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When The Digital Advantage Isn’t One

March 2, 2011

As we’ve discussed occasionally here, I’m a Luddite in every meaning of the  term but the club (I save that for other things).  So when I say I don’t really get e-books on a personal level, I typically recuse myself from commenting on the plusses and minuses of the technology.  But this one gets into strategy, so here goes. From The Register:

Libraries already work with e-books on the basis of one copy, one loan, leading to waiting lists for popular titles, which will mean that those will have the shortest life span before ‘wearing out’.

HarperCollins claimed in the Library Journal that the 26-loan figure reflected the average lifespan of a paper book, after which it is too tatty, torn or stained to offer for lending, forcing the library to buy a new, replacement copy.

If its e-books don’t disintegrate virtually, the publisher said, libraries will not replace them, costing it sales revenue.

Yep, experience the freedom and longevity of the new e-book era… provided it doesn’t actually cost me money to give it to you.  This is on the level of companies charging for Internet access to their sites back in the ’90’s.  They decided to stick to an old business plan in a new era, and it typically ended up passing them by as a result.  In the least, I guess Harper Collins is trying, since many other publishers aren’t even making e-books an option for libraries.

But still, a new channel is a call for a new strategy.  I’m not saying I have one, especially since I don’t pay much attention to the category.  I’m just saying that looking at revenue loss from one channel and trying to turn that into revenue gain in a new one is a losing proposition.  This is indicative of an organization run by the finance team, not by the strategic thinkers.

Okay, I’ll give you two ideas, not all that thought out… First, charge a perpetual licence for lending that re-ups on a declining basis and eventually goes to free when frequency of actual lending drops off.  If you want to be a numbers geek about it, model it after the existing buying patterns of libraries for new books.  It’s not a linear number, so show the curve and make it attractive to buy that way as opposed to the paper way.  Then you’re doing the environment a favor, and making people happy.

Second, become the lending library yourself.  When someone with a library card comes to you, do a back-bill on the service to the library systems that have signed up, and take the whole mess of digital archiving away from them.  At that point, you’ve opened a new buiness of archiving all of the library’s materials and you suddenly have a new revenue stream that you didn’t have before.  There, and I didn’t even have to think that hard.

The lesson that I’ll stick with: trying old business models in a new business environemnt is just going to get your burned.  Don’t strike the match in the first place.

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