DRM is crushing indie booksellers online

In June of 2011, my friend Emily Gould came up with an idea for a new kind of online bookstore: one that would sell only e-books, but would strive to offer the personalized customer service and curation of a local independent bookshop. I thought it was a great idea and signed on to be the chief operating officer of Emily Books right away. [Here’s more on paidContent about Emily Books and the rise of the independent e-bookseller.]

We both had some well-founded fears about problems we might face. We worried about the dim future of the publishing industry. We worried about money and the logistics of launching a business while keeping our day jobs to make rent. We worried about running a company as best friends and how that would affect our relationship. And we worried that, even if we overcame problems one through three, our taste in books was too esoteric and idiosyncratic — too AWESOME!! — to have the general appeal necessary to sustain our business.

Maybe the only thing we didn’t worry about was major publishers telling us we could not sell their books. But that’s exactly what happened.

Publishers told us that if we did not have digital rights management (DRM) technology, they weren’t interested in letting us promote and sell their products. DRM is the set of technologies that encrypt and prevent the reproduction of e-book files. A new bricks and mortar bookstore, even the tiniest one, could have easily opened accounts with all the major distributors. But to sell electronic versions of those exact same books, publishers told us that you have to be a mega corporation. We were confused, and set about finding out why this counterintuitive business practice has taken root.

DRM is supposed to prevent piracy and illegal file sharing. In order to provide DRM, you need at least $10,000 up front to cover software, server, and administration fees, plus ongoing expenses associated with the software. In other words, much bigger operating expenses than a small business can afford. By requiring retailers to encrypt e-books with DRM, big publishers are essentially banning indie retailers from the online marketplace.

DRM is like the anti-theft sensors by the doors at the drugstore. The sensors go off all the time, but they still can’t stop a crafty teenager who knows how to remove a magnetic tag — nor can they stop criminals who break in and steal directly from the till. Similarly, DRM prevents a lot of legitimate, noncriminal usage while remaining unable to stop actual, intentional piracy, or its crafty teenage equivalent: someone with internet access and the ability to type “remove DRM” into Google.

Our hunch is that publishers know that DRM doesn’t stop piracy. What it does stop — and what they hope it will stop — is casual sharing: people lending books that they love to their friends. But casual sharing has always been a part of the reading experience, and when we think about why publishers are feeling desperate enough to want to take it away, we start to understand what’s really at stake here. Reliable figures on piracy are understandably hard to find, as both high and low numbers make publishers look bad. If piracy is high, then DRM isn’t working. And if piracy statistics are low, well, then piracy isn’t really much of a threat to the marketplace, and time and money spent implementing DRM could be better spent on promotion, marketing, or customer service.

Certainly some sort of system is necessary to prevent unlimited distribution of copyrighted material and to be sure authors are paid a fair price for their intellectual property. But the current approach, which makes piracy E-book Enemy #1, misses the real threat. The real threat is the near-duopoly publishers are imposing on themselves and their customers by making e-book sales easy for Amazon (s AMZN) and Apple (s AAPL) and almost impossible for everyone else.

We’ve all heard about the crucial role that independent bookstores play in supporting young writers and new talent, and we know that supporting small local businesses is good for the long-term health of our economy. But there’s an even more compelling reason that we need indies to exist in the e-book market: The Amazon/Apple near-duopoly on e-book sales is cripplingly destructive for readers, writers, and publishers. Once one of the big “A”s can freely set the price of e-books, they can determine the conditions of the market for everybody. They can charge consumers anything, pay publishers very little (for who will exist to sell their products otherwise?), and leave writers hoping for some small crumb of the pie. Everyone who reads or writes or cares about books has a reason to support the existence of a viable alternative.

While Apple uses the same file format and DRM standards as other major online booksellers, Amazon has its own proprietary file format and DRM scheme. A Kindle will not read other e-book formats. When publishers insist that products be sold with DRM, they are making it impossible for Kindle users (32 percent of e-book readers use a Kindle, according to one recent survey) to buy those publishers’ books from any other retailer.

Given the industry’s fears about Amazon’s increasing monopoly on talent and market share, coupled with its ability to drive prices, you’d think publishers would be hesitant to do anything that would make it easier for Amazon to maintain its dominance. Instead, by insisting that e-booksellers implement DRM, publishers are essentially handcuffing themselves to the train tracks and giving Amazon the key.

Emily Books has gotten around this problem, so far, by selling great books published by smaller companies who either agree with us about DRM’s uselessness or can’t afford to care about it. And we’ve experienced exactly zero problems with piracy so far. We still dream of rescuing neglected books from major publishers’ backlists and using our unique platform to introduce these books to a new audience of eager readers. That major publishers currently can’t allow a small bookstore to do something that’s in their own and in their authors’ best interests means the system is broken.

Ruth Curry and Emily Gould are the founders of Emily Books.

Image courtesy of Flickr user quinn.anya.