Albert Wegner at Continuations has shared his thoughts on the ongoing case between the book publishers and the US Department of Justice, and he brings up an excellent point: This entire antitrust case is the fault of the publishers.
Letting Wegner speak for himself a bit:
“The book industry, much like the music and movie industries, continues to shoot itself in the foot with their insistence on Digital Rights Management (DRM)… The net result: instead of having commoditized distribution, the publishers have enabled just a couple of highly concentrated distributors who have huge power in the market. The only chance that publishers then saw to break Amazon’s power was to collude with Apple.”
Wegner has hit the nail on the head with this point, and it is something that everyone should be considering when thinking about the case. For the most part, people have been wondering which side to take in this battle. On the one hand is Eric Holder and his allegedly* airtight case against Apple and the book publishers claiming collusion. And on the other side is one of the world’s most popular and liked companies, Apple. With two opposing sides that are both respected and well-liked, which one to take?
Well, as Wegner shows with his piece, it seems like the only people that are really at fault here are the publishers. If the publishers hadn’t pushed DRM to begin with, then we wouldn’t be having this problem, Amazon wouldn’t have become the de facto ebook monopoly, Apple wouldn’t have been put in the position of implementing agency pricing, and the Department of Justice wouldn’t have had to file an antitrust suit against Apple and the book publishers.
It is abundantly clear that in an effort to avoid marginal pirating of content, publishers sealed their fate by implementing DRM.
This isn’t only true of the book industry. Consider the electronic music industry. Music labels were so fearful of people pirating goods that they began to lock down music with DRM that the everyday user couldn’t crack. Then, as users began to get fed up with this, they turned to Napster. Instead of the labels just recanting and selling music DRM-free, the labels turned to Apple as their savior. Apple obliged the music publishers, and released iTunes.
Originally, the music labels were ecstatic. iTunes was the answer to all of their problems, and it was a roaring success. The music labels would have a nice, steady, pirate-free revenue stream from physical discs, and a steady and growing revenue stream from iTunes. Problem solved! Well, problem solved, except for the fact that due to the publishers ecstatic response to iTunes, iTunes has become a monopoly in the music industry to the point where Apple is the number one music seller in the country.
While they’re not as public about it, you can be sure that the way book publishers feel about Amazon is the same way that the music labels feel about Apple and iTunes. However, and this is a moot point by now, this entire problem could have been avoided if companies hadn’t insisted on DRM’d content. The content could have been sold openly, by anyone, with the end result being 10 players, all with a 10% marketshare, selling the music/books/whatever at whatever price the publishers negotiated with each player.
Of course, at this point it is too late for the music world, and almost too late for the book world. Book publishers could change to a DRM-free model, but that doesn’t appear likely, as Apple and other book publishers are now adamantly fighting the Department of Justice over its allegations.
One group for which it isn’t too late is the film industry. With TV and movies taking a bit longer to join the Internet party, this particular industry could very easily skip the entire DRM monopoly problem and go directly to a DRM-free model. It’s risky to be sure, but as shown by a number of comedians recently, the model does work, if the content has quality.
[*Yeah, “allegedly,” blah blah blah, we all know it’s a legal case, and it isn’t settled yet, and that it could go either way, but I’m not going to write “allegedly” 1,500 times in this post.]