Monday, November 10, 2008

November 10, 2008

PARIS — Long after other media joined the digital revolution, book publishers clung to the reassuringly low-tech tools of printing press, paper and ink.

But now the world of books is starting to go digital, too.

Late last month, American authors and publishers reached an agreement with Google to settle lawsuits over Google’s Book Search program, which scans millions of books and makes their contents available on the Internet. The deal lets Google sell electronic versions of copyrighted works that have gone out of print.

“Almost overnight, not only has the largest publishing deal been struck, but the largest bookshop in the world has been built, even if it is not quite open for business yet,” wrote Neill Denny, editor of The Bookseller, a trade publication based in London, on his blog.

The settlement remains subject to court approval, and the bookshop would operate only in the United States for now. But the agreement is only one of many initiatives under which books are making what may be the biggest technological leap since Gutenberg invented moveable type.

This month, a group of European national libraries and archives plans to open Europeana, an online database of two million books and other cultural and historical items, including films, paintings, newspapers and sound recordings. Letters from Mozart to his friends, from the Austrian National Library in Vienna are there, along with early printings of his work, from the Bibliothèque Nationale de France.

Meanwhile, publishers are moving ahead with a flurry of digital initiatives, sometimes in a race against Internet start-ups.

“The book business model is under siege, just as the music industry earlier came under siege,” said Eileen Gittins, chief executive of Blurb, a Silicon Valley company that helps people publish their own books, using the Internet. “The book publishing business has had a front-row seat to see what happened to the music industry.”

Until recently, while the music business was decimated by digital piracy, book sales rose, aided by the ability to browse and buy from online stores like Amazon.

But in the first nine months of this year, book sales in the United States fell 1.5 percent, according to the Association of American Publishers.

Among the few bright spots were sales of so-called e-books, read on devices like Amazon’s Kindle, on personal computers or on mobile phones. Wholesale sales of e-books were up 55 percent from a year earlier.

Questions remain over the best way to deliver digital books. In the United States, a surge in sales followed the introduction of the Kindle last year and upgrades in rival devices like the Sony Reader, which allow users to download books wirelessly or from an Internet-connected computer.

But in Europe, where such devices are only slowly becoming available, sales of e-books remain in their infancy. The price of these gadgets — the Kindle, for example, costs $359 — may put off readers.

In Japan, the mobile phone has been the most popular way to read e-books, according to the Digital Content Association of Japan. Sales of digital versions of manga comic books are leading the way. Penguin said it also had high hopes for selling e-books to mobile phone users in India.

About half a million people in more than 50 countries have downloaded Stanza, an application that lets them read e-books on the iPhone, said Michael Smith, executive director of the International Digital Publishing Forum in Toronto.

“The adoption is happening,” he said. “It’s not theory. It’s happening.”

A survey published in conjunction with the Frankfurt Book Fair last month showed that 40 percent of book publishing professionals thought digital sales would surpass sales of paper-and-ink books by 2018.

Now, though, revenue from e-books and other digital sources remains tiny — less than 1 percent of the worldwide sales of Penguin Group, for example, according to Genevieve Shore, digital director for Penguin in London.

But the Google deal with the Association of American Publishers and the Authors Guild could be a catalyst. Under the proposed settlement, Google would share online sales revenue with publishers and authors.

“We’re very excited about it,” Ms. Shore said. “What it means is that a very important player in our online lives, we’re not in conflict with anymore.”

Publishers are exploring other new ways to sell books in digital form. She said Penguin was considering subscription plans, where readers would pay a monthly fee for online access to best sellers. Another possibility would be free or reduced-price online versions of books, supported by advertising — an approach adopted by newspapers on the Internet.

“We will have some interesting new business models on the market in 2009,” she said.

Free electronic versions of some books have been available for years. Project Gutenberg, a volunteer archival effort, makes more than 25,000 books available for download. Feedbooks, a start-up company in Paris, is formatting many of them for use on mobile devices.

There are limits to what readers can find on Feedbooks. George Orwell’s “1984,” for example, is available; the latest best sellers are not. That is because Project Gutenberg focuses on books whose copyrights have expired.

The Google settlement largely concerned works that were still under copyright but no longer in print. Digitizing these books could allow publishers to offer readers vast numbers of additional volumes — the so-called long tail of the Internet.





MGM to Post Full Films on YouTube

SAN FRANCISCO — YouTube is by far the world’s biggest stage for online video. But in some ways Hulu is stealing the show.

With critical plaudits and advertising dollars flowing to Hulu, the popular online hub for television shows and feature films, YouTube finds itself in the unanticipated position of playing catch-up.

On Monday, YouTube will move forward a little, announcing an agreement to show some full-length television shows and films from MGM, the financially troubled 84-year-old film studio.

Metro-Goldwyn-Mayer Studios will kick off the partnership by posting episodes of its decade-old “American Gladiators” program to YouTube, along with full-length action films like “Bulletproof Monk” and “The Magnificent Seven” and clips from popular movies like “Legally Blonde.” These will be free to watch, with ads running alongside the video.

