How Publishers Are Cutting Their Own Throats With eBook DRM 355
An anonymous reader writes "Sci-fi author Charlie Stross has written a post about how the Big Six book publishing companies have painted themselves into a corner in the rapidly growing ebook industry. Between user-unfriendly DRM and the Amazon juggernaut, they're slowly pushing themselves out of business. Quoting: 'Until 2008, ebooks were a tiny market segment, under 1% and easily overlooked; but in 2009 ebook sales began to rise exponentially, and ebooks now account for over 20% of all fiction sales. In some areas ebooks are up to 40% of the market and rising rapidly. (I am not making that last figure up: I'm speaking from my own sales figures.) And Amazon have got 80% of the ebook retail market. ... the Big Six's pig-headed insistence on DRM on ebooks is handing Amazon a stick with which to beat them harder. DRM on ebooks gives Amazon a great tool for locking ebook customers into the Kindle platform.'"
I hate DRM. (Score:5, Insightful)
DRM on ebooks gives Amazon a great tool for locking ebook customers into the Kindle platform.'"
Which is why I'm not buying books from Amazon or B&N at this point. Either it's without DRM, or I'm not buying it. Baen's Webscriptions for me, at least at the moment.
Not sure DRM is the biggest issue at the moment... (Score:5, Insightful)
... pricing an e-book $13 when the paperback is $6 is a much more visible issue for the average e-book buyer, at least judging from the various comments on amazon's message boards.
I sense a pattern. (Score:3, Insightful)
Why does every aspect of the publishing industry seem to fail at grasping the advantages of limited or no DRM and digital products?
Re:Not sure DRM is the biggest issue at the moment (Score:5, Insightful)
This pricing system is nothing new. All the modern Call of Duty games stay at $60 on Steam. The latest version rarely goes on sale, if so it's only like $10 off. Publishers of any sort only want to be paid what they think customers should pay.
Then, some indie mucky-muck makes something like Minecraft, Angry Birds, etc, charges so little, and sells millions. It's not fair!
Why I don't have a kindle (yet) (Score:5, Insightful)
"Here's a great book I just read. Let me lend it to you..."
Re:Not sure DRM is the biggest issue at the moment (Score:5, Insightful)
in that case ebooks should cost 10% less than the paperback edition when it comes out, and 10% less than the hardcover before the paperback comes out.
And maybe they do "cost" 10% less. However, that's their cost. Their price to you, on the other hand, should be whatever they think you'll pay that gives them the most profit. It's how capitalism works: buy low, sell high. It really is that simple.
If they think you'll pay an extra $3 for the convenience of sitting on your butt while having the book whisked over the aether to your Kindle, then they'll happily collect it from you. If they think you'll pay an extra $5 for the smell of a dead tree, they'll be even more happy to collect that. And if they think you'll pay $79 for a Kindle today that will lock you into an investment of $15 DRM'd books, they're ecstatic.
The only part of the equation that matters is what the largest number of consumers are willing to pay in order to maximize profits to the stockholders. Nothing else, not fairness, not reasonableness, not public opinion, not whiny authors, not abusive commenters in the Amazon reviews, nor the public good, matters. Never forget that.
Ahh the Australia Effect (Score:5, Insightful)
Re:My book (Score:4, Insightful)
- They emerged originally as a replacement for a national navy, keeping garbage from being dumped in Somali waters?
Irrelevant
- They generally let people go unharmed after receiving a ransom?
They kidnap innocent people at gunpoint for money. Fuck them.
Re:I hate DRM. (Score:5, Insightful)
industry standard DRM
Meaning Adobe's proprietary DRM, instead of Amazon's?
Re:I hate DRM. (Score:2, Insightful)
Can someone explain why locking you into a platform you have no control over is NOT DRM?
(I have a Kindle, and I can't take a book off it and do what I wish with it.... or can I?)
Comment removed (Score:5, Insightful)
Re:I hate DRM. (Score:4, Insightful)
WHOOT!! The model works.
My history with the Baen books is quite different from your own. But, I've been an avid reader, all my life. I exhausted my elementary school's library, then my junior high school's library, and then got a library card at the city library. It took years, but I finally read everything there, that I wanted to read. In the meantime, I read everything in my high school's library.
When I couldn't find FREE reading material, quite naturally I started BUYING books. Of course, a number of trilogies and anthologies were missing parts in the various libraries, so I had already bought those. Most of which, I donated to the city library when I was finished with them!
Yes, the model works.
If an author wants to be read, he must have an audience which loves to read. You can't capture an audience if you are not willing to give them good introductory material. The average school kid can't afford to buy books, and when he can afford to buy a book, he isn't going to UNLESS you've already taught him the value of reading.
