Random Thoughts on the Economics of Internet Publishing

Random Thoughts on the Economics of Internet Publishing by Solomon Elusoji

1.

I remember having a conversation recently with my new boss, about whether people should make illegal copies of digital products. He did not see why not. He downloads free music from the internet frequently, and he argues that if a thing cannot be protected or ‘put in a box’ by whoever chose to place it on the internet, it should be free. I do not agree with him, but it is hard to win this type of argument, because my only weapons are ethical. If people can make illegal copies of digital products, why shouldn’t they?

If you have been on the internet for some time, you might have come across a meme that satirises people who are willing to pay five dollars for a cup of coffee that was made in and is consumed in minutes, but are not willing to pay a dollar for a music track or book that cost tens of hours to make and has near-eternal value. It’s easy to dismiss these kinds of people (who are in the majority, anyway) as irrational and stupid and evil. But, alas, they are not. They are only being human. Human Beings.

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The first thing economics teaches us about human behaviour is that every decision we make is made to maximise our utility. This means that individuals act to make themselves as well off as possible. We decide to buy a car because it gives us utility – it makes us better. We decide to get married or start exercising or go to university because these things give us utility. Utility, it is important for us to note, is subjective; that is, different people have different ideas about what gives them utility. This is why Mr. A can decide to use hard drugs (“it makes me feel good”) and Mr. B can decide not to (“it will destroy my life”).

Now, let us return to our Cup of Coffee meme. Let us imagine a guy called Ugo. Ugo is a university student who likes to read books. While reading, he loves to listen to music and sip a cup of coffee. Let us create a special scenario where he has N100 on him and he wants to read a book worth N70 on Okadabooks, listen to a music track worth N30 on Spinlet, and cuddle up with a cup of coffee, which is worth N100 in the university cafe. What to do? His brain starts to hum.

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This brings us to the first thing economics teach us about life: scarce resources. No matter who (Bill Gates) or what (the United States Government) you are, you will never have enough. So, you will have to learn to ration. In fact, this is what economics is all about. If we all had enough of everything, there would be no need to study economics.

Back to Ugo: The rational thing to do, of course, is to go somewhere other than Okadabooks to download the digital book he wants to read, for free. He will do the same for the music track. All it takes is a simple search on Google. But . . . wait for it . . . he walks to the university cafe and pays N100 for his cup of coffee.

Now, let us go back to our Cup of Coffee meme and ask whether Ugo is an irrational, stupid individual who does not know how to ‘value’ things?

The truth, really, is that digitalisation has changed how we relate with products like books and music. This is not breaking news, but what would amaze you how book publishers in Nigeria still act like nothing has changed. In Europe and America, where capitalism is aggressive and there is a wide spectrum of mature players, digitalisation has broken hearts and ruined companies. In Nigeria, the music is still playing. But one wonders: for how long?

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2.

In October 2014, I submitted a fairly long research paper on the Future of Reading in Nigeria, as part of the requirements for a university degree. It should have been titled the Future of Book Reading on a University Campus in Nigeria. But long titles cost you marks. The paper took me about five months to complete and the conclusion was that Nigerian book publishers need to do more in the digital space, as a revolution is about to happen. I liked the paper and its conclusion, but I felt it was an obvious no-brainer. Everyone knew that. Not with all that had happened with Amazon and publishers in America and Europe.

In 2015, I interviewed Okechukwu Ofili, the founder of Okadabooks, for a newspaper interview. Okadabooks is the only half-serious digital book retailer in the Nigerian publishing space. The others are still cracking jokes. That was why I badgered him constantly via email. I wanted to hear the story of the only half-serious digital book retailer in a country of over 160 million people and thousands of schools.

The first thing that strikes you about Ofili is his passion, which is undiluted. He started Okadabooks after he had been hurt and short-changed by some physical bookstores which had retailed his first book – it was self-published. So he looked around and thought of starting a digital bookstore. He recruited a friend, and they built an Android mobile application where books could be bought and read. “I feel that books are powerful, and they should be for every single person out there to read,” he told me. “So, that, combined with my frustration with bookstores in Nigeria, started the whole Okadabooks idea.”

