Small Update on the Price Fixing Lawsuit

It kind of seems like this whole thing with the lawsuit over price-fixing of ebooks has just been blowing about in the ether lately. I found a small update today, though. From this post at the Guardian:

Apple and five major book publishers have failed to persuade a US judge to throw out a lawsuit by consumers accusing them of conspiring to raise electronic book prices two years ago. …

HarperCollins, Simon & Schuster and Hachette reached settlements, while Apple and two of the publishers, Macmillan and Penguin, said in court last month they want to go to trial to defend themselves against the government charges.

So the only real update I’ve heard so far is that they won’t be throwing the case out. It sounds like HarperCollins, Simon & Schuster and Hachette must have had to pay a fine, while Apple, Macmillan, and Penguin want to go to trial. The end result of that trial will be fairly important for the publishing industry. This article on The Atlantic does a good job of explaining the whole thing: Confused By the eBook Lawsuit? So Is Everyone Else

On one hand, it appears that the publishers who were involved with this alleged price fixing were breaking the law insofar as that you’re not supposed to team up with your competitors to decide on industry-wide prices. On the other hand, they were attempting to prevent Amazon from becoming an ebook monopoly. I’m no lawyer and I don’t really understand all of the technical details of this stuff, but it will certainly be interesting to see what happens in this trial.

I think that if I were running a big publishing company, I would just try to sell my books at the same price at each store, and then let the customer decide which store and ebook platform they wanted to use. That kind of thing shouldn’t be so difficult, and I hope that in the end things will be simpler for the consumer.

Major Publishers Being Sued Over the Agency Model

The United States Department of Justice is suing Apple along with publishers Hachette SA, HarperCollins, Macmillan, Penguin, and Simon & Schuster, for conspiring to raise the prices of ebooks. This article at PC World does a pretty good job of explaining the basics of the situation. Here’s the core of it:

At issue is Apple’s use of the “agency” model of e-book pricing, which lets publishers set their own prices. Apple takes a 30 percent cut of sales, but requires that e-books are sold for no cheaper elsewhere. That approach came into conflict with the “wholesale” model used by Amazon, where the bookseller pays roughly half the recommended cover price, then sets its own pricing.

With the wholesale model, Amazon could offer cut-rate prices on e-books — often $10 for bestsellers — in order to build up its Kindle service. When Apple launched the iPad in 2010, publishers flocked to the agency model, fearing that the wholesale model would lead to a race to the bottom in pricing. Amazon was forced to adopt the agency model, and today, a $10 bestseller is much harder to find. New books tend to sell for around $13 to $15 instead.

Apple and publishers may argue that the agency model leveled the playing field for booksellers, forcing them to compete on hardware and software features instead of pricing. And as Bloomberg points out, e-book sales rose 117 percent in 2011, so it’s hard to argue that higher prices ruined the digital book industry. source

Opinions on this could go either way, but if there really was a conspiracy by the big publishers to raise prices, that would be against the law. This is a big enough story that they even talked about it on the Nightly News with Brian Williams tonight. From my position as someone who works in this industry, it’s all kind of surreal because for the longest time ebooks were overlooked and not taken seriously. Now they’ve become popular and mainstream enough that there are serious legal issues being considered. I also know that the agency model created major headaches for independent ebook sellers, so for that reason it would be kind of nice if it was deemed illegal. However, I can also understand that from a publisher’s point of view, Amazon’s price cutting is very scary for them.

I wonder what actually happened. I remember that Amazon offered most Kindle ebooks for $9.99 in the beginning, and that suddenly stopped once Apple started requiring that publishers couldn’t sell their ebooks for a lower price than the price they set for iBooks downloads. But was that the only thing? Was it solely Apple’s decision, or was there some kind of secret meeting between publishing executives where they sat in a dark room around a table and agreed to raise ebook prices? The truth is probably something in between. It’ll be very interesting to see what comes of this and how it affects ebook prices and publishing in the future.

Harry Potter eBooks

The big ebook news this week is that official Harry Potter ebooks are now available on the Pottermore website.

When I read about this, the first thing I wondered about was what format the ebooks were being made available in, and what kind of DRM they were using. From looking at their supported devices FAQ page, at first it appeared that they were using typical Adobe DRM, since they mention the use of Adobe Digital Editions. However, it seems to be more complicated than that. In order to get ebooks onto a Kindle, for example, they’ve somehow set it up so that you link your account so that the ebook can be delivered to your Kindle. The same goes for your Sony Reader, Nook, or Google Play accounts. Additionally you can download an ePub to your computer. It also appears that you can transfer the ePub to other eReaders with ADE in the same way I’ve outlined on this blog before.

