On the Adobe eBook Platform – Part 7 of 10: DRM

Digital Rights Management (DRM) is a hot topic these days for folks in the ebook business. There are strong opinions on both sides—pro and con. You won’t find me at either end of the spectrum. Bluefire’s mission is to develop technology solutions for the distribution and use of digital content that help our retail and publishing partners compete and succeed. Fulfilling that mission often comes with the requirement of supporting DRM protection. I have neither the luxury nor the responsibility to make decisions about when, or if DRM is used. When it is required we make every effort to execute on it well.

Given that perspective, my goals for this post are to explore why and how DRM is used, look at some of the challenges it can present to publishers, retailers and their customers, and to discuss some potential solutions.

Rights holders are concerned about sharing

The main driver for rights holders such as authors, publishers, and others to require DRM is to reduce the risk of lost revenues due to casual sharing of ebook files. This directly relates to the inherent nature of digital files where I (as a consumer) can buy an eBook, keep a copy for myself to read while simultaneously sending additional copies of it to my friends and family—some of which may have otherwise bought a copy themselves. The popularity of social networks amplifies this dynamic. A single consumer sharing an ebook with a few friends and family is not a big problem, but many thousands doing so can be. This is a REALLY BIG CONCERN for many rights holders. You can take the tact that there are other more important concerns or countervailing benefits, but any productive conversation on this topic has to begin with recognizing and respecting how passionate many authors and publishers are on this topic.

That said, one of the things that many of us really value about books we enjoy is our ability to share them with people we care about. So, it is worth noting that services can be crafted, that employ DRM, while still offering readers the ability to share in a meaningful way. In fact, a couple of the large ebook retailers already offer such services to their customers—though I personally find them to be a little too restrictive. There are many different potential approaches to enabling sharing. A service could enable consumers to share books with friends with a “loan” term that expires, or to share with a limited number of people, etc. My point here is that there is nothing inherent in DRM technology that prevents retailers and publishers from enabling customers to share content in a reasonable way –this is a “business rule” issue rather than a technological limitation. It seems to me that even just making it easy for readers to effortlessly send a preview of any book they are reading to a friend or family member would be very welcome.

But what about piracy?

A topic that is often unfortunately conflated with sharing is “Piracy.” In my mind, that term most usefully refers to folks that sell or freely distribute a collection of ebooks to the general public without permission to do so and without compensating the rights holders. This could be a real problem for some publishers if left unchecked, but commercial DRM is not designed or intended to address that particular problem. It appears to me that the only effective means of reducing piracy are enforcement, smart pricing, synchronous global availability, and consumer convenience.

However, DRM can aid in the enforcement efforts as retailers that sell unprotected content can be quickly identified as pirate sites by rights holders that require DRM.

A lack of a crisp separation between the concepts of “Piracy” and “Sharing” in regards to downloadable content is counterproductive to meaningful conversations around the ultimate cost/benefit analysis of the use of DRM—and I see that happen too often.

Beyond copy protection

One aspect of DRM is the symbolic message it can convey. One might think of it as a short fence: I can easily jump over it, but if I do, I’ve got a pretty good idea that I’m now standing on someone’s property. The point being that DRM is not always about just what it actually does–or prevents, but also what it communicates.

DRM can also communicate and enforce license terms such as how much content can be printed or cut and pasted from an ebook and can even control the resolution at which content can be printed. This can be important to publishers of high value content, such as industry reports and hi-res photography or collections of artistic works. It can also be important in documents distributed within an organization to employees and partners.

In some countries, there are federal laws that require that rights holder’s that wish to enforce copyright claims on digitally published content must apply DRM when distributing the content.

DRM in the supply chain

There is another, often overlooked aspect of DRM which relates to control and tracking mechanisms in the distribution channel. Publishing houses often choose a small number of partners that are entrusted with housing many thousands of unencrypted ebook files. These partners then re-distribute content through a wide variety of retail and library channels. In most cases, these files are directly fulfilled to the end customer once purchased rather than flowing through the retailer’s infrastructure. The agreements between the publishers and these distributors often specify robust network security systems and policies with a right to audit these systems. Beyond the security aspects of such an arrangement, it also offers a streamlined, auditable and track-able supply chain. DRM is not absolutely required in order to put such control and reporting systems in place, but it is worth recognizing that it is currently a key component in much of today’s digital book infrastructure world-wide.

