Home » Amazon, Big Publishing, Legal Stuff » Indie bookstores sue Amazon, big-6 publishers for using DRM to create monopoly on ebooks

Indie bookstores sue Amazon, big-6 publishers for using DRM to create monopoly on ebooks

21 February 2013

From Paid Content:

Three independent bookstores have filed a class action suit against Amazon and all of the big-six publishers, alleging that the proprietary DRM Amazon uses on ebooks, and the publisher contracts that allow this DRM, create a monopoly. The indies, represented by Los Angeles antitrust firm Blecher & Collins, argue that the contracts restrain ebook sales and that Amazon “has unlawfully monopolized or attempted to monopolize the market for ebooks in the United States” through its proprietary DRM.

The case was filed in New York’s Southern District court (which also oversaw the Department of Justice’s antitrust suit on ebook pricing) on February 15.

. . . .

The filing cites estimated market share for Kindle, Barnes & Noble’s Nook and Apple’s iBookstore as evidence that Amazon has a “dominant position” in the ebook market. The estimations cited are generally accepted in the publishing industry — over 60 percent for Amazon’s Kindle e-readers, around 25 percent for Nook and under 10 percent for the iBookstore (though some believe that Apple’s market share has grown ). The filing says Nook is Kindle’s “only substantial competition” but, in reference to recent news and earnings reports, notes Barnes & Noble is “experiencing financial difficulties and will be downsizing by closing a significant portion of their brick-and-mortar bookstores.” The filing doesn’t mention Kobo.

. . . .

[T]he filing takes issue with Amazon’s proprietary DRM, AZW: “Ebooks with the AZW DRM can only be read on a Kindle device or on another device enabled with a Kindle application…the Kindle app works solely with ebooks sold by Amazon.” While the case mentions big-six publishers, Amazon includes DRM on nearly all of its ebooks from all publishers.

Link to the rest at Paid Content


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32 Comments to “Indie bookstores sue Amazon, big-6 publishers for using DRM to create monopoly on ebooks”

  1. Pass the popcorn.

    Could book buyers similarly sue?

  2. The pleading, as quoted online in various places, contains blatantly false allegations of fact. Whoever wrote it should be horsewhipped. They know less about e-book formats and DRM than my wife, who despite not having an expensive legal education and not really caring for computer-geekery, can easily and quickly upload books bought from other places into a Kindle and read them on a Kindle App.

  3. “Amazon includes DRM on nearly all of its ebooks from all publishers.”

    I thought Kindle DRM installation was publishers choice.
    (Is this class action suit just fishing for deep pockets?)


  4. Here’s an interesting comment from the article:

    “DRM? Seriously, that’s just the tip of the iceberg, small potatoes, kiddy stuff…well…you get what I’m saying. Not to mention that any insider knows the eBook bubble burst months ago. Thus, the infighting begins.

  5. There’s no reason Amazon should be included in this lawsuit.

    One of the complaints is “because Amazon and the Publishers have agreed to use DRM we’re locked out of selling those books.”

    That’s not actually the reason. The reason is that Amazon uses a proprietary format–the Kindle format–to sell their books. Now, that’s a legitimate criticism to level at them, but that has nothing to do with DRM. That’s good old fashioned proprietary lock-in, brought to you from such notables as Microsoft and Apple (and Amazon, while a service company, graduated from the Computer Industry when it comes to how they do things). DRM is completely voluntary, and was instituted in order to get publishers interested in using Kindle in the first place because publishers are scared to death of piracy.

    As far as I know it’s not illegal to use a proprietary format when you’re selling things. It’s really damned ANNOYING and generally bad for everyone other than you, but that’s not usually a legal concern.

    It also doesn’t make any sense that they’re including Amazon because of B&N. Books from major publishers that are available on Amazon are also available on B&N, and B&N doesn’t use Amazon’s propietary DRM, it uses the Adobe DRM which the Indie Bookstores *can* use. So if it’s available on Amazon *and* B&N but the Indie Bookstores still can’t sell them, the problem isn’t with Amazon’s DRM. The problem is something else, and that something else might very well be worthy of a lawsuit, but not this one.

    • I find this suit to be rather silly as well Christopher, but I would point out that Amazon is a publisher AND a distributor.

      This sounds like a poor execution of an even poorer idea. Even the language reads as if whoever wrote it doesn’t even fully grasp what it is they are complaining about.

      My prediction; they will be crushed. Somebody got talked into doing something stupid in the hopes of getting a nice settlement, and then they found two friends to join them.

  6. Okay, this suit is almost too dumb to respond to, so I’ll keep it brief:

    (a) Amazon didn’t force DRM, the publishers did.
    (b) The publishers didn’t force DRM to affect the retail landscape, they did it because they are dumb about piracy.

    And then there’s the really obvious bits:

    (c) Publishers don’t want Amazon to “win”
    (d) Anyone can sell Kindle-compatible ebooks

    • Pretty much every allegation is factually incorrect and demonstrably so.

      Amazon does absolutely *nothing* to keep their customers from buying ebooks from other sources. Or other types of content, on their tablets.

      And too many people keep forgetting that when Amazon was developing the Kindle ecosystem there was no such thing as epub, only a handful or equally proprietary formats and DRM systems; LRF, LIT, eReader, Adobe PDF, etc. Amazon was well into the Kindle2 by the time epub was commercially usable and even then it was incompatible with direct wireless delivery, the oh-so “insignificant” reason the Kindle took hold so quickly. It took another couple years before Adobe’s “standard” system was able to match whispersync and by then Amazon was in control of the business.

