DRM and Pricing

SO TOR BOOKS HAS ANNOUNCED that they will stop locking up their ebooks with DRM (Digital Rights Management) and the publishing world is all a-twitter. (Pun intended.) And it appears that most of the legacy press is ignoring the fact that some publishers (e.g., Baen Books) have never had DRM at all.

Just for the record, I’m on the anti side. I think DRM stems from the mindset that the customer is out to screw the seller. This is every bit as witless as the seller is always out to screw the customer. Not so by half.

In the case at hand, I’ve seen a lot of prognostication that this move will enable piracy. Evidence doesn’t square with that (q.v., Baen Books above). But more to the point, piracy, like price resistance, is a marketplace signal — to put it shortly, your prices are too high. That is to say, your product is deemed desirable and yet your prices are not low enough to clear the market with all acquisitions being via paid exchange.

This is especially true with digital media, since the net marginal unit cost is effectively zero. That is, once capital costs to pay for development are met, there is no cost attached to selling the next copy, nor any others thereafter.

Now, since intellectual property — particularly books — are a high-value proposition, society sees nothing wrong with remunerating creators far beyond costs. Any level of profit is considered reasonable. Laudatory, even. Thus we admire J.K. Rowling or Stephen King. Still, there ought to be a price at which it is preferable even to truly piratical scofflaws to pay for an ebook as opposed to downloading it from a bit torrent site. And there also ought to be a point of equalibrium where an irreducible minimum of copies are pirated (albeit not zero), and the rest are willingly paid-for.

But that there is sufficient demand, yet also sufficient price resistance, for there to even be a traffic in a particular title ought to be a signal to a market-savvy seller.

Some of this is due to what Dean Wesley Smith refers to as the produce model of selling books — the assumption that a title only has value during a very small window and that that window must be ruthlessly kept clear of unsold product. Picture crate after crate of still-edible lettuce sitting out back of a grocery store and you get the idea. I don’t know how many books and records I have missed because I was broke at the exact moment they hit the market and not even looking for them, but would have enjoyed them immensely had they been available when I was looking.

They pulled it from the shelf because it wasn’t selling. But it wasn’t selling because it wasn’t on the shelf. That makes no sense at all. But it’s how the book business looks at things.

And they’re wrong. And if they don’t face facts soon, they’re going to get a rude awakening.

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