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When I asked him about the challenges Okadabooks was facing, he talked about the bottlenecks involved in receiving mobile payments and the ever-evolving challenge of meeting readers’ expectations. But a funny one, to me, was his inability to convince some publishers to sell their books on the platform. They told him there was no way they would put their books in digital form, because they were scared it would be pirated. It is funny, because it is ironic. It is like printing ten thousand books and putting it in a warehouse, because you don’t want it to be pirated.

But before you join in vilifying these publishers, it is wise to note that they are not stupid, only myopic. Digital piracy is nothing like print piracy, where you need some level of finance and technology that cannot fit into a palm to become the bad guy. In essence, print piracy is usually driven by profit. Digital piracy, on the other hand, is not driven by profit, but by free-dom. There is a school of thought, which my new boss seems to subscribe to, that espouses that information on the internet should be free for all. This is why most newspapers and magazines have struggled to replicate their print pay-as-you-read model on the internet and have been forced to rely on advertising as their major source of revenue. This is why books have been less impacted by the digital age, because book publishers have been the most conservative and sceptical of the internet’s sweet tongue. The internet pulverises your business model to dust and expects you to rise from its ashes. Usually, there is not enough time to make a comeback.

However, the reality is that times are changing, and book publishers have to come to terms with that. In 2007, Amazon introduced the Kindle and it changed the way millions of people around the world read books. The book readers of today are shifting towards the screen. In Nigeria, that should be good news, since a mobile revolution is happening right before our face. Ofili’s Okadabooks is enough proof. “People have downloaded over 415,000 books, we have more than 39,000 users, and we are growing every day,” Ofili told me in 2014. One wonders what the numbers are, now.

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Still, the big question that should bother anybody who reads books in Nigeria is this: how do you reconcile the internet’s free model with the need to pay authors and publishers enough money, the need to incentivise the creators of books to create more books? Advertising? Digital Rights Management?

In theory, this is not a difficult question to provide an answer to. You should just look at what Amazon, Apple, Kobo and Google have done. You should create an e-book platform, where books are locked down with DRM, integrate a payment gateway, and start selling. It is what Ofili did with Okadabooks. It’s the right answer. But have you ever solved a maths problem where you got the workings wrong but still ended up with the right answer? And you felt elated? Sure, because sometimes, in real life as in maths, we forget that success is not guaranteed by the output, but what went into the output. The success of e-book platforms like the Kindle Store and Kobo is built on the shoulders of a mature and flourishing book business in Europe and North America. Despite how diverse media has become and despite the global decline of book reading, people still pay for and read books in these cultures. The environment is nothing like Nigeria where there is no structure to back up a reading culture – we don’t produce enough books and not enough people read. Essentially, this means that an e-book platform will face two key problems – supply and demand.

Two years after I interviewed Ofili, Okadabooks has continued to upgrade its content, by being able to convince book publishers to trust their DRM-ed platform to protect their intellectual property. Still, most of the local content on the platform are second rate books, content that looks like afterthoughts. Ofili claims to trust a crowd-sourcing model: “I don’t think there is a select few that are chosen to write”, he told me; but it hasn’t worked to make the platform appealing to readers like me. It is easy to blame the platform’s algorithms, but I think a much bigger reason is that there are not enough good writers and editors in the country that are ready to write for free or self-publish. While it is incredibly hard to make good money from book publishing in mature environments like Europe and North America, in Nigeria it is near impossible. The ground soldiers of book publishing – writers, editors and book designers – would rather do something else (write for a newspaper, go to law school, run a business) than invest hundreds of hours slaving over a manuscript. So book creation is an afterthought. It’s a nightmare for any e-book platform that wants to get more people to read.

On the demand side, the writing on the wall is equally clear. I like to play a game in my head, regarding what should come first – demand or supply. Ping-pong. It’s a classic chicken and egg thing. But I always end up with supply. How do you get more people to read, if they don’t like to read? Give them good books. Supply creates its own demand. But what is an e-book platform like Okadabooks expected to do? Become another publisher (handicapped by a lack of structure for a book culture) trolling for good content?

