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

by Micah | Apr 30, 2012 | Adobe Publishing Platform, Micah

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

On the Adobe eBook Platform – Part 6 of 10: Why Should I Care?

by Micah | Mar 7, 2012 | Adobe Publishing Platform, Micah

First, Some Context…

We are in the early stages of a very rapid global transition from print to digital for long format text content. This revolution will dramatically alter how content is created, distributed, sold and read. The changes will make a powerful impact on nearly every corporation, institution, bookseller, publisher, library and individual reader worldwide.

This transition is being shaped and greatly accelerated by the growth of handheld devices and by the adoption of reflowable document file formats, such as ePUB, that make reading on these devices appealing and productive.

Opportunity in Abundance

The opportunities that this revolution presents are immense for education, entertainment and professional development. The costs of production and distribution are dropping dramatically. Geographical barriers are disappearing. New markets and audiences can be reached on a global scale—in homes, offices, on the road, or sitting by the pool. These changes are enabling new business models.

Organizations have the opportunity to gain valuable insights into how, when and where content is used and to engage audiences in two-way conversations in contexts that were simply not possible before.

Challenges Too

This shift presents mighty challenges as well. Reading software can be time-consuming and expensive to develop and it requires rare technical and industry specific expertise. Content creators and owners are concerned about the ease with which digital files can be copied and redistributed, and thus they often demand the use of rights management technologies—which adds another layer of cost and complexity.

And while these technology hurdles are pretty significant, navigating the supply chain is a far greater challenge. That’s because most organizations (especially trade booksellers) must exist in an ecosystem of suppliers and service providers that need to integrate and coordinate with each other to survive and thrive. They require common file formats, rights management systems, fulfillment systems, licensing agreements, metadata APIs, and so forth.

The Age of Goliaths

This situation has set the stage for a very few large corporations with deep pockets and market leverage to make major strides early in this transition. These corporations are capturing large portions of the consumer ebook market, and perhaps more dangerously, mindshare. Of course, we’ve all seen how the Internet leads to monopolistic tendencies, or at least is a fertile ground for building market dominance. You can probably think of many examples of this: eBay, Google, iTunes, Craig’s List, Amazon and the list goes on… And in the world of books, we have the additional wrinkle of operating system and device makers with ambitions to become the world’s largest booksellers.

This threat of market dominance presents significant risks for almost all other participants in the digital publishing space including authors, publishers, independent and regional booksellers, educators, libraries and especially consumers. It is particularly troubling that these private ecosystems close off the opportunities for ongoing direct two-way communication between content creators, owners and their audiences, and the insights that can otherwise be gained from direct audience engagement.

And as we all know, when markets are dominated by only a few players it has a chilling effect on innovation, competition and consumer choice. When we are talking about the written word—the embodiment of culture and knowledge—the stakes are high indeed. Let us not forget that the book business is larger than the global music and movie businesses combined.

David’s Slingshot

The Adobe eBook platform is not the only solution to these challenges, but it is an important tool that levels the playing field. Adobe provides essential pre-built technology components and services that would otherwise be prohibitively expensive and time-consuming for each organization to develop in-house. These technologies, along with a globally diverse range of distributors, aggregators, developers, libraries and digital service providers already participating in the platform, create a robust ecosystem that lowers the costs and other barriers to entry for new participants allowing them to quickly innovate, iterate and thrive.

The Adobe eBook platform is not just about DRM, albeit the value of having an industry standard content protection solution that is approved by most publishers and authors worldwide should not be underestimated. The platform also includes Reader Mobile Software Development Kit  (RMSDK) which offers developers core code libraries to build reading apps for desktop and laptop computers, and mobile platforms such as Apple iOS, Android, Blackberry and others. RMSDK also powers dedicated reading devices.

