Accepting Amazon's DRM Makes It Impossible To Challenge Its Monopoly
from the from-one-monopoly-to-another dept
Amazon was the target of some well-deserved criticism this past week for making the anti-customer move of suspending sales of books published by Hachette, reportedly as a hardball tactic in its ongoing negotiations over ebook revenue splits. In an excellent article, Mathew Ingram connects this with other recent bad behavior by Internet giants leveraging their monopolies. Others have made the connection between this move and a similar one in 2010, when Amazon pulled Macmillan books off its digital shelves.
That dispute took place a little over four years ago, and ended with Amazon giving in and issuing a statement that people found a bit strange. Here's a quote:
We want you to know that ultimately, however, we will have to capitulate and accept Macmillan’s terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books.
"Monopoly" was a funny choice of words there. The author John Scalzi, whose piece decrying Amazon’s actions at the time is still very much worth reading, memorably took issue:
And not only a forum comment, but a mystifyingly silly one: the bit in the comment about Amazon having no choice but to back down in the fight because “Macmillan has a monopoly over their own titles” was roundly mocked by authors, some of whom immediately started agitating against Amazon’s “monopoly” of the Kindle, or noted how terrible it was that Nabisco had a “monopoly” on Oreos.
Monopoly, of course, is economically the correct term. Publishers of books that are restricted by copyright have a set of exclusive rights granted to them by law. Their monopoly looks distinct from Amazon's near-monopoly bookseller position, though, because it's one agreed to in public policy. In a sense it is also more absolute, and less vulnerable to challenge, because it's a legal monopoly, and not just a market monopoly.
To the extent Amazon has a monopoly on selling paper books, then, it could be challenged not just by legal action (such as antitrust investigation) but by other businesses competing. There would be some extreme logistical difficulties, and disparities created by economies of scale that might be impossible to overcome, but in principle other businesses are able to compete for Amazon's market position on physical books.
Copyright behaves differently: when it comes to Macmillan or Hachette's books, nobody may undercut prices by making production more efficient, or design prettier covers, or edit the text into a more compelling presentation. Where that's a good thing, it's because we've reached it by public policy. We've granted copyright holders an inviolable (if limited) legal monopoly because we as a society like the results.1
A very real danger, though, is if Amazon can take the challengeable market monopoly it has put together, and ratchet it into an unchallengeable legal monopoly. That is exactly what DRM does.
By putting DRM on its digital products—ebooks and audio books—Amazon gets the legal backing of the Digital Millennium Copyright Act's anti-circumvention restrictions on its products. This isn't for the advancement of public policy goals, either; Amazon gets to create the private law it wants to be enforced. Thanks to DRM, Kindle users are no longer free to take their business elsewhere—if you want a Kindle book, you must purchase it from Amazon.
Fortunately Kindle software can, for now, read other non-restricted formats. But the functionality is limited, and not guaranteed to stick around. And it's a one-way street: other software and hardware may not read ebooks in the Kindle format. Customers who amass a Kindle library will find no compatible non-Amazon reader. The fact that individual users can usually circumvent the DRM, too, doesn't help businesses trying to compete in that space.
Amazon has a lot of fans, and they tend to ascribe its rise as a bookseller for its aggressively pro-customer stance. If it drops that stance, even major fans would probably agree that it no longer deserves the throne. Unfortunately, DRM takes the conditional monopoly that customers like (you get to be the largest bookseller so long as you're good to your customers) and replaces it with an unconditional one (you once achieved monopoly and that is now permanent).
Last week's sketchy move against Hachette looks like a willingness to throw its customers under a bus in the name of better business deals. If publishers continue to insist on DRM, and if customers continue to allow it, we lose our ability to object.
- Of course, that is only as true as copyright policy reflects the will of the public, which it doesn’t, but it’s something to aspire to.
Republished from parker higgins dot net
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Filed Under: books, disputes, drm, monopoly
Companies: amazon, hachette
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This article seems to be ambiguous as to who is at fault. Not to sound like an Amazon apologist, but I don't see a problem with a company who is fighting to push down prices of an infinitely distributable good so its audience can enjoy them, perhaps leading to more sales.
Every electronic device has DRM on it, so it's rather pointless to suggest the Kindle shouldn't have it. Think those ebooks you read on other devices can be shared? Not unless you have the official app on the device, and even then, it doesn't always work (Looking at you, UltraViolet).