The initial lineup may not be all that compelling, but for YouTube, which is owned by Google, the relationship with MGM is a crucial step in an essential reinvention. YouTube had its debut in 2005 and quickly became famous for the democratic sharing of bite-size video clips. Users love the site — 81 million people visited in September alone, according to Nielsen.

But Hollywood executives have complained over the way clips of their movies and shows pop up on the site without their permission. And advertisers have found that user-created videos of pet pratfalls and oddball skits are largely incompatible with commercials for cars and other products. Revenue at YouTube has disappointed Google investors since the company bought the start-up in 2006.

Now YouTube is trying harder to make friends with Hollywood — and emulate the appeal of Hulu, a joint venture of NBC and Fox. Along with its MGM relationship, YouTube has recently forged ties with the independent studio Lionsgate and with CBS, which this month started posting to YouTube full-length episodes of older shows like “Star Trek” and “Beverly Hills 90210.”

“We believe in comprehensiveness, and we want to have deals with everybody,” said Jordan Hoffner, the director of content partnerships for YouTube. “We want to be able to give users the most content possible.”

In the last few months, YouTube has swept its virtual floors and painted its stage as it prepares to offer more professional videos. This month, it introduced a “theater view” button that expands the viewing screen and darkens the rest of the Web page for optimum viewing — a feature similar to one introduced by Hulu.

YouTube has also developed a system called VideoID. It allows media companies to spot unauthorized clips of their material on the site, and then either remove the clips or leave them up and sell ads on them. As part of its deal, MGM will begin scouring YouTube for studio clips, from properties like the James Bond and Rocky franchises, and pulling many of them from the site.

But MGM will also work with YouTube to choose which clips can remain online, supported by advertising.

“YouTube is essentially saying to media companies, ‘We are sorry for our past copyright stance; we weren’t thinking big enough. Let’s see how we can make some money together,’ ” said James L. McQuivey, an analyst at Forrester Research.

Mr. McQuivey thinks the strategy can work. “They have hundreds of millions of views,” he said, “and it will be very hard for studios to pass that up.”

For now, the studios appear to be dipping their toes in cautiously. Many Hollywood executives complain that YouTube’s online presentation is too cluttered.

They also say they are more comfortable with the cleaner, better organized Hulu, which does not have amateur-created videos and which sprang from their own ranks. Hulu had 6.3 million visitors in September, according to Nielsen, and has more than 100 sponsors trying out creative forms of advertising, like interactive games.

Jim Packer, MGM’s co-president, said his studio was starting slowly on YouTube, with action films intended to promote the studio’s video-on-demand channel, Impact, on Comcast. He said other MGM material would move to YouTube soon, including films like “Moonstruck” that appeal to women. But he did not see putting a significant part of the studio’s catalog on the site anytime soon.

“We will have some long-form videos up on YouTube, but I don’t think that’s the platform to have 30 or 40 movies up at once,” Mr. Packer said. “I feel much more comfortable doing that on a site like Hulu.”

Lionsgate has also tiptoed onto YouTube, putting up clips from certain films and TV shows and directing viewers to sites where they can buy the DVD or pay for a full-length download.

“We didn’t have huge expectations for this year,” Curt Marvis, Lionsgate’s president of digital media, said of the studio’s presence on YouTube. “We are still discussing, as I think YouTube is with every studio, how we can further take advantage of this audience.”

Mr. Hoffner, the YouTube executive, hinted that more digital deals were in the pipeline. Potential candidates, according to Hollywood and high-tech executives, include Time Warner and Sony, a part owner of MGM.

A Sony spokeswoman said the studio was already putting abridged versions of older shows, called minisodes, on YouTube, and that no larger deal was imminent — at least in the next few weeks. Time Warner is conducting some technical trials of YouTube’s clip identification system.

The ice between YouTube and Hollywood clearly has yet to thaw. During its first few years, YouTube stood behind the Digital Millennium Copyright Act and told media companies it was not legally required to remove unauthorized material from its site unless specifically asked to do so by the owner.

The stance provoked a $1 billion lawsuit from Viacom, which is still pending, and animosity from media executives who say they still believe YouTube could be more aggressive in taking down pirated clips.

“A lot of studios have taken the position that they won’t embrace YouTube until everything is perfect and the copyright protection is ironclad,” Mr. Marvis of Lionsgate said.

But YouTube may face an even greater challenge in the effort to transform itself. Ken August, vice chairman of Deloitte & Touche and the head of its media and entertainment practice, said the largest studios were in a state of inertia — willing to experiment with online distribution but mostly aiming to protect their traditional way of doing business.

They are also waiting to see what will happen with Viacom’s lawsuit, Mr. August said.

“There needs to be a major realignment inside some of these companies for profound digital deals to happen,” he said.

Brad Stone reported from San Francisco, and Brooks Barnes from Los Angeles.

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