      Those folks just want to pretend the last six years of open market competition didn’t happen and want the courts to erase them so they can do now what they didn’t have the vision to do then.

      PG should know better but I’m pretty sure their use of antitrust is way off base. They’re not looking to protect consumers but rather to be protected from competitors that got there “first-est with the most-est”. 😉

      • “PG should know better but I’m pretty sure their use of antitrust is way off base. They’re not looking to protect consumers but rather to be protected from competitors that got there “first-est with the most-est””

        Nail on the head, right there. This sort of suit makes indie booksellers look like they don’t even understand the industry. Which it’s possible they don’t. And it’s good to remember what the industry looked like just a few years ago with multiple proprietary formats. It hasn’t been that long, and people have already forgotten what a mess it used to be, and (though it’s still not perfect) how much better things are right now.

        • Except we’re still dealing with *five* proprietary DRM regimes. 😉
          Amazon, Apple, B&N, Kobo, and Adobe all use different DRM systems. And epub alone has at least 4 proprietary format variants. And that is without counting KF8, the epub that isn’t epub.
          Things *have* immproved dramaticallly as to pricing and availability of content and devices but the business is still being competed on proprietary terms by *all* players. Which isn’t necessarily wrong; the console gaming business has grown and prospered for nearly 40 years through a series of *competing* proprietary platforms and the wheel is turning for another heallthy cycle there.
          The problem for the indies is that ebooks, like gaming consoles is a game for big sharks, not minnows. The time when minnows could play was six years ago; now we’re into a phase where even the sharks are going to have to hustle to rustle up some grub. 🙂

          • The problem for the indies is that ebooks, like gaming consoles is a game for big sharks, not minnows.

            If writers needed to develop their own ebook readers, that would matter. We don’t. Meanwhile, increasingly, the profits in electronic games come not from console games but from apps — and there are thousands of app developers out there, some of them one-person operations.

            There are, of course, still the blockbuster console releases, developed by houses with hundreds of programmers, graphic and musical artists, etc., etc., and a budget of millions of dollars per title. There is no equivalent to that in the book business; the overwhelming majority of books are still written by a single author, and would not be improved by adding more. Plenty of room for us minnows there — as there has always been. What changes is the number and nature of the intermediaries we need to go through; and the old intermediaries, the trade publishers, no longer contribute enough to justify their overhead.

  7. I am not a lawyer, but isn’t this completely invalid because Amazon gives you the choice as to whether or not you want DRM on your Kindle book?

    Also, um… VHS/Betamax comes to mind. Really? This is a lawsuit?

    • Amazon gives both publishers *and* readers a choice.
      As a publisher, you can distribute through Amazon with or without DRM, or distribute without either Amazon or DRM.
      As a reader you can buy from Amazon or from any other distributor that *chooses* to traffic in Mobi format files. Be it a store (Fictionwise), a publisher, (Baen) or an author. Plenty of examples abound. They even provide a mechanism for *other* vendors to use whispernet to get ebooks to the Kindles.
      Their gripe is that they want to sell the exact same books everybody else sells in their ebookstores on *their* terms, not the publishers’. Which, considering that ebook sales aren’t product sales at all, but sales of use licenses suggests they are barking up the wrong legal branch.

      Paging Mr PG… 🙂

      • It’s not Mobi any more. Whatever format they’re using now (kzw?) is different from Mobi.

        • Kindle Format 8 (KF8) *is* different–it’s epub in drag–but all kindles stil read mobi7 just fine. You don’t even have to change the extension to azw: prc and mobi work just as well. As is, Amazon provides free tools to create both mobi and KF8 and Calibre and other converters also create both.
          Mobi format is alive and well.
          (And readable by non-Kindle apps, too. FBreader, Coolreader, and others.)

  8. As far as I understand, the problem they point out (or should) is that if someone wants to buy a DRMized ebook for their Kindle/Kindle software, there is only ONE store which will allow it : Amazon.

    Yes, that someone can choose not to buy the book.
    Yes, he can buy other ones somewhere else for his Kindle.
    But if he wants for his Kindle ereader a specific ebook where the publisher asked for DRMs, he’s stuck.

    • Going back to the Atari/Nintendo lawsuit it was more or less settled that hardware vendors can not only control what software and content runs on their hardware, but they can *charge* for access to the platform. Walled garden platforms (iOS, Nook, Kobo, Playstation, XBOX, and yes, Kindle are all perfectly legal).
      As far as walled gardens go, Kindle’s walls are lower than some, higher than others.
      Singling Amazon out of that crowd isn’t going to fly.

  9. Uh, what? I put DRM on my books, but I sell them across multiple platforms. I just use the DRM to stop people from pirating them. DRM doesn’t stop publishers from selling the same book on different platforms. This is crap.

  10. I am a supporter and fan of indy bookstores in most ways, but I agree with what everyone else is posting here. This seems like an absurd case full of non-sensical accusations.

    Much like the jaw-droppingly lame “Price Fix Six” justifications for committing antitrust violations, the substance of this complaint seems to be: “Amazon is running a better business model and doing it much more successfully, and rather than compete effectively or innovate and experiment to adapt to a changing market, we want to find a way to mitigate Amazon’s success in book retailing.”

  11. Destined to fail. Considering most ebooks are available on every popular electronic device, the idea of a monopoly seems pretty far out of reach.

  12. I HATE DRM, I don’t trust Amazon at all…

    And this lawsuit will go exactly NOWHERE. Complete waste of time.

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