Much of the content read on these devices is free of DRM. This is because RMSDK supports PDF and EPUB, the two most popular open and standard file formats. Adobe Content Server (ACS4) is an important part of this ecosystem as well. It enables retailers to source content from a wide variety of publishers, distributors, and aggregators with a single, common fulfillment API, allowing retailers to offer a richer and more diverse catalog.

This is Just the Beginning

I sometimes hear folks who say essentially “Game over man!” when talking about ebooks—assuming that the Goliaths already have the ebook cat securely in the bag. To that I say: Wrong, wrong, wrong!

Certainly, there are real challenges for smaller retailers to compete in the digital landscape, but hard and impossible are two distinctly different beasts.

Brick and mortars can take a cue from B&N and leverage their direct customer interactions to move customers to their digital offerings. Another example in the U.S. is Hastings, a retail chain in the Midwest. Hastings has its own branded iOS and Android apps (powered by Bluefire Reader) and they sell an Android “Nextbook” tablet device (just $149) in their stores that comes pre-loaded with their branded eReading app and integrated store.

Small independents can work together to create shared solutions. A good example is the IndieBound apps and platform, operated by the American Booksellers Association. IndieBound offers a huge selection of ebooks and enables consumers to support their local neighborhood bookstore with their ebook purchases. I for one treasure my favorite local bookstore, Elliott Bay Books.

A Bright Future

We have a lot to look forward to in a broad and diverse marketplace for digital content. Here are a few other things I’m personally excited about:

Community Bookstores: I’m not talking about High Street communities here. I’m talking about communities based on common interests and lifestyles that are independent of geography. Communities around things like rock climbing, sustainable living, cooking, gardening, zombies and more. Ebook apps can be more than just places to read books—they can become a nexus for like-minded people.

Mobile app platforms have the power to easily integrate web-based content. When entrepreneurs combine the ability to manage and read a library of ebooks, with shopping, blogs, forums, feeds, social media and push notifications in a mobile app (centered around topics that people are passionate about) magic will happen.

Professional Development: I’ve always felt that ebooks are the best thing that ever happened to professional publishers. Why? In part because of the many ways professional publishers can take a community-building approach as described above.

But the huge opportunity is in the unprecedented insight that publishers can gain from the knowledge of how their content is actually being used — e.g., what do users search for, what chapter do they return to repeatedly, what do they bookmark and annotate? I could go on at length about this topic of analytics as I find it fascinating and incredibly promising, but for now we’ll leave it at that, except to say that while this may seem on the surface to be benefits that accrue only to the publishers, if you think about it, the resulting upsides for readers will be just as great.

New Business Models: Imagine services like Spotify, Rhapsody, or Netflix—but for books. The possibilities are endless.  It’s about innovation. ‘Nuff said.

Corporate Apps: Many of us don’t often think of the average enterprise as an ebook publisher or distributor. However, enterprises create tons (literally) of long format content for their employees, partners, investors and customers. Corporations also often buy commercial content in bulk and distribute it to employees.

The opportunities for corporations (or any large institution for that matter) to leverage ebook platforms with mobile distribution are immense—and unlikely to be fully addressed by the giant mainstream retailers. Ebook platforms will bring significant cost savings for corporations over print production and distribution, and will empower a wide variety of strategic initiatives: marketing, training, and standards compliance to name just a few.

One particular angle that is interesting is corporate ebook lending—as it relates back to those bulk content buys. And many of the points raised in my comments about Community Bookstores and Professional Development above play in here as well. Would corporations like to have insight into which of their documents were actually read (in part or in full) and by whom? I think so. As mobile devices play a larger and larger part of the global economy and in our lives, so will the pivotal role of digital documents in the workplace.

I could dive into libraries (e.g., as aggregators of regional content), or the revolution coming in education, and several other promising areas. But I’ll leave those for a different day.

So, Why Should I Care?

