Apr 052011

This is a recurring question in ebook circles, particularly for authors — are people going to pirate my book, and how can I stop it?

One technical “solution” is DRM — digital rights management. And to know if DRM is right for you, the context is probably best understood in comparison with the music industry’s success and failures.

You may recall a small ruckus re: iTunes about 18 months ago when they removed DRM from their MP3s, at the industry’s request actually, not just customers. Customers who buy MP3s want portability across devices, and some aspects of DRM prevent that — it is designed to prevent rampant pirating but generally speaking, it can be bypassed by those likely to pirate rampantly, and those who would abide have no idea what to do when their legitimately purchased MP3 that they had been listening to on an Zune can’t be easily copied on to their new iPod (DRM tries to lock a file to a single user, or, in the past, often to a single device as well).

For ebooks, you have three barriers to rampant pirating — first, the price point. As with MP3s being dropped to 99 cents by iTunes, and the ease of finding almost anything at once, a lot of the pirate shops lost their edge (don’t get me wrong, they’re still there, just not with the same number of customers). But a lot of people buy their copies just cuz it’s easy, and virus-free. And the policy-wonks in the crowd will know that this is called rent-seeking behaviour by economists — how to set a price point that balances incentives to buy against incentives to cheat or not buy at all, while maximizing profits for the producer. So, for example, if you make the perfect car, and sell it for a $1, everyone will buy one, but you’re losing money. If you sell it for $3M, maybe you only sell one. For the thief, if it is $1 to buy one vs. life in prison for stealing it, they’ll cough up the $1; if it is $3M, some stupid thief will take the risk. With ebooks, the price margins are narrower — the number of people who will steal something worth $2.99 for legitimate purchase is a very different calculation than the number who will steal it if the price point is $9.99 or $14.99 (particularly if they believe the price is set too high and should be cheaper than paper versions — they’ll rationalize their guilt away by saying the publisher/author was just trying to gouge THEM first).

Slow-to-adapt print publishers are going through the same growing pains as music producers did 7 or 8 years ago (although it lasted for 4-5 years) or that early adopters in book publishing did about two years ago — the concern is not about loaning things around like a book, as books only have one copy, but rather that Joe Reader with little technical skill will buy an ebook, and then email everyone in their address book to say, “Oh, hey, great book, and here it is”. With everyone getting an identical perfect copy instantly, no waiting to share. In other words, if they get a perfect copy from me and it’s DRM-free, their copy is no different from what they would get by paying Amazon or Smashwords. Free, easy, little risk, and you get to tell yourself you’re sticking it to big business who were price gouging? That’s a huge incentive for people to share after they buy, and not to feel too bad about it. Personally, I’m hoping ebooks go the way of some of the new DVD releases — with some now, you get regular version, extended version, Blu-Ray version, PC version, extra blah blah blah, all in one package. Five years from now, people may expect that if they buy a paperback, they can also DL it in ebook form too and choose which to read at any given time. But that’s a level of complication not envisioned much by anyone now outside of the textbook world.

Second, you can combat piracy through official DRM — some ebooks have it (you have an option at Amazon to include or not…I thought Smashwords had the same, but apparently not). This is a software code embedded in the file that tags it to say basically “I am registered to Paul’s Kindle”. Then, when you open the file, the device reads the software code and asks “Is this Paul’s Kindle?”. If yes, “great, go ahead”; if no, “HEY BOOK THIEF, no book for you!”. A partial consensus on a marketing list for authors seemed to be that most indie authors weren’t bothering to include it — partly as it presents an opportunity for the reader to have a technical problem and thus associate a negative experience with YOUR book … and you can bet your tags and reviews will reflect it, regardless if it was user error.

Finally, though, piracy is a bit hampered by the simple problem of file formats…if you buy an Amazon Kindle version, you can’t automatically read it on your iPad iBooks app (you need to install a separate Kindle app and read it in that) nor your Nook (no Kindle app available). If you buy the Nook version, you can’t read it on your Kindle either, etc. These files are still relatively proprietary formats. So piraters can’t exchange completely their entire list — the Nook pirater and the Kindle pirater don’t want the same files (I’m being a bit overly simplistic here, but you get the drift).

Until the market share hits about probably 20% of book sales, the format wars won’t really heat up — it was about that average, as I recall, for MP3s and Blu-ray DVDs (other formats for MP3s still exist for other devices, but there are converters easily available; for alternatives to Blu-Ray, HD-DVDs and LaserDiscs and Betamax and VHS went the way of the typewriter).

