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DRM For Publishers: Bad For Indie Sellers, Destroys Competition

Posted by: , 13:50 AEST, Wed April 18, 2012

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eBook DRM isn't just bad for consumers, it's bad for publishers, authors and especially the small independent booksellers that want to bring a personal touch into the online book selling business
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An article published on paidContent has shown the real damage DRM can do to the economy.

Consumers have had to deal with DRM, or Digital Rights Management, for years, often struggling to deal with compatibility problems, portability restrictions, usability issues, and other things that people who pirate content don't have to contend with. But it appears DRM is causing even more of a problem for those on the opposite end of the transactions - sellers.

The paidContent article tells the story of Emily Gould, who, along with the author of the article Ruth Curry, came up with the idea of starting a new eBook online business that would give consumers the same friendly and helpful service they would expect from their local independent bookstore. A good idea, but once the realities of DRM set in, the dream turned to a nightmare.

The paranoia over piracy meant that publishers were unwilling to allow their books to be sold without DRM being implemented, something that's not a problem for a brick and mortar bookstore. 

"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. We were confused, and set about finding out why this counterintuitive business practice has taken root," explained Curry.

But it turns out, deploying DRM isn't as simple, or as cheap, as simply running a software tool over unencrypted files.

"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," Curry continued.

And this is where the real nastiness of DRM comes in for booksellers: "By requiring retailers to encrypt e-books with DRM, big publishers are essentially banning indie retailers from the online marketplace."

And it's not just about pushing the smaller players out of the picture, DRM also prevents interoperability, and with the big players increasing becoming suppliers of both content and the devices that read them, this is creating a crushing monopoly (or duopoly, of Apple and Amazon, specifically) that is destroying the marketplace. 

"While Apple uses the same file format and DRM standards as other major online booksellers, Amazon has its own proprietary file format and DRM scheme. A Kindle will not read other e-book formats. When publishers insist that products be sold with DRM, they are making it impossible for Kindle users (32 percent of e-book readers use a Kindle, according to one recent survey) to buy those publishers’ books from any other retailer," Curry warned.

And in the end, it's bad for consumers, as well as the paranoid 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."

So what became of Emily and Ruth's idea? Their online bookstore, Emily Books, now only sells DRM-free eBook, from smaller publishers "who either agree with us about DRM’s uselessness or can’t afford to care about it", while they wait for major publishers to come to their senses and do what's best for themselves, and authors, by allowing the indie players back into the scene. They may have to wait for a while.


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