Picard's Syndrome

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You probably
suffer from an affliction. Millions of Americans share this affliction.
I am doing my best to deliver you from it, but I am having only
minimal success.

There
may be a book inside you. There may be two. Because of the Internet
revolution, it is now possible for you to publish your book online
for almost no money. But if you do, you will come up against a
major resistance factor. I call it Picard’s Syndrome.

Fans of the
second generation of "Star
Trek
" aware that only two adults on the Enterprise ever
read books: Commander Data and Captain Picard.

Data reads
digital books online that flash past his eyes at lightening speed.
He shifts his eyes back and forth rapidly across the pages. Why
he doesn’t simply download the data directly into his positronic
brain remains a mystery, rather like another major mystery, i.e.,
why the crew never wears seat belts when going into battle. (“Click
it or ticket!”)

Captain Picard
can occasionally be seen, sitting in his lounge chair in his stateroom,
reading a book. The book is made of paper. It has a binding.

Captain Picard
is an amateur archeologist. He collects ancient tools and implements
of various kinds. He loves nothing more on his vacation than to
spend a few days on some planet that was noted for its ruins.

As far as
Star Trek was concerned, "books = ruins."

Picard, an
eccentric, still reads books.

Today, millions
of people still insist on reading physical books. They have a
bias against e-books. This is Picard’s Syndrome.

THE
FAILURE OF E-BOOKS

Barnes &
Noble recently announced that it is getting out of the e-book
business. E-books don’t sell.

Why not?
Think of an e-book’s advantages. It can be printed out for a penny
a page. You can underline the printout, make notes in the margins,
or file chapters in filing cabinets. You can use a three-hole
punch to create a permanent book on your shelf — tall, but
functional.

You can search
the e-text for key words electronically. You can use your cursor
and CTRL-C to extract sentences or paragraphs that can then be
inserted into reports or term papers, word for word, without the
necessity of proofreading the citation. You can use a free-form
database to store pages or extracts. You can add keywords to this
database for easy future searching. You can’t do any of this with
a printed book.

Yet there
is no well-known free-form database, over two decades into the
microcomputer revolution. College students still buy 3×5 cards
for note taking. The cost advantages of electronic reading, filing,
and printing out are passed over in favor of books with bindings.

Book readers
suffer from Picard’s Syndrome. If a book doesn’t have a binding
— if it isn’t suitable for reading in bed — well, it
just isn’t a real book. That’s what most book buyers believe.

Why isn’t
an e-book a real book?

We are operating
in terms of our youth. Books came in bound form. Publishers had
to order 5,000 copies to get a good price — 5,000 copies
in inventory. Five years ago, I had over 100,000 books in inventory.
Then I gave up. I gave away all of them to a non-profit publishing
firm. It took three semis, and the outfit now wishes it had never
accepted the deal. I had at least $400,000 tied up in those books.

There is
now print-on-demand technology: one book order at a time. The
machine prints it, collates it, and binds it. Then the printing
company mails it. The technology is great for sufferers of Picard’s
Syndrome, but it still has not taken off commercially.

O COME,
O COME E-MANUAL

At the same
time, I can sell an e-manual for over $100. Such a manual is typeset
to look like a report: 13-point type, unjustified right-hand margins,
and no binding. If it looks like a high-priced business report,
I can charge what a physical business manual used to cost. It
costs me virtually nothing to deliver it to the reader. The buyer
downloads it, prints it out, and reads it. No problem.

It’s all
in packaging. You can charge 5 to 10 times what a physical book
would cost, deliver it free of charge, and avoid inventory. Sufferers
from Picard’s Syndrome get instant emotional relief when they
read the words, "special report." These words calm the
sufferer. He types in his credit card number and downloads the
document.

The document
is not called a book, let alone an e-book. If it were an e-book,
you would have to give it away.

An example
is my manual on how to create a Yellow Pages ad that triples any
existing ad’s response. Five to one is possible. The local Yellow
Pages directory is the primary means of advertising for 95% of
businesses. Yet only a handful of businessmen know how to design
an effective Yellow Pages ad. This market is a small fraction
of 1%. I face what economists call an inelastic demand curve.
Revenues do not rise proportionally to a fall in price.

I sell my
88-page manual for $176 — $2/page. For a businessman who
wants to make his Yellow Pages ad work, $176 is not much money.
He pays that much every month, or even every week, to run his
ad. As for everyone else, they would not pay me $17.60 for such
a report. Most would not pay $1.76. They are not interested in
writing Yellow Pages ads. So,
I sell my manual to a tiny market at a high price
— high
in relation to what paperback books at Barnes & Noble cost.