Eventually though someone is going to come out with a decent ebook interchange converter and fight the good fight when they get sued out the ying-yang for facilitating breaking digital copyright mechanisms, etc. Calibre does basic conversions, but not perfect — on the positive side, it often isn’t a problem for the legitimate reader as companies and authors make their books available in multiple formats to avoid cross-platform compatibilities (Smashwords has multiple formats available, Amazon just has the one — Kindle! — but they have apps available for all smartphones, tablets, etc, just not other one-off ereaders like the Sony or Nook that don’t run other apps). It is just a problem that if you go to pirate, you have to make sure you are getting the right file format or know how to convert it (or are willing to put up with less than perfect conversions by Calibre). Which is not the same as with MP3s were the format is fairly “settled” (please, no OGG-lovers or AAC-philes flaming me in the comments).

So the three work together, but with mixed success, quite like the old MP3 world of music — until the price point tended to override the attempts at technical solutions.

However, I won’t say a print publisher has nothing to worry about in the interim…if you go on a site like PirateBay, click on TOP 100, and under OTHER you choose EBOOKS, you’ll see that most of the big titles are all non-fiction ones like PC-repair manuals, playboy & penthouse (oh wait, that’s the fantasy category!), PC magazine etc. Which a lot of people would just say is “niche” publishing, bad for certain presses, but not all.

However, if you then look more closely at the long list, nestled in about #11 is a link to something called “Kindle Books Volume 2″ which contains 1400+ Kindle Books including things like Harry Potter, Tom Clancy, Sue Grafton (up to the letter U), and, more timely, Deborah Harkness’ Discovery of Witches. If you click the torrent link, DL it into a prog like BitTorrent (freely available), wait while it DLs in the background (hours to days depending on your connection speed), then voila, 1400 books ready for your Kindle. All without DRM. Free. Completely illegal. And, of course, you may also be DLing a virus too, part of the risk of piracy. Kind of like stories you hear of friends of friends who went to a street hooker, you might come home with something you didn’t want.

But here’s the economic kicker, and where publishers and pirates diverge in their arguments before the court — calculating “damages”. Yes, those people just stole the book. Or the song. Or the movie. So the publisher says, “Hah! Pay me!”.

But are the publisher and the author really out any money from a “lost sale” when the pirates were never going to “buy” those books anyway? They only steal them because they can, none of them had $125,000 to buy them all. They might have bought one or two at $15 each…after all, they like books enough to collect ebooks, but surely not 1400 of them. Or 14,000 of them. Or 500,000 of them. And they’re not going to read them anyway…just as with MP3s, pirates are often hoarders masquerading as collectors.

For example, there are regular nerdy pirates (not including the hardcore site runners) with 500,000 MP3s sitting on their hard drives — if they pressed play, and listened to them end to end, they would be listening for almost three years straight with no breaks. And guess what? They’re still downloading more that they will NEVER LISTEN TO, but they want them. Like Everest, because it’s “there”. Book pirates are doing the same…so they argue “no lost sale, $0 real damages”.

But what if you aren’t a regular pirater? What if you are just Joe Reader, and you are thinking of reading Deborah’s new book. What if you DLed the whole collection for that file only, or found it on other sites in single copies to download in seconds, not hours. Either way, you would save the Kindle price of $9.99. That would be a lost sale, which is not from the hoarder’s pirating but rather from the hoarder’s SHARING with the small-time book-reading hood.  :-P Kind of like the smoker who buys contraband cigarettes from his buddy but isn’t themself an active smuggler or sub-distributor, except the hoarder pirates aren’t usually profiting in this digital scenario.

What no one really knows is how many one-off DLers there are who are able to buy, but choosing to pirate occasionally instead. They can only get the books they want for free because the pirates’ hoarding enables it. But the music pirates often get convicted and sued for possession and lost revenue, not for the enabling — which is why you see stupid cases involving 75-year-old grandmothers getting targeted for one DL rather than the 18-year-old enabler in Kansas with a cache of 3M songs. It’s easier to catch the technically illiterate for possession than it is the hard-core pirate who knows about proxy servers.

The much bigger issue though is people who are somewhere in the middle, like myself. I’m not “addicted” to books, there’s no Kindle patch on my arm. But I do like reading, owning maybe 1500-2000 paperbacks in my basement in boxes, never unpacked from moving them several times.

I’m more like a social “smoker”, or maybe more like a “binge” smoker who falls off the wagon and reads everything in sight for months. And I have both disposable income and a Kindle.

If I want a particular book, I can buy it. And my interest is going to be in three types of books.

First, there are the new indie authors, selling books for $0.99 – $2.99. Like the joy of the audiophile finding a new garage band who is amazing, I’ll take a chance on a lot of books at $0.99 for purchase.

