Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.
First a bit of background:
The DRM technology used outside Apple and Amazon is Adobe Content Server (ACS), currently in version 4.1.
This DRM technology is used by Barnes & Noble, Kobo (but not in all scenarios, i.e. not for its mobile apps, but it IS used for its ereader devices), Sony and many others. As a result an ebook bought from one vendor can be read on the devices or app of another vendor.
The one major exception is Amazon devices.
Apple does allow 3rd party eboook apps and thus its devices are compatible with Adobe DRM as well, though ebooks purchased through iBooks are not portable to non-Apple devices.
Thus there is an asymmetry today that strongly, very strongly favors Amazon.
Publishers and retailers used to have a direct relationship with Adobe and licensed the technology directly from Adobe.
These licenses cost money. Typically $10,000 upfront with $1,500 in annual maintenance fees and a $0.22 transaction fee per ebook purchase. This is revenue that flows to Adobe, not authors, publishers or retailers. Where the retail price for an ebook is $0.99 or $1.99 this is a very noticeable percentage (12% to 22%) of the retail price.
The DRM technology restricts sharing to a maximum of 6 devices (same applies to Apple and Amazon, so no difference here).
Adobe’s changing role
However, ebooks is small fry for Adobe and Adobe recently is forcing most folks to go through resellers and is or will soon also apply to big publishers.
I am now getting to my major point.
Big publisher now have no direct contact to Adobe and have little or no way of influencing the direction of future DRM technology in terms of features, etc. In many ways the development of ebook DRM technology is already stagnant. In other words, publishers are now powerless with regards to the technology that protects their content (and so are authors).
I hypothesize that this is not an insignificant factor in publishers reconsidering their position with regards to DRM. It may not be the central issue, but in light of recent developments it is an issue publisher are paying attention to.
One should not underestimate that the larger the base of installed devices is that can be addressed, the more innovation happens and the bigger economies of scale. Fragmentation dramatically increases distribution cost and moves value to intermediaries who specialize in managing this fragmentation. This means value flows to players outside the traditional value chain. Not a positive sign for publishers either.
End of DRM
It is my observation form discussion before and during the London Book fair that no-DRM has suddenly moved from the fringe to the mainstream. The central reason is the DOJ and how the playing field has tilted in Aazon’s favor.
This does not mean that the end of DRM is necessarily imminent, but it now has become a distinct possibility. If 2 or 3 top tier publishing houses were to drop DRM, then every publisher would follow. This is what almost every publisher at London Book fair confirmed to me. In other words the change could be sudden and rapid when it comes.
At Jellybooks, we are already taking into consideration that any investment in Adobe technology could potentially be worthless in 6 months time and assign it a certain probability.