Authors should look at Bill Gates for inspiration. Gates put his operating system within reach of every school kid in America for FREE. That is exactly why Microsoft has a monopoly today!
Re:Not sure DRM is the biggest issue at the moment (Score:5, Insightful)
Let me correct you on this - Amazon does NOT want to do this. In fact you will note that almost all of their book prices specifically state that they were set by the PUBLISHER and not by Amazon. Why? Because Amazon WAS selling books at pretty reasonable prices aka under $9.99 for even new best sellers and then Apple released the iPad and gave the publishers the ability to set pricing - which they then demanded from Amazon. Amazon tried to fight this but in the end knuckled under and we have the Agency Pricing Model that we have now - and we have Amazon acting as a publisher for many smart writers. Amazon doesn't like this but they have no choice, in fact someone is suing Apple and the publishers for this now.
End result? I no longer buy many books and I think this industry will be learning a very hard lesson just as the music industry did. In fact it will be WAY worse since books are WAY smaller (say 4megs with multiple formats) and because books aren't read over and over quite like music is. A real shame too since I and many I know were buying books more and more frequently prior to this truly stupid move by the publishing industry.
P.S. MacMillen was one of the big publishers leading the charge and on their blog, I shit you not, they actually tried to defend their pricing by stating how expensive PRINTING presses were! The mind boggles - these dinosaurs aren't long for this world...
DRM Isn't the Driving Factor, it's the Kindle (Score:4, Insightful)
Re:Not sure DRM is the biggest issue at the moment (Score:4, Insightful)
Not only that bust as many authors are finding out ebooks don't have limited shelf life. In the paper world a book is only on the shelf and then in print for shipping for a limited time. An ebook on the other hand need never leave the shelf - it's ALWAYS available for sale. Many authors are waking up to this and telling their old publishers to take a hike when they come calling asking for rights to the electronic copy and doing it themselves. I cannot find the blog now but there's a guy out there who's making huge bucks on books the paper publishers REJECTED and laughing his way to the bank using Amazon. The faster the old school paper guys go under the happier I will be, we need less greed in the world.
Re:Not sure DRM is the biggest issue at the moment (Score:4, Insightful)
Because the correct price for a good has nothing, zero, zip, nada, to do with the cost of producing it. The correct price for a good is "all the market will bear". And claiming the price is too high is simply not moral justification for stealing a book, electronically or otherwise.
"Industry Standard DRM" (Score:5, Insightful)
"Industry standard DRM" is an oxymoron. If you can't implement it, then it's not a standard. You're locked into the sole supplier of the trade secret. When you mentioned that everyone has to run Wine just to be able to read the book, didn't that clue you into how ridiculous you must have sounded? How about the part when you mentioned a .. I don't know what to call it .. a "spec"(?!) that has one particular companies' name in it. Seriously, you might as well say the XBox is an industry standard; that wouldn't be any sillier.
You know what's an industry standard? You're reading it right now. HTML. (And that's a fragmented and contentious one!) You would never even be able to guess which browser I'm using because it doesn't matter. HTML just works, with more programs than you can shake a stick at. And if you don't like any of them, you can even write your own. Text. RTF. Even PDF -- it's hard to say this with a straight face -- but even PDF is standard compared to that other Adobe thing you just mention that nobody else in the world has ever heard of, which probably explains why nobody ever makes readers for it.
Re:Not sure DRM is the biggest issue at the moment (Score:5, Insightful)
Along with paper and ink, shipping cartons, shipping costs, inventory management, retail floor space costs (IOW retail markup), damaged and unsold merchandise, etc. All essentially zero cost. Just like digital. That's why the pricing is the same.
Sure.
The Story of DRM (Score:4, Insightful)
Reader: I'd like to buy your book please.
Publisher: Buy a Kindle first.
Reader: No, I don't want a Kindle. Sell me a book?
Publisher: Buy a Kindle.
Reader: If I buy a Kindle, can I read the book without it?
Publisher: No. But buy a Kindle. I don't even care if you buy my book. Just please, buy a Kindle.
Reader: What is this, a MLM scheme? Do you get paid for Kindle sales?
Publisher: No. I just want you to buy a Kindle.
Reader: Whatever. Anyway: money. Here is some money. Want my money? Sell me book. Book. File. No Kindle. Not any particular Kindle competitor. Data, not tool. Book. Sell me book. Money. Money. Here is some money. Money.
Publisher: Fuck off.
Reader: [blink] I think we had a misunderstanding. Let's try this one more time: money. Money. Here, please take my money.
