The Good, the Bad, and the Ugly: Piracy, DRM, and the E-book Issue

“…it’s hard to turn fame into money in the arts, [but] it’s impossible to turn obscurity into money in the arts.”

– Cory Doctorow, Canadian-British Journalist, Author, and Internet Activist

 

Last summer, it was announced that J.K. Rowling’s latest book—her first for an adult audience—was being withheld from certain “high-risk” publishers in Italy, Slovenia, and other countries until the U.K. and U.S. release date in September.

Despite the complaint that the late release would make it difficult for these publishers to translate The Casual Vacancy in time for the holidays, Rowling’s literary agency insisted that the precaution be taken to prevent the manuscript being pirated, digitally or otherwise, and leaked before official release. Rowling has shown strong feelings about e-book piracy before, withholding the rights to digital editions of the entire Harry Potter series for a full five years after the final installment was released.

Could this be the future of big-ticket e-book releases, if the issues of DRM and e-book piracy continue as they are? Or, alternatively, does this method have the potential to exclude a group of digital book-exclusive readers that may or may not emerge in coming years?

In December, 2011, the Pew Research Centre’s Internet & American Life Project conducted a survey revealing that 88% of respondents who read e-books regularly had also read a print book in the last 12 months, and 58% of these same respondents had read a print book in the last 48 hours. These results suggest that print books still have a strong readership, despite e-book sales doubling each year since 2007.

Maybe “despite” is the wrong word to use, because there is evidence that while e- and print books are in competition, in some cases people are simply reading more than before. Amazon reported in August, 2012, that U.K. sales of e-books had surpassed sales of both hardcover and paperback combined, taking into account sales of all e-book formats (not just Kindle) and excluding free e-book downloads. Sales in the U.S. reached similar levels the year before, according to the New York Times. Even more interesting is the fact that, since the introduction of e-books on amazon.co.uk, book sales per unit had nearly quadrupled. Whether this explosion is the result of increased reading among U.K. citizens or coincides with a shift from brick and mortar to online retail is hard to determine (especially, considering the general lack of data sharing between e-retailers and publishers), but the figures remain a point of interest. The Internet & American Life Project survey showed more concrete evidence of this, with e-reader owners reading 44% more books per year on average. This is good news, in a climate where another 19% of those surveyed, 16-years and older, hadn’t read a single book or any long-form writing (such as a magazine article) in the preceding 12 months.

According to Publishers Weekly, as of November, 2012, at least 11% of e-reader owners in the U.S. were regular users of library e-book-lending programs. On the other hand, the top sources for e-book purchase and/or download were Amazon at 73%, BarnesandNoble.com at 21%, the Kindle App at 13%, Apple’s iBookstore at 10%, and the Nook App at only 4.5%. Another 11% of those surveyed borrowed e-books regularly from public libraries. If you consolidate these numbers, Amazon is left with the greatest amount of traffic, with a total of 86% of respondents having purchased an e-book or downloaded a free one, followed distantly by Barnes & Noble at 25.5%. At the same time as these e-book sales numbers were made public, Amazon devices were reported at 48% of market share, while the Barnes and Noble Nook held just under 17% and other devices (Pandigital, Sony, Hanvon, Kobo, etc.) made up the remainder.

So, What’s the Big Deal?

We know that people are reading e-books at an increasing rate. We know that e-reader sales are on the rise. But where do piracy rates fit into these figures? There is so little data, it is impossible to talk concretely about print book piracy, let alone e-book piracy, though a few conclusions can be drawn with a little guesswork. Toward the end of 2009, the Association of American Publishers commissioned a study to track the illegal download of 913 titles across ten file sharing websites. Within three months, the titles had been downloaded more than nine million times. There is no evidence of a similar, more recent study, but the steady growth in e-reader sales and e-book titles since 2009, as well as the failure of publishers and e-reader developers to find an alternative to the (easily crackable) existing DRM, would suggest that these figures are much higher now.