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3.

In January 2015, I took my love for economics beyond mere words and started to study the basics of the discipline. It didn’t put money in my bank account, but it transformed the way I saw the world. It taught me one of the most important tools for getting things done or achieving a goal – incentives. This is self-evident. If I want a lawyer to defend me in court, how do I convince him to do that?  If I want a surgeon to help correct my heart, what do I do? If I want more books to be written…

Incentives make the world go round. It is the engine of capitalism. If you get it right, whether you are in business or government, the world is your oyster. Incentives, I have come to believe, is the best way to create a vibrant book space in Nigeria. If writers, editors and designers could earn as much as they can in an advertising agency, a newspaper house or a public relations outfit, don’t you think we would have more people writing books? Of course. But where is the money, one might ask? Where are the incentives?

No, I am not trying to beg the question when I speak of incentives like they fall from the sky. I think creating incentives is a matter of creativity. People always like to think incentives can only be created through money. Money is only one way of incentivising people. In fact, money is overrated. Money cannot solve your problems, if you don’t know what your problem is.

Still, I’ll agree that it is a difficult question to answer. Because how do you create supply, when you cannot gauge demand? Yes, supply creates its own demand, but how reliable is that? Writers, editors and designers need money to buy gas and pay bills. How do you incentivise them without money? Absolutely mind-boggling questions. A plethora of credit should go to trailblazers like Ofili who have started to take them on.

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4.

Sometime in 2014, I sat down with a friend and colleague, Ikechukwu Onyewuchi, inside a dorm room (We call it hostel, but Facebook started from a dorm. Duh!) and created the idea of a book company that would get more people to read more books. Taking a leaf from the penny-priced paperbacks that launched modern publishing in America, we were going to sell print books which had advertising on its pages. It was a brilliant concept, but we never made it to market, for two reasons. One was money. No bank or right thinking investor in Nigeria would give money to two kids without a degree or prior experience, to execute a business that was riskier than launching a rocket to find God. The second was evolution. Advertising was thrown out and the components, not the idea, took a different shape. Like Ofili, we danced to the tune of digitalisation.

One of the first questions I like to ask people when I meet them for the first time is: do you read books? A lot of people interpret that question as ‘do you read paper books?’ But books are not books just because they are printed on paper. Books are books because they are an expression of written and/or graphic bounded ideas and thoughts. The web has been eternally touted to be a replacement for the book, but that usually stems from misunderstanding what a book is.  A book is a capsule of ideas, knowledge, thoughts, and emotions. But the web denotes ideas, knowledge, thoughts, and emotions in a loose fashion. The web, in trying to replace books, will cease to become a web and turn into a diverse collection of books. So, until our sun collapses and mankind goes into extinction, books will always remain relevant, a part of sophisticated cultures.

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The gravest sin of today’s book publishers, and this is not even restricted to Nigeria, is touting paper as the alpha and omega of books. But men did not start to write books only when paper was invented, but when writing was invented. A cursory search of scholarly literature will reveal that the history of books date back to the Babylonian Clay Tablets. So, the only reason for their misinformed evangelism, one can hazard a guess, is fear. Like the cotton spinners of 17th century England, they are scared of change.

Although I believe that commercial print books will stick around, at least to the middle of this century, digital books will gain more ground. And no one should be scared – not in Nigeria anyway. We do not have the gargantuan print-focused publishing infrastructure of Europe and North America, so we have a better chance of creating the publishing space of the future. Our past is weak, and we have fewer debts to settle. The future is spread before us, like an endless field of wheat.

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Photocredit: Oluwatomilola Boyinde

Solomon Elusoji is a co-founder at Wanmilion, a startup seeking and implementing creative ways to get more people to read more books.

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1 COMMENT

  1. Amazingly well written. I agree totally. The whole book industry should re-position to accommodate the digital movement. It is critical and we need to start thinking now.

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