Title

A Q&A with Joel Waldfogel, Author of 'Digital Renaissance'

On digital book monopolies and the audiobook revolution.

January 10, 2019
 
 

I loved Joel Waldfogel's book Digital Renaissance: What Data and Economics Tell Us about the Future of Popular Culture.  (See my review).   

But I had some questions.

Fortunately, Dr.Waldfogel was willing to provide some answers.

What would you want to ask Joel about Digital Renaissance?

Josh's Question #1:   

I purchased Digital Renaissance on Amazon. The Kindle book was $15.37. I added the accompanying Audible audiobook option for $7.49.  Total cost to read your book was $22.86.  Every book I read is a digital book purchased from Amazon. My personal digital book renaissance is built on my ability to seamlessly switch back and forth between reading with my eyes (on multiple devices including my phone) and reading with my ears.

My question to you is if you are worried that I buy all my digital books on Amazon?  Does it worry you that Amazon has a near monopoly on the digital book market (Kindle and Audible), and a total monopoly on the integrated e-book/audiobook format?  When it comes to books, is a digital renaissance just another way of saying "concentrated ownership".

Joel's Answer:

First off, thanks for posing the questions, which I’m more than happy to address.

Second, to the question of whether digital renaissance is another word for “concentrated ownership, I say: Funny!  Not at all.

Chapter 11 discusses threats to the continued renaissance, and chief among them is the concentration of power in the hands of a small number of intermediaries. Think Amazon, Apple, Spotify, Netflix.  So far, these intermediaries have by and large delivered benefits to both creators and consumers.  But just as the recorded music industry used to worry about Wal-Mart’s then-substantial share of distribution, it’s reasonable to worry about the possibility that platforms will develop enough power to control what comes through, as well as the prices charged downstream and paid upstream.

Since the book, I’ve explored the extent of power at a major music distribution platform, Spotify.  The paper is at https://www.nber.org/papers/w24713 .  In that paper we find that Spotify has substantial power to determine which songs succeed.  So, yes, platforms have power.  The question of whether they abuse that power is a separate one.  In the book I come down strongly in favor of keeping an eye on these platforms, which I refer to as “bridge trolls.”

Josh's Question #2:

Why did you ignore audiobooks in Digital Renaissance?  Audiobooks are the fastest growing segment across book publishing.  Where the revenues from the sale of paper books increased by less than 3 percent last years, revenues from audiobooks jumped by over 30 percent.   Last year, audiobook sales in the U.S. in 2017 topped $2.5 billion. Audiobook listeners are big readers, reading an average of 15 books per year.   

It seems as if the rise of audiobooks is a perfect digital renaissance story.  Audiobooks are growing so quickly because they can be so easily downloaded (including from public libraries), and listened to on our phones and smart speakers.  The transition from bits (tapes) to atoms (digital files) means that we can discover, download, and consume audiobooks on our smartphones.  We can have entire audiobook libraries in our pockets.  Digital audiobooks have done more to change reading than any other book-related advance.  And yet, you ignored audiobooks.  Please explain.

Joel's Answer:

My basic explanation for the digital renaissance has two parts, falling costs along with unpredictability of product appeal.  Digitization reduces costs of production, promotion, and distribution and as a result delivers a lot of new books, songs, and movies.  That by itself is helpful but does not deliver a renaissance.  What makes the new crops of creative products so beneficial arises paradoxically from the unpredictability of product success.

If success were predictable at the time of investment, then new technologies allowing more new products to proceed would deliver us a bunch of products less appealing than the least appealing pre-digitization products.  With unpredictability along the lines of William Goldman’s famous “nobody knows anything” dictum, getting a bunch of new products created and distributed means that while some will be of little value to consumers, some will be of high value to consumers.

Which brings us to audiobooks.   In many important ways, audiobooks are happy children of the digital era.  Digitization means that lots of books can fit in a phone, either as text or as audio files.  That’s enormously convenient, in much the same way that digitization allowed the unbundling of the audio music album into digital singles that could also fit on a phone.

What audiobooks lack, over and above their underlying books, is the element of unpredictability.   Once we know that a book has substantial appeal, or is likely to have substantial appeal, then it makes sense to invest in the creation of an audio version.  And, again, that is good news and digital good news at that; it’s just not driven by the cost reduction plus uncertainty mechanism that is the main engine of the digital renaissance.

It is, instead, a valuable offshoot of digital technology, much like the digital files that allow audio and video to be transmitted and stored at high capacity on small devices for convenient untethered use.

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