As a consumer, I'm siding with Amazon on this one. It think it's atrocious a publisher demand prices near their physical equivalent (then steal 80% from the author while producing no physical good in exchange).
Amazon isn't throwing customers under the bus. It's trying to pull them out from under the bus publishers put there decades ago, and continue to do so to this day.
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That is correct. Many, if not most, of the books I've purchased on Amazon have come without DRM (and I've had no problem moving them from a malfunctioning version of the Kindle app to a working version without having to re-download,) mainly because they are Tor books (yes, I am a Sci-Fi fan,) and Tor has been quite vocal about their views on DRM.
Unfortunately, there isn't really an easy way on the Amazon site to determine if the books have DRM or not. I saw, at one time (I think in the Kindle App itself,) a statement on books already downloaded the statement "The publisher has denied applying DRM to this book," but I cannot find that verbiage anywhere on the site.
If there was, I'd be far happier on spending money on more books because they wouldn't break after three downloads or break when Kindle decided to stop working (because I don't use "Kindle for Windows" on Windows or Kindle's Google App on a Amazon Kindle.)
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See Vikarti Anatra comment below... You actually have to expand the description to find it.
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That right there is why I'll buy other things from Amazon, but never ebooks. I don't believe in supporting those that think they can still retain the rights over something I just purchased(and pricing them identically to paperbacks if not more is just insult to injury), able to tell me where I can use it and on what, so I try and avoid DRM'd products as much as I can.
However, since with Amazon there's no visible 'Does this ebook contain DRM?' description, and the only way you can tell is after you'd purchased it, unless I want to play DRM roulet, that means I can't buy any of them.
It can be annoying, as several times I've run across people talking about how awesome a particular ebook on Amazon is, but without a clear DRM/No DRM distinction available to the customer, ebooks shall remain a 'No purchase' for me on Amazon, and I'll just get them elsewhere(Smashwords and Baen generally).
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your are wrong.
DRM usage is author/publisher's option.
you will see "At the publisher's request, this title is being sold without Digital Rights Management software (DRM) applied." in many Kindle Store books
example: http://www.amazon.com/Like-Mighty-Safehold-David-Weber-ebook/dp/B00EGJ3R1U/
You can use eInk Kindle without Kindle Store if your books come from other source and are not in DRMed format. You just need to convert books to .MOBI. You could use Calibre for that.
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Hah, I knew it was in there somewhere, you have to click the expand button to find it. I remembered seeing something like this (comment above,) but didn't see it on any of the books I knew were DRM-free...expanding all of them revealed the same verbiage.
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Kindle version: $13
Paperback: $8
I'd love to know just what makes the ebook version worth so much more than the paperback, because as far as I can tell the only real reason is 'Because idiots will pay more for digital'.
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yes, of course i realize there are plenty of middle income to poor people who buy ebooks, but, by and large, who do you think they market to ? upscale buyers...
they could give a shit some cheap bastard wants to save pennies, when they know profligate soccer moms and such will pay without even NOTICING the price...
and -yes- it beggars the imagination to *otherwise* figure out why raw electrons cost more than taking those raw electrons and printing them out, transporting them, etc, etc, etc...
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That is the point. The publishers have handed Amazon a monopoly by forcing Amazon to include this type of DRM. Now, publishers are feeling that mistake in their negotiations with Amazon.
Every electronic device has DRM on it, so it's rather pointless to suggest the Kindle shouldn't have it.
You need to stop shopping at the Apple store and you will relaize that this is not true. Lots of devices are totally DRM free these days.
As a consumer, I'm siding with Amazon on this one.
While they may not be wrong, they have made you (as a customer) a point of leverage against the publishers. It may be helping you now, but tides shift.
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Not to mention, this is EXACTLY what the record companies did with Apple and then when they realized that Apple ended up with all of the leverage completely freaked out about it.
Surely, this will not happen with streaming video...
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It's very sad that the publishing industry is apparently intent on making the exact same mistakes. But then, we're also talking about a market that thinks that a digital file should be priced the same as an 800 page printed hardback just because of the release date of the title. Then wonder why sales are low...
The reasons why video hasn't already gone down the same route are that there isn't a single dominant player in the sales space, and much of the market has gravitated toward rentals & streaming (where DRM is far more acceptable since you're not buying the product).
