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Publishing News: There's no such thing as degrees of DRM

Harry Potter ebooks, Google surveys and the DoJ's investigation.

Here’s what caught my eye in publishing news this week.

Social DRM is as bad an idea as traditional DRM

HarryPotter.pngThe most talked-about news this week was the release of the Harry Potter ebooks. The release was interesting on a couple of fronts. First, Amazon and B&N were strong-armed into allowing a portal to a third-party sale on an outside website — and into allowing a third-party download onto their proprietary devices. As a post at The Bookseller notes, “It is believed to be the first time Amazon and Barnes & Noble have allowed an e-book sold on a third-party retail site to be downloaded onto a Kindle or Nook device.”

Second, the Potter books are being sold DRM free. Well, that’s not entirely accurate — Laura Hazard Owen describes the copyright situation:

“Is there DRM? No, the e-books do not have DRM. Instead, they’re watermarked (or, as Pottermore kindly describes it, ‘personalized’): ‘The Pottermore Shop personalises eBooks with a combination of watermarking techniques that relate to the book, to the purchaser and the purchase time. This allows us to track and respond to possible copyright misuse.’

I reached out to O’Reilly GM and publisher Joe Wikert, who recently called for an end to DRM, to get his thoughts. He says the Harry Potter watermark move is like being “sort of pregnant”:

“My first thought is that this form of social DRM provides a similar false sense of security as traditional DRM. Anyone who wants to put this content on the torrent sites is just going to strip the watermarking out, the same as they’d do with the regular DRM. And I find it ironic that so many publishers say they’re not concerned about torrents as much as they’re trying to prevent customers from sharing the books with friends. Well, watermarking is going to make that much easier (than regular DRM), and I doubt many customers will feel guilty about doing it. They’ll probably simply tell their friend, ‘it’s OK for you to read this too, but please don’t pass it along to anyone else since it has my name embedded in it,’ for example.

As far as I’m concerned, there aren’t degrees of DRM. You either have it or you don’t. It’s just like being pregnant. You’re not ‘sort of pregnant.’ And social DRM is as bad an idea as traditional DRM. I’d like to think that this Harry Potter situation will cause other publishers to feel they can ease up on their need for DRM, but I’m not sure that will happen.”

Mathew Ingram at GigaOm has a nice post on some of the major takeaways from Rowling’s diversion from the traditional path, which also includes the agreement with libraries: “… the Potter books can be loaned an unlimited number of times, and the lending license lasts for five years.”

Survey says …

PaywallArt.pngGoogle rolled out a new product this week aimed at helping struggling digital publishers with their revenue streams. A post at Adweek says the new Google Customer Surveys “is being billed as an alternative revenue model for publishers weighing whether to erect paywalls on their sites.” The post explains how the surveys work:

“When users visit the Web sites of partners like the New York Daily News and the Texas Tribune, they’ll find some articles partially blocked. If they want to continuing reading, they’ll have to answer a question, or microsurvey, courtesy of Google.

The multiple-choice questions will be on market research, along the lines of ‘Which of these types of candies do you usually buy for your household?’ The choices for that question include ‘None, Hard candies, Jellies, Licorice, Toffees.’ Another question: ‘Have you had personal experience with filing lawsuits? Please check all that apply.’ … Advertisers pay Google to run the surveys, and Google pays sites 5 cents per response.”

In a post at PaidContent,Laura Hazard Owen explains the advertiser side of the survey:

“The customers create surveys and select the audience who will see the questions. Questions seen by a broad audience representing the general U.S. population are $0.10 per response (with a minimum total cost of $100). If companies want to drill down by demographic or select a custom audience with a screening question, the cost is $0.50 per response.”

Owen also highlights a potential issue (and the reason both of us couldn’t get a survey to pop up at partner site Lima News): The surveys can be blocked by AdBlock and by pop-up blocking options in browsers.

Personally, I’m willing to pay to avoid my content being interrupted, whether that content is news, books, movies, etc., but as Rob Grimshaw, managing director of FT.com, points out in a post at Wired: “Old models may be broken and the industry’s initial approach to the web may have misfired, but where there’s demand, there’s a business. News publishers should have faith that they still perform a valuable service and go out looking for the right model to support it.”

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The nature of virtual goods, TBD

Tim Carmody took an in-depth look at the U.S. Department of Justice’s investigation into agency pricing this week. He argues that the investigation goes much deeper than issues of price fixing:

“… the DoJ’s investigation and a related civil lawsuit touch on issues bigger than rising e-book prices or even collusion between publishers. The cases are also about who has the right to sue e-book publishers, the nature of publishers’ bilateral interactions with Apple and other retailers, and whether it’s even possible for a true agency model to exist for virtual goods like e-books.”

That last point regarding virtual goods is particularly interesting — it looks like the courts will be facing a landmark decision regarding the nature of virtual commodities. Carmody explains:

“There are two legal models that could apply to the publishers’ sale of e-books. One is agency; the other is retail price maintenance. In a genuine agency model, the agent doesn’t own or bear legal responsibility for the stock; the seller does. Price maintenance simply allows the original seller to set a floor for final customer prices that retailers have to observe as part of their agreement.

According to [Donald Knebel, an IP and antitrust attorney affiliated with the Center for Intellectual Property Research], the usual legal tests for whether a retailer is acting as a publishers’ agent hinge on issues of liability that don’t apply to virtual goods. There is no physical possession of the stock, there are no storefronts catching fire. Knebel says this issue has never been adequately determined in court, even with software in a virtual app store, let alone e-books in a virtual bookstore.

Carmody’s piece is a must-read for this week.

Photo: Beyond the wall by Giuseppe Bognanni, on Flickr

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  • Charles Engelke

    Watermarking may be bad, but O’Reilly’s Safari service does it. Every download I get from their has my name and email address in it.

    And I’ve bought plenty of books from Pragmatic Publishers that have been sent directly to my Kindle. I just have to authorize their email address with Amazon and it’s then automatic.

  • http://Http://martinkenny.com/ Martin Kenny

    +1 to both of Charles Engelke’s points.

    Additionally, I’d note that the watermark on Safari PDFs is quite frustrating; it makes reading those pages quite a lot harder (I don’t mind my name being in the footers, but underneath the text is not cool).

  • David Loeff

    I think it’s a shame that the eBook you buy for Kindle (or Nook) works only on that particular device. Since eBooks are fundamentally similar zipped HTML files, I’d like to see an independent third party manage an owner database for eBooks. Such a database could allow device independence as well as lending, resale and transfer of ownership.