I have been trying to follow the story of the dustup among Amazon, Apple, and Macmillan on pricing on e-book readers, but have been distracted by other things. What interests me are the business models being pursued by the various parties here – and whose makes sense, whose doesn’t, and who is likely to survive and win out. Plus – someone tell me what the legal status is of “books” that I purchase today on Kindle – am I simply purchasing a revocable license of some kind to read it? What’s the legal condition. I love my Kindle, and anticipated that some kind of pricing battles would eventually break out – but I sorta hoped that competition would favor me as a consumer. At this point, is it? Someone explain to me what’s going on.
Here’s Charles Martin on the business model; there are good stories in the Times, WSJ and FT.
Update: Delighted to have Virginia Postrel, of whom I am a big fan, join the comments and point us to her article at the Atlantic business channel. Very interesting article on pricing.
Update 2: There are a number of exceptionally interesting comments here in the thread.
AndyM says:
When you “buy” a kindle book, you are buying a revokable license to use it. As demonstrated recently in the last amazon-kindle-mess, they can revoke that license at any time they wish, and they are not required to give you a refund (though they likely will).
I’ve always wondered why nobody tried pursuing them for false advertising on the grounds that they advertise books for “sale” and then insist that they haven’t “sold” you anything. You, for example, apparently suffer from the delusion that you “purchase” a kindle book, which is not currently possible. You may have rented one. But hey, that’s the sort of thinking that stops me from being a lawyer; I can’t argue with a straight face that every user read and understood the terms of service here and knows how they differ from the common expectation of words like “sell” and “purchase”.
February 2, 2010, 5:00 pmOren says:
You know something is wrong when a bona-fide smartypants (and I mean that in the most positive way) like Prof Anderson cannot figure it out from the terms and services on which he no doubt clicked “Agree”.
Can you cite a particular advertisement that you think is deceptive?
There is no requirement at US law (IIRC, correct me if I’m wrong) that a user read and understand the precise terms of sale in order to effect a legal transaction. If it were, I doubt anyone could get a mortgage or a credit card.
Misunderstanding (or lack of desire to read the terms at length and understand them) is not the same as misrepresentation.
February 2, 2010, 5:16 pmtom says:
Technically only some books you might download for you Kindle have DRM (digital rights management). All of the books in Amazon’s proprietary format are protected and hence you actually only own the right to read the book on a single Kindle. To quote Amazon:
There are, of course, a number of sources of books. Some of them are protected by other DRM agreements, and some are not DRM protected. Some of the non-protected books are ethically sourced and some not.
I’m not fond of the “just renting” concept of books. I often donate books I’ve read to the library, or re-sell them on eBay. Obviously not possible with the Kindle. On the other hand…I travel about 50% of the time and the Kindle sure beats having to lug around 3-4 books on a 2 week trip.
February 2, 2010, 5:29 pmShelbyC says:
From what I understand of the agreement, you have a permanent license to read your stuff that is revokable if you violate the agreement. I’ve always figured competitors to Amazon would negoicate agreements with publishers to give you a license to stuff you’d already purchased on the Kindle, but I don’t know if they’ve done that or not.
February 2, 2010, 5:30 pmBama 1L says:
Look at the EULA on any piece of computer software you purchase. They sold you a license. Good luck with your suit.
This issue is part of the reason I have no interest in these devices. I would price a license to read a book’s worth of words on a propriety device at about one-tenth what I would price owning the book. When the pricing matches my expectations, I’ll reconsider.
February 2, 2010, 5:31 pmChris says:
Books are so tiny I can’t imagine a world where they won’t be available for free and relatively risk free. Amazon knows this, hence the 9.99 price. Macmillan also knows this hence the 14.99 price. Amazon is competing against free and Macmillan is competing against paper.
February 2, 2010, 5:50 pmChrisTS says:
I heard an economic analysis of this kerfuffle that noted an odd current effect: competition is raising the price for consumers.
I assume that the Apple ereader offers some wonderful features that would entice people away from Kindle despite the higher price of the ‘books’?
