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Summary:

The launch of Amazon’s new “Kindle lending” feature means another form of content is becoming something that we rent, Netflix-style, rather than owning. But moving to a rental rather than an ownership model changes our relationship to content, and not always in a good way.

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The launch of Amazon’s new “lending library” feature through its Kindle devices this week means that another form of content or media — namely books — is becoming something that we rent or stream, Netflix-style, rather than owning a physical copy of. There are plenty of reasons to prefer renting or streaming over actual physical goods: It’s often cheaper, and you don’t have to lug around heavy books or CDs or DVDs everywhere, since your content is (theoretically at least) available anywhere. But there are also downsides to renting content; moving to a rental model changes our relationship to that content, and not always in a good way.

Fortune  writer J.P. Mangalindan wrote about his concerns over Amazon’s new lending feature, which the web giant launched as part of the Amazon Prime program, available only to users of Kindle or Kindle Fire readers and tablets (i.e., not available to users of Kindle apps on other devices such as the iPhone or iPad). As I wrote in my post on the launch, one of the biggest issues with the lending program from a reader’s perspective is that none of the big six publishers are involved — presumably because they are afraid of piracy and/or eating into their sales of traditional books and e-books.

But Mangalindan writes about how the lending library makes him uneasy as a consumer because it means “relinquishing ownership over the content [we] consume” and turning it into a rental model. It’s the same thing Spotify and other streaming-music services such as Pandora or Rdio have done to music, and the same kind of transformation that Netflix has brought to the world of videos: a transformation that has become so widespread that the service single-handedly drove real-world competitor Blockbuster into bankruptcy. And it’s the pervasive availability of high-speed Internet access that has helped to turn both of these services into fairly mainstream offerings.

Why own physical objects when you can stream?

In the not-so-distant past, many people thought that someday we would all have giant servers inside our houses, where we would store the gigabytes and even terabytes of movies, music, photos and other content we either buy or create — and many people I know have either bought or built their own home-media servers to do exactly that. I have one myself, attached to my television. But as I look at all of the hundreds of movies and thousands of songs on it, I wonder whether it makes any sense any more to own that data, when I can stream much of it over the Internet fairly cheaply through a variety of services.

Obviously, music has existed in streaming form ever since radio was invented — but streaming services like Spotify extend that model to the point where we can now use this for all of our music needs, not just when we happen to be near a radio or in the car. And TV has always been “streaming” in a sense, but Hulu and other services have freed it from a specific box or device and made it much more free in a lot of ways, just as Netflix has done for movies, which we used to rent in physical form or watch in a theatre. I used to have hundreds of DVDs that I bought because I thought I wanted a big library of them to keep, but I don’t buy them any more — hardly anyone does.

Now Amazon has brought this kind of model to the book business. While we have had libraries for centuries where we could “rent” physical books — and have always been able to borrow them from friends — Amazon has taken that idea and extended it to theoretically any book, at any time (although you currently only get access to one a month in the new lending library, and you can’t lend them to other people). Will we someday look back on those who keep bookshelves full of physical books in their homes as cranks or weirdos? I wonder. We certainly look that way at people who keep old newspapers, because that seems bizarre — why are books any different?

Renting changes our legal rights as well

Apart from our simple human need to own and collect physical objects, however, there’s also the way that renting changes our legal relationship to the content we are consuming. Amazon has shown the downsides of this in the past by actually deleting copies of e-books from people’s Kindles remotely after a complaint by the rightsholder — and those were copies that people had actually bought, not rented. One of the reasons I argued that a “Netflix for books” made sense was that it would at least make it clear to people that they didn’t actually own the books they were buying, but only a short-term license to use them.

That kind of behavior could become more common as we move to a streaming, rental-style model for all content. Netflix has run into trouble by changing the terms of its service in order to promote streaming at the expense of physical DVD rental — but what is to stop it or Amazon from altering the terms of the contract that allows you access to the content that you listen to or watch or read? Amazon was quite happy to remove access to documents that were hosted on its platform by WikiLeaks, even though the organization had not been charged with nor convicted of any crime. What if companies decide you no longer have the right to watch certain TV shows or read certain books?

