Publishing News: Dropping DRM may be too little, too late

Removing DRM may not save publishing, first sale doctrine goes to the Supreme Court, and Apple wants its day in court.

Here are a few stories that caught my eye in the publishing space this week.

Giving up the DRM


In the aftermath of the DOJ lawsuit, much has been written about what publishers need to do next if they’re going to survive in the face of Amazon’s increasingly powerful position, and the issue of dropping DRM is a recurring theme. Mathew Ingram at GigaOm argues that publishers first need to realize they’re partially responsible for the locked-in position in which they’re finding themselves and then realize they hold the key to breaking free: drop DRM. Ingram says that not only is it unlikely that DRM is fulfilling its intended purpose of preventing piracy, but that it’s having an unintended consequence of hindering sales:

“What these chains and locks do, more than anything else, is to make the simple act of buying and reading a digital book horrendously complicated. Does that make more people want to buy and read e-books? It’s hard to see how. In a very real sense, those locks are hobbling the industry.”

Author Charlie Stross also addresses the issue of DRM in a post about how and why Amazon has been able to establish itself so well in the marketplace. Stross goes into a lot of interesting background and in-depth detail (his post is a must-read for this week), but he succinctly sums up Amazon’s strategy: “Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.” And, he explains, publishers’ death grip on DRM played right into Amazon’s best possible scenario: “By foolishly insisting on DRM, and then selling to Amazon on a wholesale basis, the publishers handed Amazon a monopoly on their customers — and thereby empowered a predatory monopsony.”

Adrian Kingsley-Hughes over at ZDNet writes that “frightened publishers” will certainly bring an end to DRM in a desperate attempt to survive, but that it’s “too little, too late” and that it won’t make a dent in Amazon’s position — or Apple’s, for that matter:

“[Amazon and Apple] are far too popular (and, by the majority of customers, well loved) for the removal of DRM to make a difference … On the whole, consumers don’t care about DRM, and removing DRM from e-books won’t open up the market in the way that publishers hope it will. What Amazon and Apple have done with Kindle and iBooks respectively was not invent e-books, but refine how the content was consumed.”

Kingsley-Hughes argues that the only way for publishers to have a shot now is to band together: “Unless the publishers can come up with their own one-stop shop for e-books, make this as easy to use as Amazon or Apple’s offering, get this outlet onto devices that people use, and then come up with compelling reasons why people should choose to use it over other outlets (the hard part), nothing will change.”

That may be true, but I have to agree with Ingram’s argument that “at least [dropping DRM] would give publishers a chance to be more flexible and adaptable, instead of trying to prop up their failing business model with price-fixing.”

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A textbook case to settle first doctrine questions

The U.S. Supreme Court has agreed to weigh in on a first sale doctrine case, Kirtsaeng d/b/a Bluechristine99 v. John Wiley & Sons Inc., involving textbooks that were purchased in Thailand and resold in the U.S. A post at The Wall Street Journal (WSJ) describes the case:

“At issue are lower court rulings that found an entrepreneurial college student liable for copyright infringement for reselling foreign-edition textbooks on eBay. Supap Kirtsaeng asked friends and family in Thailand to buy copies of the textbooks, where they were cheaper. He says he resold them in the U.S. and used the profits to help pay for his U.S. education.

Textbook publisher John Wiley & Sons Inc. sued Kirtsaeng and won a $600,000 copyright infringement judgment against him.”

The question before the Supreme Court boils down to whether or not the first sale doctrine applies to goods produced outside the U.S. As a post at Bloomberg BNA notes, “the goods in the Kirtsaeng case were not originally made in the United States.” Implications of the decision will likely affect most categories of resale goods, including books, music, and software, but according to the WSJ post, retailers warn that the decision “could threaten companies that resell foreign-made goods and lead to higher prices for consumers. Retailers noted that many products they sell are first produced and procured from abroad.”

The issues in this case reach back to unresolved questions from a Supreme Court case in 2010 involving Costco Wholesale Corp. that ended in a 4-4 tie — Bloomberg BNA has extensive background detail on both cases here. Reports indicate the Supreme Court will hear arguments in the fall.

Apple will seek validation in court


On the heels of sending “possible commitments” to settle the antitrust lawsuit with the European Commission, Apple decided that versus the U.S. Department of Justice (DOJ), it wants its day in court. Reuters reports:

“‘Our basic view is that we would like the case to be decided on the merits,’ Apple lawyer, Daniel Floyd, told U.S. District Judge Denise Cote. ‘We believe that this is not an appropriate case against us and we would like to validate that.'”

Sara Forden at The Washington Post writes that Apple’s best defense may hinge on whether or not it was present during the publisher meetings in Manhattan where the alleged collusion is said to have taken place. Forden reports: “The maker of the iPad will need to show it negotiated pricing arrangements separately with each of the five publishers named in the Justice Department’s lawsuit, avoiding group gatherings such as those in The Chef’s Wine Cellar at Picholine described in the government’s complaint, antitrust lawyers said.” An antitrust specialist also told Forden that Apple could “argue it was providing an alternative to the near monopoly Amazon won with low margins and deep discounts.”

The next hearing is scheduled for June 22.

In other antitrust lawsuit news, litigation border hopped again, this time into Canada. According to a report at The Globe and Mail, the Vancouver firm Camp Fiorante Matthews Mogerman filed a class-action lawsuit in B.C. Supreme Court against Apple, Hachette Book Group Inc., HarperCollins Publishers Inc., Holtzbrinck Publishers LLC, conducting business as Macmillan Publishers Inc., Penguin Group, Simon & Schuster, and their Canadian subsidiaries. The lawsuit alleges a”‘conspiracy’ to lessen competition and ‘fix, maintain, increase or control the prices of e-books,” according to the report. Reidar Mogerman, the lawyer who filed the lawsuit, told The Globe and Mail, “The U.S. case isn’t going to cover Canadian consumers. So it’s the same underlying facts, it’s the same consumer protection agenda, but it is for different consumers in a different country.”

For a comprehensive roundup of post-DOJ-lawsuit coverage, check out Porter Anderson’s (@porter_anderson) latest Writing on the Ether column. For an overview of the publishing chaos in general, including industry issues with the DOJ lawsuit, Google and libraries, check out this story from The Atlantic.

Photo (top): chained by Colin-47, on Flickr

Photo (bottom): English: Gavel, on Wikimedia Commons


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