How Publishers Repeated The Same Mistake As Record Labels: DRM Obsession Gave Amazon Dominant Position

from the very-predictable dept

One of the more amazing things over the past decade or so is just how clueless legacy content companies are when it comes to the realities of DRM. For years, content creators have misunderstood the issue of online infringement entirely -- assuming that the effort had to be focused on somehow "protecting" works and ratcheting up infringement, rather than giving users more of what they wanted. The dirty secret of DRM is that it does exactly the opposite of what the content companies wanted: rather than protect works, it basically hands all the power in a market to a single tech provider, stripping much of the content companies' abilities to control their own markets.

We saw this in the music market first. Even as Steve Jobs was clear that he thought DRM was a stupid idea for music, he was happy to give the record labels what they "wanted" in the early years: building DRM into the early version of iTunes. Of course, this did absolutely nothing to stop infringement. Because all you need is a single copy to get out in the wild, and then all DRM is completely useless on that particular piece of content. So Apple's DRM did absolutely nothing to stop file sharing... but it did make Apple the most powerful player in the music market. Because the DRM locked people into Apple's platform, and there was no significant competition at the time, once people started using Apple, they were pretty much locked in. And the labels hated it, even though it was their own damn fault in demanding DRM. Eventually, of course, the labels agreed to give up DRM, by which point Apple was already so dominant that no one really challenged their position, though alternatives are finally starting to get more serious.

Three years ago, we noted that book publishers were bizarrely making the exact same mistake with Amazon. Publishers, just like the labels, were so focused on the fear side that they were adamant about having DRM. And, once again, all this has done is lock people into the Kindle platform, and made it (by far) the most dominant player... which people can't really get out of.

I was reminded of this after reading Joe Wikert's call for the end of ebook DRM, noting that all it had really done was give all the power to Amazon:

I often blame Napster for the typical book publisher's fear of piracy. Publishers saw what happened in the music industry and figured the only way they'd make their book content available digitally was to tightly wrap it with DRM. The irony of this is that some of the most highly pirated books were never released as ebooks. Thanks to the magic of high-speed scanner technology, any print book can easily be converted to an ebook and distributed illegally.

Some publishers don't want to hear this, but the truth is that DRM can be hacked. It does not eliminate piracy. It not only fails as a piracy deterrent, but it also introduces restrictions that make ebooks less attractive than print books. We've all read a print book and passed it along to a friend. Good luck doing that with a DRM'd ebook! What publishers don't seem to understand is that DRM implies a lack of trust. All customers are considered thieves and must be treated accordingly.

The evil of DRM doesn't end there, though. Author Charlie Stross recently wrote a terrific blog post entitled "Cutting Their Own Throats." It's all about how publisher fear has enabled a big ebook player like Amazon to further reinforce its market position, often at the expense of publishers and authors. It's an unintended consequence of DRM that's impacting our entire industry.

That Charlie Stross piece is also a great read, and makes the point pretty explicitly that the publishers created their own problem by insisting on DRM'd ebooks:
As ebook sales mushroom, the Big Six's insistence on DRM has proven to be a hideous mistake. Rather than reducing piracy, it has locked customers in Amazon's walled garden, which in turn increases Amazon's leverage over publishers. And unlike pirated copies (which don't automatically represent lost sales) Amazon is a direct revenue threat because Amazon are have no qualms about squeezing their suppliers — or trying to poach authors for their "direct" publishing channel by offering initially favourable terms. (Which will doubtless get a lot less favourable once the monopoly is secured ...)

If the big six began selling ebooks without DRM, readers would at least be able to buy from other retailers and read their ebooks on whatever platform they wanted, thus eroding Amazon's monopoly position. But it's not clear that the folks in the boardrooms are agile enough to recognize the tar pit they've fallen into ...
What's truly amazing about this was just how obvious it was years ago when we (and many others) pointed this out. I mean, with the music execs you could kind of understand the mistake, because if you really don't think through a few steps out, you could be forgiven for thinking that DRM makes sense as a protectionist measure. But if you're a Big Six publisher, you didn't even have to think ahead a few moves. You just had to look at the monster the labels created by demanding DRM in iTunes (something they'd already started to move away from just as the Kindle was ramping up) and realize that demanding DRM would create the same situation with Amazon. But what's even more amazing is the fact that the big publishers still haven't figured this out so many years later.

If the big publishers end up failing, it's their own damn fault for being perhaps the least perceptive strategists around. I can only imagine how bad they are at playing chess.


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    Steve Worona (profile), Feb 13th, 2012 @ 10:08am

    If you can't imagine a business model not based on absolute control, you end up tying yourself to a railroad track.

     

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      DannyB (profile), Feb 13th, 2012 @ 10:22am

      Re:

      Now replace "railroad track" with "tarpit" and I think you have it.

       

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        Hephaestus (profile), Feb 13th, 2012 @ 10:38am

        Re: Re:

        It was once thought the the skeletons found at this layer of the la brea tar pits was of movie executives. The recent discovery of fashion magazines from 1000 years ago, seems to suggest that they were book publisher. The loafers and the jackets with elbow patches seems to bear that out.

