Publishing has a trust problem (and it might just kill us)

In a fascinating interview, Matt Thompson and Steve Song talk about designing for trust:

Higher trust environments, whether in families or corporations or economies, tend to be both more effective and happier.


The point is to design systems that increase trust.

That’s why Wikipedia is such a clever example; the fact that anyone can completely erase and rewrite a Wikipedia page is a form of active design trust. The very openness of it is saying: “We trust you.” And by and large, it works.

It means we need to design for trust if we want to actually encourage people to engage in the acts of generosity that build reciprocity.

[…] knowledge is transmitted in ways that are informal and social, and that aren’t captured in org charts or documents or reporting requirements.

I think that’s an interesting space, and if I were looking at organizational work practice design, that’s what I would experiment with: those little design changes that inspire people to make that “trust deposit” that then hopefully inspires reciprocity.

Read the whole thing here.

How do we design for trust? Steve argues that that’s where openness is important: “openness is a means to an end, not the endgame. Trust is the endgame.” To build trust, build openness into your systems.

In publishing we spend a lot of time and energy making up for a lack of trust – in our colleagues, our business partners and our customers. We use endless sign-off processes, overwrought contracts, and arcane DRM. We guard royalty percentages and salary ranges like national secrets. And we rely overwhelmingly on the devils we know, from authors to booksellers. In trying to sell new ideas to publishers, I’ve seen well-meaning champions of change falter as colleagues choose not to trust their judgement.

This is not sustainable business. And it makes it harder for us to deliver what the world needs from us: more good content to more people.

Greater openness and transparency – and the greater trust they’d build – would help us divert some of that energy to things that matter more. And if we don’t build that trust into our organisations, then other, better organisations will deserve to take our place.

The way to talk about open licensing is to not talk about open licensing


Open-licensing can be incredibly powerful. Converts to open-licensing become zealots quickly, because they can see that a world that is open-by-default is a healthier world.

The problem with open-licensing is that it’s hard to describe. Evangelism is incredibly difficult. Those of us familiar with copyright law and licensing tend to forget that phrases like ‘open-license’, ‘Creative Commons’, ‘CC-BY’, ‘No-derivatives’, and ‘copyleft’ are opaque to most people. Our challenge is to find ways to talk about open-licensing without ever saying ‘license’.

At Bettercare and at Book Dash we use Creative Commons licenses for our publications. At Bettercare, we use a CC-BY-ND-NC license strategically. It’s very important that our customers and competitors know exactly what that means, and why we’re doing it. At Book Dash, we use CC-BY to make sure our books can travel as widely and cheaply as possible. We rely on lots of volunteers, and can’t waste time explaining the technicalities of open-licensing to them.

Over the last few months, I’ve worked hard to remove the jargon from our messaging. Our Bettercare page on licensing is called ‘Reusing our materials’, and starts like this:

Unlike most publishers, we let you make your own copies of our material for free, under certain circumstances. So, in certain special cases, you can reuse or share our books without asking for our permission.

If you follow these three simple rules, you can re-use or copy our books without asking for permission:

  • Each copy must say where it came from: Bettercare, including the web address.
  • You can’t change anything. You must reuse or copy the books as-is. This protects us and our authors from liability, should others’ changes be in any way dangerous or harmful.
  • You cannot reuse or copy them for a money-making activity. This is to protect our financial sustainability. There is more detail about this below.

We go into more detail in plain-language. It’s not perfect, but we’re on the right track. You can read the whole thing here.

At Book Dash, we focus on two phrases: ‘books that anyone can freely download, translate and distribute’ and ‘our work is our gift to the world’. We only use technical terms like ‘Creative Commons’ when there is space and time to do it properly.

If you’ve worked on translating open-licensing jargon into plain language, please let me know.

Why I won’t run another startup

Earlier this year, I closed my startup. So now I get to reflect on what I’d have done differently. Hindsight is unfair and inaccurate, but I still enjoy its lessons. This is one, a note to my future self: Don’t call your projects ‘startups’.It’s a semantic trick, but a really important one. Here’s why.

