The Bookseller.com

2nd December 2008

ALAN GILES

Alan Giles spent 20 years in bookselling with Waterstone’s and W H Smith. He retired as c.e.o. of HMV Group last year to take up non-executive and teaching roles.

Pirates ahoy!

24.12.07

Recent revelations have exposed a staggering difference in the fortunes of the music and computer games markets.

HMV reported that during a period when the UK music market was down 11% in volume on the previous year (and presumably even more in value), the value of the games market increased by 76%. In the US, Pepsi will give away up to a billion music tracks next year—announced on the same day as Vivendi's $18bn (£8.94bn) takeover of Activision, ironically most famous for bestselling game "Guitar Hero".

How can we explain this extraordinary contrast? A new generation of music lovers has grown up expecting recorded music to be more-or-less free. Radiohead tried a brave experiment to let fans determine what, if anything, they should pay to download their latest album. Many thought it was right to pay nothing. That's fine for an established act with a huge fanbase and a multi-million-pound revenue store from touring, merchandise and back catalogue sales. It's much harder to see the incentive for struggling emerging artists.

The deflationary spiral has been catalysed by the use of albums as loss-leaders by supermarkets, free covermounts by newspapers and, above all, rampant internet piracy. Some believe that digital rights management has held back the market for legal downloads which, despite the excellence of Apple's products and marketing, has nowhere near compensated for the collapse of CD sales.

Thus far the games market has sidestepped these problems. Unlike with music, there is an unquenchable demand for greater file sizes (which drive the quality and complexity of games), which has consistently out-stripped the rapid growth of bandwidth. Therefore most games buyers still buy physical disks, rather than opting for downloads (legal or otherwise). And although the consumer base is broadening, the core gamer is harder for supermarkets to appeal to.

What can the book industry learn from this? As with music, there is a natural limit on the file size for digital product, which makes e-books vulnerable to piracy. The digital age for the book trade is approaching at high speed; we have to find a way of protecting ourselves from the internet thieves without strangling a nascent market. Some, such as Amazon, are tackling this in a thoughtful way, even if the copy-protection  used for Kindle e-books is proving controversial; others, such as Google, may have different motivations.

In the wake of Francis Bennett and Michael Holdsworth's BA report, an urgent and open-minded debate on how best to combat piracy is a high priority for our industry.

piracy Alan Giles