         

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          TtfnJohn (profile), Feb 13th, 2012 @ 12:34pm

          Re: Re: Re:

          Actually it was fashion designers as their skinny models don't have feet big enough for loafers and the genuine leather elbow patches were a male only preserve. What was also found were decayed high gloss magazines which expounded the latest in the world shaking fashions from Dior, Chanel and whomever.

          There were also some bones found that showed serious signs of self starvation and deprivation of nutritional needs, a few cartons of oil soaked cigarettes along side a few mysterious bags of silicon for which anthropologists have found no explanation. It has been determined that microbes feeding from these remains were themselves starved to death as there was no real food or nutritional value left in them at the time of death.

           

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    fogbugzd (profile), Feb 13th, 2012 @ 10:09am

    I am amazed at how many highly trained business people get trapped by fear and moral outrage and totally ignore the economic and business side of decisions.

    Of course the DRM promoters are happy to fan the flames of fear and moral outrage at piracy. Their existence depends totally on their clients being so afraid of piracy that that they forget to ever ask how much DRM is really costing them in money, tech support, and dissatisfied customers. Businesses that sell DRM can never afford to have their clients ask what opportunities they are giving up in order to implement DRM.

    If top executives would start doing their real job, which is to ask tough questions, they would probably ditch most of the DRM they are using and increase their own bottom lines in the process.

     

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      rangda (profile), Feb 13th, 2012 @ 10:50am

      Re:

      I am amazed at how many highly trained business people get trapped by fear and moral outrage and totally ignore the economic and business side of decisions.


      I'm not surprised at all. Fear and moral outrage (anger) are emotional responses. Emotion tends to always win out over logic where humans are concerned.

       

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        PaulT (profile), Feb 13th, 2012 @ 11:18am

        Re: Re:

        ...and people tend to fear what they don't understand. Businessmen trained in the business realities of 20+ years ago can easily get frightened by modern realities that turn previous assumptions on their heads.

         

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      Edward Teach, Feb 13th, 2012 @ 11:11am

      Shiver me ulterior motives, mate!

      Arrr, 'tis not always fear and moral outrage of the management class, mate! The lessons of the ill-named "PATRIOT Act" show that powerful, shadowy conspiracies abound, and the freshwater swabs and ectoplasms in those conspiracies are always ready to fan the flames of a witch-hunt to create a polarizing fog in which to demonize some viewpoints and modalities, then impose a tight autocracy on a formerly free environment. Why, lad, I wager that elements of the King's Navy have a hand in fanning the fires of Fear of Piracy, Arrr, not to mention Defense Establishment propagandists - "Intellectual Property" enforcement demands the death of privacy! Arr, 'tis the Black Spot, matey!

       

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    Maltesh Notovny (profile), Feb 13th, 2012 @ 10:12am

    I think it was Cory Doctorow who said "Anyone who thinks any kind of DRM can protect an eBook has never met a typist."

     

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    Anonymous Coward, Feb 13th, 2012 @ 10:23am

    DRM is easy. You send the digital work with a digital lock. Where's the digital key to open the digital lock? It's already in the digital lock! But in order to turn the digital key, you need a special digital password. Where's the digital password to turn the digital key to open the digital lock? It's written on the back of the digital lock!

    Money please!!!

     

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    Anonymous Coward, Feb 13th, 2012 @ 10:24am

    Oh yes, DRM and DRM alone gave amazon the dominant position.

    YEAH RIGHT!

     

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      Ninja (profile), Feb 13th, 2012 @ 10:28am

      Re:

      Read the article.. It says they got MORE power out of the DRM against the publishers because the DRM locked ppl with Amazon (ie: I can't move my ebook from kindle - the app included - to another device due to DRM. Well, I can because I'm a pirate but most can't).

       

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        TtfnJohn (profile), Feb 13th, 2012 @ 12:51pm

        Re: Re:

        You're not a pirate. You bought the damned book, it's yours and you have every natural right to break the DRM and move your book to a more convenient device if that's what you want to do with it. Not all that much different than choosing a new spot in the bookshelf.

        One would think that the publishing industry would have learned from their cousins in Hollywood that DRM doesn't work.

        But they haven't. One of the reasons I haven't lept in to the wonder world of ebooks is DRM forcing me to use a Kindle and forcing me, essentially, to purchase from Amazon.

        (Not that I have anything against Amazon, at least not to tjhe extent I do with Chapters/Indigo up here in Canada. Something is very wrong when I can find more books on Canada, Canadian history and the history of my province at Amazon's site than I can at Chapters bricks and mortar stores or at their web site.

        Just don't try to leash me to a Kindle, please and thanks!

         

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        bratwurzt (profile), Feb 14th, 2012 @ 1:55am

        Re: Re:

        Hehe, open source to the rescue!

        http://calibre-ebook.com/

         

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      Anonymous Coward, Feb 13th, 2012 @ 11:19am

      Re:

      You read the article?

      YEAH RIGHT!

       

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      Trails (profile), Feb 13th, 2012 @ 11:21am

      Re:

      The publishers obliged Amazon into locking users into their (Amazon's) platform.

      That plus a compelling initial offering led to Amazon's market dominant position.

      Also, 2 + 2 = 4, just in case you were having trouble with that one, too.

