Amazon, Publishers Sued For Antitrust Violations Over DRM By Angry Indie Bookstores

from the that-could-make-things-interesting dept

Dennis S. was the first of a bunch of folks to send in the news of a class action lawsuit recently filed by a bunch of independent booksellers against Amazon and the “Big Six” publishing firms arguing that Amazon’s ebook DRM (and the agreements from the big publishers to use it) effectively violates antitrust law. Just about a year ago, we noted that the publisher’s annoyance that Amazon was such a dominant player in the market was really their own damn fault for insisting on DRM, which really locked people into Amazon’s platform and made it very hard for anyone to check out and move elsewhere. It was particularly stupid since they already had seen how the same thing helped Apple dominate in the music space.

This new lawsuit, however, could certainly shake things up quite a bit.

The logic of the bookstores’ argument is this. When it launched the Kindle in 2007, Amazon convinced publishers to sell ebooks with DRM on its platform. The Kindle then became the dominant e-reader. You can’t read ebooks with Amazon DRM on any e-reader but a Kindle, and you can’t read any ebooks with DRM on a Kindle that doesn’t come from Amazon. The plaintiffs argue these agreements and practices violate sections 1 and 2 of the Sherman Antitrust Act: anticompetitive restraint of trade (together with the publishers) and monopoly power, respectively.

But what about Nook, Apple, Google, Sony, Kobo? The booksellers claim that Amazon controls at least 60 percent of the ebook market, with Barnes & Noble at 27 percent and Apple’s iBookstore at less than 10 percent. But note that none of Amazon’s top competitors sell ebooks without DRM. It’s suggested here that part of the publishers’ nonpublic agreements with Amazon stipulate that the publishers won’t sell any non-DRM copies of the same books sold for Kindle.

Where it gets potentially interesting is that one of the remedies the book stores are seeking is:

… an injunction prohibiting AMAZON and the BIG SIX from publishing and selling e-books with device and app specific DRMs and further requiring the BIG SIX to allow independent brick-and-mortar bookstores to directly sell open-source DRM e-books published by the BIG SIX


… an injunction prohibiting AMAZON from selling DRM specific, or non-open-source, dedicated e-readers, alternative e-reader devices, and apps.

Frankly, it would certainly be an interesting result if Amazon was barred from using DRM, but this lawsuit has almost no chance of succeeding. There are a few significant problems (and the bookstores don’t seem to know what “open source” means despite using it a few times). Also, this impression that Amazon forced the publishers into DRM is, as far as I’ve heard, the opposite of reality. The publishers demanded DRM because they were freaked out over “piracy” of ebooks. There are a few other oddities in the lawsuit that suggest that the bookstores are (perhaps justifiably) angry, but it’s not clear that they actually have a lawsuit.

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Companies: amazon

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Comments on “Amazon, Publishers Sued For Antitrust Violations Over DRM By Angry Indie Bookstores”

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Ninja (profile) says:

You say there’s no chance this will go ahead but doesn’t it make sense you should be able to port any ebook to whatever fucking reader you so desire? I mean, shouldn’t anyone be able to deliver an ebook bought on Amazon to an ebook bought on B&N? If you buy a freaking book from X bookstore they CANNOT tell you you can only read it in their stores or prohibit you from reading in certain places where there’s the competition.

I’d go further (and possible on a tangent issue) and tell the same about games. They should all be released to a neutral platform (PC anyone?) and the consoles would win by offering better experiences such as dedicated environments where the game will load faster and have better playability. I mean we have emulators for consoles nowadays despite the fact that most incur in some sort of copyright issue but what of the games and stuff of these consoles once there’s nobody left selling them? Think about Nintendo online purchases once the Wii dies, it’s your money thrown in the trash.

Tying stuff to a single drm-ed platform is simply wrong. And generates monopolies.

Zakida Paul says:

Re: I am no pirate, but...

That is what I do as soon as I download any book from Amazon. I buy the book so I will do with it what I bloody well please. For my own use, of course.