There seems to be more to it, though. Apparently when these ebooks were first announced, the people behind Pottermore claimed that the ePubs would be without DRM. Now it’s become clear that there is some kind of DRM on them, which people are calling “watermarking”. I’ve never even heard of that term being applied to DRM. The Digital Reader has a post about this DRM method and how it was already hacked.

This article on The Guardian is quite interesting. It talks about how Pottermore has managed to force Amazon to bend to its will.

“Instead of buying the ebooks through the Amazon e-commerce system, the buy link takes the customer off to Pottermore to complete the purchase, with the content seamlessly delivered to their Kindle device. It is the first time I’ve known Amazon to allow a third party to “own” that customer relationship, while also allowing that content to be delivered to its device. Amazon gets something like an affiliates’ fee from this transaction, much less than it would expect to receive selling an ebook through normal conditions.”

This is very unlike usual Amazonian practices. I assume it’s because Pottermore wouldn’t allow them to sell the ebooks in any other way, and it shows how much power the Harry Potter brand has. There is another article at FUTUReBOOK by the same author that delves more into this Amazon situation and how DRM is applied across different platforms. The whole system must have been a pretty big undertaking for all companies involved.

All in all, it’s cool to see that there are now official Harry Potter ebooks because that only enforces the idea that ebooks are here to stay, in one form or another. I probably won’t buy them myself since I already own the whole series in old-fashioned paper. Will you?

Recent Stories of Piracy and Plagiarism

eBook piracy and plagiarism are two of the worst fears of authors and publishers. Just like with music and movies, there are now websites that offer many pirated ebook downloads. Plagiarism has been happening for ages and it’s only become easier with books in digital format.

This article on The Guardian paints a new picture for plagiarists, though. Even though it’s easier to copy the contents of an ebook, it’s also easier to get caught now that everything can be scrutinized online. This article is about an author who discovered someone ripping off many of her romance books, only changing major details like names and places. After one instance was discovered, others joined the author in researching the plagiarist’s work, and more and more cases were quickly found. The plagiarist was outed online and forced to pull her stolen work.

In this age of blogs and Twitter, a reputation can be ruined pretty easily. It seems to me like all the trouble of trying to plagiarize isn’t even worth it. If you’re interested in being an author, write your own stuff. If you don’t have any talent for writing then find something else to do.

Piracy is probably the bigger threat since it doesn’t require any work like editing details of the story. Instead, all a person has to do is strip the DRM (if it even exists in the first place). Recently one company was caught selling $99 e-readers pre-loaded with 4000 pirated ebooks. From the article:

An Australian group-buying site owned by Microsoft and Nine sold e-book readers bundled with a treasure trove of thousands of pirated books including the full Harry Potter and Lord of the Rings series.

The matter has prompted a rebuke from the NSW Fair Trading Minister, Anthony Roberts, who claims group-buying sites cannot simply blame vendors when they are caught running dodgy deals.The book industry has reacted angrily and HarperCollins, publisher of some of the major titles contained on the CD including those by J.R.R Tolkien, said its corporate solicitor ”will be ringing them today”.

The site, Cudo.com.au, this week advertised a $99 e-book reader that came with ”4000 e-books you can load from a CD”. Thousands of people signed up for the deal, but the company claims it discovered the books were pirated before orders were shipped.

Cudo’s advertisement originally linked directly to a list of books that came on the bonus CD, and the list contained thousands of books that were still under copyright and available in stores. The site later removed this link from the advertisement, but the original ad is still visible in Google’s cache.

”It’s extraordinary … there’s piracy taking place on a grand scale,” said Australian Booksellers Association chief executive Joel Becker when shown the list of books.

Whether you hate or just tolerate DRM, most publishers will continue to require it as long as they feel that their ebooks will be pirated without it. It’s unfortunate that the average law-abiding user is the one who gets punished by having to deal with DRM restrictions. Authors deserve to get paid for their work just like everyone else, though, so what are they supposed to do? And this time there won’t be another iTunes that comes along and sort-of-transforms the situation like they did with MP3s, because we already have Kindle software and iBooks and other paid ebook services. Unless all of humanity suddenly comes to a state of enlightenment where nobody wants to steal anymore, I don’t know how pirating will ever stop.

Smartphones, Tablets, E-Readers Become Physically Heavier With More Data

I just read this on TFTS: Smartphones, Tablets, E-Readers Become Physically Heavier With More Data [The More Apps, Ebooks, Information You Add to Your Kindle, Android or iOS Device, the Heavier it Gets].

Quotes from the article:

John Kubiatowicz, a computer scientist from University of California’s Berkeley campus says that the more data you put into your notebook computer, netbook, tablet, smartphone, ebook reader or any other electronic device, the heavier it gets.

It’s a matter of energy vs. matter. While downloading software and apps does not really increase the amount of matter in your device, it changes the amount of energy stored on your tablet, smartphone or e-reader, particularly the level of energy in its electrons. And given Einstein’s theory of relativity stating that Energy equals the mass multiplied by the speed of light squared (E=mc²) then the difference in weight between a full ebook reader and an empty one is about 10^-18 of a gram, or what scientists call an attogram.