       

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    Anonymous Coward, Feb 13th, 2012 @ 10:24am

    Oh yes, DRM and DRM alone gave amazon the dominant position.

    YEAH RIGHT!

     

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      nlNJA, Feb 13th, 2012 @ 10:48am

      Re:

      Read the article.. It says they got MORE power out of the DRM against the publishers because the DRM locked ppl with Amazon (ie: I can't move my ebook from kindle - the app included - to another device due to DRM. Well, I can because I'm a pirate but most can't).

       

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    Ninja (profile), Feb 13th, 2012 @ 10:24am

    I find it amusing. In their endless greed, MPAA has shot their feet with the SOPA fiasco and now ppl are more aware and prone to act against bad legislation. RIAA got tightly tied with Apple dictatorship. the MPAA/RIAA combo created a legend around TPB and made it unbeatable. Academic gatekeepers like json are seeing the scientific community fleeing from them and trying to set the stuff free in the open. Book publishers got stuck with Amazon and their pricing...

    It's amusing, we just need to make sure they can't pass bad legislation. They'll do the rest and suicide for us. Worth a laugh for sure.

     

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      Anonymous Coward, Feb 13th, 2012 @ 9:13pm

      Re:

      Quite correct. Furthermore, what Mike did not mention, there are quite a few of us who absolutely refuse to have anything to do with any content which is infected with DRM. So the foolish publishers are not only handing their destiny over to Amazon, they are wilfully denying themselves any revenue from all of us DRM-haters out here in customer-land.

      They deserve to go broke. It cannot happen fast enough.

       

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        EliJ (profile), Feb 18th, 2012 @ 1:49pm

        Re: Re:

        But do authors also have to suffer because they don't have the time, legal right or tech skills to be able to direct publish their works as e-books?

        I love my authors and want all good things to go to them. Without reading and books my life would be rather empty.
        So I am willing to buy online e-books which I am not allowed to read (because I live in the wrong region/they haven't been released in this part of the World) so that I can support the author. (And then I strip the DRM because I did buy it, for goodness sake!)

         

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    Richard (profile), Feb 13th, 2012 @ 10:27am

    As I've said in the comments before

    DRM benefits the people who sell DRM - no-one else.

    The content industry are dupes.

     

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    Anonymous Coward, Feb 13th, 2012 @ 10:31am

    Alternative headline:

    "Publishers Ask For Rope. Amazon Is Happy To Oblige."

     

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    sehlat (profile), Feb 13th, 2012 @ 10:34am

    Maybe we should all shut up about this...

    When your enemies are committing suicide, don't interrupt them.

     

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      Trails (profile), Feb 13th, 2012 @ 11:19am

      Re: Maybe we should all shut up about this...

      Well, I wouldn't call publishers enemies, just dumb. Further, the situation that behooves us(consumers) least is a monopoly, even if it's the 'zon.

       

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        sehlat (profile), Feb 13th, 2012 @ 11:30am

        Re: Re: Maybe we should all shut up about this...

        The "Big Six" became my enemies the day they forced cancellation of my already-accepted eBook preorder at $8, removed the availability of that and a bunch of other books from the site, and made it available solely through the Amazon-B&N Duopoly at the fixed price of $12.

        My eBook buying dropped from over $2K/year to < $200 anywhere but Baen and Harlequin, where I buy everything the former brings out, and whatever of the latter interests me.

        Making your customers hate your guts is a lousy business model.

         

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          Trails (profile), Feb 13th, 2012 @ 11:43am

          Re: Re: Re: Maybe we should all shut up about this...

          "Making your customers hate your guts is a lousy business model."

          Absolutely, my point is different though. I feel no sympathy for the publishers, I'm just saying under an amazon monopoly, the publishers and the consumers suffer. The publishers don't get a lot of sympathy, but it's hard to be gleeful over their predicament when consumers also get screwed.

           

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            sehlat (profile), Feb 13th, 2012 @ 11:51am

            Re: Re: Re: Re: Maybe we should all shut up about this...

            If the consumers get screwed, it's because they're willing to put up with this maulk. I don't have to buy any book I really want to read. There's this invention called a Public Library.....

             

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              EliJ, Feb 18th, 2012 @ 1:38pm

              Re: Re: Re: Re: Re: Maybe we should all shut up about this...

              But now Public Libraries are restricted from distributing e-books to their users.
              Even though stats say people often buy books that they have seen or read at their Library.
              "Short sighted businessmen!"

               

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    SilverBlade, Feb 13th, 2012 @ 10:39am

    It's amazing how all industries that sell content *never* learn from the recording industry and their piracy/DRM debacle.

    Piracy gives what the customer wants: DRM free, can be played anywhere, no hoops or hacks to go through.

    The RIAA learned this the hard way and could have spent the last 10 years giving the customer what they wanted but they tried to decide everything with lawsuits and DRM. They eventually went to Apple kicking and screaming all the way. Why don't the other industries learn from their mistake? Do they think that the same thing won't happen?

    The only saving grace (right now) for the MPAA is that Blu-Ray rips are huge, and the only saving grace for the publishing industry is that e-readers are very limited for what they can do.