Only a few
people truly understand that the value of a book is the information
it contains. Their buying habits prove this. They refuse to buy
e-books. They think, "I’m paying for paper. So, the e-book
ought to sell for $1." When it sells for $20, they refuse
to buy. Ideas in digital form are not worth what the same ideas
are worth in a bound book. Yet the seller’s cost of production
ought to be irrelevant for the buyer. What matters is the value
of the information. Similarly, his major cost is the time it takes
him to read it.

They understand
this with respect to computer software or music CDs or DVDs. They
know that the cost of physical storage of digits is low: a 50-cent
piece of plastic in a $1 plastic box. But they refuse to make
the same mental transition when it comes to books. They suffer
from Picard’s Syndrome.

This also
applies to newsletters. Subscribers to paper-printed newsletters
will pay $200 a year to be sent a monthly report by second-class
mail, yet they will not pay $200 (or even $100) to receive the
same information by e-mail within 10 minutes after publication.

Why? No one
knows. Picard’s Syndrome produces irrational behavior.

There is
one area where Picard’s Syndrome has been defeated: standard encyclopedias.
The day of the $2,000, printed, years out-of-date, 20-volume encyclopedia
is gone. It is now on a disk, updated yearly, for $89 or less.
But the mental transition from encyclopedias to books, magazines,
and newsletters has not taken place.

MY
MAGNUM OPUS

You can learn
something about book-publishing from my experience.

In 1999,
I paid a professional typesetter to typeset my magnum opus, a
1,300-page economic commentary on the book of Deuteronomy. Her
bill was $13,000. To publish it in one hardback volume would have
cost about $10 per copy if I ordered 5,000 copies, or $50,000.
So, not counting shipping or inventory expenses, I would have
had to pay $63,000 up front. That up-front expense is what keeps
authors from publishing books.

I decided
not to do this. I made the right decision. Earlier this year,
I used a copy of WordPerfect 8, which I bought on eBay for $25,
to retypeset my book. I used a larger type face, so it’s now 1,500
pages. I decided to publish it in three volumes.

I then used
a $97 program, pdfFactory Pro, to convert my Word Perfect files
to PDF format, which can be posted on the Web. This took me under
six minutes, total, for all three volumes.

I then posted
all three volumes/files on a Web site. This took a few minutes:
under 10. Then I sent an e-mail to 3,000 subscribers telling of
its existence. I offered all three volumes for free. People started
downloading it.

I mentioned
in my e-letter that sometime next year, I plan to publish all
three volumes in hardback. I will use new technology: print on
demand. It allows book sales, one copy at a time: printing, collating,
and binding. Then the publisher mails out the physical book. The
author gets a standard 15% royalty.

I immediately
received a letter from someone saying that he was not going to
download the books in PDF, which are typeset to look just like
books. He would wait for the hardbacks.

Consider
what he is saying. My ideas are worth reading only in a bound
book. Apart from a bound book, he is unwilling to read what I
have to say. He will wait for months, then pay a lot of money.
Here is another case of Picard’s Syndrome.

I will charge
at least $30 per hardback volume. I may charge $50. I will therefore
get some buyers to spend $90 to $150 for the set. They could download
the same books for free and print them out for $15, total. But
they prefer to pay me 10 times as much in a year. Why? Picard’s
Syndrome.

Are my ideas
worth more in a bound book? For sufferers from Picard’s Syndrome,
yes. These ideas are worth far more in dollars and sense. But
they are the same ideas, bound or not bound. This does not matter
in the slightest to some readers.

Why?

I offer this
thesis. It is a holdover from pre-Internet times. Generations
of book buyers for over 500 years have become accustomed to the
idea that what makes a book valuable is the pre-publication screening,
especially by censors.

This may
sound crazy. Lovers of ideas joyfully paying for pre-publication
censorship? Yet this is exactly what they did, and still do.

RESPECT
FOR CENSORS

From the
year 1450 until today, people have associated wisdom with printed
books that have bindings. A book with a binding implied the following:
(1) an editor, (2) a costly printing press, (3) a distribution
system, (4) a publisher’s risk. A book required a lot of front-end
costs. The reader assumed that a book had value because a publisher
concluded, "this will make me money."

In a very
real sense, the reader accepted the false idea of the labor theory
of value. He paid money in order to compensate the publisher for
his cost and risk. But then the equation got turned around: the
value of the book was thought to be in its cost of production.
This confusion was universal among economists until the 1870s,
when a few of them finally figured out that the value of every
item comes from people’s willingness to pay for the item, not
from the item’s cost of production.

People suffering
from Picard’s Syndrome have not abandoned the older view: economic
value based on physical costs of production.