February 2, 2010, 6:31 pmChris says:
Cheating creates an upper limit to price. Putting a stop to cheating is not cost free. The price of ebooks is going to be somewhere between the actual free price (available to amoral risk takers) and the top price (what risk averse people who want the product and are willing to pay). You can raise the price by making it hard and or risky to copy, but making it hard and or risky to copy has impacts that go beyond books. Who knows how things will play out.
February 2, 2010, 6:44 pmKenneth Anderson says:
Well, the Kindle was a gift. Alas, although I would to claim that I’ve rationally invested as much time in figuring out the terms and conditions of the downloads as it actually merits given What A Busy Important Guy I am, and so am engaged in a version of rational ignorance in Ilya’s sense … I’m afraid it’s really just, Ignorance!
But okay, I’m still trying to figure out the respective business models here, too.
February 2, 2010, 7:41 pmVirginia Postrel says:
My thoughts here: http://business.theatlantic.com/2010/02/amazon_vs_publishers_and_apple_what_should_e-book_prices_look_like.php
February 2, 2010, 7:45 pmRoscoe says:
Kenneth:
As the risk of telling you something you already know, have you checked out the ManyBooks.net site. Thousands of books (mostly out of copyright) available in the Kindle format, with no DRM, for free. Site is here:
http://manybooks.net/
February 2, 2010, 8:07 pmHunter McDaniel says:
Bama 1L nails the real problem.
The restrictive license agreement for these ebooks makes them effectively a rental. Thus the value of an ebook to me as a consumer is a lot less than that of a physical book (to which I have essentially all rights short of re-publication).
McMillan seems to think ebooks should be priced on par with physical books, notwithstanding their reduced value and that all of the cost reductions associated with this new technology should accrue to them. Good luck with that.
February 2, 2010, 8:32 pmHoward Gilbert says:
The concept of a fully paid up perpetual license has existed since computer software started to cost money in the mid ’70s. The problem you have is that bytes are intangible and they aren’t any good unless you can copy them to a device. A paper book is tangible and does not require a license, but then you can’t make a copy of it in any way. The copyright mechanism that works for paper books (you can’t copy) doesn’t work for electronic data. Since the data doesn’t work unless you can copy it, you have to copy it under a license that allows limited personal copies but then prevents you from redistributing the content to others.
The Kindle arrangement is really a much better deal than the software that has been marketed under the same arrangement for decades. I have a box of Windows 3.1 floppies, but I wouldn’t want to install it on a machine today. For that matter, I would not be particularly happy with a box of eight track audio tapes and movies on VHS video are not exciting. However, a digital copy of Pride and Prejudice, especially one that can be redownloaded into every new type of device that technology generates, will probably be just as useful thirty years from now as it is today.
I do not like the iTunes arrangement. They sell you the data, but once you download it you have to make your own backup copies. Apple doesn’t maintain a record of your library. With Amazon, they keep the records of everything you have purchased and you can download it again at any time in the future. You will never have to repurchase something you already bought.
There is, of course, a tradeoff. A paper book can be loaned out to friends. You can loan the Kindle itself to a friend, but not any individual item of content. The digital content is cheaper, but you can reasonably share it only within your family.
February 2, 2010, 8:49 pmOff Kilter says:
Chris TS: ” assume that the Apple ereader offers some wonderful features that would entice people away from Kindle despite the higher price of the ‘books’?”
The main one I can see immediately is color. While not a big issue with most books, in the college textbook niche it could be a big deal. As someone who carried (painfully, awkwardly) a half dozen large textbooks to class in the pre-backpack era, having it all on a 1.5 pound Apple iPad would seem a Godsend…
February 2, 2010, 9:26 pmEMB says:
If you look at the entry on Amazon for the Kindle edition of any book, the words “buy” and “purchase” certainly appear. It doesn’t say explicitly whether the thing that you’re buying is a “Kindle edition” of the book or just a license, but by analogy with the non-Kindle entries on Amazon, it ought to be the former. This sounds like deceptive advertising to me.
Even ignoring the DRM/anti-circumvention issue, it seems like the prevalence of digital distribution with EULAs like this is quickly eroding any “right of first sale” that may have existed in the past. This is a problem that I don’t see getting fixed legislatively, at least not in the near future.