The fact that e-book piracy is happening brings up a slough of questions about the people who pirate these e-books and that unquantifiable group who downloads the files:

  1. Does the current price of e-books convince them that piracy is worth it?
  2. What number of downloads are actually read, and what percentage ends up “hoarded” but unused on user computers?
  3. Would the readers have purchased the print book or e-book, had a pirated digital version not been available?
  4. And, more controversially, is there any chance that access to pirated digital books is positively effecting book popularity?

A common accusation is that consumers expect content for free or for very little because they don’t understand the cost of producing a quality e-book, one that started as a manuscript and was pulled through all the jumps and hoops of traditional publishing. This is probably true, but there are other forces at work. Consumers—maybe not all, but certainly a good amount—are becoming more discerning about where they spend their money. Quality free content is available in abundance online. There are smart people sharing smart things, just as often as there are ridiculous people sharing poor quality content. A book is an investment, and the careful consumer wants to know what they will get from a product before they put their dollars into it.

In an anonymous interview with an e-reader owner who downloads pirated books, piracy was described more as a sort of “preview” than anything. They use it to scope out new authors, and have been known to buy the whole series in print when they find something they really like.

Publishers, with reason, see DRM as necessary to protecting their investment in the content they produce. They put considerable time and money into their authors, and are used to a marketplace that purchases print books for their aesthetic value as much as for their authors and content.

On the other side of the argument, Cory Doctorow, a file sharing activist, insists that an “open” internet does more good than harm for the average title: “It doesn’t matter how you plan on making your money … you won’t get the chance unless people have heard of your stuff.” Doctorow’s argument is more internet-centric than the traditional publisher’s view, because it values content based on quality as well as exposure.

So, who is in the right?

Arguably, everyone has a valid argument—to an extent. Except that there is no data to prove any of it. Print book sales were in decline long before e-readers ever hit the market. E-books have hardly been around long enough to provide a conclusive idea about where sales levels should be and how e-books should be priced.

Piracy isn’t new, but is changing form. Physical piracy of books has happened as long as the idea of intellectual property has been around—an idea that Adrian Johns says was set in motion by Gutenberg’s printing press and the centuries-long cultural revolution that ensued.

Every industry with an investment in digital content is dealing with piracy in some form or another, and approaching the issue to varying degrees of success. While DRM-laden files seem to be the first resort, other more innovative approaches are offering different solutions.

With more or less 29 digital book formats floating around in the marketplace at the moment, it’s hard to know which ones will take hold, or if the next newcomer will surpass the rest. This makes development of effective DRM technology difficult, unless publishers and e-reader developers work together to find a better technology or new solutions altogether. An interesting newcomer to the digital book world is Total Boox, an Israeli company that plans to offer e-books on a read-as-you-go basis. According to Kobo’s Michael Tamblyn during a fall visit to our MPub Industry course, Kobo has been exploring a similar idea, with the plan to sell books as individual chapters in the near future.

Book production needs to be paid for somehow, and both companies are taking a bite-sized bit approach to sales: the consumer gets a taste, likes it, and hopefully wants to keep reading enough to finish the book. While the method certainly isn’t fool proof, and will probably result in a flood of front-end heavy narratives, it’s a step in the right direction: away from a flawed DRM system and onward to new alternatives.

In the end, can we really say whether piracy is good or bad for the publishing industry? There is no way to know for sure, but things will sort themselves out in the end.

