Caught Napping

It's not often a decision about the legality of downloading a free digital track belonging to Metallica affects publishing at-large, but when the U.S. Circuit Court of Appeals ruled against Napster, the controversial online file sharing provider, it sparked questions about digital publishing's overall shelf life. This week's 58-page ruling requires that Napster stop trading copyrighted content online—in the U.S., at least. But whether content is downloaded for free or for a fee, the Napster debate has fueled both kudos and criticism of a system that challenges traditional content rights laws. Thanks to the music market's equivalent of Robin Hood, publishers are learning critical lessons about the pros and cons of file sharing.According to David Dritsas, senior editor of E-Gear, "One could argue that Napster is facilitating the mass proliferation of copywritten material." Dritsas compares digital content's novelty to the proliferation of analog tapes more than a decade ago. "But in essence, the sharing of tape cassettes and recordable CDs are no different than the Napster issue," he explains. While trading files among a few friends is certainly different than hosting hits for hundreds of thousands online, copyright law's latest win still asks whether digital assets are immune to traditional protection. Publishers are questioning the manner in which they, too, distribute, store and even market textual and graphical wares. Until now, the Internet has been a portal in which little traditional legal pow wow has been practiced.The prosTechnology afficionados argue Napster's influence on the culture of digital file exchange is positive. Due to increased awareness about the ease of exchange online, many publishers, technology companies and industry professionals have capitalized on Web procurement. Proponents of Napster argue that workflows have been made more efficient and content more accessible because of Napster-type online databasing. Within the publishing realm, not only is it easier than ever for users to exchange files, but digitization is as commonplace today within professional portals as faxing was yesterday. Sites such as Carracho and HotlineHQ not only share entertainment media, including MP3s, DVDs and e-books, but also popular software, including the latest versions of PhotoShop and Illustrator, that are ordinarily hundreds of dollars to purchase at street value.This week at BookTech East in New York City, vice president and publisher at World Book, Michael Ross, expressed disappointment in laws inhibiting open file exchange. He says that in the book industry, Napster's repercussions can be felt two-fold. After a period of dot-com losses and online prospecting, the new trend in digital rights is cautiousness. He says, "It's not so important to be the first, as it is to be profitable." Ross also notes that with the first of many pioneering portals already sunk, the definition of "information" is changing. "Information costs a lot of money," says Ross. He predicts that Napsterization will not harm the industry, but will demonstrate how a highly accessible database is a new revenue stream for multimedia-savvy publishers. "The more you experience content," charges Ross, "the more likely you'll pay for it."Similarly, Steve Kotrch, director of electronic publishing technologies at Simon & Schuster, also champions file sharing. Kotrch estimates that as more consumers take advantage of digital exchange online, the outlook improves for e-books and non-traditional publishing devices. "We are at the crossroads," explains Kotrch. "The biggest challenge in the immediate and foreseeable future is to ensure profitability."For magazine publishers and catalogers, digital files are critical to production. Not only are print producers investigating electronic media through Web sites, e-prints and archiving methods, but publishers and their advertisers are eliminating stages within the workflow by abandoning traditional analog production. Therefore, it's not surprising that the Napster-induced debate about standardization and digital control is key in predicting how publishing will embrace, disseminate and eventually protect goods from pirating. Just as digital providers may bark at whether to use PDF, XML or PDF-X1 formats, the new arm of digitization will ask how to make money from reusable, repurposable content, without exploiting it.At The New Yorker, for instance, the IT department discovered that vintage materials make for profitable resale items. As a result, the magazine's digital department is electronically archiving vintage magazine covers and photography in order to sell originals to collectors and for historical research. But some of the same professionals championing digital prowess are also suspicious of the lack of regulation and wary of potential profit threats to money-making material. The consThose in opposition to Napster-like file sharing favor secure digital content over easy-access. While digital file exchange may have ushered in much-needed progress for 21st-century technology, the competition between digital and traditional worlds is growing. Not only are record executives worried about how much online portals have cut into bottom-line record sales, but sites like Napster eliminate the middlemen, a prospect shaking the foundation on which commercialization has been long-staked. In publishing specifically, parties affected by this scaling down range from content creators, servers, printers and publishers to marketers and even consumers. If a consumer can choose between paying for a product or not, the likelihood of payment diminishes. At the same time, because digital exchange online is not nearly as popular as traditional acquisition, the Napster decision, like other digitally inspired debates, anticipates future ramifications more than current market threats. Dritsas admits, "What is really problematic here is the RIAA's claim that their member companies are losing money." He claims there's little proof showing that digital exchange somehow cuts into the market and is suspicious of industry speculation so early in the game. "I'm not satisfied with their claim," he adds.Reciprocal's General Manager, Matthew Moynahan, says, "Unprotected file swapping isn't legitimate." As a result, Reciprocal develops applications to protect digital content with encryption technology that controls royalty and file exchange. "Subscription's where it's at because of the discreet nature of the product," he explains. "Everything will eventually be about having access to online catalogs to subscribe to content. Over time, digital rights will be negotiated differently. The notion of global rights will be increasingly important." Moynahan also believes that Napster was a positive prototype for difital file exchange, but would be more successful as a pay service. "Peer-to-peer sharing may be more common," he adds, "but control is still an issue. Napster proved it."In a statement released by Andrea Schmidt, CEO of Bertlesmann's e-commerce group, music wasn't the only target of Napsterization. In a recent New Media Age report, Schmidt is quoted as saying that the book market is also a high-risk sector because of how content in produced. In other words, the widespread digitization among even tradition publishing production contributes to the wealth of materials above and beyond what may have been presumed. With sufficient bandwidth and money in place, it's conceivable that just about any digital file—be it music, text or graphic—is up for grabs by any Napster-like outfit. But according to Rob Yoegel, vice president, online services at North American Publishing Company, content that is most susceptible to distribution is that which is most desirable. "To me it's simple," says Yoegel. "It's been proven that people listen to music online. It's yet to be proven that people read books and/or magazine content of any great length on a computer screen. The audiences are different and you can guess which one I'm sure is much smaller."-Natalie Hope McDonald

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Caught Napping

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