The ebook marketplace is a long way from settled
When we put on conferences, we sometimes book speakers because of who they are, or who their company is, but we also do our best to make sure the content of their presentation will be useful to our audience. So I had booked Matteo Berlucchi, the CEO of the British ebook startup Anobii, to speak at last January’s Digital Book World 2012 some months before the event for two reasons. For one, I had met Matteo at our Pub Launch London conference last June and he impressed me. And, in addition, his social-network-conscious ebook retailing operation has three major houses — Penguin, HarperCollins, and Random House — as investors.
A couple of weeks before DBW 2012, we got on the phone with Matteo to learn what he wanted to talk about. That’s when he told me he’d call for publishers to give up DRM because, as he saw it, their doing so was the only way he could compete for Kindle customers. As a conference organizer and promoter, I was instantly aware that he was handing us a major news break: a retailer partly owned by three Big Six publishers was calling for the end of DRM! There was some gallows humor on the call about how Matteo would bring his CV (curriculum vitae, which the Brits use more freqently than the American “resume”) along to New York.
But, of course, Matteo wouldn’t have been doing something like that without the knowledge of his owners. So it was not a stretch to draw the inference that three major publishers didn’t mind floating a trial balloon, or perhaps what they were thinking was that it would be good if Amazon knew they’d seriously consider this.
His presentation created a stir, as we knew it would.
But Pottermore created an even bigger stir when they demonstrated how to execute on the “no DRM” strategy, including how to position the big retailers in that context. As we all know now, the threat that Pottermore might be able to load Kindles with Potter books (by selling DRM-free; it would be hard if not impossible for an outside vendor to crack Kindle’s proprietary DRM to load “protected” content on it) persuaded Amazon to play ball. They send Potter ebook buyers over to Pottermore’s site to register and pay and then are willing to take the customer back to load a DRMd ebook file on their Kindle. (Meanwhile, Pottermore enables also loading a Nook file, an iBooks file, and even provides a non-DRMd epub file for more general use, all for the same single purchase.)
Back in the early days of ebooks, which was not a hundred years ago but actually about five, Brian Murray, the CEO of HarperCollins, invested in the company that became LibreDigital (now owned by Donnelley) because he had a vision that publishers should deliver their own ebook files. Murray’s concern at the time was about piracy and file control. Whatever it was, the ebook retailers (mostly Amazon back then) shot the idea down. No way were they going to trust a publisher, any publisher, to provide service at the level their consumers had been taught to expect from them. So the model we’ve lived with until Pottermore has been that each retailer has its own copy of the publishers’ ebooks, and they serve their customers and account to the publishers for what was sold.
Pottermore pointed the way back to Murray’s original vision.
A few weeks later, Macmillan announced that one segment of its company, tor.com, was going DRM-free, although not jumping into the full Pottermore model of serving the content themselves. (One Macmillan executive told me that they’ve been selling the books of anti-DRM crusader Cory Doctorow without protection for years, including through Amazon.)
Fritz Foy, the Macmillan EVP who oversees digital, is speaking about the DRM decision at our Publishers Launch BEA event on June 4.
Last Friday, the next round in this battle was fired. Berlucchi published a post calling on all the big publishers to copy the Pottermore model, and do it now.
How this will play out depends a bit on what happens with the DRM-free experiments now begun at Pottermore and about to start at Macmillan. If sales of their books collapse under the weight of ubiquitous piracy as a result, it would stop this kind of experimentation dead in its tracks.
It would also surprise a lot of people, including me.
If the net destructive impact on sales is too trivial to be measured compared with the DRMd status quo, then we are bound to see this practice spread, and quickly. And then all the biggest publishers could be compelled to return to Murray’s several-years-old vision with Pottermore’s execution template.
The question for the first publisher that wants to try this will be whether the power of a Big Six publisher to compel Amazon to play along is as great as J.K. Rowling’s Harry Potter franchise. It’s a really scary thing for them to do. After all, Rowling had zero digital revenue to protect and zero responsibility to anybody else for delivering it. All the major publishers have triple digit millions of dollars of Kindle revenue at stake and thousands of authors counting on them to deliver it.
But with Barnes & Noble now funded (by Microsoft) for battle for the next several years and Kobo and Apple committed to the fight as well, there’s a serious question as to whether Amazon would feel as comfortable going forward without one of the Big Six’s ebooks the way they have been willing to work without those from IPG.
In January 2010, John Sargent and Macmillan had a confrontation with Amazon and the retailing giant was forced to back down. The concessions that Charlie Redmayne of Pottermore (and he was, incidentally, recruited to that job from his position as Chief Digital Officer at HarperCollins) extracted from them are nothing short of stunning, but understandable if one considers what the impact of a Harry Potter ebook launch without the titles being available through Amazon would have been. (Oh, the headlines that would have generated!!!)
It’s easy for me to say, because I have nothing at stake, but I think Berlucchi is right. The big publishers can make this happen; it would change the game. I have trouble seeing any potential fly in the ointment for them except whatever would be the dangers of DRM-free. And that should be ascertained pretty well in the next few months.
There are still plenty of twists and turns to come in the evolving ebook marketplace.
It is important to remember that DRM isn’t Amazon’s only advantage or even their principal advantage. I’m not an Amazon fanboy (have you noticed?) and I read on an iPhone, but I buy most of my ebooks from the Kindle store because they offer the best shopping experience I’ve found.
However that (the shopping experience) isn’t a permanent advantage. The Kindle format and DRM are, as long as publishers feel DRM is essential.