Like many services that are enabled by always-on connectivity, rental or streaming of content such as books, movies and music has a lot of potential benefits: It can save money and be more convenient, and it can free us from having to worry about where the content is. But at the same time, it also removes certain rights and abilities that we’ve grown used to — just as renting a home instead of owning does — and that is something we are all going to have to learn more about as the world becomes increasingly digital.

Post and thumbnail photos courtesy of Flickr users Olaf Gradin, Arlington National Laboratory and Dave Matheson

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  1. What comes after streaming?

  2. Philip Hotchkiss Friday, November 4, 2011

    Great piece. I think this tension around renting vs. owning goes beyond media. People like Howard Lindzon have written blogs strongly advocating that the smartest financial move is to rent a home – not buy one. On content – I believe there will be clear splits across generational lines. Kids in high school today, won’t even understand the concept of shelves full of books. The idea of a shelf full of CDs has been long gone for years for this generation. But, the change, like most, won’t happen as quickly as people in tech who are early adopters of all things streaming think it will – there will be significant inertia (think RedBox for DVDs). The most obvious example is iTunes – the worlds largest music retailer is about download and ownership. (albeit with proprietary strings attached). And Target stores – is increasing floor space for music CDs – they are making a counter move to iTunes – aligned with artists who do exclusive pre-releases on CD to drive fans to buy complete albums, not just one song at a time. It’s a fascinating tension – these are fascinating times, and I believe you’ve hit on a theme emerge where people’s concept of ownership will be challenges across many categories.

  3. Trouble is, we aren’t even CLOSE to there yet. There’s still a benefit to ownership. Take the example of one of our co-workers, who noted that a child’s favorite movie had disappeared from Netflix. If you have that on as physical media or on your hard drive, it’s no issue, but if you are relying on streaming content, you are up a creek.

    Until we are at a point where every possible item is available via whichever streaming service we have (and right now, there isn’t one, much less a combination of more than one that offers ubiquity), ownership is still the answer. In addition, can you guarantee that Spotify, Rdio, Pandora will be around in 5, 10, 15 years? You can’t. And we can’t even begin to address the issue of bandwidth caps.

    Warner Bros. is “vaulting” Harry Potter movies in December. I still listen to music I loved in high school, purely for nostalgia value at times. I can’t rely on streaming. I can use it for “try before you buy,” which is what Spotify is, as well as for sharing with friends, but I think we are a long way from replacing ownership with streaming.

  4. Paul Underdown Friday, November 4, 2011

    Great article. Spot on about the usage of versus ownership of content. I embrace this but most that I know do not. YET.

  5. I’m open to purchasing access instead of digital files. But amazon’s terms, as you point out, are not favorable for anyone.

    My company is considering offering a direct-to-consumer streaming service that would let content creators set their own terms for access fees or digital downloads.

    Then consumers won’t have to rely on giant conglomerates to set the terms. So it’s not streaming per say that’s the problem, it’s giant companies like amazon setting arbitrary terms because they own the market.

  6. it wouldn’t be so bad if their pricing reflected the digital age. in a world of insta-copies, i’d be hard-pressed to say that the same value remains in the product. with near-infinite supply, the value drops exponentially, so charging anywhere near the same price as the physical copy seems ludicrous. this added value of borrowing, seems too little, too late. plus, where is my ability to re-sell or permanently trade? 10 years ago, the convenience might’ve justified a steeper price tag, but giving up all this other stuff AND paying nearly the same price? no thanks. i imagine the book industry is facing the same situation as the film and music industries. adapt or die, even if adapting means means making less profit.

    1. “with near-infinite supply, the value drops exponentially”

      NO NO NO. The cost of a copy does, but the value to me, the reader or listener, isn’t altered by how many copies are out there.

