Authors, Books, Business Models, Commerce, Controversial Topics, Copyright, Marketing, Technology

Another View of DRM for Publishers

Cover of "Accelerando (Singularity)"

Cover of Accelerando (Singularity)

I have been reading a piece by Charlie Stross, which has put me in mind of the Silicon Valley wisecrack:  A standard is a very good thing — everyone should have one.

Stross makes the interesting point that publishers’ insistence on using digital rights management (DRM) software is helping to make Amazon into an even more potent force. What is the bigger threat, copyright piracy, or an industry totally dominated by one company?

Before I get into the specifics of Stross’s argument, a word about Stross himself. He is an accomplished author of science fiction of a cerebral variety. I urge his “Accelerando” on everyone; it is Joycean in spirit, far-out in story. You would expect that an author, especially a commercial one like Stross, would take a dim view of copyright piracy and be supportive of DRM. But Stross is also a member of the technogeek tribe and is thus passionately opposed to DRM. He makes his argument against DRM on the basis of what earns publishers and authors the most income. Geek or no geek, as Samuel Johnson said, no man but a blockhead ever wrote except for money. Stross views publishers who insist on DRM as cutting their own throats.

Let’s imagine the world of e-books as many people naïvely thought it would be and many people still believe it could be. In such a world, there are many e-book vendors, none with a dominant market share. The competition among these purveyors of e-books keeps them all honest. A publisher in this world creates a single type of digital file (this was part of the impetus behind the development of the ePub format), and that file could then run on any of the many competing ebook devices. In this scenario, publishers have an interest in DRM because it appears to prevent unauthorized use of their property.

The world we live in, however, does indeed have a dominant player, Amazon, with over 50% market share.  The number two player, Barnes & Noble, has less than half the share of Amazon. The other e-book competitors (Kobo, Google, Apple, Sony, an assortment of others) do not pose any threat to Amazon. Amazon has a proprietary platform, which includes Amazon’s own DRM. Indeed, Amazon would never have been able to get publishers to support the original Kindle device if the Kindle did not use DRM. Even scholarly publishers, whose books may sell as few as 300 copies over their lifetime, fear having their books pirated.  Heck, if you put an unprotected copy of “Economic Policy of the Byzantine Empire: An Historical Approach” into the marketplace, in no time at all you might see millions of pirated copies zipping around the Internet.  Publishers, like authors, are dreamers.

Stross’s point is that Amazon’s dominant market position makes DRM undesirable for publishers because most customers prefer to trade with the largest vendor. In effect, DRM is locking customers out of other e-book formats. This in turn increases Amazon’s market share further, to publishers’ peril, as Amazon is no longer the warm and fuzzy business it was when it started out. On the other hand, publishers could make their books available without DRM, which would mean that they could be viewed on any ebook device. Thus Amazon’s huge market share would have a very strong #2 competitor: the sum of all the other e-book companies. So, publishers, choose: DRM and Amazon’s growing market dominance, or no DRM and a number of vendors able to compete on stronger terms with Amazon.  And, yes, no DRM would probably increase piracy. What’s better, the pirates or Amazon?

As an aside, it should be noted that this is not merely a matter for book publishers and trade book publishers in particular. My observation is that the publishers of research journals have been slow to pick up on what is developing with the infrastructure of the publishing industry. Random House is the canary in the coal mine; what is happening to the trade publishers, the loss of control to a small number of consumer technology companies (Amazon, Google, and Apple, with Facebook perhaps waiting in the wings), is leaking into scholarly books and will find its way into serials. Amazon is already a vendor to many libraries and is seeking to enlarge its footprint. Heaven only knows what the publisher of a distinguished journal will do when Amazon takes over the management of OPACs, Apple demands that prices be set within a narrow band, or Google decides to digitize every back issue, citing fair use and the good of the world.

It should be said that many people (I have no idea if this is true of Stross himself), are embracing Stross’s economic argument against DRM because they simply hate any restrictions on end-user options, and any charge that can be laid against DRM is thus welcome. But even a supporter of strong publisher control of the dissemination of content can understand Stross’s economic argument, even as he or she dreams of foolproof DRM.

As I have remarked before, I am in favor of DRM in principle, opposed to it in practice. I favor it because the producer of any work should be able to set the terms for its use; the marketplace is welcome to accept or reject those terms. But my practical nature notes that this is not the world we live in, that producers have little say in how their works are used, and even the mere assertion that producers should have such a right is met with strident opposition. Would I rather be right, or would I rather win? I view matters of copyright as some do the purchase of stock: you buy what you think is going up. When it comes to DRM, it’s time to sell short.

I have long wondered if publishers could create a new e-book ecosystem, with or without DRM, by supporting a new reading device. Let’s imagine a low-cost manufacturer that comes up with a clone of the Kindle Touch and Fire. (The Touch is a dedicated e-book reader, the Fire is a tablet, a poor man’s iPad.) The manufacturer could support an online bookstore for participating publishers, all of which would pay a fee (say, a couple dollars per ISBN per year) to the manufacturer to support the device, its related apps, and the virtual bookstore. All publishers would be welcome to join. This would not in any way prevent publishers from also selling their works to Apple or Google or anywhere else. It would provide a new option in the retail environment. This was the thinking behind the ScholarsCatalog project (aka Academilog), which I researched several years ago and which I would like to restart today.

On the other hand, if publishers had had the foresight to create such a service five years ago, they would not now be in such a pickle.