‘Startups’ have become a commodity in an industry of startup conferences, websites, courses and competitions. As founders of young organisations, we struggle to distinguish genuine guidance and support from the distracting pizzazz of the startup industry, where we’re just the product, not the customer. Lured by the lights, we spend valuable hours crafting slide decks, jumping on planes, giving presentations and filling out entry forms, almost always so that someone can sell tickets to the show. I worked it hard, and I didn’t see the return. I want that time back for my business.

Here are five new rules for myself.

1. No more startup events

I’ve been invited to four startup events just this week. Wait — checks email — that’s five. It’s a freakin’ craze. Startup seminars, breakfasts, retreats, showcases. Say no to all of them.

Startup events are supposedly ‘good for networking.’ I made an interesting connection at one or two, I think. For the most part they’ve sucked vast amounts of time I really should have put into working on my organisation.

Your next project may be in publishing, healthcare, engineering or another industry, but it’s probably not in the startup industry. At a startup-industry event, you’re only going to meet startup-industry people. They are not your customers. Only go to events packed full of potential customers in your industry.

Very occasionally, treat yourself to a dinner with a few entrepreneurs you like — it helps fight the loneliness. Otherwise, if you’re not out selling, get back to your office and work. Or go home and spend some down-time with your family.

2. No more startup competitions

Then there are the competitions. Innovation competitions, pitching competitions, business-plan competitions. Sometimes the prize is an investment in your company. (First prize, an investor! Second prize, two investors!)

Honestly, do you want an investor who comes shopping for startups at a cocktail function? Winning an investment is like your bank calling to say you’ve won an overdraft. Lucky you.

It can be worse. I got a call from a major international consulting firm to tell me we’d won a big innovation award. But I can’t tell you about it because I have to pay them a licence fee if I do. Seriously: they wanted 7500 euros just to let us tell people we’d won. Another time, I got interviewed on a startup-support radio show, only to be asked to sign a letter afterwards saying they’d given us R188000 in airtime. (I didn’t sign.)

You can also win ‘business support’, or well-meaning MBA students to ‘help you grow your business’ for their course project. I’ve spent days with teams who are new to my industry using my time to tell me things I already know. I want those days back.

If you’re certain that you have time to enter competitions, only enter the ones where they’re giving out loads of free money and you know you can win. Don’t be the product.

3. Beware the warm glow of startup media

The startup-industry press is so seductive. It’s pretty and says it loves you. Being a startup, especially based in Africa, is great for media coverage, more especially if you win a startup award.

At Paperight we kept a long list of posts and articles about us that came from startup-industry acclaim. We won startup and innovation awards in London, Frankfurt and New York, an Accenture Innovation Award, and public congratulations in South Africa’s national parliament. We were featured in several ‘startups to watch’ articles and were profiled on the websites of CNN, Forbes and others. We were even featured in a book about open-business innovation. We’re fairly certain that the awards made this coverage happen.

But in not one case did we see a corresponding spike in sales (or calls from investors), and for a young business running out of runway, sales are all that really matters. For a while, the acclaim is great for motivating staff, and to help inspire an investor’s confidence, but the effect wanes after a few awards. Don’t chase coverage in the startup industry. Find your own industry’s media outlets (they’re harder to find and less sexy than the startup press) and focus only on them.

4. Don’t tell customers you’re a startup

Every office-bound exec wants to love a startup. Like a pet. But no one wants to buy from a startup. Especially big companies. Big companies want to buy from big, stable businesses. They want to trust that you’ll still be around in a few years. And their people need to feel you’re a familiar name. At Paperight, we needed book publishers to trust us with their most valuable IP. It’s insane to think they’d give it to a ‘startup’. We could have put our whole business in a cupboard for ten years, then dusted it off and they’d be more likely to work with us, because we’d be too old to be called a startup.

5. Get real help

The startup industry appeals to a very real need for emotional, intellectual and financial support. But (except in very rare cases) it is going to distract you more than it delivers. It’s bad for focus. Instead, find experienced confidants from an industry like yours. If nothing else, their emotional support will mean more to you than a hundred hollow prizes.

I’ll be surprised if I stick to my new rules. So remind me, please, because I’ll probably forget: run a business, not a startup. You don’t have the time.

This article was originally published on Medium.