To be fair, though, I have not actually bought a book from Amazon in ages. I found a blog that reviews daily free ebook offers for Kindle and from that I have downloaded over 100 indie ebooks for free completely legally. Most are better than what you would buy from the big publishers too.

gorehound (profile) says:

Re: I am no pirate, but...

Better yet do what I do and build a real Library ! I own around 1100 Paperbacks (many are vintage collectible), 303 Vintage Scifi Pulps (mostly from 1930- 1945, a few lines extended to Dec.1949), and around 200 Hardcovers (many of those are 1ST Editions). I own my books.I have my Library Appraised Conservatively at $16,500USD. I can Will all my Books where I want them to go.I can read them anywhere I want to.I can also show Books to friends who really appreciate seeing the originals.

I do not nor will I ever buy into some file for a book ! Sorry, I am a Dinosaur and proud of that fact.

Corwin (profile) says:

Re: Re:

Nope. The whole of the computer/internet revolution is the ability to communicate anything to anyone at zero cost. Some evolutionary roadkills think that certain data must be protected against said replication. This is obviously counter-productive, because you can’t go against evolutionary traits. And when those traits are an advantage, the group that stupidly tries to repress the advantageous behaviors loses ecological relevance against those that leverage natural human capabilities.

“Any sort of restriction on the free flow of information is a crime against humanity.” I came up with that, but I’m certain I’m not the first one to think of it.

Corwin (profile) says:

Re: Re: Re: Re:

Yeah, so, I’m right. Trying to prevent the use of naturally evolved advantageous traits is crippling to the part of the species that does so, and thus, they may get easily eaten by the part of the species that do not forbid the use of advantageous traits.

Clearer? Progress is not made by trying to prevent people from doing things that benefit other people. Progress is made by people who enable more people to do more things.

PaulT (profile) says:

Re: Re:

Wrong. The whole revolution is defined by open standards, which are then hijacked by outside corporate interests to try and impose upon them the legacy business models that they make obsolete. Left to their own devices, technology is open (see: most of the technology that lets you access and use this very website without restriction).

But, you knew that.

Corwin (profile) says:

Re: Re: Re:

I get what you’re saying, but the imposition of legacy business models on our open standards does not work. The only useful material is that which stays open.

Who uses copy-protected WMA? Everything everywhere is in MP3, the de-facto free-as-in-beer standard, unencrypted. Stores that impose any DRM are roadkill.

It’s not the same for ebooks, because they’ve all been built with proprietary ecosystems in mind, only able to read their one own format. But the DAY someone has the balls to have all-readers built in China that can connect to all stores out-of-the-box, read everything, and PDFs all the files it gets for easy subsequent use, it will take about 100% market share overnight, right up until the day it’s yanked out of the stores by panic-induced injunctions.

Some time soon, it will be so easy to make such devices that they will be inevitable. Progress cares not for regulation.

PaulT (profile) says:

Re: Re: Re: Re:

Oh yes I agree, but it’s not for the lack of them trying. If the AC that I was responding to is one of our usual fools (which I suspect he is), it was a thinly veiled version of his usual bleating about Google and others creating monopolies at the expense of content providers. Which is garbage.

However, your points are largely valid. The music industry demanded the DRM on music with all sorts of crap about how it was better for the consumer. Now that they have been convinced to give consumers a real choice, nobody chooses the DRM format. I suspect the same will be true of books, games and movies, but time will tell as to how long that takes and how much damage they do to themselves in the meantime.

Anonymous Coward says:

Another problem with this case is Amazon has readers for iPads, iPhones, android phones and lots of other devices. I would venture a bet that they would glady put a reader app on any device willing to let it on including a Nook.

It is hard to argue monopoly when a company has is writing apps for so many devices that the don’t make but might sell.

PaulT (profile) says:

Re: Re:

Pretty much the only argument for there being a monopoly is that Kindle users find it difficult to move to other stores that use different DRM standards (ePub). But, the Kindle also supports open or non-DRM formats (TXT, PDF, HTML, MOBI, DOC, PRC). In fact, Kindle users can buy and use any format which isn’t ePub – the format forced upon other stores.

