Napster for Novels?

Not even pirates like e-books

Is the American book publishing industry headed for its own Napster crisis? To judge from a recent report from Envisional Ltd., a British digital rights management company, Napster-like online trading of bestsellers may be accelerating even as the industry's own efforts to get a digital product out the door are slowing to a crawl. Paradoxically, publishers' fear of a Napster scenario—thousands of users trading copyrighted works over the Internet without a dime going to authors or publishers—may bring that very scenario about.

The original Napster crisis was instructive: While music companies dithered about how best to distribute their intellectual property to consumers over the Internet, an entrepreneurial programmer named Shawn Fanning created a networked system for trading music online. The resulting product and service, Napster, exploded onto the national scene, with millions of users trading thousands of compressed digital music files in the MP3 format. The music companies were forced to respond, and they did so quickly—not by getting their own product to market, but by suing Napster and similar upstart companies into the ground. As it stands today, Napster is moribund (though Audiogalaxy and other rivals are still flourishing); the music companies say they plan to roll out digital distribution systems soon, but consumers are still waiting to see a new paradigm that they like.

Similarly, in recent years American publishers have been quick to embrace the concept of "e-books"—digital editions of books that can be read on computers, handheld devices, or special e-book readers—but slow to find or exploit a market for the product. Not least of publishers' concerns has been the perceived need for software makers to prevent would-be pirates from making endless and perfect copies of the original.

But while publishers have been handwringing over the prospect that their e-books will be pirated, Internet-based book pirates have sidestepped e-books altogether, choosing instead to scan the text of traditional paper editions and make the results available on the Internet, often through Napster-like file-sharing services. In an exhaustive August survey, Envisional Ltd. claimed that as many as 7,300 paper editions of popular books have been scanned and made available on the Internet through distributed file-sharing services such as Gnutella. Among the most commonly traded books are titles from bestselling authors such as Stephen King, Tom Clancy, J.K. Rowling, and J.R.R. Tolkien.

Does the Envisional survey mean that book piracy on the Net has taken off, much the way that sharing of MP3 music files did two years ago? No one has a clear answer to that question. Harriet Dorsen, general counsel of Random House, Inc., remains unpanicked by the Envisional report, since "at the moment there doesn't seem to be much of a market for reading books electronically."

Dorsen was alluding to a New York Times story last summer that called into question earlier predictions that e-books might make up 10 percent of the book-publishing market as early as 2005. Those predictions, made by the consulting firm now known as Accenture (a spinoff of the Arthur Andersen accounting firm) seem overoptimistic now. To be fair, Accenture spokesman Alex Pachetti is quick to point out that the original, bullish prediction was contingent on a number of technological advances, including cheaper e-book readers and secure anti-piracy measures, that haven't taken place yet.

In spite of the disillusionment some publishers now feel about whether there will be a significant market for e-books in the near future, the American Association of Publishers is adamant about the need to advance e-book anti-piracy technologies, and to use the Digital Millennium Copyright Act (DMCA) to prosecute those who develop means of circumventing such technologies.

On Aug. 28, the same day that the Times published its disheartening assessment of the current e-book market, a federal grand jury indicted the Russian company Elcomsoft Co. Ltd. and previously jailed programmer Dmitry Sklyarov on charges of trafficking and conspiracy to traffic in a copyright circumvention device. Under the five-count indictment, Sklyarov, who at press time is out on $50,000 bail, could face a prison term of up to 25 years and a $2,250,000 fine. As a corporation, Elcomsoft faces a potential $2,500,000 fine.

But book industry watchers wonder whether the focus on e-books and related anti-piracy technologies is misconceived, given that more than 7,000 traditional books have already been transferred in unprotected form to the Internet. "The fox is already in the henhouse," says one New York copyright lawyer who asked not to be named, adding that "e-book technology is more or less irrelevant" to the larger question of international book piracy, which already has gone digital.

The American Association of Publishers, while applauding the prosecution of Sklyarov and the Russian company that employs him, may in practice give more attention to traditional book piracy. The trade group more than doubled its funding of anti-piracy efforts in 2001, to more than $400,000. The group estimates that about $8 billion in pirated American-published books were sold or traded last year.

According to Random House's Dorsen, traditional book piracy, which predates the Internet but is easily facilitated by it, is "something that everybody takes extremely seriously," but adds that at some point the e-book market will be "more substantial" as a subject of piracy concerns. Dorsen says this explains the proactive measures American publishers are taking with the DMCA—not just encouraging the Sklyarov prosecution but also invoking the DMCA's notice-and-takedown provisions to force Internet Service Providers to remove infringing texts that ISP subscribers may be offering.

In the short term, one prediction—increasing piracy of scanner-produced e-books—seems safe. Even such doorstop tomes as Stephen King's The Stand and Tom Clancy's Red Storm Rising can be scanned and posted on the Internet in files ranging from 2 to 3 megabytes in size. That's smaller than the average MP3 music file.

Not impossibly, given the small size of scanned-book files, a brisk collective-trading phenomenon could arise using existing file-trading systems such as Gnutella or Freenet. But the thing that may be giving publishers some breathing room is the fact that the reading public has not yet shown any deep interest in obtaining books in digital form online. Publishers hope to get the wrinkles ironed out of their e-book systems before it becomes trivially easy for computer users to adapt scanned texts into attractive, readable forms for their laptops and handheld devices.

Assuming, that is, that reading books from screens ever becomes popular at all.

But if the publishers don't win that race, it may be Napster all over again.