      At heart, this is my main objection to streaming. People continually complain about prices of ebooks. I’ve seen people complain that $2.99 for a novel is too much. Yet many of them will cheerfully hit up Starbucks and drop $5 for something that they will literally crap out.

      I want to see the creators of things compensated fairly for the value they give to me. I don’t want this because I’m altruistic, but because I’m selfish. If they can make a living at doing music or writing, they’ll have more time to write and thus, on the whole, I’ll get more out of them.

      A lot of you seem to want everything as cheaply as possible though and aside from being, well, cheap, I can’t see an argument for a book being something like 99cents. Perhaps it’s just that we don’t value arts. But when you listen to a song on one of the streaming services the artist gets, basically, nothing (it’s in the few hundredths of a cent range). When you argue that a novel which gives you hours of pleasure even if you never re-read it should be 99c you’re arguing that the writer should make a few cents per hour of the reading time. In all of these cases what you’re forgetting is that it takes a lot of work and usually a lot of people to deliver a professional quality book or album even if it’s never physically produced. In the case of books, the printing and distribution is about 20% of the cost of the book.

      I’d love to see people start to price digital goods on the value they receive and not the idea that the copy is cheap.

      1. Yes and let’s not forget that the reasoning around the “cost to make copies” for content is totally bogus anyway :
        – The cost of making copies is already a minimal part of the price for “physical” medium (quotes as all this stuff is always physical in a way anyway), producing CDs for instance is cheaper than vynil, which didn’t stop to make their price more expensive at the beginning (mistake maybe)
        – the important thing is much more the respective percentage author/shop/editor etc
        – but in the end, true that we could expect private bookshelves (or records shelves, film shelves), to be much bigger (in numbers of works) in the digital context, this added to the cheaper reproduction cost, so that yes in the end the price should be cheaper.

  7. Less maintenance, no deppreciation of hardware and economy of scale. Why not and who cares?

  8. Kindle Fire Reader Saturday, November 5, 2011

    Going to cloud is unstoppable. It is an innovative way to surf and read kindle without much hassle.

  9. Owning a licence is also ownership, as is owning a share which is nothing more than some written piece on information on some account.
    When will we get past this “moronic” pseudo opposition physical/immaterial which isn’t operative at all :
    – all digital stuff are also physical (and not a little see the data centers being built today)
    – in many domain ownership is already only based on written information
    – in the end this only reveal that the real question is one of trust between actors, and the structure amongst these actors, nothing more.
    – and what is needed is somekind of “bank account” for digital licenses with several associated banks, transferable accounts, and guarantees regarding privacy (bank being legally forbidden to read/sell the data), something like below :
    http://iiscn.wordpress.com/2011/05/15/concepts-economie-numerique-draft/

    1. Who watches this “bank account” of digital licenses? What happens if it gets hacked? Will you lose you’re entire library? How do you prove you bought those thousands of dollars of media? How long do you think it’ll take to get those back? Is there now going to be digital hacker’s insurance?

      Who says that a companies EULA couldn’t change at any time and now you don’t have access to the media you “rented” because they feel it’s “unacceptable” to sell now because of changing social and corporate pressures?

      What happens if your favorite media company that you get content from pulls a “Disney” and ferrets away all media in a certain genre in a “digital vault” so that you only can have access to it on their time table for max profit?

      Yes, there are benefits to streaming of course..but not many people really think through how much the corporate owners of media can put you through a ringer if they really wanted to.

      If you have to go to the “underground” (torrents) just to get the media you want because it’s now unavailable on favorite sites (Hulu/Netflix), which I currently see happening even at this stage of the game, I don’t have too much confidence that all of the 4 major content companies will be so magnanimous with their sharing of content unless you go through 20 media portals just to get it.

      I much rather just have the physical (or stored local) media that I can access at anytime without DRM.

      1. Many questions there ! :)

        About who holds these “bank accounts” or “personal media license account” I don’t know and clearly a key question, could be many entities, banks ? ISPs ? insurances companies ? Important thing should be a clearly defined role with defined license and associated privacy rules.

