Wednesday, April 4, 2012

Fifty Ways to Lose Your Customer- Part II

So, at last, it's time to talk about DRM, digital right's management. And yet I find I've lost interest in doing so by this point. Ah well.

The most common example of DRM clasically would be "anti-pirating" features in software. You can understand how a publisher of any kind of goods would be quick to include measures that make it difficult to use the product without having purchased it. That way, if you want to use the product, "buy it you damn hippies!" unfortunately for businesses who are perhaps overeager to protect sales figures, they naturally run into a number of problems. Example: giving a hard limit on the number of installs creates trouble even for a single user. What happens when their hard drive fries? When they format their machine after a trojan or virus? When they buy a new computer? Should they not be allowed to use the product they legitimately purchased? Companies have a tendency to say "they'll just have to buy it again." Assuming of course that it's still available.

It should be no surprise that many people end up pirating the products largely because of anti-piracy measures since they're used to being able to lend things to friends. Not to mention that in those cases, licensing DRM is likely to add to the final cost of the product. Not to mention the extra problems it entails. Some years back the computer game industry was in a bit of a cold war with hackers, with people who legitimately purchased copies of overpriced games with insane DRM included being caught in the middle. At some point, exemplified perhaps most obviously by EA's SecuROM system, but others as well, DRM effectively meant installing spyware on people's computers as a precondition of using a program they've already paid to use. At which point, potential customers either A) Boycott or B) crack the DRM anyway just to prove a point. So the battle continues, and mostly it's only those in the middle, harmed by the aforementioned cold war who give it any thought. Meanwhile, prices rise and restrictions tighten threatening to push more legitimate customers into the piracy camp. It's hard to say "Bully for you, you stinkin' thieves" but it's also hard not to believe that DRM is one of those classic "slippery slopes" and the "light at the end of the tunnel is that of an oncoming train."

Ah, but we're all book people here, right? So who cares about the PC software market? Doubly so for games? Because books are obviously the only acceptable medium for *anything* according to many bibliophiles. DRM affects your e-books just as much as it did PC software.

Think back a couple of years: We couldn't lend e-books at all. That changed, but being able to lend it a small, preset number of times and only for brief periods of time, and only for those who have the same brand reader is massively less convenient than with a real book, which you can lend as long as the book hasn't fallen apart, to whoever, and for however long. Publishers see it as a way of cutting out an undesirable reality. Even more obviously, the retailers think so. But it's a terrible idea. Especially for something like books. Ask any Managing Editor, Sales Manager, Marketing Manager, Publicity Manager or any other sale/distribution position in Publishing and they'll all freely admit that word of mouth and libraries are two of their greatest assets. Word of mouth takes a hit if you can't lend copies, or are extremely limited in doing so. Libraries meanwhile have been hit with prices that are often far higher for e-books than for their print counterparts.

Which isn't surprising. So have you. Publishing is still a print centric business. Nevermind that a digital focus would save anywhere from about 1-4 dollars on physically producing the book, remove shipping and warehousing costs, and eliminate cost of returns, which is a *very* big deal in publishing, and never mind that the 30% cut that digital retailers take is a lot less than the 50-70% discount the publisher would sell physical copies to a retailer for, Publishing is, even now, pretty stuck with the old model. Often if you go to the digital teams (and I have, on ocassion) they'll say they hate it. They hate windowing the release, the practice of releasing the e-book only months after the fact. Well, after years of arguing, they've largely one that one, but how about the prices? Especially in the early days, but even now, e-book prices are often inflated. How is that a DRM issue and not just an attempt to forestall a shift towards digital?

Mostly because every retailer of e-books has their own devices, proprietary file formats and DRM schemes. Again, it makes leding hard. Again, it tracks you and your usage. And perhaps worst: it gives an astonishing amount of power to the retailer. As a digital proponent one of the most attractive things about digital platforms would be bucking the traditional retail model. And that hasn't happened. Kind of the reverse, really. Because you have to chose from the second you walk in the door which retailer you will buy from exclusively.

Of course, these battles are fought too and progress is made. Kindle app for iPhones and whatnot. But it takes months or years to get where it should logically have been in the first place. In the meantime, we all suffer. As examples, when Macmillan had a fallout with Amazon over pricing a couple of years ago, all their titles suddenly vanished- even disappearing off people's own Kindle's after they'd already paid for them. Whoopsie! Or there's the deal Apple forced on Publishers, whose eyes, misting over from the glorious site of the iPad instantly believed it to be their great savior without needing any sort of rational explanation for why. "It's Apple" seemed to have been enough. It's kind of funny when you know what I know about the inner workings of publishers, because most people's train of thought (light at the end of the tunnel!) went something like

Young people like technology I don't understand. Therefore, young people like Apple. Apple is "cool." I'd like to be cool. If I associate myself with Apple, I will be cool in the eyes of young, tech savvy customers with disposable income.

It seems rational...to a point, but it's also easy to see how people who don't really understand the technology or the market would under, or in Apple's case, Overvalue some company, product or service. In any event, Apple's deal essentially prevented books from the big publishers from being sold for less anywhere else. So forget sales or price drops at *any* retailer unless Apple okays it for their own. This has the effect of artificially keeping prices high, risking loss of sales and exposure. Even if it sold tremendously well, you still run into the problem that retailers have such incredible power over issues like pricing and who is allowed to read copies of your product.

Bottom line? DRM theoretically ensures more money per sale by reducing the number of copies pirated or even loaned. At the same time, it losses sales to people who are inent on figting the principle of the thing, sometimes killing the profits entirely, doubly so for small publishers or authors who use e formats as their primary or only method of distribution. It also reinforces the positions of of the retailers, who were too strong already, which is good for neither producer nor consumer.

So what's the answer to this vexxing conundrum?

Hell if I know.

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