TOC Latin America was held last Friday in the beautiful city of Buenos Aires. Kat Meyer, my OReilly colleague, and Holger Volland did a terrific job producing the event. As is so often the case with great conferences, part of the value is spending time with speakers and other attendees in between sessions and at dinner gatherings
Last Thursday night I was fortunate enough to have dinner with Kat, Holger and a number of other TOC Latin America speakers. We discussed a number of interesting topics but my favorite one was asking each person this question: What happens if DRM goes away tomorrow?
The DoJ suit against Apple and five of the big six has led to a lot of speculation. One of the most interesting scenarios raised is that if the government is intent on limiting the capabilities of the agency model, publishers need to figure out what other tools they can use to combat the growing dominance of Amazon.
Charlie Stross is right. DRM is a club publishers gave to Amazon and then insisted that Amazon beat them over their heads with it. So what if we woke up tomorrow and DRM for books disappeared, just like it has (for the most part) with music?
I was unable to reach a consensus at that dinner, but heres what I think would happen: Initially, not much. After all, Amazon has a lot of momentum. If current U.S. estimates are accurate, Amazon controls about 60-65% of the ebook market and B&N is second with about 25-28%. That only leaves 7-13% for everyone else. And if youve been buying ebooks from Amazon up to now, youre not likely to immediately switch to buying from B&N just because they both offer books without DRM. On the surface Amazons and B&Ns ebooks use incompatible formats, mobi for the former and EPUB for the latter. But thats where it gets interesting.
Converting from mobi to EPUB (or vice versa) is pretty simple with a free tool like Calibre. Ive played around with it a bit, converting some of the DRM-free ebooks we sell on oreilly.com. I didnt do those conversions to get our books in other formats. After all, when you buy a book from oreilly.com youre buying access to all the popular formats (mobi, EPUB and PDF, as well as others), not just the one format a device-maker wants to lock you into. I did the conversions because I wanted to see whats involved in the process.
If youve ever used Microsoft Word to save or convert a .doc file to PDF youd find its just as easy to go from mobi to EPUB in Calibre, for example. But just because the tool is available does that mean if DRM goes away wed suddenly see a lot of Kindle owners buying EPUBs from B&N and converting them to mobi with Calibre? I doubt it. Those Kindle owners are used to a seamless buying experience from Amazon, so unless theres a compelling reason to do so, theyre not likely to switch ebook retailers. And that leads me to the most important point…
Creating the best buying and reading experience is one way any ebook retailer can steal market share from the competition. Amazon has a pretty darned good one, thats for sure, but theres plenty of room for improvement, IMHO. Im not convinced any ebook retailer has pushed the envelope on innovation and exciting new features in their devices or reader apps. In fact, these enhancements seem to move at a glacial pace. So what if B&N (or anyone else, for that matter) suddenly invested heavily in reader app functionality that puts them well ahead of the competition? And what if some of those features were so unique and innovative that they couldnt be copied by others? Id much rather see a competitive marketplace based on this approach than the one we currently have where the retailer with the deepest pockets wins.
Innovation is better than predatory pricing. What a concept. The iPod revolutionized music, an industry that was highly fragmented and looking for a way forward in the pre-iPod days. The iPhone turned the cellular market on its head. Think about how significantly different the original iPod and iPhone were when compared to the clumsy MP3 players and flip phones that preceded them. I believe todays crop of ebook readers and apps are, in many ways, as clumsy and simplistic as those MP3 players and flip phones. IOW, we havent experienced a radical tranformative moment in the ebook devices and app world yet.
Of course all of this innovation Im dreaming of could happen today. We dont need to wait for a DRM-free world. Or do we? Amazon has no incentive to innovate like this. They already have a majority market share and its only going to get larger when the DoJ dust settles.
This is more of a rallying cry for B&N, Kobo and every other device and ebook retailer. If DRM goes away tomorrow nothing much changes unless these other players force it to. But why wait till DRM disappears? It might not happen for a long time. Meanwhile, the opportunity to innovate and create a path to market share gain exists today. I hope one or more of the minority market share players wakes up and takes action.
“So what if B&N (or anyone else, for that matter) suddenly invested heavily in reader app functionality that puts them well ahead of the competition?”
They’d immediately become demonized the same way Amazon was when they did 🙂
Even in a perfect world where DRM goes away and everybody settles on an open, standard format, I strongly suspect we’ll still see a form of “soft” vendor lock-in, where people stick with their preferred store because it’s just easier – a seamless experience, as you said.
I saw a fine example of this the other day, when I spent an hour trying to help somebody buy a book from the Sony store to load on their Kobo. Both stores use the same proprietary format and DRM scheme, but in the end the simplest solution was to buy the book, load it into calibre (seamlessly stripping the DRM in the process) and load it into the reader from there, rather than deal with the hassles brought on by competing storefronts and desktop software.
If DRM is dropped voluntary, by the publishers, people will just find something else to complain about.
If DRM is dropped forcefully by a retailer they will be applauded and supported for no reason.
I keep reading that removing DRM isn’t going to affect Amazon because customers will not be motivated to buy elsewhere.
I’m not saying that there is nothing to that, but as it stands, for DRMed books, Kindle owners have absolutely no alternative but to buy them from Amazon (assuming we are all law abiding citizens who will not strip DRM or download illegal copies). So Amazon gets all my business regardless and no one else even gets a chance. And all the crying that publishers do about Amazon’s dominance is meaningless to me, because I cannot buy from anyone else even if I wanted to and still read on my preferred device.