Second, there are the big name authors — Dan Brown, Lee Child, maybe even Deborah Harkness. And I want to read their new books. But I honestly don’t believe the price point for those books are set fairly — if the authors were getting 70% royalties, I’d be more comfortable with it. But even with higher royalties, I will never accept the math that print books cost the same to produce as a digital file — formatting a digital file has single unit costs that don’t change for one book vs. a billion, while print copies have both fixed single unit costs and significant incremental unit costs (printing, storing, shipping, etc.). So I won’t buy them — I have 1000s of other books to read from old classics to library copies to hardcovers to whatever. Yet, because they are “new”, I won’t pirate them either. If I want a copy, I’ll wait until the price point drops over time (hopefully).

But what about backlists? Remember those 1500+ books in my basement? I want the space back. But I’ve kept them as I like having the books once I’m done reading them — I don’t give my books away, leave them behind in hotel rooms, or donate them (yet) to library programs. Growing up, they were close friends. When times got tough at various points in my life, they were refuges from the world. They are a comfort blanket to know I still have them, like photo albums that I may never go back to look at, but I’m glad I took the photo. And I would love to replace them with ebook versions. Yet I’m definitely going to balk at paying $7.19 for the first Janet Evanovich book that I already bought once in hardcover ten years ago…And I have decent enough technical skills to DL a file and check it for viruses. A free copy of a book I already paid for? Versus my guilt at cheating an author out of another sale, when I aspire to being a writer myself? That’s the thin edge of the wedge — I have the $$ but I already supported the author …

Is it a mortal sin, or only a venial one to make / take a free copy of what I already own in another format? How is that different from the old world of tape cassettes or the present world of downloading MP3s and burning a mix CD for the car as well as putting it on your iPod and desktop?

  4 Responses to “Publishing — DRM and Contraband eBooks…”

  1. First, your example about making mixed tapes/CDs of music you bought. That was (and to the best of my knowledge remains) legal. If you *owned* the albums, and you made the mixed tape for you *own* use, that is. Making a copy for a girlfriend wasn't. (Then again, I'm going through all those old cassettes and downloading from iTunes all the songs I don't already have, so they are getting paid– 'twas a problem of liking the one song, not wanting the rest of the album, and they'd stopped making singles).

    But as for the real points. I agree, charging the same price for the e-version as the paperback is absurd. Even if the author were getting 100% of the difference between manufacturer's overheads and standard profit and the price– some would consider paying that, but most would still balk. Their greed is only to the pirate's benefit. They should look at what Jobs did with iTunes and notice the massive sales music producers are getting as a result of all those little 99c/$1.29 purchases. Those who want the album will still get the CD; but all those people who only want a song or two (like me), it's entirely new, wouldn't-have-otherwise-had sales.

    As for your point about how do you implement DRM yet let people be able to switch devices/platforms. Well, while the market's fragmented between different devices you've got some protection for the typical reader: incompatibility could prevent too much "check out this book" sharing, since most won't want the hassle of conversion, although some would definitely say that saving $10-15 is worth it. (Of course, if the books were $4-$5, there'd be no question). But longer run… lower the price, but also, what about doing something like Quicktax does? With this purchase, you can make x copies. (And remind them that that includes back up, or device changes). So, if you know you only get 3 (or whatever they decide is reasonable) copies, and you know electronic devices only last a couple of years (at most) until you get a new one…do you really want to share your copy with every member of your book club?

    (I'm running regressions in the background… time consuming and keeps interrupting so can't get any 'real work' done. MIght as well comment on this!

    • The mixed tape world has changed with the new copyright rules, and most of the lawyers involved can't even say 100% if current wording allows copying a CD to your iPod or not (they assume so, and they assume no judge would find otherwise, but the drafting of legislative language generic enough to cover fair use while excluding extra copying is difficult — similar to why solicitation is illegal, not prostitution itself, as it is hard to regulate the "act" without infringing on non-commercial sex).

      A "limited sharing" option like QuickTax is attractive, but runs into a serious issue — is it enforced technically or is it the honour system? Technical solutions present sustainability problems, plus pains for legitimate users; moral suasion does nothing to combat big piracy.

      But I like either allowing limited loans or moving to a resale system option, with some of the $$ going to the author (a used book doesn't work that way, but a used book is different from a new book — a new e-file is the same as a "used" e-file, so if a resale was allowed, it would undercut the new market way harsher than in the book world). And, as Amazon maintains the files on its servers, it could "delete" it from your account once it is resold? Might be a nightmare though.

      Overall, I really like the iTunes option instead…drop the price and wipe out the normal economic incentive. Hmmm…strange, *I* like a MARKET solution???? How did that happen??? ;)


  2. Hi PolyWogg,

    May I put a link to this wonderful article on my blog on publishing: http://rasanaatreya.wordpress.com? Thanks.

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