If the publishers didn’t insist on DRMed ePub, there wouldn’t be an issue. Stores could supply the book in any format the customer desired without restriction. Amazon might still prefer not to support ePub, and may prefer to maintain the Kindle apps to try to convince people to stay within their ecosystem, but customers would be free to move wherever they wanted.

Hopefully the publishers will stop kicking & screaming and accept open non-DRM formats as music labels were forced to accept the reality of non-DRM music. But, until then Amazon really isn’t the correct target.

John Fenderson (profile) says:

Re: Re:

It is hard to argue monopoly when a company has is writing apps for so many devices that the don’t make but might sell

I don’t see how this is relevant to the monopoly question at all. Even if Amazon (for instance) has a reader app for literally every computing device in existence, they’d be just as much a monopoly as if they only covered their own devices. It’s all still the same company.

PaulT (profile) says:

Re: Re: Re:

I see where you’re coming from, but I disagree, as I disagree that they’re any kind of monopoly. The fact that they release so many apps is a sign that they want there brand out there as much as possible – that they’re more interested in selling books than they are in selling their devices. You can say that the fact that the apps are the only thing that supports the Kindle format is a monopoly action, but the apps and devices also support a wide range of formats not sold by Amazon. A Kindle user can obtain a huge number of books not sold by Amazon, without any restriction.

Literally the only think making Amazon a monopoly in any sense is the fact that they don’t support DRMed ePub format, and that that’s what the publishers are insisting upon with other retailers. Remove that demand, and Amazon are not a monopoly with any kind of DRM, but they will stil retain a great number of readers due to the scope and quality of their apps…

Mike Spooner says:


If you are prepared to accept lowest-common-denominator visualisation, perhaps. PDF 1.2 format (read-only without all the recent web-based extensions) might sound plausible as a common format, but that only gets everyone into the font-licensing quagmire – who’s going to pay? The reason that the traditional “paper” publishers wanted DRM was to keep the copyright control roughly similar to that for paper books – anyone can read a single paper book (I could loan it to you), but not all at the same time – copying physical books of any size (several hundred pages) is very expensive, but copying an electronic book lacking DRM (one file, or perhaps several files) is so cheap that everyone and his dog would do it – just upload it to a web-server or FTP site and it will get copied *without any additional effort from you at all*. This is so different from paper books that the traditional publishers were afraid of going out of business overnight, and afraid that they would not be able to encourage and guide new authors or buy limited rights to reference data to use in reference books. I’m not defending their position, merely noting what it was.

Of course, having platform-neutral DRM in place of platform-specific DRM might sound possible, but would create some very tricky problems for users and publishers, and would not address the above concerns.

Whether there should even *be* publishing specialists is another question, of course.

Anonymous Coward says:

Re: @Ninja

The reason that the traditional “paper” publishers wanted DRM was to keep the copyright control roughly similar to that for paper books

With paper books iI would be surprised if the publishers sold more that 1 Book per 4 readers, and they actually probably sold at a lower ratio than that.
They probably see DRM as a means of selling more books by eliminating lending and second hand sales, so long as piracy does not become an issue.

PaulT (profile) says:

Re: @Ninja

“but copying an electronic book lacking DRM (one file, or perhaps several files) is so cheap that everyone and his dog would do it – just upload it to a web-server or FTP site and it will get copied without any additional effort from you at all.”

Except, of course – THIS HAPPENS ANYWAY! Remember the Harry Potter books? They were getting freely shared despite there not being an electronic version available to buy, DRMed or not. Go to any torrent site – you’ll see thousands of books that were released in DRM format, with the DRM broken in a trivial process. There’s no real reason for DRM on books apart from the publishers being scared of new technology. The DRM does nothing but put barriers between legal purchasers and publishers.

As with the music industry, DRM is crap and only serves to confuse and fragment the market, and puts some readers off entirely. Until they learn the same hard lessons that the music industry were forced to learn a decade ago, they will have the same problems.

Andrew D. Todd (user link) says:

No Need For Local Business.