February 2, 2010, 9:52 pmrb1971 says:
A paper book is tangible and does not require a license, but then you can’t make a copy of it in any way.
I think you’ll find that some publishers think they’ve only sold you a license to a paper copy of a book. See this discussion among librarians for an example. No reason that contract isn’t just as legally enforceable as that accompanying software products a la ProCD v. Zeidenberg – tougher to enforce maybe as a practical matter.
Of course this is a weird result in my view since taken to an extreme (i.e., an agreement on every book) it basically replaces copyright law with contracts of adhesion. How is that different than the current situation for software? Good question.
February 2, 2010, 9:52 pmrb1971 says:
A paper book is tangible and does not require a license, but then you can’t make a copy of it in any way.
I think you’ll find that some publishers think they’ve only sold you a license to a paper copy of a book. See this discussion among librarians for an example. No reason that contract isn’t just as legally enforceable as that accompanying software products a la ProCD v. Zeidenberg – tougher to enforce maybe as a practical matter.
Of course this is a weird result in my view since taken to an extreme (i.e., an agreement on every book) it basically replaces copyright law with contracts of adhesion. How is that different than the current situation for software? Good question.
February 2, 2010, 9:52 pmq says:
Technically you don’t own the ebook you bought. But from a practical standpoint, it’s extremely unlikely Amazon will ever revoke your right to read it and/or transfer it to other devices you may have. So ignore all the paranoia in this thread, your ebooks are safe.
(yes, yes, 1984, blah blah blah. Which only proves my point given all the uproar despite everyone receiving a refund.)
February 2, 2010, 10:22 pmRichard Allen says:
The difference in the business models is that Amazon wants to buy rights from publishers and produce their own e-edition for the Kindle, setting their own price. Apple will settle for letting the publisher sell Apple an e-edition with the publisher’s own wholesale and list price attached. Amazon’s approach is going to prompt authors to try to retain electronic rights themselves and license them separately to Amazon, cutting out the publisher of the print edition.
I discuss this at greater length over at my blog:
http://www.95years.com/2010/02/01/the-most-unkindlest-cut-of-all-amazon-gets-gangsta-with-publisher-mcmillan/
February 2, 2010, 10:43 pmDavid Sucher says:
“Book” prices will plummet.
The “book” will become totally re-defined.
Apple will make huge profits.
Jobs = Gutenberg, in long run.
Amazon will face enormous price competition.
Publishers (qua editors and gate keepers) and authors will do just fine.
New role for expert taste-makers as “publishers”
Printers and book stores are toast.
Don’t worry about ebook “monopoly” issues and DRM over more than 2 year period
But really, too soon to say.
February 2, 2010, 11:01 pmDavid Sucher says:
And I should add that I am quite modest and cautious in my predictions.
February 2, 2010, 11:07 pmJeff Walden says:
Not that the original direct question hasn’t already been answered, but this is worth reading for thoughts on resale of ebooks, a somewhat-related issue:
http://mbyerly.blogspot.com/2009/04/first-sale-doctrine-and-ebooks.html
February 3, 2010, 12:24 amfjfjfjfjfjfjfjfj says:
A bit off-topic, but isn’t Amazon’s removal of all hardcopy Macmillan books from their website a classic antitrust violation?
Amazon clearly has a monopoly in the hardcopy books market. It is attempting to leverage that monopoly to increase its market power in other markets: ebooks and ebook readers.
Furthermore, Amazon book customers tend to be somewhat locked in because many of them are “Prime” members, and they lose money by switching booksellers.
It’s true, of course, that the courts give vendors broad autonomy in “refusal-to-deal” cases. But the normal refusal to deal case involves a vendor refusing to deal with supplier because of some particular complaint in the particular market at issue. Here, by contrast, Amazon is refusing to deal with MacMillan’s hardcopy books because it disagrees with McMillan’s policies on ebooks.
I am quite surprised that neither the FTC nor MacMillan seems to be pursuing antitrust remedies. Amazon’s removal of Macmillan’s hardcopy books from its website is precisely the kind of abuse of market power that the antitrust was designed to prevent.
