Yes, I do subscribe, but thought a one time link would work. By the way, if you subscribe to the WSJ, a sub to the interactive edition is only $20.

Anyway....

Here's the article. And I don't want to hear from any of the lawyers on this site about WSJ losing revenue because I posted it here <g>. If you feel they deserve to be compensated, drop 75c in the slot of the next corner dispenser you see tomorrow:

Digital Books on the Internet

Move Closer to the Market

By DON CLARK

Staff Reporter of THE WALL STREET JOURNAL

A logjam is breaking in digital publishing. For evidence, look to

Fatbrain.com Inc.

The fast-growing online bookseller Tuesday announced one of the most

ambitious Web clearinghouses for distributing books in electronic form.

Besides serving as a new distribution channel for conventional publishers,

Fatbrain plans to let authors publish their own works on the site, setting

their own book prices and keeping half the profits.

More brainstorms are on the way. A flood of

new technologies and business alliances is

breaking down barriers to digital books, just

as the audio file format called MP3

popularized online is shaking up the music

world. The breakthroughs are leading authors

to bypass publishers, retailers to become

publishers and publishers to become

bookstores.

Among the latest developments: Adobe Systems Inc., the biggest maker of

publishing software, announced plans Tuesday at a San Francisco trade

show to modify its widely used document format to protect digital

documents from unauthorized copying. Xerox Corp. is collaborating with

Adobe and accelerating efforts to market its own copyright-protection

scheme. Microsoft Corp. is discussing similar technology, along with

software that makes text much easier to read on a computer screen.

Paper isn't going away. Indeed, most of the newest ventures are designed

to give consumers a choice of buying electronic or paper versions of

books, or both.

But the latest technologies address copyright issues that have slowed most

publishers in letting readers download valuable titles. Some Web publishers

see an entirely new market for short nonfiction works that can be published

quickly and constantly updated.

"The publishing industry is at a crossroads," declares Dick Brass, a

Microsoft vice president in charge of technology development. "By 2020,

50% of everything we read will be in electronic form."

Such dreams aren't new. Authors' complaints about stingy publishers

probably precede the invention of paper. Publishers, in turn, gripe about

the cost of distributing books and taking back those that don't sell.

Computer visionaries have predicted that powerful networks, tablet-style

computers and other devices would replace physical distribution with a

global bazaar of electronic volumes.

While the Web has done just that for newspapers and magazines, books

have been slower to change. Most people prefer reading long documents

on paper, particularly for recreation. Relatively few people have bought

special-purpose devices for storing and reading books, a market that has

been hampered by incompatible file formats.

Yet a crop of Web start-ups already let authors self-publish on their sites,

usually for a fee. 1stBooks, a unit of Advanced Marketing Technologies

LLC in Bloomington, Ind., says consumers have downloaded more than

250,000 copies of books, mainly written by people who aren't

well-known authors. Dan Snow, a spokesman for the company, argues

that copyright- protection technology has been the missing link in

convincing established publishers and big-name authors to move to the

Web.

'Piracy Issues'

Adobe, by moving to secure its document format, could have a big impact.

"I can't overstate how significant it is to finally have a way to finally say to

owners of some valuable intellectual property that you don't have to worry

about piracy issues," Mr. Snow says.

Adobe estimates that it has distributed more than 100 million copies of its

Acrobat software, which is particularly popular in applications where users

want a printed page to look just like its image on a computer screen.

Acrobat generates files known by the initials PDF, for portable data

format.

The San Jose, Calif., company plans to offer Web sites a product called

PDF Merchant that allows them to encrypt PDF documents and control

their distribution to consumers. Adobe also is adding a feature to its

Acrobat reader program, dubbed Web Buy, that allows consumers to

order and buy the encrypted PDF documents over the Web. Once

consumers have given merchants their credit cards, a software key is

transmitted to their PCs that allows them to read encrypted documents.

A range of other companies, including Xerox and Intertrust Technologies

Corp., have also developed elaborate schemes for protecting copyrighted

materials and built relationships with online middlemen. For example,

PublishOne Inc., a start-up in Santa Clara, Calif., plans to use Intertrust's

technology to securely sell business information over the Web.

Fatbrain, formerly known as Computer Literacy Inc., is adding some new

wrinkles. The Sunnyvale, Calif., company now sells technical books

through stores and through its Web sites. It also prints manuals and other

materials on demand for technology companies and other customers.

Fatbrain's new initiative, dubbed "eMatter," will let authors upload book

manuscripts, set their own prices and get 50% of the royalties for a storage

fee of $1 a month. That's much more lucrative than the 5% royalty

common through conventional publishers. At 1stBooks, authors must pay a

$159 upfront fee, and they get 40% of the royalties.

Chris MacAskill, Fatbrain's chief executive officer, expects the service will

be particularly attractive for 75-page to 100-page nonfiction books in

fields that change quickly. A writer could take three months to knock out a

75-page document and sell it for $15. Based on 50% royalties, he says,

selling 25,000 copies of that document would make the author about

$200,000. That's the same amount as laboring 12 months on a 500-page,

$40 book that sells 100,000 copies and earns a 5% royalty.

Conventional publishers, including Macmillan USA's technical book

operations, also are testing the concept and seem impressed. "We just

want to make sure that people can't copy files from computer to

computer," says Doug Bennett, president of Macmillan, an arm of Britain's

Pearson PLC. "Right now it looks pretty good."