     

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      Anonymous Coward, Feb 13th, 2012 @ 5:09pm

      Re:

      "They eventually went to Apple kicking and screaming all the way."

      From Walter Isaacsonís biography of Steve Jobs...

      Jobs was in the process of getting content to put on the then new iPod. He made the rounds of the recording labels and he asked who their customers where, they told him their customers where Wal-Mart, Target stores, Kmart, etc. Steve Jobs told Isaacson when he walked out of these meetings he had a wall-to-wall grin on his face because he knew he had them, they had completely forgotten who their real customers where, the consumer.

       

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    mrtraver (profile), Feb 13th, 2012 @ 10:51am

    They may be fine chess players, but they don't know the game they are paid to know.

     

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    Roland, Feb 13th, 2012 @ 10:54am

    emotions, in investing and elsewhere

    Bezos is following Warren Buffet's advice: be greedy when others are fearful, and vice versa. Investors have known for a long time that if you can manage to take emotions out of your decisions, you make better decisions. But it's the work of a lifetime. I'm not saying don't have emotions--you can't help it-evolution put them there. I'm saying we humans are different from the other animals. We don't have to live based on our emotions. Those who learn this late, lose.

     

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    Richard (profile), Feb 13th, 2012 @ 11:08am

    I can only imagine how bad they are at playing chess.

    They would be even worse at playing Go - but if they learnt to play they might get better.

    The skills needed to play Go map really well onto business skills.

    No surprise then that the strongest Go players come from Korea, China and Japan (admittedly Japan has slipped in recent years - but then so have their Go players.

     

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    David Muir (profile), Feb 13th, 2012 @ 11:12am

    Edit

    Sorry I'm so late to notice this, but I don't think anyone else has pointed it out yet: "...the effort had to be focused on somehow "protecting" works and ratcheting up infringement..."

    While it may be true that the legacy content distributors have ratcheted up infringement in recent years (due to copyright extensions and clawing back from the public domain)... I believe in this sentence you mean "ratcheting up enforcement".

     

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      Richard (profile), Feb 13th, 2012 @ 11:25am

      Re: Edit

      Doesn't it come to the same thing in the end???

       

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      Killercool (profile), Feb 13th, 2012 @ 11:49am

      Re: Edit

      Eh, not really. By insisting on DRM for their e-books, they were quite literally increasing what qualified as "infringement."

      Since you would have to bypass the DRM to change formats or devices, activities that were once perfectly legal were nonsensically made infringement.

       

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        David Muir (profile), Feb 13th, 2012 @ 12:46pm

        Re: Re: Edit

        Absolutely. I just think Mike was pointing out what the content folks were focused on... and as misguided as they may be, they were not focused on increasing infringement.

        Ironically, as has been pointed out: no matter where their focus was, the result in the end was indeed increased infringement.

         

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        David Muir (profile), Feb 13th, 2012 @ 12:48pm

        Re: Re: Edit

        Absolutely. I just think Mike was pointing out what the content folks were focused on... and as misguided as they may be, they were not focused on increasing infringement.

        Ironically, as has been pointed out: no matter where their focus was, the result in the end was indeed increased infringement.

         

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      angshuman, Feb 13th, 2012 @ 1:44pm

      Re:your edit

      Absolutely,thank you. I am nerdy enough to be really bothered by 'ratcheting up infringement'

       

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    V (profile), Feb 13th, 2012 @ 11:32am

    DRM is the devil...

    Speaking as an author who has published multiple books, I do believe that DRM is the devil.

    I can't even begin to tell you the number of books that I've donated over the years to elderly homes, book drives, libraries, etc. You can't do that with a electronic book.

    In fact, an electronic book takes away one of the most enjoyable aspects of reading a book - sharing it. When I first read the Harry Potter series, I was spellbound with it. I wanted to share it with as many people as possible - mostly so I could talk to them about it, discuss ideas, future plots, etc. They'd read it and give it back so I could share it with someone else... or they'd share it with someone else.

    The result was, when the next book came out... we ALL bought a copy so we could read it right away.

    How many potential customers do we loose with electronic books?

    I can't even imagine. And sadly... for author's with supposedly creative imaginations... they can't imagine either.

    And I blame this on the entitlement mentality. Someone writes a book, creates a song, software, etc. and wants to wring every drop of money they can from it.

    While there is nothing wrong with wanting to get paid, the mentality that a single act, a single book or a single software game or app is going to be your gravy train harms more content creators than any one concept.

    While it's nice to be able to coast through life, living off a single accomplishment... the only people who are remembered for a single accomplishment are inventors. Would Shakespeare been remembered had he only wrote one play? One sonnet? What about Poe? Bach? Mozart?

    They'd be a footnote to someone else in history who DID go on to be prolific.

    I think of everything I write or create as a lead-in to my future - and past - works. If someone sees something that I write, I want them to enjoy it enough that they will want to find more material created by me.

    One off sales do very little to make you money. It's repeat business that really earns you long term income.

    I just wish artist/writers/musicians would get off their duff, drop the lazy attitudes... and produce.

    Copyright law has FAILED... MISERABLY... if, as the founding father's intended, its purpose is to PROMOTE the useful arts... it does very little to promote and much more to encourage people to sit back and feed at the trough of old accomplishments.