Talk: ‘Paperight and beyond: learning from f̶a̶i̶l̶u̶r̶e̶ disappointment’

At a Mobile Literacy Network Meeting this week hosted by the Goethe-Institut Johannesburg, I talked about Paperight, why we had to close, and some of the lessons my team and I are taking to our next ventures – particularly Bettercare and Book Dash.

From the talk:

Our problems were of course, in part, the result our strategic decisions: out of an infinite number of possible alternatives, some would have been better than others. But aside from that, we knew we had three major external challenges:

Despite our disappointment, buried in those revenue stats is a promising story: we made far more as a publisher than as a distributor. We had created a hundred simple, low-priced books of our own: collections of past grade-12 exam papers. That one small collection of high-value, low-priced titles made as much as all our other sales combined. And that’s after those past-papers were free for the first seven months.

Read the whole thing on The Paperight Story.


Institutional licensing: the next textbook business model

Right now, in South Africa, the textbook-publishing industry faces a real threat to its future, because – faced with constant non-delivery of books – government is desperate to change the way it buys them. Other countries face similar challenges. Government officials often cite the ‘high price of books’ as a key issue. Whether you buy the state’s argument or not (I don’t, though I get why they’re fed up), the system is going to change, and publishers can either lead the change or be changed.

Are textbook publishers planning or being planned for? (image by Pedro Vezini, CC-BY-NC-SA, Flickr)

Are publishers planning or being planned for?

To have any real effect, the change must be a fundamental change in the mainstream textbook business model: instead of selling copies, we must sell licences. Specifically, we must sell licences with no limitations on the number of downstream copies. This is especially urgent and appropriate for school books, though it’ll work for universities and colleges, too. And it’s perfectly suited to a digital future of tablets and ebooks. Best of all, it will save government money and make publishers’ jobs simpler.

I’ll describe the model in some detail as I see it, and please contribute your thoughts and criticisms in the comments or directly with me. I’m particularly interested in hearing where similar models have already been implemented.

The textbook problem

The root of our problem is per-copy pricing. (I’ve written about this at length before.) From the moment they’re conceived to the time they’re paid for, textbooks are priced per copy:

  • If I’m a commissioning editor planning a new book, I use a spreadsheet to cost it. First, I enter my per-copy selling price, based primarily on what my customers are used to paying. Then I multiply that price by a sales guesstimate, and work out my production costs. If price × sales covers my costs, leaving some profit (often 10–15% nett), I can publish.
  • If I’m a writer, my potential royalty is a small percentage of the per-copy price. Will it justify the time I’ll spend writing? I do the maths in my head to work out how much I get from every book sold; but I have to gamble: what I’ll really earn is utterly unpredictable.
  • If I’m a marketing person, my job is to convince customers that my per-copy price represents ‘good value’, as if the effect of a given book on a child’s education can be reduced to currency. I may have a lot of work to do if I’m going to hit the publisher’s sales guesstimate. Or not – there is really no telling beforehand.
  • If I’m a state employee buying books for schools, I want to work out how many copies I can buy. So I divide my budget by the per-copy price of the books. For instance, one million rand divided by R100 per copy equals 10 000 copies. If I want more books, I ask the publisher to lower their price (or I change the rules to force a race to the per-copy-price bottom). The publisher then makes a judgement call, weighing maximum profitability against the possibility of losing the sale.

Here is a scary truth: from a textbook’s conception till the day the cash is banked, the whole system is based on false assumptions. The per-copy price is based on predicted sales, but there is no way to accurately predict sales for a given book. When future sales are always a wild guess, every aspect of a book’s financial forecast is fictional. So the per-copy price is fictional, too. For any given book, the ideal per-copy price is probably much higher or much lower than it needs to be to make the publisher a sensible margin.

Per-copy prices only start looking accurate when averaged out over dozens of loss-making and profit-making books. Once you’ve sold many different books, this fiction begins to look like truth, till we hear publishers say, in defending their prices, ‘books must cost x per copy because it costs y to create them’. Publishers say this all the time, but it’s an illusion of averages, a mirage of the fictional world we’ve chosen to sell our books in.

This is why larger publishers seem so much more successful than small publishers: the big ones don’t make better decisions, they just publish enough books to even out their guesswork.

Since everyone is in on the price-per-copy game, the entire industry is set up to make the fiction look like truth, by building business models around per-copy margins.

