Friday, April 13, 2012

The State of Publishing, Part I: DRM

Anyone who knows me knows I have strong opinions on books.  Not just the books themselves, but the industry that produces them and the marketplace in which they're sold.  Specifically, I believe it's in the common good to have a healthy publishing industry that compensates authors appropriately for their very hard work; that there should be multiple formats available for buyers to choose from; that when you buy a product, like a book, it should really, actually be yours; and that there should be a healthy, competitive market in which books are bought and sold, corporate behemoth and mom-and-pop shop alike.

Is that where we're headed?  In terms of formats, things are mostly okay--hardcover, trade paperback, mass market paperback, iBooks/Kindle/Nook/ePubs/etc. format ebooks, various audiobook formats, etc.  I've read books in each of these formats, and consider myself a format omnivore.  Not only that, I think having multiple options empowers the consumer, and that's a good thing.  That said, there's a bit of a problem.

Let me explain: each of the major ebook sellers--Apple, Amazon and Barnes&Noble--have their own proprietary format.  If you own a Kindle or Nook device, you're pretty much locked in to that manufacturer's format.  If you read ebooks on an iOS/Android device (or PC/Mac), though, you have choices.  You can decide if Apple's fake pages (that turn!) help you suspend disbelief and imagine you've got an actual, tactile book in your hands, or if you prefer the cleaner, PDF-like digital format used by the Kindle and Nook apps.  You can decide which of these giant corporations offends you the least, and give them your business.  Or you could base your preferences on the quality, quantity and accessibility of information on each of these company's online stores.  Basically, you've got choices...except when it comes to DRM.

Enter Cory Doctorow, speculative fiction writer and techie extraordinaire.  He's got an interesting article in Publishers Weekly on DRM and the ebooks industry.  Doctorow lays out the essential problem of DRM:
[We're] now entering a world where this kind of interoperability is verboten. Thanks to the 1998 Digital Millennium Copyright Act, it’s illegal to break DRM, even if you’re not violating copyright. Say, for example, you’ve bought a DRM-locked iBook from Apple and you want to switch to a Kindle. Converting the underlying files (going from EPub to Mobi) is a solved problem—a program called Calibre does it with a simple drag-and-drop operation. Of course, it’s illegal, because that conversion involves removing DRM. It is not only illegal to convert lawfully purchased e-books, it’s illegal to make a tool that does so; illegal to tell someone how to make such a tool; and illegal to distribute that tool. Even if you wrote the book and own the copyright, it’s illegal for you to remove DRM to convert your own book.
So basically, you bought a book in electronic format, but have to read it on the device/app provided by the company you bought it from.  Makes sense, from the retailer's perspective:
In practice, this means that once you use DRM, every cent your customers spend on DRM-locked e-books becomes a whip for the retailer to beat you with. Because once your customer is locked into a retailer’s DRM-locked format, your customer becomes the retailer’s customer. This is especially troubling when you consider that the duty cycle of a handheld device like a Kobo, Nook, or Kindle is all of 18 months. Every year or two your customers have the opportunity to switch platforms. If their e-books have no DRM, they can simply switch. But if they are DRM-locked, switching platforms could mean abandoning their e-books.
But what about everyone else?  People who read their ebooks on a dedicated ereader like the Kindle or Nook are the most screwed, because frustrated publishers can and have removed their goods wholesale from these stores (mostly Amazon's).  That puts readers at the mercy of the terse relationship between publishers and the big ebook retailers.  Those who read ebooks on iOS/Android devices are spared this fate, because the ability to install multiple ereader apps means you don't actually have to choice format, except on an ad hoc basis.

I'd add another disturbing possibility to the discussion: what if one of these retailers goes out of business, or stops selling ebooks?  Not likely in Amazon's case, but what about B&N or Apple?  B&N is known to have some financial troubles, though thankfully not in the realm of pre-bankruptcy Borders.  But it is plausible that the Nook format could, one day, disappear.  And how about if Apple decided to stop selling ebooks?  Probably not going to happen, at least not in the immediate future, but it's not outside the realm of possibility either.  In either of those scenarios, what would happen to your DRM-protected Nook or iBooks format ebooks?

Doctorow makes one other point I'd like to mention: ebooks allow retailers to simply cut out the publishers, and publish directly.  Nothing wrong with that, per se, except in how it interacts with DRM.  DRM, Doctorow argues, enables ebook retailers to set (mostly lower) the rates of compensation for authors.  Sure publishers can do this too, but it usually involves more negotiation and communication.  Doctorow's cautionary tale:

In February, veteran author Jim C. Hines discovered that Amazon had discounted his $2.99 e-books to 99 cents, cutting his royalties in the process. Jim tried in vain to discover why Amazon had done this. One Amazon rep told him that the company reserved the right to re-price their e-books (“...sole and complete discretion to set the retail price at which your Digital Books are sold through the Program”). Jim made a stink, and another rep got in touch with him to say that in his case, they’d lowered the price because they had out-of-date information about how he priced his books in the Kobo store.

This is what DRM enables. Imagine Amazon and other platforms all reserving the right to lower your e-book prices to match a competitor’s lowest advertised price. Imagine if Amazon decided to cut your $3.99 book to 99 cents for a promotion (while paying you royalties on $3.99 for the duration of the promotion). Its competitors would soon notice that Amazon is advertising your book at 99 cents and invoke their right to price match. The upshot: your book is never going back to $3.99, ever. Such baked-in price matching would have the effect of making all price drops permanent.

Jim C. Hines’s e-books are marketed both through a big publisher and solo. The books that were re-priced by Amazon were his solo titles—unagented, and unrepresented by a major publisher. As an individual, Jim has no leverage over Amazon. Not so his publisher, which controls a much larger number of SKUs and has much more leverage.