Retailers and lock-in

By far the most unfortunate ramification of the allowance of the use of closed, proprietary DRM technology by major retailers is the vendor lock-in effect.

How serious this problem is for rights holders and consumers is a bit of an open question in the industry, with varying opinions and little hard data. That said, I don’t think that anyone would argue that there are no downsides at all, especially given the unhealthy level of consolidation that is occurring in the retail space.

There are some market trends that are helping to reduce the negative impacts of lock-in such as the unprecedented growth of multi-purpose devices like smart phones and tablets, and even the desktop is becoming a more popular reading platform. On most of these devices, consumers have choices in reading apps, and many use more than one on a regular basis. The growth of dedicated reading devices is slowing and many industry analysts expect that to continue.

As I’ve talked about in prior posts, the Adobe ebook platform was designed specifically to avoid the problem of vendor lock-in. There’s wide variety of apps and reading devices available from popular retailers and hardware manufacturers that support this interoperable system–including Barnes & Noble, Sony, Kobo, Books-A-Million, Hastings, Indiebound, and many others both in the U.S. and abroad.

(As this post is rather long, I’m reserving my comments on customer-friendly practices when utilizing the Adobe Digital Publishing Solution for eBooks for a follow-up post.)

The popularity of Kindle devices which utilize a closed proprietary DRM system presents a real pain-point for vertically focused retailers who would like to be able to sell content to Kindle owners, but can not due to rights holder’s requirements on the use of DRM.

There are potential solutions to this issue that don’t require dropping DRM altogether:

  1. Retail systems could be crafted that utilize DRM when fulfilling purchased content directly to a reading system that is tightly integrated with the retailer’s ecommerce system, but also offer an additional “Send to my Kindle” option. In this approach, the file sent would need to be a DRM free file (but could be watermarked). It would need to be recognized that a customer could side-load that item off of their Kindle device and share the file with others, but many publishers might judge that action to have sufficient friction for the subset of the retailer’s customers that have a Kindle device as to be an acceptable risk.
  2. Another similar option would be to offer the option of direct downloads of watermarked files for those customers that wish to side-load content to a third-party device or app that utilizes a closed rights management system.
  3. Retailers that utilize a proprietary content protection method in their own reading apps can also offer an option to their customers to download a file protected with the interoperable Adobe DRM. In fact Kobo and Google both do exactly that today. Rights holders could encourage other retailers to take this approach, and possibly even require it in the cases where they have sufficient leverage.

All of the potential solutions above (and there are others on the way) require the participation and agreement of the rights holders and the supply chain operators. The same applies to any change to the current status quo.

DRM can introduce barriers to entry for ebook retailers

One of the impacts of the use of DRM is that it adds additional costs for ebook retailers as they implement their back-end systems and conduct transactions. While these costs are relatively small for larger retailers, it can be a real hurdle for independents and retailers operating in smaller regional markets abroad. These retailers are an extremely important part of the overall ecosystem for many reasons, not the least of which is as a counterpoint to over-consolidation. They can be a real driver of discovery and innovation in the market–not to mention a source of significant revenue growth in the aggregate. This is especially true in emerging ebook markets abroad that are at the early stages of ebook adoption.

As the primary drivers for the use of DRM is the interests of the rights holders, it seems to me that it would behoove rights holders to consider ways to facilitate the diversity of ebook retailers by lowering barriers to entry. There are many means by which this can be accomplished both in terms of financial arrangements, technical support and consulting, shared infrastructure, open API’s and many others.

Helping ebook retailers compete and succeed by lowering barriers to entry is our core mission at Bluefire and we are making solid progress: we currently serve 80 businesses in the digital publishing arena in over 30 countries. We are ourselves a small independent company and I would very much welcome collaboration with publishers and distributors that have common goals and business interests in supporting the success of a robust and diverse marketplace for ebooks worldwide.

– Micah