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Enlighten me to a device which doesn't use DRM, and I'll show you were the DRM is. Software is DRM by its nature.
You may be right about the leverage, but here's the point: do you see Hachette consumers happy at other venues? Of course they're not. They're pissed the prices for a digital file is too high, but what choice do they have?
Zero. Nada. Zilch. None.
That's a monopoly on the flip side of this coin.
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That's the most ridiculous statement I've ever heard. How do you figure this?
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This is a bizarre thing to say. Not only is it untrue, it barely makes sense.
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Both Mobipocket and AZW formats are Open eBook Standards using XHTML. Most eBook readers and authors can read and write the files. The only thing that isn't standard is the DRM. I have no problem opening the non-DRM'd Mobi and AZW format files using Calibre or any of the standard viewers. I actually, for some reason, prefer the Amazon Kindle app for reading eBooks, and have books from various other sources (Google Books, etc.) in Amazon Kindle, though the Linux version of Calibre is definitely growing on me.
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Maybe, but that's just as incorrect. There is nothing about the "nature" of proprietary software that makes it include DRM. DRM is a separate thing that must be programmed in, proprietary or not.
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GPL software stopping you from accidentally nuking your install with RM is not the same as software that disrespects the users wishes.
If I input my root password I can still intentionally nuke my linux install, I cannot just enter a password to bypass a game's drm so that it will play nice nice with wine or simply not fuck with DVD+/-rw drivers out of paranoia
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No, it's not -- and should never be, since this is a largely unattainable goal. In fact, I find it useful in many contexts to allow the user to do something stupid because that has educational value. ("Oh, you removed your file? I hope you did backups. You didn't? Ahhhh Grasshopper, today will be a good day for you because today you will learn something important.")
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Good software design means that you can't do stupid things accidentally, but you can still do them intentionally.
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That's not even in the same ballpark as DRM.
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Or vlc, gnu nano, battle for wesnoth ect ect
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No it's not. Most of the cost of a book is the words, not the binding. It costs so much because the author has invested a lot of time writing it. The physical book is just a way to transfer the ideas inside, and so it's perfectly reasonable to charge ALMOST as much as the physical book.
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Most of the cost of a book is the words, not the binding. It costs so much because the author has invested a lot of time writing it.
The truth of the matter is more something like this:
Ignoring super-star authors who write their own tickets, the best rate most writers can hope for is 15% of the cover price of trade hardcover books, with this percentage being achieved only after a certain number of copies have been sold. source
To put it another way, those "words" are only 15% of the cost of a book ... pretty far from "most of the cost"
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Two points
2) If I buy a physical book, I will generally eventually donate it to charity for a tax write-off (effectively discounting the price by one-third). I can't do that with e-books. From my point of view, if e-books are priced at more than two-thirds of hard-copy--and that's most of them--they are overpriced.
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Considering quite a few of the ebooks I own have really crappy formatting errors and other editorial errors, authors who self publish *may* not benefit from editorial skills (though there is certainly nothing preventing a self-publisher from hiring an editor themselves to fulfill this role.) Having a publisher pay you 15% of sales is in no way a guarantee that the publisher will provide author services like an editor for you, nor is it a guarantee they will even actually publish your book (as they could stick it on a shelf never to see light of day again.)
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Authors - ie "The Words" account for around 15% of a printed books retail price. If you consider discounted sales prices, that goes up to 25%ish.
So how 25% = "Most", I don't know.
Unless you sell directly with Amazon - who actually do pay over 50% royalties in some cases.
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Then the publisher starts making deductions from that amount, like any advances, full cost of returns, and any other cost that they can make the author 100% responsible for.
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"It costs so much because the author has invested a lot of time writing it"
No.
The time investment in a book is irrelevant to price, for one thing. Price is depending on the market and demand, and customers aren't going to pay more because someone "spent a lot of time" on it. They're going to pay what they think it's worth, which is going to be in terms of their interaction wit it, not the author's.
I also don't think you realize how expensive a print run is vs. manufacturing an ebook. You can produce an ebook for less than $1000 and sell infinite copies, whereas a 10000 print run of a book will cost in the neighborhood of $30000 for manufacturing and shipping. Yes, the editing costs must be considered as well, but you're also talking about $3 production cost per copy of a book vs. a penny's worth of production per book--or less--if you sold 10000 ebooks, which becomes less and less the more you sell.
