I have just returned from New York where I presented an idea at the Digital Book World conference based on the following questions: 

"Could Digital Rights Management (DRM) technology be the cause of a series of negative side effects? And is it actually helping in reducing ebook piracy as it is supposed to do?".

The answers I have reached are somewhat counter-intuitive but are backed by some pretty interesting evidence. What I have discovered by drawing a parallel with the music industry is that:

·  the use of DRM is not helping at all the fight against piracy. Actually, it may be one of the things that drives people towards it.

·  the current approach adopted by publishers towards the use and enforcement of DRM is helping incumbents to increase their stronghold on the market and the lock-in effect of their customers while penalising other retailers who are not able to sell ebooks to people with another reader (for example the Kindle which is used by the large majority of customers). 

Apple, Music & DRM

Apple launched the iPod in October 2001. Thanks to the use of DRM applied to music files, which was imposed by the music publishers, Apple locked in the market. No one could sell digital music which could be played on the iPod apart from Apple. The superiority of their device combined with their great marketing drove millions of customers and music lovers towards their offering. By choosing an iPod, customers were automatically locked into an impermeable ecosystem where music files could not enter or exit in any way. All other vendors were excluded by this growing device-centric market where there was little or no competition.

After 5 years, in April 2007, the first music publisher (EMI) decided to drop DRM as a way to increase sales and re-ignite ailing competition. It took only 9 months for all the big publishers to follow suite. By January 2008 DRM was essentially gone

The immediate consequence was that a number of companies were now able to launch music services that could finally be enjoyed by iPod customers (300 million of them as of today according to Wikipedia). Amazon launched a DRM-free service at the end of 2007 and Spotify saw the light not long after that (October 2008). Apple followed quickly as the late Steve Jobs publicly said in a letter in early 2007 that he would have been happy to provide a DRM-free service.

"DRM can encourage piracy", Duke University

After 4 years of DRM-free music, the industry has now enough data to be able to work out what impact the removal of DRM has had on the market and on piracy. Recent research from Duke University, reported by Wired last October, argues that DRM actually encourages piracy as it penalises honest users (the 'good guys').The dishonest ones (the 'bad guys') are not really affected by DRM because they exchange files which are not protected in the first place and can enjoy a version of the ebook/music/video without all the restrictions that come with DRM.

Analysis from Enders, a UK based media research company, shows that the revenues for music publishers kept on growing when DRM was removed (see chart above). Revenues declined after the credit crunch in 2009 but are now recovering and growing again.

DRM is not the cure (#DRMIsNotTheCure)

Looking at the data and considering the side effects, it appears that DRM not only is not the cure to piracy but it's actually causing some pretty serious 'collateral damage'. Here's a few of the undesired side effects which could be attributed to DRM:

·  Can encourage piracy and at least does not seem to prevent it

·  Can help incumbents lock-in customers inside non-inter-operable silos (read a good piece by Cory Doctorow on this point)

·  Reduces the perceived value of an ebook due to the number of heavy restrictions (making the ebook inferior to the paper book)

·  Reduces competition as vendors don't have a truly inter-operable solution

·  Reduces innovation as the locked down nature of DRM'ed ebooks removes the flexibility necessary to develop new ideas

·  Increases the cost of ebooks (the DRM cost is on top of everything else)

These are quite striking side effects. If DRM was a medicine, I would hope the MHRA would not approve it.

A note on piracy

Piracy is bad and needs to be fought as hard as possible. But we should not confuse DRM with piracy. The correct approach to fighting piracy is to educate people about its negative consequences and to take the bad guys to court. Hadopi, a French initiative against piracy, seems to be having good results without having to resort to the Draconian approach proposed by legislation like SOPA in the US.

Putting 'Morality' into DRM: Watermarking

If DRM doesn't reduce piracy while also helping incumbents locking the market up, why not abandon it like the music industry did in 2007?

I like the idea of turning things on their head (it's a good exercise). If the bad guys enjoy DRM-free ebooks, why not give the same benefits to the 'good guys' who arguably already behave following their Digital Rights 'Morality'? If you are a good guy you won't put a file on peer-to-peer networks or distribute it to thousand of people for fun.

Adding a watermark to the ebook should be sufficient as it would act as a gentle reminder to the user that the file can be traced back to the purchaser in case it ends up in the 'wrong place'. Watermarking is very simple to apply at the point of sale (a home grown solution can be developed very easily by most ebook retailers) or it could become a standard if supported by bodies like the IDPF in their EPUB format. 

A watermarked file provides a bona-fide purchaser with a number of clear benefits:

·  it can be easily loaded on all ereaders, including Kindle, Nook and all others

·  it can be shared like a real book with your partner or with a friend

·  it can be backed up

(Note that DRM should probably still be used for ebooks borrowed from libraries as it' the best way to guarantee the expiry of the file)

On the other hand, watermarked ebooks would enable any vendor to offer customers a version of the ebook which could be loaded and read on any ereader. Exactly like in the music industry where a customer can buy music anywhere they like and load it on their iPods. Now music lovers can also upload their music across different cloud systems (hopefully we'll get there for ebooks too at some point in the future).

And there doesn't seem to be evidence that watermarked ebooks are more subject to piracy. This presentation by a German initiative called Libreka shows how they have been using watermarking to protect ebooks and found that none of the watermarked files were later found on pirate networks unlike photocopied and DRM versions.

It took 5 years from the release of the iPod for music publishers to drop DRM. The Kindle was launched on November 19, 2007, 4 years and  2 months ago...

 

 

Comments

Makes sense

I like the idea of watermarking as a way of identifying/shaming enablers of piracy while allowing legitimate users to move between devices. Since it would pretty much have to be applied at the point of sale, I suppose we're waiting on ebook distributors to make this move...

Watermarking

iucounu's picture

I can't really see how watermarking does anything more than sell an extra copy of the ebook to the pirate who rips it. Surely he or she simply compares two copies with different watermarks with DIFF and instantly identifies and removes them? This would account for the fact that watermarked books aren't seen in the wild.

I have seen watermarked PDFs in the wild: role-playing game manuals which are distributed that way because they're often heavily illustrated and full of tables. The pirate chatter on that particular sharing site was about what bad form it was to post something without first removing the watermarks.

(Now the word 'watermark' just looks weird to me.)

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