Studies say that dust that gathers on your iPad’s touchscreen will weigh more than loading thousands of e-books on your device.

This is an odd fact, of course, as devices will not individually weigh more, with more data. But consider the amount of data being transmitted around the world, such as through broadband cables, datacenters and ISPs. Does this make the world substantially heavier?

I find this really fascinating. I don’t fully understand the science behind E=mc², but if more energy equals more weight, then it makes sense. It’s such a small amount that it’s nothing anyone would ever actually notice when holding their phone, but the idea that putting more digital content on a device increases the weight is so interesting because we all generally consider things like energy and digital files to be totally non-physical. There are even studies being done nowadays that show that thoughts are like little entities, and if they are made by electrical impulses in your brain, and if that has mass, then why not? Some people probably find this kind of topic way too “out there” but I love it. It’s very futuristic and I think it’s awesome that our science is starting to be able to explain these kinds of things.

One Year Blog Anniversary

This blog is one year old this month!

Technology evolves very quickly. Some big things about ebooks have changed in the past year. I think, overall, that the biggest thing has been the evolution of devices that you can use to read ebooks on. All major e-reader suppliers have released touch screen versions of their devices, and they are also moving into Android-based tablet-like models as well. I am actually surprised at the level of acceptance of tablet devices. Since they are generally not very necessary devices, I thought most people would consider them to expensive. But that’s another thing – the prices of these devices are dropping quickly. And, of course, Amazon keeps selling more and more Kindles and Kindle eBooks.

Some changes have also come in software. Microsoft recently announced it was discontinuing Microsoft Reader. I also expect formats like Mobipocket and the old Palm eReader will be gone soon. Because of that, I’ve moved them into a new category on this blog called “Obsolete Software”. I want to keep those posts around in case someone needs a reference later on, but there is no need for them to have their own categories anymore. ePub and PDF seem to be emerging as the most popular formats. ePub is so great because the text will move to adjust to your screen size, and everyone is just so familiar with PDF that they keep using it.

This isn’t meant to be a huge year-review of the state of ebooks, just a little ‘look back’ from where I sit. I think I’ve been pretty consistent in updating this blog about once per week on average. I expect that I will keep doing that. I might bring in some additional topics that are related. I am interested in how ebooks affect authors and publishers, for example. I am also always interested in how new devices and software will change the market and the user experience. So, we’ll see how it goes! Thanks for reading and commenting

Steve Jobs

I am very sad today about the news of Steve Jobs‘ passing. He was truly a driving force behind the technology that surrounds us in our daily lives, and the world would have developed into a significantly different place without him. He is someone who will be remembered for centuries.

New Kindle Devices Revealed

Amazon has rocked the eReader and tablet world today by announcing Kindle Fire and releasing some new Kindle eReader models at extremely low prices.

You can check out Amazon’s charts that compare the different devices for yourself (look at ‘Compare Kindles’ on a page like this), but I want to go over what I consider the main differences between them.

Basic Kindle

The basic Kindle is starting at $79 (with special offers) or $109 without special offers. $79 is a pretty darn low price for an electronic device, but more importantly, it’s way lower than most other eReaders. The new Sony Reader WiFi, for example, is available for pre-order right now for $149. Even if you don’t want the ‘special offers’ screensaver ads, you only have to go up to $109.

It’s also important to note that this device does not have a touch screen. Navigation is done with the button at the bottom-center.

Kindle Touch / 3G

This is similar to the basic Kindle, but with a touch screen. It is either $99 with special offers, or $139 without special offers. You could compare this one to the Nook Touch. It also has audio capabilities.

The next step up is the Kindle Touch 3G at $149 with special offers or $189 without. These models will let you connect to 3G networks, like you do with your cell phone, to get internet access even when you can’t get on WiFi.

All of the Kindle models work with Amazon’s cloud system, which means that you don’t have to download ebooks to your computer, and you can easily use your digital content on multiple devices that you own.

Kindle Fire

This is the biggest news. There has been speculation about a Kindle tablet for a long time. Amazon has announced a tablet-like Kindle device, and it’s available for pre-order for only $199.

One of the things that has been wondered for so long was whether Amazon would be able to release a device that would be a competitor for the Apple iPad. This cnet article says they have, but I don’t know if I agree. Since this is a smaller device at 7″ and lacks many of the features of the iPad, in my opinion it’s more comparable to the Nook Color. Both of those devices are more like big brothers to eReaders. They have the color touch screens and run on Android, which means you can watch videos and play games, so in the end they are eReaders with some additional fancy features.

