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Did The Publisher's Own Insistence On DRM Inevitably Lead To The Antitrust Lawsuit Against Them?

from the the-DRM-they-required dept

We've discussed in the past how it was the book publishers' own stupidity that put them in a position of demanding DRM from Amazon when Amazon wanted to launch the Kindle. The end result, of course, went exactly against the publishers' best interests, because it locked everyone in to Amazon as the platform. Because buyers can't easily switch to another platform and take their books with them, they have to keep using the Kindle (or Kindle app) if they want to continue to have access to the books they've bought in the past (because, remember, you don't own what you think you "buy" with ebooks).

Making Amazon such a dominant player in the market was a huge mistake -- and it was totally avoidable. We'd already seen the exact same thing happen with music and iTunes, where the labels originally required DRM, and Apple complied, locking many people into iTunes (a lock-in that was eventually taken away). We couldn't figure out why the publishers were so stupid to give Amazon such power, but it sounds as though it was a combination of technological illiteracy and an irrational fear of "piracy" trumping business sense.

Author Charlie Stross has a great blog post discussing a variety of issues around the history of Amazon and how it became such a dominant player in the market, in which he notes:
However, as subsidiaries of large media conglomerates, the executives who ran the big six had all been given their marching orders about the internet: DRM restrictions would be mandatory on all ebook sales, lest rampant piracy cannibalize their sales of paper books.

(This fear is of course an idiotic shibboleth—we've had studies since 2000 proving that Napster users back in the bad old days spent more money on CDs than their non-pirate peers. The real driver for piracy is the lack of convenient access to desirable content at a competitive price. But if your boss is a 70 year old billionaire who also owns a movie studio and listens to the MPAA, you don't get a vote. Speaking out against DRM was, as more than one editor told me over the past decade, potentially a career-limiting move.)
Once the publishers realized (way too late) that they'd turned Amazon into something of a monopsonistic buying power, they struggled to figure out what to do -- and the end result appears to look something quite like collusion -- which is why they're being sued today by the Justice Department. As the details of the lawsuit make clear, the deal with Apple wasn't just a deal to bring another competitor into the market, but one that was explicitly designed to increase prices for consumers.

As Stross notes, this was plan B. And it has now failed. That means that it's time for Plan C -- and the only reasonable plan C to get out from under Amazon's thumb is to drop DRM:
It doesn't matter whether Macmillan wins the price-fixing lawsuit bought by the Department of Justice. The point is, the big six publishers' Plan B for fighting the emerging Amazon monopsony has failed (insofar as it has been painted as a price-fixing ring, whether or not it was one in fact). This means that they need a Plan C. And the only viable Plan C, for breaking Amazon's death-grip on the consumers, is to break DRM.

If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").

And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.
I know there's been some talk about whether or not Apple or Amazon is the more "evil" party in the ebook world -- but it really seems like the publishers dug their own graves here. In their desperation to avoid the dreaded word "piracy," they never bothered to understand the real issues or the obvious results of focusing so strongly on DRM. Handing Amazon so much power was stupid. Colluding with Apple to try to get away from that original stupid decision was potentially even more stupid. The only real path to fixing things is to go back and fix the original stupid decision, and recognize that piracy is a hell of a lot less of a "threat" than handing over the entire market to a single player (or even just two major players).

If only they'd realized this originally -- just as tons of people had warned them.

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  1. icon
    AzureSky (profile), 18 Apr 2012 @ 11:18pm

    Re: Re: Humans!

    its not really a racket, the main reasons directX is used is it works on any windows system that supports the proper version of windows.

    Linux/Unix/OSX dont really have an equivlant of what DirectX offers.
    DirectX isnt just D3D, its direct sound, direct draw(2d), direct input, among others, these are designed to work togather and work on pretty much any windows system.

    D3D is also far more advanced now days then OGL, this isnt MS's doing you can blame kronos and car manufacturers/cad software companies for holding OpenGL back for so long(they couldnt stand the thought of loosing ogl 1.x native comparability)

    *nix has its good points, but gaming will likely never be among them for average users, this has many reasons, from the fact that the linux community cant agree on any one set of standard ways to do anything, each distro has its own way of doing things, each developer/group has their own "best" way to do things....its a mess, and its why linux on the desktop is still not common, and wont be for quite some time....

    when a simple kernal update breaks your drivers and software, thats not koo.....and it happens alot on linux, lack of stable driver abi/api really dosnt help.

    lack of unified installer package type across linux distro's makes many software developers who would be interested shirk away.

    lack of unified support for audio/video/input methods/standards also has the same effect....again, I cant blame them, if you think trying to support gaming on windows is a pain, try it on linux with the thousands of different distros out there in various patch states.....the dependency hell linux can be....there is a reason i only use linux in specific situations for people, and not all the time...

    I do not hate linux, I use it on some systems myself, I do think the hate for Windows and MS are misplaced in this day and age, sure the price isnt dirt cheap for windows/office, BUT they are still 2 of the best "it just works" options out there, and they at least work with what your work likely has(not many companies out here use *nix/osx or non-ms solutions)

    windows 7 has its flaws, but, i will take it any day over *nix for the average user, and I will take OSX over windows for the below average user(its amazing at hand holding, even more so then 7)

    and if you want a racket, try apple with osx charging for service packs.....

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