ebooks, monopolies, monopsonies, DRM and me

I was late last night reading. I had finished reading Evan Currie’s Valkyrie Burning (Warrior’s Wings Book Three) on Amazon. I went looking for new publications from Evan which included The Heart of Matter: Odyssey One. But there was a change in price, The Heart of the Matter is $7.99. Sure it’s not a lot of money. But I’ve previously bought 4 of Evan’s books (including the price I paid):

So from an average price of $3.49 to a new book of $7.99. A 229% price increase. I want my authors to get paid. I like them earning more and generating more and better content. But a 229% price increase, and it’s not just the popularity of authors but current events and my choice of operating system that have me paying more. So I support an author and they become “famous” or “popular”, and I’m am supposed to grin and bear it because I can. I’m all for paying for integrated services, I’m all for authors earning more, I’m all for a better experience. But seriously a 229% price increase, something doesn’t feel right.

Amazon Prime pricing for $0.00

But wait, I can get the book for $0.00 as a Prime member. I didn’t think Amazon Prime was available to me in Canada. I was on Amazon.com, but my credit card and my shipping address is Canadian. Maybe with hope that Amazon Prime was finally available in Canada. I don’t think so, Kindle Owner’ Lending Library is only available in the US. I was just being hopeful that perhaps another large company had decided to invest in the Canadian market, much like Netflix and take on the regional licensing restrictions. </sigh>

I am trying to better understand the implications of my choices, i.e, buying and consuming DRM books in a closed ecosystem (see Kindle SF). I like integrated services. I like unified experiences. But I don’t like being taken advantage of, or having freedoms taken away.

Distribution, Disintermediation, and Monopsony

I was trying to understand Amazon’s ebook strategy and what its implications mean for me as a consumer in Canada.

We’re use to monopolies, well really ogliopolies (wireless companies, banks, internet service providers, we’re good on this one) and monopsonies (Canadian Wheat Board that ended Aug 1, 2012) . But I was surprised in Charles Stross’ analysis of Amazon, was they were playing both sides of the monopoly/monopsony market equation.

“And the peculiar evil genius of Amazon is that Amazon seems to be trying to simultaneously establish a wholesale monopsony and a retail monopoly in the ebook sector.” Charles Stross

One explanation for the increase in kindle prices is predatory pricing. And it’s not like the DOJ is investigating Amazon, Apple and the big six publishers for predatory pricing of ebooks. This has disintermediated retailers and how consumers purchase and consume books. Next to disintermediate the publishers themselves, and Amazon with Kindle Direct Publishing has given authors a way to get large distribution and forego publishers. The ebook market is growing at 200 percent per year, and Amazon owns “70 to 80 percent of the [ebooks] market“.

 “By foolishly insisting on DRM, and then selling to Amazon on a wholesale basis, the publishers handed Amazon a monopoly on their customers—and thereby empowered a predatory monopsony.” Charles Stross

Crap, I fell for it. Other consumers fell for it. Publishers fell for it. What to do next?

“And the only viable Plan C, for breaking Amazon’s death-grip on the consumers, is to break DRM.” Charles Stross

O'Reilly eBooks Advantage - No DRM

This means changing my behaviour to support authors and publishers that publish DRM-free content. Thank you O’Reilly, all of the technical books I’ve purchased are available without DRM. It also means that I might consider removing the DRM from my existing Kindle purchases, oh wait, I can’t do that any more. It might violate the Terms of Service for Kindle, which you, like me, probably didn’t read. It’s too bad that I have bought a “limited license to use the product, rather than actual ownership of an object” with the ebooks (yah, it surprised Bruce Willis about his iTunes collection). It is why for a long time, I purchased movies on DVD rather than iTunes. At least, I could back them up.

But the goal isn’t to put the books back on my Kindle, but to have a back up copy that is future proofed.

Bill C-11 and Changes in Canada

But I can’t do that in Canada since Bill C-11 which passed in June 2012. It includes a digital locks provision that is “one of the most restrictive digital lock approaches in the world“. It seems that my worries in Dissident, Citizen were more about the Canadian government. And it seems that my worst nightmares about copyright and content are coming true.

I am going to have to rethink all of my media consumption behaviours. Ranging from ebooks to mp3s to DVDs.

I’m starting to really understand companies like Wattpad, Smashwords, CD Baby, O’Reilly and others that offer distribution, monetization and consumer choice related to DRM.

Additional Reading

Integrity, hunger strikes and plagiarism

Some rights reserved by The Rocketeer http://www.flickr.com/photos/kt/309783238/in/photostream/
Some rights reserved by The Rocketeer

I asked Mark McQueen to comment on the OMERS/ABP newly announced €200 million venture fund (with €100 million being spent in Canada) knowing full well that he was currently unable to comment. Mark responded with a little bit of the history of the OMERS efforts to create a venture fund.

