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Amazon’s "1984" Problems Are Just Beginning

earths-biggest-selection-450px._V251249388_Apparently, Amazon (s amzn) CEO Jeff Bezos’ abject apology for remotely nuking copies of “1984” and “Animal Farm” from hundreds of unsuspecting Kindle devices was not enough for one Michigan teenager. Seventeen-year-old Justin Gawronski filed suit against the company in federal court in Seattle last week, charging the Kindle maker with violating its own terms of service, breach of contract and illegal hacking, among other things. The plaintiff claims the unilateral removal of “1984” from his Kindle wrecked his work on a summer reading assignment because the notes he took accompanying the e-book now referred to paragraphs and electronic pages that are no longer there. His lawyer is seeking class action certification for the case.

If I were in Bezos’ shoes I’d settle this one quickly, because the issues raised in the Gawronski suit are likely to be the least of Amazon’s Kindle problems going forward, legally and otherwise. The biggest legal problem Amazon created for itself with the sneak attack on “1984” was revealing that it has the capability to remotely delete Kindle books in the first place.

Even if Amazon were to promise not to do it again (as part of a settlement with Gawronski, say) it won’t be possible to un-ring that bell. Amazon now will undoubtedly face demands (and perhaps court orders) in future copyright disputes to use its powers to zap the offending files en masse, thus turning unwitting Kindle users into legal cannon fodder. The capability could also land Amazon in the middle of the brewing controversy over software “kill switches,” which may soon come complete with subpoenas from the Federal Trade Commission and “invitations” to testify before Congress.

The non-legal problems stemming from the episode, however, could prove an even bigger headache for Amazon, and the lawsuit can only draw more attention to the e-tailer. Though some consumer rights groups have waved the episode like the bloody shirt of excessive DRM, what Amazon did wasn’t really a case of digital rights management run amok. The problem was that the company didn’t really have the rights it thought it had.

What Amazon did have was liability, for distributing infringing works. And in an effort to manage its liability it threw its customers under the bus. Call it: Digital Liability Management. That’s hardly the image Amazon wants to be projecting right now, as consumers are just starting to pay attention to e-books and e-book devices in significant numbers. According to a new report from Forrester Research, the percentage of American consumers who had never heard about e-book readers fell by more than half between the first quarter of 2008 and the second quarter of 2009, to 17 percent from 37 percent. Meanwhile, the percentage who had seen (but not yet used) a device jumped to 36 percent from 21 percent in the same period.

At the same time, Amazon is facing its first serious competition in the e-book market, as described in a new GigaOM Pro report (subscription required). Last month, for instance, Barnes & Noble (s bks) announced the launch of a full-scale assault on the e-book market, rolling out the multiplatform Barnes & Noble eBookstore and releasing an updated version of its eReader application for reading e-books on a wide range of portable and desktop devices. B&N also said it will become the exclusive e-book store provider for Plastic Logic’s planned Kindle-killer when it’s released early next year.

Google, meanwhile, recently announced plans to make an e-commerce platform available to publishers to sell e-books directly to consumers starting later this year. Sony is also expected to release an updated version of its pioneering e-book reader, perhaps as soon as this week, and has partnered with Google to make thousands of public domain titles available on the devices.

The “1984” and “Animal Farm” kerfuffle, in other words, could not have come at a worse time, strategically, for Amazon, and could ultimately prove more costly than settling the Gawronski case.

Paul Sweeting writes The Media Wonk blog and is the author of “The Evolution of the E-book Market” released today by GigaOM Pro (subscription required).

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18 Responses to “Amazon’s "1984" Problems Are Just Beginning”

  1. Amazon won’t ever sell me a Kindle. Nothing infuriates me more than the concept of the software kill switch more when it is a piece of software or ebook, or music that I have purchased the rights to listen to. I understand that Amazon discovered they didn’t have the legal right to distribute the two ebooks after they already had, and I respect that they wanted to treat the copyright owner fairly. However, I don’t want Microsoft , Amazon, or anyone who I have bought something from coming onto my device and taking it off. Amazon should have their PR crisis team on overtime right now making this fiasco go away.

  2. While it is interesting that Amazon has decided to pull these books from Kindle owners, it only sheds light on a bigger issue with Amazon’s current DRM policy. Kindle owners who purchase electronic books cannot copy this content to other devices such as their PCs and should they decide they are interested in another eReader, they will lose all their content. IREX has always and continues to promote an open/standard DRM solution. We believe that consumers should be able to purchase books, magazines, and newspapers from a variety of stores and should be able to take that content from one device to another.

    Karel Byloos, IREX Technologies.

  3. Anonymous

    Just to remind you folks: the Kindle is only available to 300 million people worldwide. When you talk about the ebook market, you’re really only talking about the American ebook market.

    Us 500 million Europeans, 127 million Japanese, and few billion others can’t get one, and after the 1984 fiasco (remote wipe? Who knew!) don’t want one.

    • “When you talk about the ebook market, you’re really only talking about the American ebook market. ”

      I think you mean when you talk about the *Kindle* market. Sony and other eBook readers do quite well in Europe and Japan.

      My opinion is this 1984 issue is a bit overblown – intellectual property and personal rights activists care, most readers don’t. And I guarantee Amazon will take extra care to make this doesn’t happen again.

      Its like eating at a restaurant that a month prior had tested positive for e Coli – its likely that from then for the foreseeable future, its the safest place to eat on the block.

  4. Using a Kindle means having to make lots of compromises of the sort I never had to deal with when reading dead tree publications. To a point I put up with this, but this particular episode was the straw that broke the camel’s back, and I didn’t even own any of the Orwell books. I sold my Kindle today.

    DRM on books needs to the way of the dodo, just as music DRM has largely disappeared. I don’t even want to think about Amazon’s patent on in-book advertising.

  5. There may be potentially significant legal issues here, but this seems to come down to one company getting caught between conflicting sets of legal and ethical obligations, and trying to solve the problem as well as they could for all concerned.

    They couldn’t have satisfied both hardline advocates defenders of IP rights and their customer base, so they tried to undo stolen property/ Best of intentions, but they wound up screwing the pooch.

    Since Amazon has admitted (well, Bezos, anyway) that they were wrong, there doesn’t seem much at stake here other than entertainment.

    • Certainly, this is your opinion, which is why we have laws regulating such commercial behavior. It is far more important than entertainment, because it is oddly always the consumer that is caught between corporate interests.

      While I admired Amazon’s attempt at creating such a market and envisioned some real possibilities in the space down the road, I would be loath to actually make such a book purchase in the future. The fact that it was 1984 is the entertainment! Truth is stranger than fiction indeed.