How did we end up in this fiction? We confused customers with beneficiaries, and our product with our solution. When your customer is your beneficiary, per-copy-pricing makes sense, as it does in general-interest publishing – when I buy a novel for myself I am the customer and the beneficiary. But in education, especially in state schooling, large institutions are our customers and their students are our beneficiaries. The state doesn’t want ‘ten thousand copies’, it wants ‘every child to have textbooks’. Those are two fundamentally different products. As publishers, we keep trying to sell ‘ten thousand copies’, when we should be selling the solution to the state’s problem.

The licensing alternative

Per-copy pricing is so ingrained that an alternative model seems inconceivable. But licensing is not only worth exploring, it’s already happening. As I’ll explain later, it’s been around for years under other names.

What do I mean by licensing? Instead of selling copies of finished textbooks (in paper or as rights-managed ebooks), a publisher sells a single, flat-fee licence to an institution. That licence lets the institution produce and distribute as many copies as they like for their beneficiaries, in print and digitally, for as long as they like.

For example, let’s say the state needs to give each learner a grade-ten maths textbook. It has to allow for a lot of uncertainty:

  • It doesn’t know how many learners will take maths over the next few years.
  • It doesn’t know when central government will change the curriculum.
  • Some learners need the book in print, and others as an ebook. This ratio will vary constantly across the country.
  • Different schools have different kinds of learners, so schools need to be able to choose, from a wide range, the books that best suit theirs.

The state’s textbook team looks at several publishers’ books and identifies their favourites by publishing an approved-books list. Teachers then get to see the books and say which ones they want to teach with.

In the traditional per-copy-pricing system, provinces would estimate how many copies they need before placing orders. For the ebooks, they’d have to know whether the publishers’ ebooks will work with the province’s ebook platform, and especially their DRM scheme, and whether those ebooks come with time-restricted licences (e.g. some publishers’ ebooks expire after, say, three years). Some provinces also work through bookstores, whose margins are included in per-copy prices.

Under a licence-based system, instead, central government would buy a licence from each publisher in return for a flat fee. Each publisher hands over a set of open digital files watermarked (in document metadata and on visible pages) with plain-language details of the licence. For instance, the title page says ‘Smart Maths 10 may be freely used by teachers and learners at government schools in South Africa. For any other uses, contact the publisher.’ Each publisher provides the state with:

  • a print-ready PDF
  • a web-optimised PDF
  • an epub file.
  • Potentially a web-based, free-to-view version.
  • Potentially a content-database API.

Each of these formats makes the licence more valuable to the state. The licence lets the state print their own copies centrally in big runs, and lets its schools and parents print their own extra copies as needed. The licence lets them email the ebooks, with no digital rights management, to all their schools. This gives all teachers electronic access to all approved textbooks, in addition to the printed copies of the one they chose for their own students. This diversity enriches their teaching and exposes teachers to new publishing brands.

If the publisher provides a content-database API, too, the state, provinces and schools can integrate the content and exercises into Learner Management Systems. (This is turn feeds usage data to the publisher. If there is a free-to-view website version, the publisher also gets to collect data on user behaviour there.)

Importantly, there is no need for expensive DRM systems to control access to digital textbooks. Right now, the per-copy-pricing model requires installing and maintaining content servers running DRM schemes that uniquely identify devices and students and lock content to each, tracking identities with hardware addresses and user logins. In under-resourced state schools, DRM is going to be a massive, complicated expense fraught with technical and educational problems. With DRM-free ebooks and free-to-view websites, all that goes away. Learners and parents can even use their own devices in addition to those provided by the state or the school, which in turn mitigates the problem of lost or damaged devices and the security risk of having children carry valuable devices around.

The licence fee

The big question is this: how much should a licence cost?

We can safely say that a high-school textbook costs about R1m (US$100K) to create. That includes paying writers, editors, artists, photographers, designers, developers, project managers, and management and admin support staff, all of whom will be working on several books at a time. That means that for a R2m licence fee, a publisher could make a good margin that lets them invest in new books before future licence deals are secured, and cross-subsidises titles that don’t get licensed.