February 3, 2010, 6:27 amDavid Sucher says:
Clearly? Is that why Google will show competing prices (new and used, hard and softcover) for dozens of different bookstores? And that’s why Amazon will on its own site offer competing titles for (at least) used books? Down to a single copy? And why there are still (alas, fewer) bricks-and-mortars bookstores? And why Costco sells (limited) books at outrageously low prices? And so on?
There may be issues with Amazon but I can’t see how it is a monopolist. No?
February 3, 2010, 7:12 amZubon says:
http://www.lmgtfy.com/?=define%3A+monopoly
February 3, 2010, 8:51 amA market in which there are thousands of booksellers is not a monopoly.
Carl Donath says:
Of course. When Amazon removed MacMillian books from its website, there was simply no other way to buy those books, and for all other hardcover books there just isn’t an alternative source. …except for Barnes & Noble. And Borders. And Books-A-Million. And, well, thousands of other retailers.
Hurm. Seems this is a definition of “monopoly” I am not familiar with.
February 3, 2010, 9:52 amCarl Donath says:
Seems a good time to review Richard Stallman’s The Right To Read (a then-preposterous and now-looming parable about students facing jail for reading each others’ digital textbooks).
February 3, 2010, 9:55 amGabriel McCall says:
I’d like to point out that there exist people who have ethical disagreements with intellectual property laws, and that being a scofflaw is not synonymous with being amoral if the law being scoffed at is itself immoral.
February 3, 2010, 9:57 amsureyoubet says:
fjfjf….: For the reasons others have put forward, the Amazon as monopoly theory probably doesn’t get you very far as an antitrust issue. But the possibility that publishers as a group, who are generally unhappy with Amazon’s low prices, could be coordinating to find ways to raise those prices could be a very serious antitrust issue under Section 1 of the Sherman Act. I think that the last thing MacMillan wants is a serious antitrust investigation of the digital books market.
February 3, 2010, 10:17 amEMB says:
The books in question may, in the short term, be unlikely to be deleted at Amazon’s whim, but that doesn’t make them safe or yours. Being able sell or lend a book that you’re done with or donate it to your local library are all important things you can do with normal books that you aren’t allowed to do with Kindle-book-licenses.
If you never buy/sell used books or donate books to a library, maybe none of these things worry you too much, but there are other problems as well. For example, if buy an ARM netbook there is currently no legal way to read the Kindle books you’ve purchased on it. This isn’t a consideration you should be having to make when choosing a new computer.
February 3, 2010, 11:05 amDavid Sucher says:
I am sanguine that Amazon et al will have to give way to open standards and some manner of transferability. How? I have no idea. But people are clever.
The market forces will be so enormous that it won’t be long before options arise. Amazon will make more money via selling ebooks than by selling Kindle-only devices. And that goes for every other gated sellers.
For example, maybe it’s easily and freely to transfer books — but you need an encrypted code in order to unlock it. Will computer hot shots break the code? You bet. But I don’t think that
February 3, 2010, 11:14 ama great number oftoo many people will cheat.ravenshrike says:
Given that computer software is largely non-returnable and that the EULA is not present when you buy the peice of software it is questionable whether they are enforceable.
February 3, 2010, 11:59 amspeedwell says:
I need to replace my previous e-book reader (an old first-gen Palm Tungsten PDA without phone capability). But it had color and the Kindle does not. Really the Kindle is not worth its current market price to me.
February 3, 2010, 12:26 pmEarly Bird says:
Laura Miller at Salon does a really good job of explaining why the iPad is superior to the Kindle; you can surf the web, check your email, and all kinds of other stuff. Many iPad buyers will be people who are not interested in owning somethig that only works to read books on, like the Kindle, but want a web browser-email checker-thingy. Some of them will undoubtedly become e-book readers of some sort. I think the Kindle is doomed in a world where you can buy devices that do more than just let you read books, and that let you read books better (in color).
February 3, 2010, 12:44 pmShawn-non-Anonymous says:
This assumes that the company you purchased your digital copy through either a) still exists thirty years from now or b) chooses to maintain that service thirty years from now. Microsoft is still around but its music service is not. People who had digital music on that service lost access to those files when Microsoft killed that business.