Well that depends on who you are. Are you an author? An educator? A publisher? Content manager? Librarian? Are you a bookseller, student or an avid reader? Do you simply want to make sure that consumers have as many choices as possible in where and how they get the media they care about? If you are any of those—and chances are, if you’ve read this far you fit one of those categories—you care about access, interoperability, choices, competition and innovation in ebooks. You understand the power of the written word and the responsibilities we in the industry have.

Don’t Drink the Kool-Aid

The Adobe eBook Platform is a useful tool for sure, but there are other important digital publishing technologies, and lots of new stuff is coming down the pike: ePUB3, watermarking, open publisher APIs, Windows 8, and more…  Our plan is to use the best tools available no matter who makes them.  That plan does not including waiting for the newest shiny objects, rather it includes using the tools and ecosystem available right here and now. Because there is one thing we can all be sure of—no one knows what tomorrow will bring.

– Micah

On the Adobe eBook Platform – Part 4 of 10: What is the Reseller Model Anyway?

by Micah | Jan 18, 2012 | Adobe Publishing Platform, Micah

This is part 4 of a 10 part series by Micah Bowers, Co-Founder and CEO of Bluefire. Click here to read the first post in the series.

The software reseller business model is a model in which the developer of a technology product (such as Adobe) authorizes other companies to sell licenses to their products. The reseller has the ability to offer services and support that are related to those products. In the case of enterprise products, these authorized resellers are often focused on a particular, sometimes very narrow market vertical. Sometimes resellers are also “systems integrators” – offering integration services for the software they license.

This reseller model has a long history at Adobe, both in the packaged software sold via retail channels, and – more to the point here – in enterprise software. For example, the Adobe PDF Library is a Software Development Kit (SDK) that has been licensed via the reseller channel for many years. Licensees use the SDK to incorporate PDF functionality into their systems, often with the help of an Systems Integrator who has special expertise in PDF related software development. A similar model is employed by Adobe in a variety of verticals, such as education and government.

In the case of the Adobe eBook Platform, resellers provide important services such as consulting, support and systems integration that help retailers and publishers entering the rapidly evolving ebook marketplace make good strategic and technical decisions, while lowering overall costs and time to market.

Adobe announced the transition of their eBook Platform technologies to this reseller model on February 14th, 2011. They are working with a growing group of highly capable resellers with deep expertise in the digital publishing industry, including Bluefire. Products now sold through the reseller channel include RMSDK, ACS4, and Adobe Vendor ID. This switch to a reseller model takes time. It’s nearly a year after the announcement and the transition is still underway. Resellers are being added in new markets as demand warrants. The switch to a reseller model is indicative of a platform that is reaching maturity.

One downside of this transition is that it has at times caused some people in the ebook world to wonder whether Adobe is somehow “abandoning” the platform, as Adobe has transitioned their sales efforts to other areas and inquiries to Adobe about the products are referred to the reseller channel.  That is certainly not the case.  It is incumbent upon the reseller channel companies to promote the products they license, provide product information and deploy sales and support teams. We and others have been doing just that. The ebook marketplace is expanding so incredibly rapidly, with so many companies entering the market recently, that the bulk of our focus and energies have been spent on these new customers. We all have to get out and evangelize the platform to a larger audience.

Bluefire is aggressively pursuing our current business strategy because we believe that Adobe is actively supporting their eBook ecosystem. Supporting our belief is the fact that Adobe has continued to make significant enhancements to the platform throughout this transition. I described these enhancements in the previous post in this series. Adobe provides excellent support to the reseller channel and we talk directly to the developers and product management team at Adobe on a weekly basis. Based on this demonstrated history of support, it is my expectation that Adobe will continue to innovate in the digital publishing arena with solutions for magazines, newspapers and books. To learn more on what’s going on at Adobe visit http://www.adobe.com/solutions/digital-publishing.html.

In my next post in this series I will look a bit deeper at Adobe Vendor ID which enables developers to create RMSDK based desktop and mobile apps that don’t require the use of an Adobe ID.

– Micah