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Price Fixing Won’t Open the E-Books Market, But Dumping DRM Just Might

The single biggest distortion in the e-book market goes unmentioned over all 160 pages of the ruling U.S. District Judge Denise Cote handed down this morning, holding Apple guilty of antitrust violations.

That flaw is not the way Apple conspired with publishers to raise e-book prices and force Amazon to switch to an “agency model” that stopped it from selling titles below cost. No, it’s the “digital rights management” restrictions that have served to plant Amazon on its current perch and built a wall of incompatibility around it.

We’ve seen this movie before–and been unable to watch it on the device of our choice.

The crimes that Justice Department alleged aren’t fictional, and Cote cites convincing evidence of them in her ruling. But Amazon’s disproportionate influence over the e-book industry–the problem that Apple and publishers Hachette Book Group, HarperCollins Publishers, Simon & Schuster, Macmillan and Penguin Group set out to fix–is real too.

And attempts to undermine Amazon’s pricing, even if you think Apple did nothing wrong, aren’t the best way to solve it.

Consider the choice you face today. Just as the DoJ alleges Apple and the publishers wanted, prices are effectively equal between Apple’s iBookstore and Amazon’s Kindle Store: Among the top 10 New York Times fiction bestsellers on Wednesday, eight cost the same in each shop and two cost slightly less at Amazon.

So you’re unlikely to decide that way. The presentation of these titles varies little–neither store has gotten around to allowing custom fonts in books, much to the dismay of typographical dorks like myself.

What does vary is how widely you can read these books. There, Amazon peels, cores and dices Apple.

Beyond its own Kindle tablets, the Seattle retail giant provides free reader apps for iPhones and iPads, Android phones and tablets, Mac OS X, conventional Windows and Windows 8’s Start-screen interface, Windows Phone, BlackBerry and the newer BlackBerry 10 and even Palm’s long-dead webOS–plus an HTML5 Cloud Reader that should work in any modern browser.

Apple, meanwhile, lets you read in iOS. Period. You’ll have to wait until OS X Mavericks ships this fall–a good three and a half years after iBooks debuted with the first iPad–to read your iBooks on Apple’s own desktop or laptop computers.

So, duh: The Kindle Store it is. And every single download of a Kindle e-book reinforces that dynamic—why have to switch from one app to another to read different titles?

Apple could rethink its bizarrely limited distribution and acknowledge that men and women of good will may use other companies’ operating systems. (Competitors such as the shrinking Barnes & Noble aren’t as restrictive in their support, but they still can’t match Amazon here.)

But the smarter play would be to push publishers to go through DRM detox (yes, you’ve read this from me before in 2011 and again last year). If I could buy a title off iBooks and know I could open it or convert it to open in any e-book app, even Amazon’s–and retain such fair-use rights as the ability to loan or sell the book to other people–the Kindle Store would have no chance.

That should sound exactly like how Apple’s iTunes Store and Amazon’s MP3 store work. But it wasn’t that many years ago that abolishing DRM in music downloads looked like an impossible task.

So far, the publishers have made major record labels look like an innovative and daring lot. (Judge Cote’s ruling does reveal that they abandoned the “foolish and even dangerous idea” of delaying the release of e-books until after paper copies go on sale, so they’ve got that over the movie studios.) Last year, however, the MacMillan imprints Tor and Forge somehow misplaced the DRM-forever memo, followed the example of such independent publishers as O’Reilly Media by dropping DRM from their titles, and have done fine without that crutch.

The other publishers have already lost the fictional protection of DRM in many cases but don’t seem to realize it. The encryption on Kindle and iBooks downloads has long since been compromised; cracking one of those titles may not be easy, but it doesn’t have to be to enable commercial-scale unauthorized redistribution.

It’s gotten less attention that Amazon’s own Cloud Reader for Kindle e-books apparently doesn’t impose any DRM beyond only sending a chapter of a book at a time.

The publishers now have a choice. They can keep whining about Amazon’s power while insisting on a pointless technological measure that cements its continued domination of the industry–even as Amazon continues to elbow publishers aside by inviting authors to publish through its own imprints.

Or they can give a competitor a chance to do to Amazon what Amazon did to iTunes when it offered DRM-free music from all the big labels a year before iTunes.


Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.