 

Sources (also linked in text):

Johns, Adrian. Piracy: The Intellectual Property Wars from Gutenberg to Gates. Chicago: University of Chicago Press, 2009.

http://www.guardian.co.uk/books/2012/aug/06/amazon-kindle-e-book-sales-overtake-print

http://www.nytimes.com/2011/05/20/technology/20amazon.html

http://www.publishersweekly.com/pw/by-topic/digital/retailing/article/54872-tablet-use-e-book-sales-grow-beyond-amazon-nook.html

http://www.publishersweekly.com/pw/by-topic/international/international-book-news/article/53337-is-rowling-tarnishing-her-rep-abroad-over-piracy-fears.html

http://www.publishersweekly.com/pw/by-topic/columns-and-blogs/cory-doctorow/article/55513-cory-doctorow-how-writers-lose-when-piracy-gets-harder.html

http://www.cbc.ca/news/technology/story/2012/03/27/pottermore-e-books.html

http://www.publishersweekly.com/pw/print/20100118/41649-study-finds-massive-online-book-piracy.html

http://libraries.pewinternet.org/2012/04/04/the-rise-of-e-reading/

http://www.3dissue.com/ebook-sales-doubled-spring-2012/

http://www.totalboox.com/

 

 

4 comments:

  1. Great article Angelina! Really insightful and thorough! I’m intrigued about the idea of taking a “bite-sized bit approach to sales” and giving consumers a taste before making them purchase the book. I think there is truth behind what the anonymous e-reader owner in your article said, who uses the ebook to preview the book before buying the whole series in print. Just like iTunes lets you preview an album before you purchase it, it makes perfect sense to let people preview a chapter of the book before buying it.

    Today’s consumer is a more conscious consumer about where they spend their money, so it makes sense to allow them to justify their purchase by providing them with a little taste beforehand. If publishers were to actively promote their books with previews, with easy access to purchase the eBook once the preview has been read, people may be less inclined to take a look at the pirated version and just go straight to the publisher’s preview. Harlequin does this with some of their eBooks to introduce readers who new series, and if we’ve learned anything, it’s that Harlequin knows what its readers want, so maybe other publisher ought to follow suit.

    Another concept that I’ve come across is an innovative approach to DRM, which is the idea of getting rid it altogether and instead placing a watermark that contains the personal information of the customer who purchased the eBook and a warning not to resell or distribute the eBook (I believe Pottermore has done this to the digital versions of the Harry Potter books). This is meant to act as a “disincentive for the user to pass the book along to unknown third parties” however they can still pass it on to friends and family who already have their personal information. Or, in the worst case scenario, if the copy did get distributed, find out where the copy originated. This method gives consumers the freedom to pass on their favourite reads, like they would print books, while also deterring them from widely distributing it illegally. You can read more about it here:

    http://www.digitalbookworld.com/2012/a-new-form-of-drm-a-legal-and-pragmatic-solution-for-protection-of-e-books/

    Although I’m sure this concept has it flaws, and I’m not sure how easy it is to remove or hide the watermarks, its comforting to know that progress is being made and the issue is not being completely ignored.

    Thanks Angelina!

  2. Angelina, what a great overview of the issues surrounding piracy and DRM. Your paper clearly shows that there really is no clear cut solution, but you raise several good questions.

    I think that J.K. Rowling played her cards well by holding onto the digital rights of the Harry Potter series, but in truth, she lucked out that the content didn’t leak. Reading this made me recall of the leak that happened in 2008 with Stephenie Meyer’s partial draft of Midnight Sun, which was illegally posted on the Internet and got distributed virally. Like she explains, “With the Internet, it is easy for people to obtain and share items that do not legally belong to them.” In her particular case, it goes to show how easy it is for content to be shared digitally and the fact that someone owns the intellectual rights to a work doesn’t prevent people from illegally downloading it. (http://stepheniemeyer.com/midnightsun.html) Your example of the commissioned study by the Association of American Publishers wasn’t that surprising, especially after seeing what happened with the music industry with Napster, Limewire, etc.

    You didn’t mention this explicitly, but it appears as though the future of the DRM issue is in subscription. Allowing people to pay for e-books on a read-as-you-go basis is much like what Netflix does already. And who knows? Perhaps, a system will be implemented similar to Rogers Hi-Speed Internet service that puts a monthly usage allowance on how many GB you can download. Once you surpass that amount, charges apply for additional use beyond the monthly usage allowance associated with your tier of service. This could potentially work for an individual publisher, but if the subscription model was similar to Netflix, there would have to be some system developed on how each publisher/author got paid. Maybe something similar to the Public Lending Right?