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About Joseph Esposito

I am a management consultant working primarily in the world of digital media, software, and publishing. My clients include both for-profits and not-for-profits. A good deal of my activity concerns research publishing, especially when the matter at issue has to do with the migration to digital services from a print background. Prior to setting up my consulting business, I served as CEO of three companies (Encyclopaedia Britannica, Tribal Voice, and SRI Consulting), all of which I led to successful exits. Typically I work on strategy issues, advising CEOs and Boards of Directors on direction; I also have managed a number of sticky turnarounds. Among other things, I have been the recipient of grants from the Mellon, MacArthur, and Hewlett Foundations, all concerning research into new aspects of publishing.

Discussion

10 thoughts on “Another View of DRM for Publishers

  1. A note concerning a scholarly research publisher: Springer Verlag’s electronic books and journals, hosted on Springerlink.com, have no DRM whatsoever. The articles and chapters can be downloaded (by permitted users) to any device that can read a pdf file, printed, emailed, etc., and Springer certainly doesn’t seem to be going out of business . . .I hope that other publishers of scholarly e-books and e-journals will take notice of this, since one of the primary complaints I hear about electronic versions of e-books and journals is that they must be read in a proprietary reader on a PC or laptop, and many people would rather look elsewhere than do this.

    Posted by Matthew Ismail | Dec 6, 2011, 10:39 am
  2. If everyone dropped the DRM from their eBooks and settled on a common file format, would that actually reduce Amazon’s hold on the market? Amazon has an enormous number of registered users and they’ve done remarkable work to make purchasing seamless. Opening up other devices like the Nook or Kobo reader to Amazon’s eBook store might only further cement their dominance. Remember that Amazon is not looking to profit from sales of devices, but from sales of content. Getting their purchased content on to more devices is in their favor. With the state of eBookstore contracts these days, since all must offer the books for the same price, the winner will be the most convenient bookstore, which is in all likelihood going to be Amazon.

    On another subject, I am not aware of any scholarly journal publisher that loads DRM onto their article files. The field uses unprotected PDF files as the standard. Am I missing something here?

    Posted by David Crotty | Dec 6, 2011, 12:13 pm
  3. The one sure way to combat piracy–and put Amazon out of business–is to switch to OA as a way to publish. If there is nothing to sell, DRM becomes irrelevant. As it is, we have a great of piracy even in this world where much publishing is still done with DRM in place.

    Posted by Sandy Thatcher | Dec 6, 2011, 2:02 pm
  4. Do you think publishers could win by creating a new e-book ecosystem without a new reading device? Seems to me that most people are only opposed to DRM when it reduces their reading options or causes unnecessary annoyance by forcing them to install new reading software or making them jump through other hoops before being able to read. Is new hardware needed if an ecosystem can provide hassle-free DRM content on all current devices transparently?

    I don’t know what the general opinion is on DRMed Kindle content but I have no problem with it purely because I can click to buy on Amazon and have it delivered to my Kindle 10 seconds later – the DRM doesn’t add pain to the transaction and isn’t noticed.

    Of course, the actual task of creating a system that is transparent across many devices is much harder than targeting the one device.

    Posted by Steve Claridge | Dec 8, 2011, 5:55 pm
  5. Specialty publishers (sheet-music, blueprints, screen-plays, etc.) have been using micro-licensing systems to distribute both DRM protected and open PDF and ePub publications for several years. Of course, these publications don’t lend themselves to eReaders and tablets as they often need to be consumed physically even though they are distributed digitally.

    There are a few magazine publishers and at least one news publication that are beginning to use micro-licensing systems as well. They link their use of these systems to their digital editions so their readers can download and use content off-line. For these publishers, micro-licensing enables them to re-purpose content, offering the same content under different usage terms and price points. Some even sell advertising on the licensed content.

    As a subscriber to a couple of these digital magazines, what I like about publishers who use micro-licensing is that it makes me feel they trust me. This may or may not actually be the case, but it is the impression I get when they simply tell me, via their licensing terms, what rights they grant to me and what rights they want to retain. Also, reading their content on any of my multiple digital devices is a breeze because they distribute their content using open, non-proprietary formats of ePub and PDF.

    DRM always assumes the worst…that every reader is a copyright pirate. Combined with device specific file formats, and content distributed this way is always a show-stopper for me.

    Consequently, if book publishers want to capture the ever increasing numbers of consumers adopting digital devices while retaining their business independence from the grips of device manufacturers and eBook distributors, I suggest they consider the micro-licensing approach.

    Posted by Robert | Dec 20, 2011, 8:49 pm
    • The micro-licensing approach is already in heavy use by all those companies that are using the CCC’s RightsLink program: http://www.copyright.com/content/cc3/en/toolbar/productsAndSolutions/rightslink.html.

      Posted by Sandy Thatcher | Dec 20, 2011, 10:56 pm
      • Very true Sandy, and from what I hear, this is a good program. There are several other micro-licensing services available as well. A few of these do not require digital content to be centrally uploaded to the service as is the practice of legacy clearance centers. Such services permit publishers to leverage the semantic search capabilities, which in turn, helps their digital publications be discovered by more web-users.

        Posted by Robert | Dec 22, 2011, 5:38 pm

Trackbacks/Pingbacks

  1. Pingback: where can i find “scholarly articles and/or journals? - Dec 6, 2011

  2. Pingback: DRM and e-books « Kristin R. Eschenfelder - Dec 11, 2011

  3. Pingback: Another View of DRM for Publishers « publishbutton - Oct 8, 2012

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