I'm surprised that he doesn't address the effect of DRM on Amazon's infamous $9.99 pricing strategy.
Part of the reason the government went after the publishers and Apple rather than Amazon, even though Amazon has a near-monopoly on ebook sales, is the they tend to believe that predatory pricing is inherently self-limiting, whereas cartels directly and immediately harm consumers. No one in the physical book retailing world would mark every hardcover in their store down to $9.99. Sure, it would drive a lot of customers into the store, but there would be no lasting value. Eventually they would be forced to raise prices and customers would go elsewhere.
Amazon is only interested in selling ebooks at a loss because it establishes a Kindle monopoly. Kindle can only have a monopoly because DRM represents a huge barrier to entry. When they eventually raise retail prices to a sustainable level, DRM ensures that anyone with an existing Kindle library won't be as price-sensitive as someone who can easily decamp to a competing platform. If the publishers drop DRM now they remove the incentive for Amazon to engage in predatory pricing.
Not entirely. There's still plenty of path-dependence in a DRM-free world. For instance, iTunes still dominates digital music despite many things Amazon has tried (exclusive sales, Cloud Player, free credit, ...). Aggressive pricing may still be worth it to entrench Kindle as the default, even if customers can easily leave.
I've been saying it for a while: the publishing industry right now is where the music industry was ~3 years ago. The cycle is going to be exactly the same. At one point big music figured out that removing DRM let them sell more songs, and they finally dropped it. It looks like publishers are starting to realize the same thing. About time, too--I have an ereader that I like to use but I refuse to buy DRM ebooks on principle, and the selection of unread Gutenberg books is growing rather slim :)
Eventually publishers will also bring down the prices of their books ($10-$15 for an ebook? Really?) and discover that they can bring in even more profit. But that discovery is a year or two down the line still.
Thanks Charlie for giving them an eloquent and firm nudge in the right direction!
Agreed. I don't have quite the qualms regarding DRM you do (most things I only read once so it's a tad moot), but do despise it and avoid it when possible. When it's gone I'll buy considerably more ebooks.
I was reviewing my epubs/ebooks a while ago to see which had breakable DRM (for one reason or another...). I discovered that of my 30 or so ebooks, only Steven Levy's "Hackers" wasn't DRM'd. Rather ironic, and quite a welcome discovery.
On another note, I've bought two of Charlie's books in electronic format recently... perhaps I should've waited? ;)
There's no equivalent that I know of for publishers.
These are all separate industries and organizations, not some kind of multi-headed hydra that acts and thinks in unison. So, in this context, your question makes no sense.
"I've been saying it for a while: the publishing industry right now is where the music industry was ~3 years ago. The cycle is going to be exactly the same. At one point big music figured out that removing DRM let them sell more songs, and they finally dropped it. It looks like publishers are starting to realize the same thing. "
I hope publishers have begun to realize that proprietary DRM only furthers the lock-in of parties like Apple and Amazon, and makes it even harder to resist their bargaining power, because now millions of your customers have huge libraries that only are readable on $COMPANY_DEVICE, therefore they are much more likely to buy that device in the future, and you will be forced to sell through them.
I'm one of the "voracious" readers that Charlie mentions and while I really like the Kindle DX hardware, I'm increasingly concerned at being tied into an Amazon ecosystem long term.
Baen, O'Reilly , Pragmatic Programmers and Fictionwise are some of the places I look for new books for my Kindle before Amazon these days, as they have DRM free titles.
I'm one of the "voracious" readers that Charlie mentions and while I really like the Kindle DX hardware, I'm increasingly concerned at being tied into an Amazon ecosystem long term.
I have an atavistic attachment to paper books, [1] but even so, I have a Kindle that I use primarily for Instapaper and, more occasionally, for out-of-copyright books. I'm reluctant to buy DRM'ed books for the same reason you are, and for the same reasons Stross articulates: no one knows what the publishing / reading landscape is going to look like in two years, let alone five, but the paper books I bought when I was 12 still work quite nicely.
