Indie bookstores sue: the end of Kindle-specific DRM?
I wanted to wait to write about the
by three bookstores against Amazon and the “Big Six” publishers (Random House, Penguin ((those two are in the process of merging)), Simon & Schuster, Hachette, HarperCollins, and Macmillan) alleging that, through the use of DRM (Digital Rights Management), they have unfairly cut independent bookstores out of the e-book market, until I had a chance to really read it. This is a class action suit, on behalf of all independent bookstores which sell e-books.
IANAL (I Am Not A Lawyer), but my basic understanding of the Sherman Act (which is the basis of the suit) is that on the one hand, you can’t get together and act to constrain trade, and on the other, you can’t have a monopoly.
It’s a lot more shaded and complex than that, and even having 100% of a market doesn’t make you automatically a monopoly.
If the suit were to succeed, I think the likely result would be that publishers would sell e-books with “open source DRM”, meaning that you could buy an e-book from an independent store (but not meaning that you wouldn’t be prohibited electronically from copying and distributing that book).
The filing is not particularly long, or terribly steeped in legalese…you may want to read it yourself.
I think it is a long shot, but again, I’m no real expert.
From Amazon’s defense viewpoint, there are a couple of obvious angles.
First, Amazon allows publishers to sell e-books without DRM through Amazon. Tor (a division of Macmillan) does it, for example, and indie publishers using Kindle Direct Publishing can opt for that as well. If publishers don’t choose to do that, that is their choice.
Second, there are competitors. You can buy most of the same e-books from Barnes & Noble, Sony, or Apple…certainly, that’s true of many of the most popular books. The existence of Kindle-specific DRM coding doesn’t prevent other coding. Could independent bookstores come up with a DRM plan that the publishers would accept? I think so, but it doesn’t seem to me like that is Amazon’s issue.
On the publishers’ side, it might be trickier.
As I understand it, you can’t, as a supplier, not give retail stores an equal opportunity to buy and sell your goods, especially if you get together with other like entities to enact a policy like that. Let’s say you make a…widghookie. You set a wholesale price for it. Then, you decide you won’t sell it to any stores managed by people with…oh, blue eyes. Even though the blue-eyed people offer you the exact same compensation as the other people. That’s a very simple illustration, and lawyers, please be welcome to explain why it might be incorrect.
Let’s say your widghookie has a wholesale price of a gazillion dollars. That’s going to price small stores out of selling it, but it wouldn’t be a violation…as long as,if a small store can raise that gazillion dollars somehow, they can buy it (and resell it to the public).
If the publishers have not allowed independent stores to develop a similar DRM plan which they accept, then I think they have a problem.
I think that’s unlikely to be an issue, though.
The suit makes some odd points…
- It suggests that the introduction of Kindles allowed e-books to be read on a portable device. Actually, there were already at least ten EBRs (E-Book Readers) in the US market when the Kindle came out in 2007…including Sony being in the market. The Kindle transformed the market in part by allowing wireless downloads, in part by being associated with Amazon (which was associated in a strong way with books), and yes, in part by getting fuller tradpub (traditional publisher) participation (in my opinion, on all three of these). That might have been an interesting argument: did tradpubs enter the market more strongly because of Amazon’s DRM?
- The suit is simply wrong when it says, “All e-books sold by AMAZON contain the AZW DRM.” As I mentioned above, selling with DRM is optional at Amazon
Let’s say that the suit continues to the point where Amazon might choose to settle. Could I see that happening?
While I think it’s unlikely, yes. I could see Amazon dropping DRM. There are other ways to bind buyers to you, including great customer service.
The unintended consequence of no DRM, of course, would be publishers suing people who were distributing books. DRM, when used properly, can work as an infringement preventative (by average users). This is always a difficult thing to discuss, because some people are very passionate about not liking DRM (and certainly, the success of DRM MP3s for music can be legitimately raised, even though the use models of books and songs are quite different). Publishers can reduce casual (and often unintended) infringement using DRM, or they can pursue people legally after the fact.
We’ll keep an eye on this suit, but I don’t think it will have the impact of the Department of Justice’s legal action against five of the Big Six and Apple over the Agency Model.
What do you think? Is the use of platform-specific DRM inherently anticompetitive? Would the publishing industry be helped or hurt by dropping the sort of DRM that exists now? Was DRM perhaps important in the nascent stage of the e-book industry, but no longer as important? Feel free to let me and my readers know by commenting on this post.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.