Publisher: Fuck you and your fucking money. I don't want money.
Publisher Stockholders: la la la I am blissfully unaware. The management is trying to increase revenue. The management is trying to serve my interests. I will not sue them, or even fire them. la la la la.
Publisher: Fuck money. Money is bad. I hate stockholders. Die, stockholder. Die, author. Die, customer. Everybody die. Fuck you all! RAAAA! Buy Kindle. *drool* *ramble* *rant*
Reader: Hey, this torrent site is pretty nice. And everything just works!
Amazon: You know what else just works? Reading those pirated books on a Kindle.
Reader: ok. Here, have some money.
Amazon: Moooney! Woohoo! Here you go. Enjoy your Kindle. Wanna buy some books?
Reader: No thanks, but I gotta admit, this Kindle is actually pretty cool. And thanks for pointing me at those torrent sites.
B&N: Wanna buy some books?
Reader: I didn't know anyone was still trying to sell books. No thanks.
Borders: please, money .. i need money.
Publisher: Money baaaad!! No money.
That is what DRM is all about. Saying no to money, in order to advance someone else's interests at your own expense. DRM means "Fuck you and your fucking money." That's about as rational as DRM gets, if your business is content. If your business is selling the one legal implementation of that DRM, though, it's reasonably sane.
Re:Can they invent a new model now? (Score:5, Insightful)
At the same time, the release prices for entertainment are completely batshit crazy. Games are $60, books are $35, and movies are $12? Who can afford that crap? Those prices all fall pretty quickly, but can't they come up with a better model than fleecing their most eager customers and then doling it out one step at a time to the next most impressive or convenient formats?
This is actually the whole point: Market Segmentation. Your goal with any product is to extract maximum sales revenue from it, which means finding the optimum point on the price/demand curve. But if you sell at only one price point, you actually leave money on the table from individuals who were willing to pay you more for that product. For example, suppose I've figured out that maximum revenue for my widget is at $10/widget. However, I also know that there are people who are willing to pay $20/widget; there simply aren't enough of them to make the $20/widget price more profitable than the $10/widget price. Wouldn't it be great if I could get the best of both price points? If I could sell the product for $10/widget to those customers who would only be willing to buy at $10, but also turn around and sell it at $20/widget to those customers willing to pay more? Wouldn't it be great if I could do this in such a way so that the $20 customer actually is pleased with his purchase, and doesn't feel ripped off, by providing some kind of extra value to that $20 customer?
The solution to this problem is to segment your market. With some goods this means coming out with slightly different products for each market segment. (eg, Mercedes has a C-series, an E-series, etc. etc. etc.). The solution in other products is to segment by time, so your most ardent customers pay extra to get the product right away, while more value-conscious customers wait for price drops or sales.
This is in fact the solution used for most entertainment products, and honestly I don't think there's anything wrong with it. The brand new game may start at $60, for those fans that are very interested in the product and want it right away. (Market segementation also goes higher, with special and collector's editions with extra doodads for superfans). Then the price gradually drops until it covers every level of enthusiasm/budget for the product, until it shows up in a Steam sale for $5 and even those people who say "meh, looks interesting, guess I can try it" become customers. This system nicely balances multiple interests - it makes the same product accessible to a wide range of consumers, with each consumer paying what they think that product is worth to them (and the ones paying more getting some benefit from that higher price).
Re:I hate DRM. (Score:3, Insightful)
> The average school kid can't afford to buy books
As a parent, I have to say that I believe, in the case that economics enables it, that's exactly one of the things a parent is for.
(I have to admit feeling a bit like a drug dealer, however, since I instituted a "first N books fully subsidized, all books afterwards X% subsidized" strategy --- I feel it's important that a child who's old enough can get experience planning how he spends the pocket money he has).
Re:I hate DRM. (Score:5, Insightful)
There is no such thing as industry-wide-standard DRM that has any use. It's self-defeating. Well DRM is in itself self-defeating anyway.
First of all, remember that the R has to do with Restrictions, no more no less. Just that, restrictions in what you can do with a file. Now if all devices all over the industry use the exact same DRM, that means all these devices can decode all materials just fine. All resellers incorporate it in their media, all reader software and devices incorporate it, and the end user basically never sees any restrictions. So why add it to begin with? If DRM doesn't get in the way of the end user, it's not doing anything, and you'd just as well not have it at all and save money in the process (as in: the work to implement the restriction scheme on both the media and the reader sides).
Of course it's used to prevent copying, including making backups for oneself. But with all those devices out there it will be cracked, and cracked fast. There may also be devices that simply ignore the DRM - to make it industry standard it means you need wide adoption, and control of who has the keys is getting more and more difficult.
