Another Reason Why DRM Is Bad -- For Publishers

from the self-foot-shooting dept

As a way of fighting unauthorized sharing of digital files, DRM is particularly stupid. It not only doesn't work -- DRM is always broken, and DRM-less versions quickly produced -- it also makes the official versions less valuable than the pirated ones, since they are less convenient to use in multiple ways. As a result, DRM actually makes piracy more attractive, which is probably why most of the music industry eventually decided to drop it.

Sadly, the world of ebooks seems unable to learn from that experience, and insists on making the same mistakes by using DRM widely. But it turns out that there are even more problems in the publishing domain, as this fascinating tale of how DRM acts as a barrier to entry in the online bookstore market makes clear:

In June of 2011, my friend Emily Gould came up with an idea for a new kind of online bookstore: one that would sell only e-books, but would strive to offer the personalized customer service and curation of a local independent bookshop.
But there was a problem:
Publishers told us that if we did not have digital rights management (DRM) technology, they weren’t interested in letting us promote and sell their products. DRM is the set of technologies that encrypt and prevent the reproduction of e-book files. A new bricks and mortar bookstore, even the tiniest one, could have easily opened accounts with all the major distributors. But to sell electronic versions of those exact same books, publishers told us that you have to be a mega corporation.
That's because DRM is not only annoying for the readers, it's also expensive for the online booksellers that are forced to use it:
In order to provide DRM, you need at least $10,000 up front to cover software, server, and administration fees, plus ongoing expenses associated with the software. In other words, much bigger operating expenses than a small business can afford. By requiring retailers to encrypt e-books with DRM, big publishers are essentially banning indie retailers from the online marketplace.
That might just sound like typical big-company indifference to the plight of small startups, but it's actually worse -- it's suicidal. Techdirt has already written about one reason why that's the case: DRM helps lock readers into Amazon's platform. But the article quoted above provides us with yet another: lack of competition in ebook retailing.
there’s an even more compelling reason that we need indies to exist in the e-book market: The Amazon/Apple near-duopoly on e-book sales is cripplingly destructive for readers, writers, and publishers. Once one of the big "A"s can freely set the price of e-books, they can determine the conditions of the market for everybody. They can charge consumers anything, pay publishers very little (for who will exist to sell their products otherwise?), and leave writers hoping for some small crumb of the pie. Everyone who reads or writes or cares about books has a reason to support the existence of a viable alternative.
And yet the big publishers are doing the opposite. Their insistence on the deployment of DRM with their books is making it hard for independent online booksellers to thrive, which increases the power of the two giants of the sector, thus weakening the bargaining power of the publishers and writers. So DRM turns out to be not only stupid, ineffectual and unfair, but also doubly bad for the very companies who blindly insist on its use.

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Filed Under: drm, ebooks, publishing
Companies: amazon, apple

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  1. identicon
    Craig, 16 Apr 2012 @ 6:21am

    Same old story

    They just dont learn do they. They see pound signs and dont think that the technology they so blindly want to use actually hurts their business in the log run. As said the music industry more or less learnt this lesson and so too will publishers.

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