Then there
was the issue of editors, i.e. screeners of ideas. A bound book
was a surrogate for the reader’s input of prior intellectual evaluation.
Someone else had done his screening work for him. Now all he had
to do was pay for the book and read it.

The problem
was, and still is, this system of publication requires intellectual
gatekeepers. It is a system of censorship. It allows the State
and other groups to control what the public reads. This means
that the gatekeepers can control what people think, merely by
cutting off access to politically incorrect material.

Picard’s Syndrome
creates in its victims a longing for layers of hirelings, none
of whom has ever written a book, each of whom declares "yes"
or "no" with respect to the content of a book. These
censors stand in between the author and his audience. They tell
the author that "this book won’t sell unless you allow us
to modify it." They tell readers, "we will screen out
the useless, the ugly, and the politically offensive." To
both, they say, "trust us."

Picard’s Syndrome
is an affliction that is left over from the era of censors, i.e.,
pre-Internet. The Internet has created, for the first time in
human history, an international society with almost no intellectual
gatekeepers. An author can reach his readers without going through
the labyrinth of printers and distributors. With Google, they
can reach him.

Picard’s Syndrome
is visible evidence that we readers not only trusted them, but
we are also still unwilling to read a book that does not show
signs of the censorship system. Print-on-demand publishing has
not fared well because it offers no censorship.

In volume
3 of my book on Deuteronomy
, I include a highly controversial
essay, Appendix D. I prefer not to discuss its contents here.
Let us say that an editor at any major book publishing firm probably
would have asked me to drop it or modify it. Yet the essay is
important for the overall thesis of my book. The only way for
me to get the information into the hands of readers was by self-publishing.
The cost of self-publishing is vastly lower this way.

In contrast,
for specialized manuals, which imply inside information, readers
will pay a bundle and download them. A special report is special.
It isn’t supposed to go through layers of readers, editors, and
all the rest of the censorship apparatus. No, it’s a direct link
between the author and the reader. For this, readers will pay
big bucks.

It’s all
in the packaging.

TOUCHIE-FEELIE

Why do book
readers want to hold a book in their laps? Because they want to
touch and be touched. They want the intimacy of holding a book.

At some point,
there will be book-sized electronic reading machines with screens
that have the equivalent of a printed book’s 1,200 dots per inch.
We will then insert a card or download a book. The book will be
there for us to read any place or any time, page by page. We will
be able to extract passages, mark them with keywords, and in other
ways file them for future reference. But until the electronic
reader looks like a book and feels like a book in our laps, Picard’s
Syndrome will keep the product from selling well. It will be a
gadget, unlike a printed book, which is a necessity.

At some point,
public schools will require books on a disk. This will cut the
costs of delivery and maintaining lists of students and books.
Textbook production costs will fall. Then anyone can get into
the field. The world of textbook publishing will cease to be a
government-funded, textbook publisher oligopoly. We will then
have a free market in textbook production. Well, not a free market,
exactly, but something that some University of Chicago economist
will call a free market: tax coercion coupled with lower costs
of book production.

Okay, so
I’m wrong. Public school textbooks won’t be on disk until long
after the public has gone to digital lapbooks. But it sounded
good, briefly.

There is
a case for screening, of course: letting experts judge quality.
But this is a service that publishing companies can charge for,
based on productive services actually rendered. This screening
will not be a function of printing and distribution technology.
It will be part of editorial expertise. Those who want this can
buy it. Those who prefer to get their books straight from the
authors with no middlemen will be able to do so.

Basically,
it’s a war between Matt Drudge and Jean-Luc Picard. When the editors
at Newsweek spiked the story of President Clinton and Monica
Lewinsky, the editors relied on Picard’s Syndrome to shield the
president. Matt Drudge within hours blew away that shield.

I am betting
on Drudge and his imitators, but not before the death in the wilderness
of the generation of Picard.

When newsletter
readers think, "I’ll pay more for a newsletter because it’s
delivered electronically in seconds," Drudge’s Syndrome will
have replaced Picard’s Syndrome.

What about
you? Which syndrome do you prefer, Drudge’s or Picard’s?

CONCLUSION

I like to
go to Barnes & Noble. I like to buy books on a shelf. I especially
like to buy steeply discounted books that did not survive the
stiff competition of the market. I buy other people’s mistakes.

But if I
had a book reading device that looks like a book, feels like a
book, and lets me store (say) 500 books that are searchable by
text or (at my discretion) keywords, Barnes & Noble can kiss
me goodbye.

As for my
3,000 square foot library building and my 13,000 books, make me
an offer. But not yet.

November
19, 2003

Gary
North [send him mail]
is the author of Mises
on Money
. Visit http://www.freebooks.com.
For a free subscription to Gary North’s newsletter on gold, click
here
.

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