Bookstore Lawsuit Draws Attention to DRM for Platform Lock-in

Over at paidContent, Laura Hazard Owen wrote about how three independent bookstores have sued Amazon and the “big six” publishers (the six largest in the United States), alleging that Amazon’s digital rights management (DRM) tools have created a monopoly. The claim is that publisher contracts requiring DRM restrain ebook sales and that Amazon “has unlawfully monopolized or attempted to monopolize the market for ebooks in the United States.”

I have no sense of how the case will be resolved, in large part because the bookstores may have a hard time showing that Amazon is a sufficient monopoly given what seems to be a lot of competition: Apple’s iBookstore, Barnes & Noble, and Kobo. These other marketplaces also all sell ebooks with DRM and make up an estimated nearly 40 percent of the ebook market. Plus, as Cory Doctorow points out at BoingBoing, the lawsuit has remarkably uninformed statements about “open source DRM.”

What I find more interesting about the lawsuit is that it draws attention to how DRM has been used by Amazon to create platform lock-in: An ebook purchased from Amazon’s Kindle Store can be read only on a hardware Kindle or in a Kindle app, in part because of the Mobipocket format, but mostly because of DRM. Publishers also can’t sell from their own sites a DRM-protected ebook that can be read on the Kindle reader — only a DRM-free alternative format that has to be sideloaded by connecting a reader via USB to a computer and copying the file to the correct folder. (J.K. Rowling’s Pottermore is the only exception, selling DRM-free copies of her book that can
be registered with accounts at Amazon, Barnes & Noble, and others — but not Apple — to be downloaded to those firms’ readers and reading software.)

Though the minimal market share of the iBookstore causes it to fly under the radar of this particular lawsuit, Apple has exactly the same restrictions with its FairPlay DRM and with the iBooks Author license agreement, which states that commercial books created with iBooks Author may be sold only in the iBookstore. (See “Examining iBooks Author from the Publisher Perspective,” 22 January 2012.) To be fair, publishers can upload books without Apple’s DRM to the iBookstore, but many turn that locking feature on. (Our Take Control ebooks sold in the iBookstore are DRM-free, of course, just like from our own site.)

It’s ironic how, in their DRM-driven desire to prevent copying by readers, publishers have put themselves totally at the mercy of Amazon and the other online booksellers. Whether or not Amazon has an actual monopoly on ebooks is open to debate, but there’s no question that the company occupies a dominant position in the market.

That position played into why the publishers negotiated an agency model with Apple, which let the publishers set the price and receive 30 percent as an agent’s commission. This stands in contrast with the wholesale model used by Amazon that lets Amazon purchase a book at a set price below the retail face value and then sell the book at any price it desires, including below its wholesale cost. That agency negotiation resulted in a price-fixing antitrust lawsuit filed by the U.S. Department of Justice against Apple and the major publishers; in May 2012, HarperCollins, Hachette, and Simon & Schuster settled, with Penguin settling in December 2012 and Macmillan in February 2013, leaving Apple as the remaining defendant.

Why is platform lock-in a problem? After all, when you buy a Macintosh app, you’re not bothered that it won’t run on your Windows machine. That’s technical lock-in, and is merely a fact of life. Apps written for one platform can’t run on another, and we don’t argue about it. Virtualization and emulation blur this line — you can run Windows and Windows applications on your Mac — but it’s interesting that the main example of a license-based restriction I know of is Apple’s license for OS X, which states that it may run only on Apple hardware; at least virtualization on Apple hardware is allowed as of OS X 10.7 Lion.

DRM-based lock-in for books and music is a beast of a different odor, given that the file formats involved are generally open standards (but not always; more on that later). Thus, the only thing that prevents users from reading a book or playing a song on any platform they like is a DRM wrapper around an otherwise readable format. It’s an entirely artificial limitation, not related to the technology underpinnings, and would be akin to a bookstore telling you that the physical book you just purchased may be read only by you (and no one else) when you’re sitting at your desk, and when in bed.

The history of DRM in the iTunes Store is instructive. The recording industry originally demanded that Apple apply its FairPlay DRM to all songs. But in doing so, the industry created a hegemony, since only Apple’s software and hardware could decode that DRM, locking out all other music players. The iTunes Store became the preeminent source for digitally downloaded music, which left the industry subject to Apple’s price demands, which were originally to sell nearly all music at 99¢ per track and $9.99 per album.

In 2007, following Steve Jobs’s open letter examining DRM, which suggested the logical course to expand legal purchases of music was to remove protections, labels quickly got in line. EMI, then in dire financial straits, was the first to crack, but it and other labels negotiated tiered pricing and higher prices for some albums. This change let Apple sell music to those without iPods (and soon without iOS devices), but also let Amazon, Google, Walmart, and many others compete with sales, deals, previews, and ultimately cloud-based music lockers to sell songs to Apple device owners.

The question is, would Apple have pushed to get DRM-free music if the iTunes Store hadn’t already been the dominant online music store? And would music labels have acceded if they weren’t also highly concerned about Apple’s hegemony? We certainly haven’t seen Apple pushing the publishers to remove DRM from their titles in the iBookstore even though it would benefit Apple to let books it sold be readable on a host of other devices.

I’d argue, based on the example of the iTunes Store, that Amazon should make like Apple and push the publishers to remove DRM from all titles sold through the Kindle Store. That would make the Kindle versions of ebooks all the more attractive and, as with the iTunes Store, cement the Kindle Store’s leading position. Of course, if Apple wanted to goose its share of the ebook market, it could beat Amazon to the DRM-free punch, causing the iBookstore to become the go-to outlet for DRM-free books that could be read on any platform and with any software.

(My understanding is that Amazon’s DRM can be removed relatively easily, and a number of people I know who buy a lot of ebooks always purchase from the Kindle Store and then crack open the DRM to read the ebooks in any app they want or on any device they want. Apple’s FairPlay DRM is nearly unbreakable — the efforts I’ve seen have been only minimally successful.)

Amazon has another ace up its sleeve, even without DRM. The Kindle hardware and apps use proprietary file formats (the DRM-free Mobipocket, the DRM-encumbered AZW, and the new Kindle Format 8, also known as KF8). Even if Amazon were to remove DRM, the file format would ensure a lightweight platform lock-in, since most people wouldn’t go to the trouble of converting their ebooks to an open standard like EPUB. Apple is taking the same file format approach with iBooks Author, which uses an EPUB-like format without actually making it EPUB-compliant. As a result, iBooks Author-created books can be read only in Apple’s iBooks app, and thus only on the iPhone, iPad, and iPod touch.

I’ll admit, this entire situation frustrates me as both a reader and a publisher. As a reader, I don’t generally buy ebooks because the DRM prevents me from lending them easily, something we often do with family members, and I also don’t buy anything that I can’t read on whatever device I like. There have been some high-profile cases where DRM enabled Amazon to take purchased books away from customers (see “Double Plus Ungoods: Amazon Unpublishes Orwell,” 19 July 2009) and Apple’s license agreement gives it the same permission.

As a publisher, I want to be able to sell my books as broadly as possible, but with Amazon and Apple and other online booksellers walling off their gardens with bricks of DRM and mortar of proprietary file formats, it’s difficult to play.

What I’d like to see is support for DRM-free EPUB3 become standard everywhere. EPUB isn’t perfect, but it’s an open standard, and thus a solid foundation that both readers and publishers can trust going into the future. At least some books — not ours, for the most part — have very long lives, and I really don’t want to see the platform lock-in from DRM and proprietary file formats cutting those lives short for no good reason.