I have a very old copy of Black Beauty with my great grandmother’s name written into the cover when she was very young. She was born in 1901. The book is still in decent shape and can be read. Compare that to a computer game I bought for my Amiga 1000 computer in the late 80s which is entirely useless. The book is still useful at nearly 100 years old and the computer file didn’t even survive a decade.
February 3, 2010, 12:45 pmSoronel Haetir says:
I don’t see the hard copy book EULA working out. Even where present I think people would ignore it. Software EULA works, for the most part, because it does in fact comport with how people expect to use software. People don’t expect to pass their old software on to someone else in most cases (except perhaps with an existing installed computer). And I think most people would agree from an ethical standpoint that commercial software requires a separate purchase for each simultaneous use.
Hardcopy books on the other hand, people except certain rights to attach to possession of the item and a EULA type arrangement just doesn’t match those expectations. I can certainly see why a publisher would try to protect material that isn’t subject to copyright (such as the membership directory) by such a licence, I just don’t think it would work if challenged.
February 3, 2010, 12:53 pmTatil says:
I believe Yahoo and Walmart also stopped providing DRM servers for their now closed music businesses. It is not very rare.
If I am going to pay for digital purchases with DRM, I think it is better to use subscription services that provide access to almost unlimited amount of selection as long as I keep paying, assuming the price is reasonable. If the company goes out of business, no harm no foul. Well, either that or buy them from companies whose DRM is relatively easy to break. :)
February 3, 2010, 1:04 pmChrisTS says:
That makes sense. I do not have any kind of ereader – being a serious real-book lover. Can any of these ereaders do a decent job with art/architecture/photography books?
February 3, 2010, 2:21 pmAk Mike says:
Shawn and Tatil – I think you misunderstand Howard Gilbert’s point. Pride and Prejudice, in digital form, is not software. Depending on the format, once you possess the file, you will not need any particular connection with the service that provided it to you. There are dozens of sites on the Internet that provide millions of books, many free, in formats that are going to be stable over time or easily convertible (TXT, PDF, etc.). DRM is definitely an issue, but you can get Pride and Prejudice without it.
Whether Laura Miller is right depends on whether people continue to read books. As a pure reading device, Kindle, Nook, Sony Reader, and the many similar gizmos are far superior to iPad. The only real advantage of iPad in reading regular books is that it can be read in a darkened room. Conversely, many people find that eInk’s reflective surface is easier on the eyes. The battery life is ten times longer. Color is no advantage for pure word books. The reading devices are lighter and more portable than iPad. For those looking for a book substitute, the reading devices will be fine. For those less interested in the reading experience and more in other kinds of experiences, the iPad may be the right choice.
Compared to paper books, an e-book provides a different group of pluses and minuses. Whether the price of an e-book justifies the trade-off will vary for different people. You can’t resell it or lend it out, nor can you keep it in your living room to impress people. On the other hand, others will be less aware of your trashy reading habits, the book won’t physically degrade with use, your house won’t fill up with old books, you can search for words, and you will be able to carry it along with hundreds of others at the same time in your pocket. Once you’ve purchased the reader, nearly anything not in copyright is free, and lots of periodicals and blogs are also available for free.
Shawn’s grandmother’s century old copy of Black Beauty may be in decent shape, but what that tells me is that it hasn’t been read much. I’ve got some kid books from the 1930s through this past decade, and the ones that have been read a lot are beat to pieces.
February 3, 2010, 2:58 pmmikeyes says:
What I don’t hear anyone talking about are the unintended consequences of ebook use (for good reason, I suspect no one can predict them right now) but if the iPod is any example, people will find ways to use ereaders in ways not suspected by either Amazon or Apple. (Not just Ipod; cell phones, computers and every other entry into the net have evolved at the speed of light as have their uses. We don’t even know all that we can do with these devices and each day seems to bring out a novel use.)
