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Tuesday, June 10, 2014

DRM Keeps Amazon in Driver's Seat

The contract tussle between Hachette and Amazon has been all over the news of late, but the problem is more than Amazon’s tactics. It’s the deal with the devil publishers signed up for years ago when they decided proprietary digital rights management (DRM) was the way to go, according to Ben Thompson in a Bloomberg News article.

Thompson, founder of Stratechery.com, a blog about the business and strategy of technology, wrote that since publishers were so worried about allowing free access to their content, they ended up putting Amazon in the negotiating driver’s seat.

“The problem with DRM, as Nook owners now know all too well, is that it ties your books to a single company,” Thompson wrote. “If you start buying Kindle books, you will always buy Kindle books, because your books will only ever work on a Kindle app.”

Thompson said he thinks publishers could change the balance of power by eliminating proprietary DRM.

“To be sure, this digital future would require a new business model,” Thompson wrote. “Publishers would need to rework their businesses from speculative investment to publishing-as-a-service, with upside directly tied to a book’s success.”

Such change might be difficult. In fact, George Packer wrote in an article for The New Yorker that Amazon executives believe publishers are so woefully behind the times that they probably will never catch up.

“I’ve worked with publishers, and here’s the thing: Amazon is largely right,” Thompson said. “Publishers, as currently constructed, simply aren’t prepared to compete in a world based on Internet economics.”

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