     

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      bratwurzt (profile), Feb 14th, 2012 @ 2:00am

      Re: DRM is the devil...

      "In fact, an electronic book takes away one of the most enjoyable aspects of reading a book - sharing it."

      Hmm... ever heard of file-sharing? ;)

       

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    Anonymous Coward, Feb 13th, 2012 @ 12:10pm

    It's amazing that execs are so out of touch with their market that they actually believe each other. DRM has been a public relations nightmare that continues to only grow and they still refuse to see the handwriting on the wall.

    I don't think this is just a problem with copyrighted content though. I think this is a symptom of a bigger problem, overall, with many industries - "capitalism gone wild" makes the consumer always wrong.

     

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    Silence8, Feb 13th, 2012 @ 12:11pm

    Just got done reading this article

    E-Book Publishers Want Library Borrowing to be Difficult
    http://www.pcworld.com/article/249862/ebook_publishers_want_library_borrowing_to_be_diffi cult.html#tk.rss_news

    decided to pop over to Techdirt, and whoa.. E-Book discussion.

    All this lock-down will do is make people angry when they do try to switch device brands. Then they'll scour the net for a way to transfer from Kindle to Nook, Nook to Kindle, and they'll find a way to do it. Along their search, they'll also discover sites where you can just download books for free, No DRM, no hassle with credit cards etc..

    DRM turns otherwise paying people into pirates. It happens with games, movies and books.

    I do however love my Nook.

     

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    Anonymous Coward, Feb 13th, 2012 @ 1:27pm

    V - DRM is the Devil

    You haven't been paying attention, "Content is advertising."
    Mike allows for links. Put a name and what you've written under this community's scrutiny and see happens.

     

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    Lew, Feb 13th, 2012 @ 2:49pm

    Amazon has always be the leader

    So, a dead argument.

     

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    Ray Trygstad (profile), Feb 13th, 2012 @ 6:12pm

    One publisher clearly gets it...

    All their ebooks are provided in multiple formats, all with no DRM...

    They have a large online library of free ebooks...

    They sell ebooks from 11 other publshers as well, all without DRM...

    Every so often their print books have a CD full of ebooks, which clearly states that you can do anything with it except sell it. Consequently as soon as each one comes out, it is posted online by loyal readers...

    BAEN BOOKS www.baenebooks.com

     

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      sehlat (profile), Feb 14th, 2012 @ 10:39am

      Re: One publisher clearly gets it...

      There's a reason for that.

      Baen books was run by Jim Baen. He was an editor, *and* a bibliophile *and* a reader *and* a fan. He was, to put it in short form, one of US, not one of THEM.

      Here I must define "THEM." "They" are the executives, accountants, lawyers who actually run the business end of things. It doesn't matter to them whether they're selling books or diapers. Their concerns are cash flow, costs, and profit. The product and the customer response to it are secondary concerns. And, like the music industry, their customer base is Target, Wal-Mart, etc. etc.

      Mention "connect with fans", and the response will inevitably be "That's the slaves' ... er ... authors' job."

      Baen got it because Baen was (and is) run by someone who loves books and stories.

      When Baen started Webscriptions (eBooks) back in 1999-2000, it got me back into reading after a several year hiatus. I could take the books, turn them into the format I wanted to read (plaintext plus _italics_) and read them comfortably in my PalmPilot.

      Because Baen treated me not as a faceless blob but as a friend and supporter, they got my unswerving and utter loyalty as a customer. I buy every eBook bundle they bring out (there's a new five-book bundle by Charles Sheffield out today), and I buy a treeware copy of every new book they bring out and donate it to the Berkeley Public Library to help expose the books to new addic ... er ... fans. :)

      To use an expression from one of their new books, Guardian of Night, Thrive Baen!!!

       

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    Al Bert (profile), Feb 13th, 2012 @ 9:54pm

    then they start drooling

    Strategy? Hell, the only thing publishers and labels know about chess is that it involves pawns, and they like crushing those.

     

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    Ed C., Feb 13th, 2012 @ 10:35pm

    Actually, they might know how to play chess, and may even be excellent players. In chess, the board is level--both players with equal standing--and one wrong move can cost you the game. When it comes to business, however, publishing execs think they are above everyone, the board is always tilled in their favor, and someone else is always at fault when their game plan fails--simply because they are never, ever, wrong.

     

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    AJBarnes, Feb 14th, 2012 @ 5:58am

    Slight update

    "If the big six began selling ebooks without DRM" AT A REASONABLE PRICE, then they'd sell a lot more books. As long as they're selling 20 year old titles for $9.99, they've really limited their customer base. I can go to my local public library and read for free. Or they have sales once a month where you can get old paperbacks for a quarter. So, $9.99 for conveinence? I don't think so...

     

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    Hara, Feb 14th, 2012 @ 8:14am

    DRM

    It's not DRM that made Amazon so strong...it's price competition.

    Yes, DRM does not protect the books 100% from piracy, but neither does any lock, or alarm protect a house from burglars. ...so what? Do you ever leave your house unlocked?

    There will be always people who complain for something no matter what. People complain even for the free books and applications that they get...
    Just some food for thought.