Well, maybe Amazon. As others have pointed out, the middle man in this whole change is the publisher. In music the most important aspect seems to be distribution. Small bands can record with existing technology for very little money and can publish a CD on their own or distribute their music electronically via CD Baby and other similar sites. A number of very big names have done the same thing, even giving the album away and asking for donations instead based on the reaction of the listener. The end result is more money to the artist and a steady income for the distributor with no middle man to pay off. CDs are becoming less of a money maker while epublishing of tunes/songs is increasing.
Amazon seems to be in a position to take advantage of changes in the publishing industry while (ironically) Apple is siding with BigPub.
Print books are a well developed technology and I doubt that they will be suddenly extinct. It is more likely that ebooks will forge new pathways and the two will exist side by side for a very long time (check out the predictions implied in the Star Trek series) with electronic books forging novel ways of selling and distributing entertainment and knowledge. (Which exist in a chaotic way right now on the net. The Conspiracy is a good example of an educational source disguised as a blog.)
I suspect that Amazon will not just sit around and lose customers to newer and better technology or distribution systems. There is already a strong brand loyalty to Amazon (and to Apple, too) that will work in their favor. Color will soon arrive if it is profitable and useful.
Better and faster changing textbooks may be one of those “unintended” things that will happen with ebooks. I already rely on the computer to upgrade my knowledge of medicine and don’t even bother with textbooks (which tend to be two years out of date when published) anymore. An electronic textbook can stay current every time you turn it on. Part of the cost to you will be the upgrades. Sort of a refereed Wikipedia which can continue to bring money to the authors and spawn new information industries.
It will be fun to watch what happens over the next two years. (40 years in computer time.)
February 3, 2010, 3:21 pmloki13 says:
I have to disagree with this here. I am a voracious reader and there is no way in heck I would get a Kindle. OTOH, I will probably get an iPad.
There is only one possible argument in favor of the Kindle- the supposed eyestrain benefit. But I have never suffered any sort of eyestrain from reading a high-quality LCD screen, and I haven’t seen any serious studies to back up the claim.
OTOH, as a pure reading device, the Kindle has serious (in my mind) drawbacks. There’s the obvious- color. Yes, eInk is fine for, say, Notes From Underground. But what if you want to read a travelguide? Enjoy leafing through a sumptious cookbook? Read Dr. Seuss with your kids? Read a newspaper or magazine? Color is nice. Oh- and columns. Columns are nice too.
As we are already seeing with McMillan, there will be no price advantage for Kindle books. And if there is (which there won’t be)- there’s an app for that. I have the Kindle app on my iPhone now.
Then there’s the refresh problem. Maybe (maybe?!?!) I’m a little ADD, but I can’t stand waiting for the stupid Kindle screen to DRAW the page when I turn it. Sheesh.
So as a book reader, the iPad would win hands down. And I head it can do other stuff, too. I don’t know about the overall success of the iPad, but I do know this- at a starting price of $500*, it will kill the Kindle.
*Note that most Apple products have an educational discount.
February 3, 2010, 5:10 pmDavid Sucher says:
May I suggest that Kindle v. iPad is small potatoes.
There will be another half-dozen ebook readers in the next year.
The market will shake out.
Some folks will not like back-lit screens and will prefer e-Ink.
Others may want a richer web experience with the iPad.
All will have prices plummet as content providers offer discounts for subscriptions. There may be ‘stacks’ of subscriptions — maybe even to the point where individuals obtain rebates when you buy a device.
February 3, 2010, 5:25 pmgrog says:
A few rambling points on the topic…
To see where Apple is headed, look at what Mcgraw-Hill and friends have been doing in the textbook market. For decades now, they’ve been attempting to kill the second hand market by incrementally changing editions, CD-ROMs, companion websites that require a code printed in the book, etc.
Now think about a “text book” with interactive features. Anyone who has used Mathematica (an amazing, and amazingly expensive, math, engineering and general computation platform from Wolfram, the folks who came out with Alpha recently) knows what I’m thinking of here – for sciences, trades, engineering, etc. this will be a huge thing, and will effectively kill the aftermarket.