    In any case this paper was a pleasure to read. Thanks!

  3. An interesting and thought-provoking article.

    Interestingly, while sales figures of ebooks and e-readers have been on the rise, it is still not clear whether e-reading has been increasing accordingly. Although research shows that e-reader owners have been reading more ebooks, their reading motivations are questionable. Are they reading ebooks out of a genuine interest in reading, or are they actually studying ebooks to produce better ebooks and more competitive e-readers? The issue of e-reading is a key factor in understanding the dynamics of the publishing industry now and in predicting where it is going, publishing is, to a large extent, a consumer-oriented industry. For instance, if more and more people are reading more and more e-contents and less and less print material, e-publishing will gather momentum. But if people are buying more ebooks to collect them, and purchasing more e-readers mainly as gifts, and are not actually reading more ebooks, then the sales figures don’t mean that much to the present publishing industry.

    With the ebook format comes the issue of digital rights and piracy. Rather than looking at good aspects versus bad or ugly aspects, we might as well view it as a battle, to which the key concern is who wins and who loses. And I shall say whoever wins will bring the whole industry and the human society forward, for this battle is more of a technological battle than a moral battle. So the battle will eventually bring up technological innovations and advancement. Moreover, the tricky thing about the copyrights issue is that publishers and authors are trying to protect the expressions of their books, while readers are actually more interested in getting free information and stories, rather than the expressions. So, while it’s immoral to pirate ebooks and make profits by selling pirated books to others, it is not really that bad for readers to try to get information and stories at lower costs. After all, the purpose of publishing is to make known, not to keep secret. And, if we take the whole human society into consideration, what’s the point of trying to prevent people from trying to read more?

    In a word, the ebook and piracy issue is a big issue worthy of being considered in a big picture. And this article here really prompts one to think more, and think bigger about it.

  4. Good article and excellent comments. I especially agree with Jaspring that publishing is to make known, not to keep secret. We did live in a time before copyright existed, and I wonder if the wishes of the reader today are really taken into consideration by publishers. It’s fine to say, yes readers want more content cheaply, but it’s not fine to say, and that’s not how we roll. Why not figure out where the money exists in the system? Like in music, dropping DRM has allowed the industry to flourish. Sure it’s moved some of that money away from labels and into the hands of the musicians themselves, but isn’t this what we’re already seeing with self-publishing?

    I should clarify too, that I don’t envy the position of publishers today, and I do sympathize with the legal state of affairs they’re working under in regards to copyright and historical author contracts.

    I just think they are losing sight of the real battle, which is over who owns the customer relationship, not over who owns the content. The customer relationship battle is between the retailers. Apple, Kindle, Google, Kobo–whoever owns the customer relationship wins. They make the money. The publishers, sure, provide the content today, but what’s to say that will always be the case? And once the retailers sort themselves out, who’s to say they won’t set their own demands regarding copyright and drm that will then trickle down to the publishers and authors? It already happens.

    On a totally different track, you bring up a great point about why people download pirated versions. They want to see if it’s worthwhile. If it is, then why wouldn’t they consider buying it? This is the direction apps are taking, the “freemium” model lets people download the app for free and then there is a cost for additional features of content. The preview idea for books makes perfect sense since this is what we’re doing in a bricks and mortar store anyway. We’re sizing up the book’s quality, price and contents as we hold it in our hands, flip through it and read the blurb or first page. Surely we can figure out digitally the point at which curiosity turns into peaked interest and purchase desire and prompt for payment at that stage? Those are the problems I’d rather see the industry trying to solve vs. how to make drm more secure and banish piracy.

    Great topic. Thanks.

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