It won't prevent copying either: one would just copy the complete file DRM and all. It's an industry-wide standard so anyone can read it anyway, DRMed or not. If it works on device A it works on device B. For books requiring on-line verification is troublesome as books are often read off-line and out of reach of a network, e.g. on the bus or on the train.
And by restricting your DRM to a single vendor, that's self-defeating. Amazon has now something like 80% of the e-book market, so if you want to use DRM on your book media you're kinda obliged to at least use Amazon's system. Otherwise you lose out on most of the market. This gives Amazon a huge market power: it can dictate prices, refund policies, their commissions, being exclusive reseller of the book, whatnot. They are in control of the whole process, and by the publisher's decision to require DRM the publisher also completely locks out any competition between resellers.
And to see a classic example on how that works out: iTunes. Music industry demands DRM on music sales, Apple owns well 80-90% of the market or so (not just the retail side, but also the player side) and offers DRM, and as a result Apple has enormous power to set prices - like the $0.99 per song demand. And this DRMed iTunes music is restricted to Apple's devices only to boot. The only way for the music industry to get back their pricing power and control over the sales of their music, was to drop DRM, which in the end they did.
Re:My book (Score:4, Insightful)
I bet you change your tune when it's your mother/sister/girlfriend/wife who gets kidnapped and raped, and then killed because you can't come up with what they want fast enough, or if she gets returned, seeing her live with the aftermath. You'll be just as miserable as she is, unless you shut her out of your life afterwards.
Yeah, think about that. That Tomahawk sound a little better now?
Re:I hate DRM. (Score:3, Insightful)
I don't think the comparison is fair. Because subsidies for behaviour seen as useful, is common all trough life, including as an adult. The thing with "first hit is free" for drugs is that's it's subsidising *bad* behaviour.
The government has multiple ways of making wanted behaviour cheaper, and/or making unwanted behaviour more expensive. Thus if I buy a book as an adult, it's VAT-free, whereas if I buy alcohol as an adult it's 25%VAT and carries an additional alcohol-tax.
These, and other strategies, change the price, in the hope that it'll influence our spending-habits.
I as a parent do the same thing, and see nothing wrong with it. That is, if my kids by sweets for their allowance, then that's fine but I don't support it further, while if they buy books or something else I consider useful, I often volunteer to pay half the price for them.
Re:My book (Score:3, Insightful)
Here's the thing: the statistics you posted are from 2002. Also, it's a myth that the music industry is doing well. )I can imagine why pirates would have an interest in perpetuating this myth,) Here's the real numbers - all the way up to 2010. The music industry sales are in serious decline. They're roughly 30% of what they were 10 years ago - that's a 70% decline. In fact, you can find the peak year for music sales: 1999. Also, Napster was released in the middle of 1999, which I think it suggestive. There's also data showing that the top-selling albums can never get anywhere close to the sales numbers they were getting ten years ago. Top selling albums in 2010 are getting something like 1/3rd the sales that top selling albums were getting 10 years ago. Here's a chart showing the huge decline in music sales: http://static6.businessinsider.com/image/4d5ea2acccd1d54e7c030000/music-industry.jpg [businessinsider.com] and here's related article: http://articles.businessinsider.com/2011-02-18/tech/30052663_1_riaa-music-industry-cd-era [businessinsider.com]
I've run similar numbers for the movie industry, and while it hasn't been hit as hard, it's also seeing declines both in box-office revenue and DVD/BlueRay sales. (Box Office revenue peaked around 2001/2002.)
Hell if someone made a torrent on The Pirate Bay of my work I'd probably just feel proud that I'd made a book people really want to read.
When you heave neither fame nor money, it's easy to accept the idea of getting fame and no money. I think this is particularly pervasive among college students and recent college students because getting fame alone would be a step up from obscurity and poverty. However, I absolutely back the "getting paid" part of the equation because it sustains the industry - otherwise, you're going to lose people (like so many of my college graduate friends who studied history or psychology and are now doing other jobs - because they can't get paid for it). I wish that "I'll work for your approval but you don't have to pay me" worked for people in other spheres of life -- the company that mows my building's lawn wouldn't ask for money, they'd just do it for my approval. I think that's really devaluing their work and effort.
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Re:I hate DRM. (Score:5, Insightful)
What I don't understand about the whole DRM mess is this: Why hasn't somebody brought up the bigger question which is why force a tech THAT DOES NOT WORK and ONLY pisses off the people PAYING you?
You must be new here. Some of us have been saying it for 30 years, going back to "copy protected" floppy disks... and our voices are hoarse by now.
Now get off my lawn...