Now think of children’s books, science fiction, etc. I strongly suspect that we will see a company like EA team up with publishers for the really big names – what do you think Harry Potter — Interactive Edition with mini-games, movie trailers, etc. will sell for? And those endless series of Star Trek branded novels sell in surprisingly large volumes. The owners of those brands, I assume, are puzzling over the difference between books, games, movies, interactive fiction, and web sites as I write this.
I know EPub (the e-book format they picked) doesn’t yet allow for this sort of thing, but I don’t think Apple is going to stop there at just repackaged content.
So, if I’m right about this, e-books are going effectively fragment into more immersive entertainment on the high end of the author spectrum, and stay “legacy” for authors where the upfront costs for doing that are too high and for people like me who actually like reading.
The costs are going to fall to closer to the marginal cost (near zero), and I’m afraid that this will end up squeezing a lot of authors not named Rowling or King hard enough that they might end up taking up another line of work, which will lead to fewer professional works produced. At the same time, we’ll see more works total – lots of authors who couldn’t convince a publisher they’d recoup the investment of a print run have a manuscript or three sitting around – think of how easy, cheap blogging has led to an explosion of free opinion (without, for the most part, an explosion of quality).
I suspect some of the publishing houses are going to have problems akin to the record labels. There’s still very much a role there to be had – capital, promotion, managerial capability, etc., and publishers have seemed to have much better relations with authors than the labels have with bands, but I think life will become very interesting for them over the next ten years.
Finally, I do think DRM will have to die. In the long run, charging people more to remove functionality they want is not a winning strategy, and as the novelty wears off and people realize they are building up a substantial investment in books that they want to outlive the lifespan of the device, they’re going to demand it. If you disagree, ask yourself if you’d want to have to repurchase dictionaries, favorite novels, etc. if Amazon gets forced out of the Kindle-making business and then you drop it. Or possibly worse – having to keep three or more different devices around and working because the market keeps shifting. Tor and O’Reilly have managed to make e-publishing without DRM work, and I suspect the other houses are going to have to as well.
February 3, 2010, 9:48 pmWht9 says:
I really do not understand so many people paying so much money for ebooks. They are way overpriced for what they are. Deep down the reason the IP monopoly businesses are having trouble is they are trying to take away property rights purchasers expect. Deep down the fights are about destroying the secondary markets for IP. Think used cds, books, etc…
Software never really had this problem, because nobody wants a copy of DOS from 1985 [it is interesting that games have had more of a problem than functional software]. But with other IP – what was made in 1985, sold in 1985, and is being sold now, is essentially the same product, so the IP monopolies in these areas have forever hated that secondary markets exist for their products.
You are paying $10 bucks to sign onto a leasing agreement longer than U.S. Constitution that is specifically written to decrease the value of what you licensing. You have no resale rights, you have limited to no transfer/gift rights…at the end of the day you are paying $10 books for the right to read a book, not to own a copy of it. What you bought is basically worth about 2-5 bucks but you overpaid because its “digital”
It is technically possible to create a file that can be transferred freely to any device, while deleting the copy on the original device. Thereby mimicking real life. The best solution I had seen in this area are the two file system. One main file is what you own – it is allowed to make a limited number (usually between 1-3) limited run copies (say 14 days) that can be transferred to any device, but the owner maintains the original. At any point the owner can sell/transfer this original file to whomever they want, but they must relinquish the entirety of the file. I would pay more than $10 for that.
The problem with that system isnt piracy it is that it creates a secondary market, and publishers are tired of missing out on the money generated in that market.
It is interesting that there is now “Used Licenses” section for kindle purchases.
February 4, 2010, 10:57 amLynne Kiesling says:
Hi Kenneth,
Like Virginia, I’ve been following this one too, focusing on price discrimination:
http://knowledgeproblem.com/2010/02/02/the-amazon-macmillan-ebook-kerfuffle-an-ode-to-price-discrimination/
and resale price maintenance:
http://knowledgeproblem.com/2010/01/31/publishers-and-ebooks-innovation-drm-and-resale-price-maintenance/
February 4, 2010, 11:26 ammikeyes says:
There is a very good discussion of the whole issue from a variety of viewpoints on John Scalzi’s blog. Scalzi has a very clear viewpoint on the subject.
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