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Why DRM Won’t Be Abandoned Soon

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.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

20 Comments

  1. Chris
    May 22, 2011 @ 07:40:05

    Re: your third item – while Amazon has songs that are $1.29 each, they also have lots of songs that are $0.99. And they now have the “top new songs” for $0.69 each.

    ReplyReply

  2. Michael
    May 22, 2011 @ 08:47:37

    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.

    Seems to me a better price point would encourage more sales and negate any need for a piracy tax.

    One of my friends has a novella out that’s widely available on the pirate sites, yet she’s selling 2000 copies a month on Amazon close to a year after its release. It’s currently priced at $2, which seems to work well for its length and appeal. When it was 50 cents higher, it was only moving 400-500 a month.

    If publishers really want to offset losses due to piracy, they can start by making smarter choices that help sell books.

    ReplyReply

  3. Mike Cane
    May 22, 2011 @ 08:58:36

    >>>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.

    So how do they explain the success of DRM-free Baen and O’Reilly?

    ReplyReply

  4. Carly M.
    May 22, 2011 @ 12:56:46

    So the piracy tax is punishing the people who buy e-books … ie the ones who aren’t actually pirating the books? No, thank you. It’s not that you’re paying a “premium” for a DRM-free book. You’re now paying for other people – people who would strip DRM from DRM’d books anyway – to be freeloaders.

    ReplyReply

  5. SAO
    May 22, 2011 @ 13:50:27

    It’s so nice knowing I get to pay a tax for piracy. It would be nice to know how much it is. When has my tax added up to a moral right to download one pirate book?

    ReplyReply

  6. Gennita Low
    May 22, 2011 @ 15:42:55

    One way to look at the “piracy tax” is that it’s similar to property insurance. Your insurance keeps going up because you’re paying for the insurance company’s pay-out to houses that are affected by disasters in another county/state. Not saying that it’s fair or right, but in business, it’s the consumers who always pay. The publishers perceive they’re losing $$$ through ebook piracy.

    ReplyReply

  7. SL Clark
    May 22, 2011 @ 16:09:09

    >The publishers perceive they’re losing $$$ through ebook piracy.

    Publishers are a SLOW moving lot and they can not possibly understand how Coehlo & Gaiman are so successful actively PROMOTING their work on the vast pirate networks.

    As Tim O’Reilly said 10 YEARS AGO, obscurity is an artist or author’s enemy, not pirated works…

    ReplyReply

  8. Bill Smith
    May 22, 2011 @ 16:13:48

    DRM is a very legitimate issue for anyone who cares about having ownership of their books and things like the ability to format shift, read on other devices they own, and keep backup copies.

    When readers start buying non-DRMd books in large numbers and REFUSE to buy books crippled with DRM–and readers send irate notes to publishers explaining why they refuse to support DRMd books–only then will the publishers take notice.

    Right now is the “infatuation” stage of ebook adoption. Most readers have not experienced a fatal device crash nor needed to beg an ebook vendor to reauthorize a new device so they can read books they have already bought.

    But the time is coming. Two, three, four years down the road, we’re going to be having many readers with devices that break or are replaced. How are they going to react then when they realize they don’t have free access to their books?

    You can bet that this is going to be a HUGE issue for readers in a couple of years.

    It’s like buying DVDs and only later learning that you can only play it on the one DVD player you owned at the time of purchase.

    The issue is a matter of educating readers and pushing them to look for “Simultaneous Device Usage: Unlimited” on Amazon or buying from Smashwords.com and other sites that use no DRM at all.

    It’s not much of an issue now…just as we’ve only felt the tiniest tremors before the avalanche strikes.

    – Bill Smith
    http://www.BillSmithBooks.com, BillSmithBooks.Blogspot.com

    ReplyReply

  9. library addict
    May 22, 2011 @ 17:24:23

    Sadly I think you are correct. But I still wish DRM would go away :P

    ReplyReply

  10. Man of la Book
    May 22, 2011 @ 19:39:24

    I wrote a post about DRM a few weeks ago (http://manoflabook.com/wp/?p=2116), while I think you’re right ad that DRM won’t be abandoned soon I think it’s mostly because of the fundamental greed and misunderstanding of technology by corporate America.
    And greed?
    Did I mention greed?
    OK, greed!!!

    From the sidelines, it’s amazing to see the publishing industry making the same mistakes the music industry made.

    ReplyReply

  11. RKB
    May 22, 2011 @ 20:50:50

    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.

    Ah, so what you are implying is that anyone over 40-50 will not take the time to figure out how to remove DRM from their books because they are not computer savvy.

    You forgot the younger, computer savvy generation who not only shares music, but shares books via bitTorrent, Usenet, IRC, etc. Only one person has to break the DRM for everyone else to easily share it.

    Transforming a paper book into a digital one is time consuming..[snip]..Few people are likely to undertake this on a regular basis in order to create a digital book file.

    You do know that there are quite a few book piracy groups that do nothing but transform paper books into digital files? Teenagers love to brag about how much warez they have cracked and given away, including books.

    DRM is only a symptom of a larger problem of disruptive technologies and what is has been doing to many industries.

    ReplyReply

  12. Jane
    May 22, 2011 @ 20:57:44

    @RKB: I’m not differentiating between older and younger readers, but between casual and avid readers. I think avid readers, readers who buy books weekly instead of monthly and who read voraciously (more than one a week) will likely find their way to DRM stripping tools. I think the casual reader who buys one book a month, if that, will not care.

    And yes, I do know that piracy groups are devoted to the transformation of a paper to a digital file, but I don’t believe this practice will ever reach the levels that it needs to provide the right pressure on publishers to remove DRM.

    DRM is a business decision for publishers and until or unless DRM is proved to them to be a financial deterrent, I don’t see their behavior changing. And it’s not just publishers, but it is authors as well. Many authors and agents push for DRM, believing that it is a deterrent to piracy.

    ReplyReply

  13. Geert
    May 23, 2011 @ 05:24:51

    The big uproar about DRM will start when a non-Amazon Kindle alternative becomes popular and large numbers of Kindle users migrate to this new device, and than discover that their large collection of books cannot be read on the new device.

    ReplyReply

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