FYI, editing and author advance is often less than the cost of printing, and most books are pulled when the advance is earned out.
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As another commenter said, this is not actually true. However...
"Think those ebooks you read on other devices can be shared?"
Mine can. I buy abooks, including Kindle's, and the very first thing I do is strip out the DRM specifically so I don't have to use the Kindle app or be tied to a particular computer.
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http://en.wikipedia.org/wiki/.azw#File_formats
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Only the broken ones.
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That's actually not true. Publishers can request that their books be DRM free. But many publishers don't want that either. You know, because... pirates.
Take a look at at Baen and their model - subscriptions that get you 5-6 titles per month, lots of free books in many different formats. Don't meant to promote Baen, but their creative approach has gotten many of my acquaintances to try authors they otherwise would not have.
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Amazon DRM: "At the publisher's request, this title is sold without DRM"
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Remember how that went with iTunes? history repeating...
I'm siding with amazon on this one. It is another prime example how the publishers paranoia is actively detrimental to their business.
For the record, I don't spend money on ebooks, especially when DRM is involved (movies and music don't factor in to this, I don't buy those out of principle, physical or download doesn't matter). I rather have the dead tree edition.
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1) having DRM, practically required by most major publishers for e-distribution
2) having DRM, which can't be circumvented by law even for lawful purposes
3) using its buying and distribution power (i.e. the customers) as leverage when making distribution deals for products
So.. What exactly is it that Amazon is doing that any random competitor of its size wouldn't do in its place? If the nook had won the e-reader war, would we be complaining about Barnes & Noble instead?
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Nothing, but that's beside the point.
"would we be complaining about Barnes & Noble instead?"
Absolutely.
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Yay Amazon
Boo Publishers
Customers watch out because Amazon may turn that monopoly on you some day.
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If Amazon's past behavior is any guide, this will happen.
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Once infinite goods are priced according to the costs associated with providing them I will start purchasing some of them. Until then there is plenty of free (legally and financially) material on the Internet to read that will keep me busy until the day I am pushing up daises.
To me Amazon is doing the right thing trying to get the prices down, the publishers are too dumb to realize they are shooting themselves in the foot.
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So they're still walling you in, but giving you a choice of which walls you want to be behind? That's better, but still not even close to good.
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I don't get it
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Considering Amazon's ebook prices I find even more irony in their statement
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Re: Considering Amazon's ebook prices I find even more irony in their statement
The publishers are the ones wanting to set stupid high prices, Amazon wants them lowered.
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Discounts
As Techdirt has pointed out a million times, just because you think you put a lot of effort into writing a book, doesn't mean you can artificially set any price you think you deserve for that effort.
As with any digital file, the 'cost' of an eBook is zero, because as soon as you make one, you can make an inifinite number for basically no cost. That's why publishers need DRM to artificially fix prices.
If you want to read an eBook on a kindle, just type the title and the word 'mobi' into Google, I guarantee you'll find a copy for free. However I sometimes buy books from the Kindle store, if it's cheap enough to offset the hassle of finding a free copy. You can also view it as a form of charity to authors you like.
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"Accepting Amazon's DRM Makes It Impossible To Challenge Its Monopoly"
Amazon at one point had a 90% of the ebook market. Now they have considerably less (50% to 60%). Clearly the monopoly can be challenged, DRM ro no.
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Under a bus?
It's also worth noting that Amazon made its announcement last night not in the form of a press release, but on its forum. The subtext is that Amazon is speaking directly to its customers about what's going on, rather than speaking over their heads to the press. They even apologized for the inconvenience and suggested how people can order the books under dispute if they want them in a timely manner.
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http://spacefem.com/hydrox/
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Don't blame Amazon for DRM
Point of order here: Amazon does not require publishers to put DRM on their e-books. Tor hasn't for two years, Cory Doctorow and Baen never have, and plenty of self-publishers don't. It's a choice individual publishers make for themselves, and so far most of the Big Five have chose to use it.
If the publishers are looking for someone to blame for Amazon's DRM platform lock-in, they need to look in a mirror.
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Correct me if I am wrong...
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One-Way Street?
Can't you download a Kindle reader that's synced to your licenses on any Android or iOS device? I wouldn't be surprised if you can on any other major mobile OS, too, but I also wouldn't know for sure. I don't use Kindle much, but I have a feeling you can probably access your books from a web-based Kindle reader, as well...
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Amazon drm
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