On the other hand, that cnet article points out something very important: if you’re an average user who’s using these devices for typical stuff like reading, video streaming, and basic internet access, you don’t need an expensive iPad. And on top of that, if you’re going to be traveling with the device it feels a lot better to tote around a $199 tablet rather than one that cost you $500+.

I think it will come down to what you actually need to use the device for. If you will actually use additional features that the iPad has (like Bluetooth, video conferencing, or HD video recording) you might be willing to spend the money for those. But if you’re the average user, something like the Kindle Fire might be perfect.

I’m going to be really interested to find out how open the Android OS will be on this device. If you can install Aldiko Book Reader on it, that will mean that you won’t be tied down to the Kindle store anymore, and you’ll be able to get ebooks from other websites. I suspect that it won’t be possible to install other ebook apps in the beginning, but people will find a hack-around for it.

The other big question is how this is going to affect the market for eReaders as a whole. These new Kindles are being sold at such a low price that other companies might not be able to compete at all. Or, it might force companies to find ways to use cheaper materials to build these devices. It will be interesting to see how everyone reacts to this.

HP Discontinuation of webOS Tablets and Phones

Recently HP announced that it would be discontinuing the production of devices that use their webOS, including the HP TouchPad tablet and phones like the Pre. I’m following news about tablets because they are also e-readers. In fact, I just recently added the HP TouchPad to my Squidoo lens that shows comparisons between different tablets.

From the press release:

“HP reported that it plans to announce that it will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. HP will continue to explore options to optimize the value of webOS software going forward.”

You can see the full press release on this page, about halfway down. The rest of that article points out the fact that HP is not discontinuing webOS itself (the operating system used on their mobile devices), but just the devices. So my question is: where would that OS possibly be used, if not on their own devices? When I first heard this news I figured it was because they’d decided to stop competing with the likes of Apple iOS and Android, but apparently they want to make things even harder on themselves by trying to get webOS to be used on devices they don’t even manufacture? This doesn’t make any sense to me. We’ll see what actually happens in the future.

This article talks about how HP put the tablets on massive sale for $99, down from $399, and they flew off the shelves. Personally, I would not buy a device that I knew was being discontinued because it means that you’ll probably get very little support for it. Plus, the people who create content for these devices like apps aren’t likely to be bothering with webOS when there aren’t any new devices being sold that use it, at least right now. The article does address that with: “But if you want to future-proof the TouchPad in case HP never succeeds in its plans to keep the webOS operating system alive by finding new partners to license the software, it looks like the independent hacker community has you covered. Efforts are already underway to get Google Android and Ubuntu Linux running on the TouchPad hardware.”

For about a year I owned a Palm Pre that ran on webOS. I liked it quite a lot. It did everything that my old iPhone did, and I didn’t have to bother with iTunes to sync it. (I absolutely hate working with iTunes. It is extremely slow.) The big downfall of webOS is that you don’t have access to all of the iPhone apps. There are plenty that provide the same function, but it’s just not the same. I would have liked to see it become more popular and be real competitor for Apple iOS.

eBook Vendors Switch to Outside-App Purchasing

A while back I wrote a post about the news that Apple was going to start charging vendors 30% on all sales made from within apps on Apple devices. At the time, the big hullabaloo was related to Sony, who were threatening to pull all of their music out of iTunes.

Today I read here that Barnes & Noble has removed the ability to make purchases from directly within their Nook app. They instruct users to open the Safari browser and make purchases from nookbooks.com instead. That removes the 30% fee from Apple, but causes extra steps for shoppers. I then read here that it’s not just Barnes & Noble that has removed this in-app link, but also Amazon, Kobo, and others.

Reaction to this appears to be split. Commenters on the first website mostly seem irritated with Apple, saying things like, “No Flash, No Ebooks, No HTML5, No real multi-tasking, No side loading = No Thank You Apple. Apple is the AOL of today.” But the second article claims that people are all up in arms about it, complaining about how they can no longer make in-app purchases.

I think that whether or not you agree with this development will mostly depend on what kind of technology user you are. If you’re someone who wants the easiest way to buy and download content and you don’t care about the details of where your money goes, then the in-app method of making purchases is obviously much easier method. If you’re someone who’s really into gadgets and also sympathizes with smaller businesses who get 30% of each sale chomped out by a larger company, you might be more in favor of taking the extra few steps to buy your content through Safari instead.

Personally, I feel that 30% is a pretty hefty amount for Apple to take from every sale. I understand their reason for charging a fee. They are, after all, providing the platform for the sale to take place. But this could easily be prohibitive for a small business or app developer, and more than that, it just feels unfair, like a big company that’s trying to take advantage of everyone else just because they can. It will be interesting to see what happens with this in the future.

Don’t forget that you can always buy ebooks directly from websites and then transfer them to your device. That actually gives you a lot more shopping freedom because you can purchase from independent ebook stores as well.