     

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      PaulT (profile), Feb 14th, 2012 @ 8:21am

      Re: DRM

      "It's not DRM that made Amazon so strong...it's price competition. "

      That's what made their physical business so strong. They don't have as many competitors as they should in the digital space thanks to DRM.

      You may have missed one of the points. No DRM does not protect from piracy, but it does lock people into systems. An open format wouldn't make people buy from Amazon instead of Barnes & Noble. DRM does.

      "Do you ever leave your house unlocked?"

      No. But that's not what DRM does. DRM is there to stop me from getting into my own property and do with it what I wish.

       

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        Hara, Feb 15th, 2012 @ 1:55am

        Re: Re: DRM

        Thanks for sharing your opinion on my thoughts.

        Amazon's physical business was strong, but when they pretty much "forced" publishers to sell ebooks at $9.99 instead of any price that the publisher would have preferred, they grew even stronger. However, when Apple got into the business and allowed publishers to set their own price, Amazon changed its policy as well but they are still the strongest. I still believe that it's not DRM that helped Amazon. It's a combo of a cheap device (Kindle) and a massive load of low priced content. Apple offers DRM and non DRM ebooks. Why aren't they stronger or as strong? It's because there is a huge price difference, even though the iPad is a superior device. Of course another success factor for Amazon is that they did all that first, so they have the first mover advantage with much more content than any other competitor.


        "Do you ever leave your house unlocked?"
        I am looking at it from a publisher's perspective, or in other words, the homeowner's perspective in that example.
        You assume that the content of the book is your property; it isn't. It is the property of the rights holder. You just buy the right to have access to it, not the right to own it.

         

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          PaulT (profile), Feb 15th, 2012 @ 2:16am

          Re: Re: Re: DRM

          "Amazon's physical business was strong, but when they pretty much "forced" publishers to sell ebooks at $9.99 instead of any price that the publisher would have preferred, they grew even stronger."

          How, exactly, did they do this? I do find it difficult to accept the idea that an industry that's been guilty of price fixing many times in the past would have to be forced to do so again, especially when the nature of the files means that the higher prices were almost pure profit. Call me cynical, but I think that was more of an excuse because they were scared of ebooks and wanted all the money they could get - unless you have information to refute this of course.

          "I still believe that it's not DRM that helped Amazon. It's a combo of a cheap device (Kindle) and a massive load of low priced content."

          But DRM is definitely a factor, especially for people who want to switch to a different reader. Without DRM there would be no lock-in. With DRM, even if B&N or other competitors offer cheaper, better products, users are tied to the Kindle.

          "It's because there is a huge price difference, even though the iPad is a superior device."

          A matter of opinion. An iPad is a horrendously overpriced unit to be buying purely to read books, with far lower battery life, and the screen on the Kindle is far superior for that purpose, especially in bright sunlight. The iPad is a superior general device, but an inferior ebook reader IMHO.

          "You assume that the content of the book is your property; it isn't. It is the property of the rights holder. You just buy the right to have access to it, not the right to own it."

          So, you're renting me something instead of letting me buy it. Sorry, not for full price with restrictions on how, when and where I use it.

           

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            Hara, Feb 15th, 2012 @ 5:11am

            Re: Re: Re: Re: DRM

            Thanks PaulT.

            From your answer, I infer that you are assuming something that is not true-correct me if I am wrong. You say that ebooks is "almost pure profit" and that publishers are scared of ebooks. I don't know if they are scared, but ebooks would be pure profit if they were a complementary good to printed books. However, they are a substitute; not pure profit for sure and that is the reason why the height of a "higher price" is up to a sane publishing company to determine.

            "But DRM is definitely a factor, especially for people who want to switch to a different reader. Without DRM there would be no lock-in. With DRM, even if B&N or other competitors offer cheaper, better products, users are tied to the Kindle."
            Yes, they are locked in, as they are on iPad, Nook or Kobo. So, why aren't these companies as successful as Amazon?

            To close this, my point of disagreement is that this article focuses on the mistake of publishers to install DRM which helped Amazon achieve a dominant position. That is what I disagree on.
            Some kind of protection would have to exist for publishers and authors one way or another, because of the intangible nature of ebooks, which makes their free distribution very easy.

            Kindle vs. iPad. I have both, and your points are valid. Unless I am at the beach during the Summer, I mostly use my iPad to read books because I do most reading at home. Indeed it is a mater of opinion and we both express our own.

            "So, you're renting me something instead of letting me buy it. Sorry, not for full price with restrictions on how, when and where I use it"
            Well, first of all, personally I am not renting you or selling you anything.
            You don't know the full price of this content. Only the rights holders know it and it is different for every author or publisher. Not all content is the same. What you and I as readers pay is access to it. We are not allowed to redistribute it, change it, or claim it's ours. I am talking about the content, which is what people buy, whether it's an ebook or a printed book.

             

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              PaulT (profile), Feb 15th, 2012 @ 5:34am

              Re: Re: Re: Re: Re: DRM

              Thanks for the interesting, polite conversation, although I do still disagree with you on many points.

              "You say that ebooks is "almost pure profit" and that publishers are scared of ebooks."

