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Amazon, Big Six publishers face antitrust suit from indie bookstores over ebook DRM

Amazon, Big Six publishers face antitrust suit from indie bookstores over ebook DRM


Class-action suit by New York and South Carolina bookstores seeks to prohibit limiting books to specific apps or devices

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Posman Books - Flickr - CC - Yusuke Kawasaki
Posman Books - Flickr - CC - Yusuke Kawasaki

A lawsuit filed on February 15th in the Southern District of New York seeks to change how ebooks and e-readers are sold forever. Posman Books, a well-regarded independent New York City book chain, The Book House, a similar chain in upstate New York, and Fiction Addiction of Greenville, South Carolina are suing Amazon and the "Big Six" publishers (Random House, Penguin, Hachette, Simon & Schuster, HarperCollins and Macmillan) for monopolizing the ebook market. The plaintiffs charge that the publishers' agreements to sell ebooks encoded with DRM, and their unwillingness to enter into agreements with independent bookstores or collectives, have locked readers into a single ecosystem and barred independents from the ebook market. If successful, the suit would effectively eliminate device- or application-specific DRM on ebooks forever. The only kind of DRM permitted would be something lightweight and general enough that it could be employed by any seller and used on any device.

"We are seeking relief for independent brick-and-mortar bookstores so that they would be able to sell open-source and DRM-free books that could be used on the Kindle or other electronic ereaders," attorney Alyson Decker told The Huffington Post.

Just when these publishers settled for colluding against Amazon, they're being charged for colluding with Amazon

The logic of the bookstores' argument is this. When it launched the Kindle in 2007, Amazon convinced publishers to sell ebooks with DRM on its platform. The Kindle then became the dominant e-reader. You can't read ebooks with Amazon DRM on any e-reader but a Kindle, and you can't read any ebooks with DRM on a Kindle that doesn't come from Amazon. The plaintiffs argue these agreements and practices violate sections 1 and 2 of the Sherman Antitrust Act: anticompetitive restraint of trade (together with the publishers) and monopoly power, respectively.

But what about Nook, Apple, Google, Sony, Kobo? The booksellers claim that Amazon controls at least 60 percent of the ebook market, with Barnes & Noble at 27 percent and Apple's iBookstore at less than 10 percent. But note that none of Amazon's top competitors sell ebooks without DRM. It's suggested here that part of the publishers' nonpublic agreements with Amazon stipulate that the publishers won't sell any non-DRM copies of the same books sold for Kindle.

The high costs of creating or licensing and maintaining a DRM system effectively means the only possible e-booksellers are large technology companies or major bookstore chains. Each of the plaintiffs currently sells ebooks with DRM through Kobo's platform — a tiny part of the e-reading market, especially compared to the Kindle. The plaintiffs' claim is that these are the only conditions under which they would have any access to ebooks from the Big Six.

Amazon would be declared a monopoly and barred from selling ebooks with DRM

The plaintiffs are asking the court to order a radical change in how ebooks and e-readers are sold. Amazon and the publishers would be prohibited from selling ebooks with device- or app-specific DRM. Amazon would only be allowed to sell e-readers and tablets that allowed ebooks from any store, and publishers would be compelled to make their ebooks available for independent bookstores to sell. There would also be fines.

Frankly, this is unlikely. These are moderately-sized independent bookstores suing some of the largest media corporations in the world and a technology giant whose flagship business would be essentially gutted. The charge that the publishers colluded with Amazon has to feel especially biting so soon after the US Department of Justice finally forced each of them to settle on charges that they colluded with each other and Apple against Amazon. Bookstores simply don't have the firepower of the US government.

Do the bookstores want to eliminate DRM or create a friendlier, easier-to-use version of it?

The lawsuit throws around the word "open-source" in a way that's technically inaccurate and seems to speak to a vague understanding of what DRM actually is. Really, what's meant is an interoperable standard for DRM that decouples bookstores from devices. But the logic of the case and the lawyer's statements suggest that DRM, at least in any of the forms in which it currently exists, is unworkable, pointing to iTunes and the music industry's move away from DRM as an example. Do the bookstores want to eliminate DRM or create a friendlier, easier-to-use version of it? It's not perfectly clear. Really, if you can't get Cory Doctorow to sign up for your quixotic quest to sue book publishers and big corporations over DRM, you have done something seriously wrong.

Still, there is a real argument that DRM as it's been implemented by publishers and e-bookstores has seriously limited competition. Last year, Emily Books' Ruth Curry wrote a terrific, scathing account of how the sheer cost of DRM keeps independent bookstores from competing with Amazon, Apple, and Barnes & Noble:

DRM is supposed to prevent piracy and illegal file sharing. In order to provide DRM, you need at least $10,000 up front to cover software, server, and administration fees, plus ongoing expenses associated with the software. In other words, much bigger operating expenses than a small business can afford. By requiring retailers to encrypt ebooks with DRM, big publishers are essentially banning indie retailers from the online marketplace."A new bricks and mortar bookstore, even the tiniest one, could have easily opened accounts with all the major distributors," Curry writes. "But to sell electronic versions of those exact same books, publishers told us that you have to be a mega corporation."

Earlier, Emily Books' Emily Gould said something very similar:

I had an experience with one publisher who said, the author wants to [make a book available for sale via Emily Books] and we want to, but we can't because we don't want to jeopardize our relationship with Amazon and Apple. That's been the subtext to a lot of our conversations, but to have someone say that out loud — that's mind-blowing. To have the publishing industry so under the thumb of big companies is not good for anyone, so we're doggedly doing our best to try to change the situation.

So there is potentially a real case to be made that the major publishers, whether in collusion with or coercion from Amazon, Apple, and others, kept independent booksellers from selling ebooks, and used DRM protection as a cudgel with which to do it.

Without DRM, you would probably see more ebook piracy. It would probably be impossible for Amazon and other e-bookstores to automatically sync your reading place, bookmarks, and other metadata across devices. But without DRM, anyone — authors, publishers, bookstores, fans — could build and curate a digital bookstore. You, tomorrow, could have your own bookstore, selling books in any format, that anyone could read on any device they wanted.

Ebooks could be like digital music has become. Instead, we have a handful of giants and one mega-giant selling the vast majority of ebooks. You really can't deny that the DRM-free world would be more vibrant, more open, and far more competitive, no matter what the courts and lawyers eventually decide.