the collection for new books that reflected their interests--a benefit both to the public and the publishers. Findings could be regularly emailed to users. The real could even offer TeleRead such services as a contractor. The result? Less need for readers to hear of books through television or happenstance--and more chance of books finding appreciative, well-informed audiences.

Increasing the Usefulness, Longevity and Seriousness of E-books

Usefulness-related issues abound, along with those related to longevity and the suitability of e-books for writing that is more ephemeral than popular fiction.

Skeptical librarians have rightly questioned the usefulness of e-books in their present form and now are reluctant to spend major money on the medium. The appropriate search engines and distribution systems could help, as could quality-control mechanisms. So, too, could more focused work in such standards-related areas as format and technological ways to protect intellectual property.

For one thing, e-books still come in a variety of formats. Readers cannot use Microsoft software to read a book formatted for the Rocket eBook. The Open eBook format has been usefulness in streamlining the process through which publishers release ebooks in different formats, but hardly is a panacea, and the industry badly needs truly meaningful standards of the most direct benefit to consumers. A national library system, with assistance from the National Institute of Standards and Technology and groups such as the National Information Standards Organization, could help set the direction and smooth out the wrinkles. In the end the solution might be hardware and software that could accommodate a number of different formats and perhaps take a plug-in approach similar to that used by Web browsers.

Longevity is another thorny issue and is closely related to the seriousness of e-books. Imagine the frustration for readers, writers and librarians if there is no assurance that e-books will be permanently readable. A well-integrated, TeleRead-style system could better deal with the threats of changing formats and lost or corrupted computer files. A TeleRead-style library system could help make certain that older formats were readable by new software or at least could be translated. It could also arrange for decentralized storage of e-books and other items in a variety of different media and in different locations, and monitor the condition of e-book files. What's more, in an era of hackers and terrorism, it could protect files against viruses, natural disasters and other threats. Content-providers could do their own storage but entrust master files to a TeleRead-style library. Otherwise we'll find that many e-books will vanish just like early movies and ancient television shows; reliable storage must happen in a truly massive way. While there is talk around the Library of Congress about preservation of "born-digital" content, much work remains to be done in this area.

Associated with the archive issue is the linking question. What happens if a writer of a Random House book links to a book from a small publisher, which then goes out of business? The link will be obsolete. Despite all the excitement over Digital Object Identifiers and the like, that still does not offer a final solution to a more basic problem--the mortality rate among publishers, especially minor houses. A TeleRead-style approach certainly could help deal with this issue. Without good, solid linking, including internal links, so that Author A can reliably send readers directly to a relevant section of a book by Author B, e-books will never be able to realize their full potential. The TeleRead model, as opposed simply to a bookstore model alone, is the best way for this to happen.

If nothing else, the financial woes of NetLibrary show the limits of a purely private-sector approach if we want to store e-books for centuries and increase the seriousness of the medium. Perhaps it is time for publishers and their owners to show some enlightened self interest and work toward the day when the permanence and efficiencies of a TeleRead system could increase the value of e-books and other digital properties.

Comments? Suggestions? The above will continue to be a work in progress. Feedback should go to David Rothman at Original draft: Nov. 8, 2001.