May 22 2011
I know that there have been people hopeful that DRM would soon fade away, but it won’t and here is why.
1. Growth. Most trade publishers have a vested interest in making ebook adoption difficult. Their profit structure is built on a paper book business and they have not yet determined the optimal business system that would allow them to consistently earn a similar profit under a digital dominant environment. Slowing the growth of ebooks is in their best interests.
2. Control. Writing up the article about Amazon and Google’s move into the cloud made me realize that DRM free music was the only way Amazon and Google’s cloud player worked WITHOUT license agreements from the copyright holders. Apple is apparently making licensing deals with various music companies before launching its own cloud player. Music, like books, used to have DRM and be tied to the portals where you bought the music. Cloud players would not have been possible under a DRM scheme.
Because of DRM, publishers can avail themselves of protections of the DMCA (even though some of those protections have been abrogated by the recent three year exceptions declared by the Librarian of Congress. DRM allows the transaction to be deemed a license instead of a sale, cutting off revenue draining used book sales. DRM provides a number of legal benefits to the publisher that provides them a measure of control.
3. Price. Do you remember that music once cost $.99 per song? Steve Jobs then convinced the record labels to go DRM free and the price was upped to $1.39 per song. While removing DRM can represent a savings of nearly $.50 per copy sold, the consumer has obviously placed a higher value on DRM free books and are willing to pay more to get DRM free music. One digital first publisher whose prices seem uncommonly high has shared that the higher prices represent a piracy tax. Their books are pirated at a high rate and thus they charge more in order to offset the piracy. You want DRM free books? You might have to pay for it.
Further, any economic advantage that Kindle or Nook may have had through platform specific DRM has largely been reduced through Agency pricing.
4. Piracy. While most readers agree that DRM punishes the legitimate customers and not the piraters, publishers have repeatedly said that DRM can prevent casual piracy where one person sends a copy of the book to everyone in their email address book. Readers love to share their books with others and publishers want to prevent this casual piracy. DRM is an effective way to do this. While DRM is easy to remove for anyone who has some computer savvy, most casual readers won’t take the time to figure out where the DRM removing tools are and how to use them. Thus most casual readers’ books will remained locked to their devices with no way to share.
5. Ease of transfer. One of the reasons why I think Jobs was able to convince record labels to remove DRM was because of the ease of transforming the CD into a digital music file. This process was fairly automatic. Place your music CD into your computer and use the iTunes converter. Transforming a paper book into a digital one is time consuming. You have to either turn every page by hand or cut off the spine and run the book through the scanner. Once the book is scanned, you then have to run it through a computer program called OCR (Optical Character Recognition) which looks at the pictures of the letters and creates a text file from those pictures. From there, you have to proof and format the book. Even with the aid of computer programs designed to create books, clean up scanned images, and the like, this is no small task. Few people are likely to undertake this on a regular basis in order to create a digital book file. Until the ease of transfer becomes nearly automatic, the threat of home made transformative copies remains small and the pressure of removing DRM is lessened.
At this point, I don’t see a lot of pressure points on publishers to remove DRM and I don’t see it being removed anytime soon.