“This is not the first anyone’s heard of OMERS getting into the direct early stage VC business. CEO Michael Nobrega spoke about it last Spring at the CVCA conference, OMERS Worldwide chief Jacques Demers mentioned in during a panel last September in Boston, and OMERS PE boss Paul Renaud was equally detailed during a CVCA panel in May in Ottawa. I feel as though I have a good sense of what they are planning, and would be happy to share. E100 million over 15 years for Canadian startups is welcome and needed capital, even if it represents one tenth of the money that the Government of Ontario wiped away (for Ontario-based firms) when they announced the end of the LSIF program five years ago.”

It’s too bad that Mark is currently on Day 10 of a hunger strike. His writing, humor and insights on the financial industry and it’s impact on Canadians is unsurpassed. The hunger strike stems from Globe & Mail not properly referencing the originating sources of their published news stories:

“Unfortunately for we providers of the what must have been the original source material, none appear to receive a single acknowledgement as to the origin of the analysis, research, storyline, etc., etc., that made up the key underpinnings of the Globe’s lift masquerading as a bona fide “news” article….we’ve now reached the 10th incident by last count (see prior posts “Google acquires BumpTop part 3” May 3-2010 and “DTM copycats at it again part 8” June 20-08). I’ve broached the topic with the editing team in writing on more than one occassion, but no response has ever come.”

Mark documents at least 10 incidents where mainstream media has plagiarized stories from online resources. And has started a hunger strike to protest the lack of integrity and referencing sources present in mainstream media. It seems that many journalists are able and willing to reference their sources, I’m looking at good guys like ex-Globe & Mailer Mathew Ingram, who referenced Mark’s Bumptop piece in his post on GigaOm.

I’m supporting Mark’s efforts by uninstalling the Globe & Mail application from my iPad and refusing to share any link love.

I’m also accepting food donations and lunch invitations on behalf of Mark. Ping me if you have a hankering for lunch at Cava, George, Spendido or anywhere else that you’re buying 😉

Network Locked

mifi2372I keep wondering why carriers are stuck in a business model that is so anti-consumer? Is it because having to compete on price and customer demand is too scary? Or are customers so undesirable that it’s easiest to think about them as ARPU instead of real customers.

This all started with I would like to purchase a Novatel MiFi 2372 to use on a Canadian carrier. Currently the only provider with this device is Bell Canada. I am currently a Rogers subscriber, and I have been been for a long time (There was a brief period in June-September 2007 where I was a Bell customer because it was the network of choice by my employer). However, as soon as possible I transferred my account to Rogers, mainly because GSM was a better choice for me. I’ve finally had enough of not having a reliable, high speed network connection around the city. I was looking at buying a Rogers Rocket Stick, but I’ve seen the MiFi and damn it, it looks like a great portable solution (basically I can share my HSPA connection with a variety of device and colleagues). I’m happy to purchase the device outright, and I’m happy to agree to a network service term (30 days), but I want the option to move the device between carriers. It is after all, a thing that I own after I’ve purchased it.

It has brought up a lot of questions for me about consumer rights in Canada. Is this a provincial issue (Ministry of Consumer Services)? A federal issue (Canada’s Office of Consumer Affairs)? What happens if I purchase a device and choose to unlock it? Is this prevented by copyright law?

“Section 41 of the Bill states that, subject to certain exceptions, it is illegal to to descramble a scrambled work, to decrypt an encrypted work, or to otherwise avoid, bypass, remove, deactivate or a technological measure.” – CIPPIC

But this is only relevant if I choose to unlock the device, or pay someone else to unlock the device. It’s my device. I may not own the copyright, but I own the right to resell it to another individual. Why should the carrier be able to lock the device to their Network?

“Unlocking a Device may void the manufacturer’s warranty and Bell will not provide a warranty or any return policy for the unlocked Device.” – Bell Wireless terms of service

I’m assuming that this means that Bell has realized that they must provide unlocking, however charging a $250 fee (or is it a $75 unlocking fee for non-iPhones) this seems a little crazy. It feels like a cash grab, particularly on hardware that they have sold to customers. I don’t need to pay a service fee to unlock a book or DVD. Why should I be forced to pay a fee to correct something that a carrier is doing anyway? Is there a consumer manifesto for this? Who is representing the Canadian citizens?

No Rocket Stick. No MiFi. I’m waiting for a new phone. I’m left waiting and network locked.


Sidenote: I need to read more about Joe Clark’s The Cranky Copyright Book and his Comments submitted to copyright consultation. I respect Joe’s opinion, and I appreciate his contrarian viewpoint. And I’m truly interested in his opinion on copyright law, something I know very little about. And it’s nice to see an addition to the expected voices of Cory Doctorow, Michael Geist, and Lawrence Lessig. Two of whom I’ve supported by purchasing their books.