        Otherwise about all the security aspects, many things already relie on similar things, but yes a certain trust level should be built.

        About changing EULA or access being cut, yes no full guanrantee could be given, but the fact that there could be several actors in each role would somehow create such a guarantee, as zeen.com points above, the quasi monopolistic conglomerates that get set up is also what in the end creates power distortion, or even them defining censorship rules as to what content can be published.

        Moreover for me the difference isn’t so much between streaming and having the file on your machine, it’s more between having a licence allowing you to access the content whenever you want from whatever machine (atawad concept), and having ownership only relie on a file. What I mean is that it could be the case that if you bought the content and a copy of it is on your current machine, then it just use this copy full stop.
        Seems to me that the key to have payed digital content really take off is that it should created a true added value to the user when buying compared to pirating, whreas today most of the time buying can only leads to problems, things not working etc. If it is the case that when you buy, you don’t have to worry at all about files, backups, synchronisation between machines transfer, that would be a true added value. But it doesn’t necessarily mean always streaming to access the content, can also be file download if no copy in the cache of current machine.

        Also streaming is quite often associated to “catalog subscription”, but seems to me that at least for some people, buying content is always more or less “impulsive” and subscription is the contrary : it smells of electricity, gas, phone bills. I’m quite in line with Loren Feldman on this about spotify for instance :

        Whereas buying some content is also about building its own bookshelf, disc collection, film collection, etc
        For sure there should be strong license terms about the thing remaining available, but much preferable than a bunch of subscription services where if you stop one, none of your stuff works anymore.
        Not to forget that “web sites” can also be considered as a form of content streaming, and a lot of “buyable” stuff could exist under this “format”, most of the more or less static content sites that are or tried to go through the non free route, went the subscription route (encyclopedia britannica, cornell birds of america, petit robert dictionary in france), but I’m sure one time buying, even for a dated version would work much better, you buy the stuff and that’s it, provided sufficient guarantees it stays on line, and then you can buy upgrades to new versions etc.(same as apps especially when they move to html 5 by the way). Overall the contents on the web is in fact quite poor compared to what it could be, and the “everything free dogma” clearly has something do to there.
        Not to forget that these accounts could also be used to store your access credentials (login passwrd) to any sites also.
        Clearly we aren’t headed to anything like that (more towards giants trying to do everything each on their own), but it would be totally possible.

  10. This is all fine from the consumer point of view, in terms of access and, probably, lower prices

    From the content creator’s point of view, it’s not so much ‘adapt, even if that means less profit’ as ‘decide whether there’s a business there at all’ – as most of us who make music know, some genres simply become unviable under the current ‘system’ – few now will fund anything that isn’t immediately and obviously ‘commercial’ and while many try to do it on a shoestring, the results often disappoint.

    Quite simply, streaming models require listeners- and readers- that number in the millions, not thousands, simply to break even, and while production costs may drop, promotion costs rise, just to get those numbers. Few will ever manage this via social media, working from their kitchen table.

    So expect a world where there will be plenty of new content, but you won’t find the good stuff except by accident, and it’s likely that anyone who wants a family or a reasonable income will give up their artistic activity at a young age, when lack of time and resources precludes them carrying on with it, unless they produce content suitable for whatever mass market corporations still manage to achieve the mass market penetration required.

    We’ve all been lucky to have lived through a period where producing ‘art’ as ‘copies’ produced enough money- even on sales in the low thousands- for more esoteric/experimental/left field producers to survive, thrive, and invest in pushing boundaries. Those days are fast closing, in terms of anything beyond ultra DIY productions of that kind of work.

    A lot of musicians I know – good, reasonably successful, and talented people in their 30s, 40s, and 50s, who’ve had good careers and still have fans, are now giving up. Family responsibilities combined with losses from piracy prevent them making “art” anymore. It just doesn’t pay.

    Now it’s the writers’ turn ?

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