I went with a Nook Touch instead of a Kindle, because it is very easy to get your hands on standard epub and load them at will. Loading e-books from outside the Amazon ecosystem can be done, but it is a cumbersome process at best. The Nook feels less tied to the B&N ecosystem than the Kindle is to Amazon. This is true for Sony and possibly Kobo as well, but I prefer the Nook as a device.
Cumbersome? I just select the epub in Calibre and press D. It could hardly be easier, in my opinion. Hell, the kindle doesn't even need to be plugged in...
As a publisher I am able to opt out of DRM with all the majors like Amazon and Apple, but there is no indication that my book is DRM-free, nor a way to search for DRM-free books on their stores. I wish there were.
I can imagine a scene in the next book about that kind of stuff...
"Here you go," said Count Modulo, "That is the lock, and that is the key."
Of course -- in the comments on the tor.com article: "Worldwide distribution is a much harder problem. Most of our contracts with authors grant us rights only in certain territories; we can't just unilaterally rewrite existing agreements."
I'm really interested to see what they do with a Memory of Light (the final wheel of time book). Brandon Sanderson has been pushing for things like getting a free ebook when you purchase the hardcover, but when I saw him in melb a few weeks ago he was saying those kind of solutions where more for his own books. WoT was too big a deal for TOR to play around with.
Wow, that is a terriffic post, from the perspective of explaining the issue to a person who doesn't just intuitively get it why DRM encumberance is obviously bad for both consumer and publisher (e.g. 99% of readers here).
I wondered how long it would take the industry to get it that the only thing allowing Amazon to achieve its Herculean e-book dominance over book publishers was the DRM. The DRM obviously serves Amazon much more than the publishers -- and that would be the case even if the publishers' naive belief that DRM effectively prevents piracy were true.
Probably more publishers will start to get it after seeing the results of Tor's experiment.
Has anyone from Tor / Macmillan said anything about what will happen to past purchases? Ideally it would be as simple as re-downloading from Kindle/Nook/etc to get a DRM-free copy, but I worry it won't be.
That's not the publisher's responsibility, but the distributor (Amazon/Apple/B&N). This is how the distributors will win our business - by offering us great services in addition to the actual content.
Think of how Apple will now let you re-download every TV Show you ever purchased from them onto your iPad. Likewise, Amazon will hopefully do a deal with the publishers that will let their customers re-download all the books they've purchased (in DRM-free format)
In theory, you're right and this is the distributor's responsibility. However, as we've seen with the agency model, even Amazon ends up taking the distribution terms large publishers give them. Most publishers (and, in particular, all of the large publishers) are the ones who insisted on DRM in the first place. They're the ones who are going to end up handling the aftermath.
Speaking of Apple, so far as I know, no one got their DRMed music officially unlocked for free. You either had to pay for an iTunes Plus upgrade or, more recently, subscribe to iTunes Match. That's the sort of thing that I would like to see avoided in the ebook space.
And yet, DRM-free movie downloads elude us (other than standup comedy). I find this deeply ironic, since eBooks and MP3s can both be trivially shared via email, and video files cannot.
Part of the reason the government went after the publishers and Apple rather than Amazon, even though Amazon has a near-monopoly on ebook sales, is the they tend to believe that predatory pricing is inherently self-limiting, whereas cartels directly and immediately harm consumers. No one in the physical book retailing world would mark every hardcover in their store down to $9.99. Sure, it would drive a lot of customers into the store, but there would be no lasting value. Eventually they would be forced to raise prices and customers would go elsewhere.
Amazon is only interested in selling ebooks at a loss because it establishes a Kindle monopoly. Kindle can only have a monopoly because DRM represents a huge barrier to entry. When they eventually raise retail prices to a sustainable level, DRM ensures that anyone with an existing Kindle library won't be as price-sensitive as someone who can easily decamp to a competing platform. If the publishers drop DRM now they remove the incentive for Amazon to engage in predatory pricing.