Without DRM, I would probably still buy a lot from Amazon. But not necessarily everything – depending on what kind of alternatives should pop up.
For DRM-free books, I have choices, and even though using Amazon is easier and seamless, I have still gotten books from other outlets. For technical books, I have bought e-books from O’Reilly. I have never bought a single technical e-book from Amazon.
For public domain classics, I like to download from manybooks.net – even though I can get most books from Amazon if I like. Why? Because Manybooks helps me find public domain works that I hadn’t thought to look for or that I hadn’t known existed. If you go to their site today, they have two books in the spotlight – one I have partially read (Arabian Nights), one I have never heard of. There are four books in the books of the week section – three I have read, the fourth (Wizard of Oz), I have never thought about reading before – so I downloaded it. I can click on Recommended to find books recently reviewed by readers – many of which I had never heard of. Amazon doesn’t promote these books as there is little to no profit in it (public domain books never show up in my Recommended for You list from Amazon despite the large number of classics I have on my Kindle), but manybooks helps me find these. Probably the most valuable service to me is helping me to find something that I really want to read. I’d rather buy fewer books at higher prices and have them be the right books for me, than buy a plethora of books at lower prices and find that most are a waste of my time.
If you get rid of DRM, it will enable smaller online e-book retailers to find their own niche and customer base and compete with Amazon in ways that Amazon is not as interested in competing. Will they eliminate Amazon’s dominance – probably not – unless Amazon really screws up or they do their job exceptionally well. But with DRM in place, there is no competition at all for Kindle owners. And if Amazon does go power crazy like the publishers seem to fear – it would be much easier for some other e-tailer to step in and compete. And if a publisher decides that Amazon’s terms will make them go bankrupt, they could pull their books from Amazon but still sell to Kindle owners (this may not make their authors and readers happy – but it would be better than pulling from Amazon and losing that market completely). DRM-lock-in gives Amazon more negotiating power.
Without DRM, am I likely to go shop at B&N instead of Amazon? – probably not or I would be locked in to B&N instead of Amazon – but you never know. The brick and mortar store sometimes has promotions where they donate a percentage of my purchase to my children’s school – if I could buy e-books under those promotions, I definitely would. But much more likely, I would be enticed to shop at smaller niche-based e-tailers that provide a service that helps me find the types of books I want to read based on something more than “you bought this, you might also like this.”
@Peter – I think you are mistaken about that. As a reader, I have always had a strong positive feeling about publishers until the last couple of years when they have made me feel like they think of readers as their enemy (or at least an annoyance) and not as their customer. It is sad the way their image has fallen in my eyes and the eyes of many other readers – but I have never wanted to hate them or make them the bad guy.
If publishers were to drop DRM, it would be the first thing that they have done in a while that would improve the image I have of them and that would show that they are starting to have faith that the majority of their readers are not thieves.
And the main reason I would like to see DRM go is that I would like a more open marketplace where I can buy from anyone and use the product I buy on whatever device I want – not because I want to give away copies of my library to everyone I know. Trust me, no one I know wants to read my books. My husband and I have separate Amazon accounts because he doesn’t want my books cluttering up his library.
Wouldn’t it be interesting if the US Department of Justice sought to outlaw DRM as an anti-competitive mechanism?
There are people who care about DRM and it’s like politics or religion, there’s no talking sense to them, one way or the other. DRM isn’t a deal breaker, at least for me. While it would, theoretically, be better if all eBooks didn’t have DRM, it’s presence or absence is unlikely to modify my buying habits greatly.
I don’t see Barnes & Noble becoming an innovator, IMHO. They seem to following along behind in the race as second rate players but will not win unless Amazon gets taken out. They’re more to wait for a wipeout event like the 1998 Winter Olympics were all the front runners went down in a crash and the back-of-the-pack Australian skated to the gold.
However, the Delirium Book Club, a small publisher, does innovate. They have a monthly subscription to two novellas per month. At first I had to download and transfer purchases via USB, but now they offer sending the titles as Kindle gifts. I get an email asking if I want to accept the gift, then it is sent to my Kindle and add to my Amazon library. I could decline the gift, of course, and just accept the cash value, and the owner of the site says that’s my choice, I’ve paid him and what I do afterwards is up to me.
One simple advantage of getting rid of DRM is that we would no longer have to pay for it. I believe that using Adobe Adept adds 25 cents to the sale price of every ebook, plus whatever it costs to have an Adobe Adept server up and running at the ebook retailer. I don’t know what it costs Amazon to put their DRM onto Kindle books, but it must add something to the final price. Initially, this money will flow to the retailer as a reduced overhead cost, but if the Agency Model is prohibited, the vendors will start to compete on price, and the vendor’s reduced cost may be transferred to the retail customer.
Another advantage is that it will simplify shopping for the cheapest price for a given book. Despite the agency model, there is usually some variation in the price. Sometimes it would be cheaper for me to buy a mobi version of a book from Amazon, and to convert it to ePub to read on my reader. This, of course, is not possible without stripping the DRM from the kindle book. (Note that “Agency Pricing” doesn’t seem to be 100 percent effective. There are price differences between vendors.)
Finally, it helps to open up the book selling market to new competitors. I was just thinking as I typed this that we could, for example, see single genre e-bookstores. There used to be a bricks and mortar independant bookseller near where I live which specialized in murder mysteries and another that sold only science fiction. Customers who were mystery fans much preferred to shop at these stores, instead of at a big box chain bookstore. I’m not aware of an e-book store which sells only murder mysteries, or any other genre, but it might be a workable concept for on-line selling as well.