Buy the book, get the search service

University of Chicago professor Randal C. Picker says Amazon Upgrade could wreak havoc with competition in the bookselling market.

The digitized-book market exploded earlier this month. Google Print went live, and Amazon.com, Microsoft and Random House each announced new programs. Amazon's announcement says a great deal about the important issue of how we will sell digital texts and what that means for copyright law.

Amazon announced Amazon Pages and Amazon Upgrade. Pages is a pay-per-page model. Want to read only the juicy parts of the latest tell-all? You can go to the bookstore and stand there flipping through the book with a clerk looking over your shoulder, or now, with Pages, you can go legit: You can just search for "Monica Lewinsky," pay for the two pages you really want to see and be done with it. Amazon Upgrade is something else entirely: digital access to books purchased through Amazon.

This is a really clever move by Amazon. The company is changing the basic scope of the book business, and this will put even more pressure on independent booksellers and even large operators like Barnes & Noble and Borders. And Amazon has come up with a structure that should put meaningful limits on the sharing of digital texts.

Many readers want it both ways: the joy of reading books on paper and the search capability of books online. If I am actually going to take the time to read the whole book, I want to be able to maximize my use of it. A paper copy and a searchable digital copy will do just that. Amazon Upgrade does just that. The details are a little murky, but the core idea is: buy the book, get the search service. Buy a book from Amazon--one click shipped to you--and Amazon will sell you the right to search that book online at its site.

Amazon doesn't seem to be selling digital offline copies with the paper copies. Instead, the company is selling a search service.

Sell when? Just when I buy the book, as a bundle? Can I buy online access later? At the same price I could have paid at the time of purchase? Pay an annual fee and get access for all of my purchases through Amazon? The company hasn't said yet.

But now we get to copyright and digital copies. Amazon doesn't seem to be selling digital offline copies with the paper copies. Instead, the company is selling a search service. Everything suggests that Amazon intends to do this with the consent of copyright holders, presumably for a split of the revenues. Here the difference between service and product is substantial. If I downloaded a copy of the digital book, Amazon (and the copyright holder) would have to worry about what I do with the copy. Do I try to make other copies? If it is wrapped in some encryption via digital rights management software, do I strip off the wrapper and put the content into the open? It only takes one sophisticated person to break the encryption, and then the content can circulate freely.

The service model limits that possibility considerably. Presumably, I will need to log on to Amazon as me to use the digital books that I have "purchased." For me to share my access with anyone else, I will have to give them full access to my Amazon account. I will probably do that with family members, and maybe a friend or two, but I won't do it with my 10,000 closest friends halfway around the world.

Many readers want it both ways: the joy of reading books on paper and the search capability of books online.
That was Napster and Grokster. The service model gives me a strong incentive to control access to the copy. By linking access to the digital object to access to other attributes that I care about--my account information and the ability to ship books via one-click around the globe--the service model turns me into an honest trading partner. I don't have that same strong incentive with a digital book product. Note that this structure is completely dependent on easy network access, but that is where we are now. The service model--and Google is the best example of this--brings with it the chance to capture click-stream information and advertising dollars.

Now consider what Amazon Upgrade means for competition in the bookselling market. When Amazon started, I feared for the state of the Seminary Co-Op, Hyde Park's leading independent academic bookstore. The Co-Op has continued as before, perhaps with a greater emphasis on author events (especially at the 57th Street store). I don't remember getting any dividends lately, but I can live with that. But Amazon Upgrade is scary, especially for academic books. Amazon Upgrade means that Amazon can sell me the physical book, plus the right to search it at Amazon. I don't assume that this is a simple business extension for Amazon, but Amazon is already a server-based business with strong searching (the search-in-the-book feature).

But for an independent bookseller--and maybe even the chains--this is likely putting a man on Mars. There is no way to "extend" ordinary offline selling of books to this. The only possibility for that is if Google Print, or another service like it, provides this as a back-end service to the offline booksellers. Even that will be tricky, as you need to make the link between the customer and the search service at the point of sale. Embed some code in the book itself and you can be sure that some individuals will just grab the code without purchasing the book. The other possibility is that owning the book and searching it won't be linked and that consumers won't care about actually owning the book. This is the Google Print fight, and now we will need to sort through how Amazon's new services alter how we should think about Google Print.

Amazon Upgrade? Indeed.

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