              That's the impression I get. There's no marginal costs with ebooks. Once the type is set and the master produced, there's no further direct costs. Shipping is almost nothing, especially compared to their physical counterpart, and "printing" costs literally nothing. Once the initial investment has been recouped, it's all profit.

              As for "scared", well you confirmed this yourself. They're concerned that ebooks will replace physical books, and are afraid of the consequences of that happening. If they try to limit this substitution with artificially raising prices and trying to enforce obtrusive DRM, they're failing before they start. They cannot force the market to do whatever happens to be most convenient/profitable for them if other options are more attractive to customers.

              "the mistake of publishers to install DRM which helped Amazon achieve a dominant position. That is what I disagree on."

              It's well documented that the insistence of the RIAA on having DRM enforced partially drove iTunes dominance of the industry - iPod owners literally had no other choice when buying digital music while DRM was enforced. You're not giving any reason why the same cannot be said about Amazon/Kindle other than your opinion. You're entitled to that, but I believe you're wrong due to the above.

              "Some kind of protection would have to exist for publishers and authors one way or another, because of the intangible nature of ebooks, which makes their free distribution very easy."

              Go and chat to Baen or Cory Doctorow or Paulo Coelho or O'Reilly (among many others) and ask them how scared they are of DRM-free books and how difficult it is for them to compete.

              You're failing at the first hurdle - assuming that without DRM then people won't buy the books. In reality, DRM is a failure because once it's broken, only legal purchasers are affected by it. It doesn't restrict the pirates but restricts legal customers - exactly the point Mike is making in the article.

              "Indeed it is a mater of opinion and we both express our own."

              Indeed. I chose Kindle because it was cheap, lightweight, and between my iPhone and laptop I couldn't justify the extra expense of an iPad. That's fine, just don't pretend that Amazon's dominance of the eBook world affected my decision of hardware purchase (as I can read Kindle books on either device). I suspect there's many thousands of people out there who made the same decision for similar reasons.

              "Well, first of all, personally I am not renting you or selling you anything."

              I meant the "royal you", as in publishers.

              "You don't know the full price of this content."

              I know the price I am willing to pay, the current market price, and the price of physical books (which would have been much more expensive to manufacture). That's enough, isn't it?

              "We are not allowed to redistribute it, change it, or claim it's ours."

              I'm allowed to do the first 2 things with a physical book. Why should I pay the same money for an item that loses much of its functionality and all its resale value?

               

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    Hara, Feb 17th, 2012 @ 4:26am

    This is interesting conversation but it getting way too long and unfortunately I don't have time to respond with as much detail as I would like to. However, since you put the time to do it, I will put the time as well. I will answer as I look at your points. Keep in mind that I am not trying to persuade you or anyone. We just see things differently and through this exchange of ideas we can only learn more.
    Ebooks is not all profit. The profit would have been more if they had the same price as printed books. But thatís not the case; printing, shipping, storage etc costs are 15-25% of the total cost of a printed book. The rest is overhead and marketing which applies to ebooks as well and then you still have to account the higher royalties to authors and the continuous maintenance of the IT infrastructure that is required. And then top that with the lower price of ebooks. Only a few people know that. If it was so profitable, or so easy, there be no publishers already. Authors would publish their own work. For more look here: http://www.nytimes.com/imagepages/2010/03/01/business/01ebook_g.html?ref=media
    I am not confirming that publishers are afraid. The ďhigher priceĒ in quotes was what you said. I donít consider the price high, because I understand the value of content. If a price is high, the first to lose is the publisher, because people will not buy it. Everything is a matter of supply and demand and publishers are making products that they want to sell at a profit, so they search for the equilibrium. Amazon on the other hand sells a lot of products at a loss, just to attract customers. I have studied Amazon and anyone who has, can confirm that for as long as they were selling only books, they had huge losses every single year-this will become an irrelevant topic so I stop here.
    You canít compare music to books. iTunes, again was successful because it was the first to offer low priced content at a different business model that no other company had done before; Sell individual songs, and bundle a great platform (iTunes) with a great device (again a matter of opinion ). It was not DRM that gave it itís dominance. It is still dominant in the last two years, even without DRM. Why didnít other providers emerge in the last two years? Why isnít Amazon successful in that?
    I donít know what Coelho has in his mind, or how much more income he wants to get after all this success. It could be another form of promotion. I donít know. But just because a few people do it, it doesnít mean that it is viable for everyone, or that everyone has to follow it.
    Without any limitations to sharing, friendly sharing would be disastrous for any e- product. Keep in mind that with a single purchase of a printed book, you can share it only once at a time, and only one person can read it at a time. Most of these times, you even chose the person you will hand it to, because you probably want the book back. With ebooks I hope that you understand the impact of simultaneous sharing withÖeventualy gazillions of people. How can you assure anyone that the above will not happen? What do you suggest? Ö donít compare it to music sharing because there you are talking about $0.99 songs.
    How are you permitted to change the content of a physical book? How can you redistribute it? You can only hand the hardcopy of the book to someone, but you are not allowed to make photocopies and distribute it or change the content.

     

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      nasch (profile), Feb 17th, 2012 @ 6:44am

      Re:

      The rest is overhead and marketing which applies to ebooks as well and then you still have to account the higher royalties to authors and the continuous maintenance of the IT infrastructure that is required.