You understand, my perspective on Amazon is very different from that of some other people. I do not have a Kindle, or any other “walled garden” reader. I find that used paper books are always a better bargain. No publishers show any disposition to sell e-books for fifty cents. Amazon is, as much as anything, my grocer. My most recent purchase from Amazon was some packets of precooked rice that one can prepare by putting them in the microwave oven for sixty or ninety seconds. The grocery market is at least twenty times bigger than the book market, and that is where Amazon is going. I expect local merchants to adapt to Amazon’s competition by placing more emphasis on things like salad, which don’t travel.

The main point is that, with e-books and the internet, the publishers simply don’t need a local entity to sell their wares, and obviously, these small booksellers are in no position to create their own proprietary e-book tablet readers. If we are talking about purely software readers, each of the “big six” publishers could easily have its own reader program, which could be downloaded, and run on a Windows PC, like different apps on a tablet. The requirement to partner with the big publishers in e-books is to produce your own hardware. By analogy, British Airways and KLM do not feel any need to “code-share” with the local taxicab company either.

I do recall reading some years ago, in Dr. Dobbs Journal, about a system of “chained DRM,” involving public key cryptography, in which each successive party applies its own certificate to an encrypted data stream, with the result that the data ceases to be encrypted with one key and becomes encrypted with another key, without ever having been in plaintext, and eventually reaches a dedicated hardware device. I believe it was tied to RSA encryption, and might not transfer to the newer and more advanced forms of public-key cryptography (*). Of course, this is largely moot, because it is a simple matter for someone in India to just look at the screen and retype everything. The famous “analog hole,” in short.

(*) As near as I can recall, it went something like this:

[disclosed] A = [undisclosed] B * [undisclosed] C

[disclosed] E = [undisclosed] D / [undisclosed] C

[computed] F = [disclosed] A * [disclosed] E
F must = [undisclosed] B * [undisclosed] C * [undisclosed] D / [undisclosed] C
F must = [undisclosed] B * [undisclosed] D

I don’t recall the details, or how the system handled remainders in division.

Nick-B says:

It sounds, actually, like the guy is demanding that they can sell books with DRM, just that it can’t be a format-specific DRM, one tied to their own device. One preferably open-source, so anyone else can come along and make their own e-reader and support that DRM on their own device.

He’s just complaining that Nook bought book DRM books won’t open on Kindle, and Kindle bought DRM won’t open on Nooks because the devices refuse to open their DRM, which closes down portability of the multiple markets and forces people to have to purchase a separate device for each one.

It would be like, today, having to have a Sony TV to watch Sony movies, a Universal TV to watch their movies, and a Fox TV to watch Fox movies.

Andrew D. Todd (user link) says:

Re: The Ultimate Grievance

Well, I think the plaintiff’s grievance is more basic. He’s got this little bookstore in the train station, and people used to come in for books to read while they were waiting for the train, and he can only afford to stock a thousand titles or so, and never set out to compete with traditional mail-order operators like Edward R. Hamilton, who catered to an entirely different audience. That didn’t matter because people waiting for trains took what was available. But now, people aren’t coming into his store anymore, because they have their little I-thingies, Kindles, Nooks, Galaxy Tabs, and what have you. These things work wherever there is Wi-Fi, and the transit authority just installed Wi-Fi in the concourse, and someone with one of these I-thingies can pull down just about any book in Books-in-Print, at the tap of a key. Mail-order has gone real-time. The plaintiff doesn’t really understand how these things work, since he’s muddling Itunes together with Open Source, but he want people to bring their I-thingies into his store and pay him to put books on them. Traditionally, book pricing allowed a 40% cut for the retailer, and 20% for the distributor, and nothing remotely like that is being allowed anymore.

Obviously, a reader cannot be completely open-source, and run DRM, because then someone could just change the code to bypass the DRM, to intercept the book and save it to a text file. If the operating system’s Screen Saver still works, that is enough. Itunes dropped DRM because the piracy ecosystem had become so robust that there was no point to having DRM, that the customer was only paying as a matter of courtesy, like tipping a waitress.

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