What would it change for the state? We can make some ballpark estimates. If a country has 100 000 grade-ten learners enrolled for maths, and buys a R120-per-copy textbook for each one, it’ll spend R12m on physical books before distribution costs. If they can’t deliver a copy to every child (perhaps they under-order or under-deliver in some districts, as often happens), they’ll incur further purchasing and logistical costs to fill the gaps. If they want to buy a further, say, 10 000 ebooks at R100 each, they’ll spend another R1m before the cost of DRM infrastructure, training and maintenance. If we conservatively ballpark the DRM setup at R10m per year, the state is in for at least R23m. (Today, the South African government budgets about R5bn for books, which is very roughly R20–50m per subject per grade.)

Let’s say the state wants ten different maths textbooks for teachers to choose from. If they bought a once-off R2m licence from each publisher instead, they’d spend R20m on licences. The state could then print 100 000 copies for, say, R3m, depending on the books’ specs.

But now that the licence is paid for, next year they could print more copies without paying any further fee. Schools could fill their own gaps by printing off extra copies on school copiers or at nearby print shops, reducing the need for top-up orders. This saving would apply every year till the curriculum changes, when the publisher creates a new book for a new licence sale. Curriculum changes and updates are inevitable, so there will always be work for publishers.

Moreover, there is almost no cost for distributing ebooks, because there is no need for DRM, which is a major cost factor in ebook distribution, given the skills and server infrastructure required to manage it.

Licence fees would likely be negotiated over time and price bands might settle. Ideally, quality, popularity and value-added services (such as LMS-pluggability or multi-platform support) might factor into final pricing. This would be an important way to keep a diverse range of publishers in business. Book diversity is critical to a healthy educational system.


What happens when the textbook leaks out of the institution? For instance, if a private school uses the textbook that was licensed to the state. Or, in contravention of the licence terms, a university puts on its intranet a textbook only licensed to another university.

Exactly what happens today when an institution illegally copies a book for its students: the publisher can choose to take legal action. Under a licence-based system, this is much easier to do than in the per-copy-pricing system:

  • Firstly, the licensed files can be watermarked (and even digitally fingerprinted), which makes them trackable and identifiable downstream. The traditional per-copy-pricing system makes watermarking a book with every customer’s details very difficult.
  • Second, institutions that matter as customers are generally easy to identify and take legal action against. They are legally exposed and must stay above the law just to stay in business.

Of course it would still be important that anyone can buy single copies from publishers at a per-copy price for small-scale or private use. But those sales would be small compared to licence-based revenue.

Institutional licensing by any other name

Licensing like this is not new. The DBE’s printing and distribution of Siyavula books is one similar system. While Siyavula books are open-licensed for anyone, not just for a specific institution, the effect is the same. Essentially, Siyavula’s philanthropic and corporate funders have paid the licence fee up front on behalf of the education system. From then on, the state can distribute copies for as long as the books suit the curriculum.

Institutional licensing is already the norm for many publications: every time any institution commissions a publication, they are effectively buying a licence to make and distribute unlimited copies to their beneficiaries. For instance, if a medical company pays a small firm to brand a book on diabetes for them, they can print and give away as many copies as they like. Many media-production companies run this way, producing IP for institutions to distribute to their beneficiaries. There is no reason this can’t work for the ones we call textbook-publishing companies.

There will still be a measure of risk-for-reward: a publisher is a company that invests in creating content in advance of a sale. After much of the initial investment is made, the state must approve and buy the licence for the investment to pay off. But licensing is a much simpler model than per-copy pricing, and with fewer marketing overheads.

In another way, institutional licensing is already baked into the DNA of the publishing industry. When a publishing company signs a contract with an author and pays a flat fee for the right to distribute their work, they are entering into exactly the kind of unlimited-copy, institutional licensing scheme I’m describing.

The challenge

To become reality, institutional licensing for textbooks requires a special kind of alchemy: perfect timing. The state must phase in a licence system at a time that fits with curriculum change and book-publishing timeframes. This is very difficult. And publishers must be ready to sell licences when the state comes knocking, despite limited resources and immediate challenges.

In South Africa, our current crisis provides, perhaps, the opportunity we need: a state department determined to change the way they buy books, and a clan of publishing companies facing an uncertain future. We are about to see what we’re made of, and it’s an exciting time to play a part.