      Of those costs, only the royalties are marginal, everything else is fixed.

      And then top that with the lower price of ebooks.

      Except for the ebooks that cost the same as paper. Oh, and the ones that cost more than paper.

      If it was so profitable, or so easy, there be no publishers already. Authors would publish their own work.

      They do, more and more all the time.

      I donít consider the price high, because I understand the value of content.

      Do you understand the difference between price and value?

      You canít compare music to books.

      Why not?

      Why didnít other providers emerge in the last two years?

      They did.

      Why isnít Amazon successful in that?

      They are.

      But just because a few people do it, it doesnít mean that it is viable for everyone, or that everyone has to follow it.

      Around here, that's known as Masnick's Law. It states that any time a successful business model that doesn't depend on copyright is described, someone will complain that it may work for that person, but it won't work for everyone. This is an irrelevant point - I can explain more if you're interested.

      Without any limitations to sharing, friendly sharing would be disastrous for any e- product.

      Only if your business model doesn't account for the fact that your content is infinitely reproducible at no cost.

      What do you suggest? Ö donít compare it to music sharing because there you are talking about $0.99 songs.

      Use a business model that sells scarce goods rather than infinite ones. The price of the artificially scarce goods doesn't matter.

      You can only hand the hardcopy of the book to someone, but you are not allowed to make photocopies and distribute it or change the content.

      Actually you can change it all you want as long as you don't redistribute it.

      I'm not sure why you keep saying you can't compare book publishing to music publishing. Fundamentally, they're very similar, but this is really interesting, because I'm thinking that's actually the problem. It's not that book publishers didn't notice what happened to music, they just think they're somehow different, and doing the exact same thing the music labels did will turn out differently for them. Can you explain why you believe this?

       

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    Hara, Feb 17th, 2012 @ 1:59pm

    -Regarding marginal cost and pricing, the link I posted says it all. You don't have to agree or disagree to it. It's a fact, not theory.

    Except for the ebooks that cost the same as paper. Oh, and the ones that cost more than paper.
    -I rarely see those nowadays, unless they have enhanced content. It doesn't make sense, and people are right to complain about this.

    -Authors publish their work on their own...they always did even in printed form....and if any of them become successful, they find a publisher to publish their future work.


    Around here, that's known as Masnick's Law. It states that any time a successful business model that doesn't depend on copyright is described, someone will complain that it may work for that person, but it won't work for everyone. This is an irrelevant point - I can explain more if you're interested.

    -It is relevant. You can't mention exceptions as if they are the rule. I am not interested in theory, but practical solutions that apply to most...I don't know what "around here" means. Also, I don't live "around there", but in the US, Amazon is not widely known for selling music, and definitely not as successful as iTunes. Who else has emerged successfully?

    You canít compare music to books.
    Why not?
    -Because they are different products, that are enjoyed by using different human senses, and require completely different involvement.

    Use a business model that sells scarce goods rather than infinite ones. The price of the artificially scarce goods doesn't matter.

    -Good theory. But how do you do that in practice for electronic books?

    -Well, when you say that you, as a consumer can change the content of a book in any way you want...then there is no common line of communication-you are talking about writing your own book on top of someone else's work. I am talking about buying a finished book by an author as it was published; otherwise, it becomes a different book, and if you change it even slightly, you have to add your name as the author and perhaps choose a different title as well. Once you do that, good luck in the courts.

     

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      nasch (profile), Feb 17th, 2012 @ 3:16pm

      Re:

      -Regarding marginal cost and pricing, the link I posted says it all. You don't have to agree or disagree to it. It's a fact, not theory.

      And that chart specifically excluded overhead from the marginal cost, just like I said. I'm not sure why marketing costs more for each unit sold, it seems to me that would be a fixed cost. But I'm not in marketing.

      if any of them become successful, they find a publisher to publish their future work.

      You're claiming there are no successful authors who continue with self-publishing?

      You can't mention exceptions as if they are the rule.

      First, I'm not claiming they're the rule. Second, they're growing. These are very new things, and at some point they will become the rule. Third, your statement is exactly what legacy industries use to discredit new business models - "it's just the exception, not the rule". Who cares? It works!

      I am not interested in theory, but practical solutions that apply to most.

      This is another point of failure of legacy content businesses. They insist on a single business model that is suitable for most or all creators. That is no longer the reality we live in. Everyone must find their own mix of strategies that works for them.

      in the US, Amazon is not widely known for selling music,

      I couldn't find recent numbers in a little Googling, but anecdotally I disagree. I think if you ask people who listen to digital music to name some places where you can buy it, many of them would mention Amazon.

      -Because they are different products, that are enjoyed by using different human senses, and require completely different involvement.


      How does any of that affect what business models will succeed and fail?

      if you change it even slightly, you have to add your name as the author and perhaps choose a different title as well.

      Nope, I don't. I can buy a book and make whatever changes I want to it, without any limitation or exclusion. I can write notes in it, cross sections out, draw naughty pictures, anything. I can even then sell that book to someone else, and the copyright holder has absolutely no recourse.

       

      reply to this | link to this | view in chronology ]


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