Yesterday, over on Facebook, I kinda sorta touched on the new HarperCollins digital watermark, which is another updated rendition of their failed attempts (thus far, apparently) at a secure and impenetrable DRM. Those pesky pirates are costing publishers a lot of money, so of course the natural response is to put even more money into a system that will be obsolete in about four months. Most of us who know anything about computers will roll their eyes when reading the description of what this new digital watermark does:
“We are pleased to add this new service to our anti-piracy toolbox,” said Chantal Restivo-Alessi, Chief Digital Officer at HarperCollins Publishers. “Part of the value publishers provide is protecting the livelihoods of our authors and ensuring that they’re being properly compensated for their work. Digimarc Guardian Watermarks help us identify and stop potential e-book leaks in our digital supply chain that result in piracy. This technology, alongside the monitoring and takedown service, helps us better protect our authors’ content.”
The real fear for publishers, it seems, is not in the average 4chan user who has a copy of some bestseller, but leaks from within their own organizational supply chain. Of course, this does nothing for those dedicated individuals who are willing to type up an entire hardcover book and release it into the wild, ala Harry Potter before J. K. Rowling allowed for ebooks to be created. The amount of money that they would need to spend to get this started, as well as ensure on a daily basis that their DRM code within each and every book is unique, is going to be expensive. Intuitive thinking leads one to believe that in order to combat this growing cost (and it will grow, since the digital algorithm for their DRM will be cracked inside of a month by some 13 year old kid who was bored after playing Destiny), prices may go up in the near future for all HarperCollins books, especially with the beating that its parent company, NewsCorp, took this year with their quarterly earnings.
Now why, one may ask, would HarperCollins do this? Well, their 1Q 2014 earnings show that they had a 15% increase in profit, which is very good in the publishing world. Most of their profits came from the NYT bestseller Divergent and ebook sales. Well, one was made into a movie, and the other… must be protected from piracy, because that 15% could have been 15.2%? I don’t know. To me, this sounds like it was a call from above, since piracy of their most popular book (Divergent) didn’t seem to hurt their profit margin any. NewsCorps, in case you were wondering, did not have a good 2013 on the whole (HarperCollins was their lone bright spot, apparently). Instead of riding the surging popularity of their books, a decision was made to ensure that the Dread Pirate Roberts would not be able to pilfer their books. This is going to hurt them in the long run, methinks.
You see, the typical Information Security Analyst clears about $117,000 a year. I’m not sure what the hell a “Chief Digital Officer” is, but I’m willing to bet it’s something like a management level ISA, so let’s say that a senior manager like that would make more than $117,000 per year. Of course, this is also a publisher notorious for pinching pennies, so let’s cut that back a bit. Call it $100,000 a year. But she’s not going to be doing all this coding and whatnot alone (if at all, if my own history of working for senior managers is any indication), so she’ll have coders doing this for her. And the code monkeys should be making about $45,000-$75,000 per year, according to my sources in the industry. That’s quite a bit of money to be paying, per year, to ensure that they don’t lose half of that in sales.
One of the things I’ve found, doing a little bit of research into the matter, is that while HarperCollins is protecting their rights and intellectual properties through the digital marking, they’re also data mining your device. This wasn’t mentioned in the same article as the one above, but from a previous interview done with Ms. Restivo-Alessi by Fast Company back in January of this year. She mentions her job history was in the music industry (specifically, EMI) and digital security, which makes you wonder just how far HarperCollins is going to be willing to go to protect their books from piracy. There is a reason that the music industry has been properly vilified over the past 15 years.
But let’s go back for a moment. In the interview with Fast Company (in regards to a question about data-driven projects), Ms. Restivo-Alessi said this:
The first one is insight. Where we are making the first inroads is really allowing ourselves to acquire more consumer data–primary and secondary–and do it in a more cost efficient way. Also, we’re in the early days of then having a way of providing a digested presentation of the data to our publishing colleagues so that they can incorporate that information in the way they run the business.
The other is a little more sensitive, but I can tell you just in general it’s the area of digital sales and pricing. Again, because of digital, much more data is available so you can start inferring and analyzing impact and demand elasticity. That team doesn’t report directly to me, but it is a part of my job, as a part of looking for what works in the digital space and what best practices we can share.
There are a lot of buzzwords in there that sound impressive until you break it down. Once you do that, it starts to sound downright creepy.
We are consumers, and companies like HarperCollins wants us to buy their product. In order to do that, they have to put out a product that is both of value to us, the consumers, and entice us to purchase their product over someone else’s. This business model is pretty much capitalism in its most basic form, most people would agree. However, when you begin to take away the choice of the consumer through manipulations and “trends” in data mining, suddenly you have 56 different versions of Twilight floating out there because that’s what the data mining shows. The consumer is no longer the consumer, but a part of the product. As Facebook has shown, when you own the trends and data history of a consumer, the consumer becomes the product.
The second part is pretty simply: prices are going to go up, and that will justify more DRM. It’s a self-serving loop, one which tells the Greek myth of the Ouroboros. Eventually, this will consume itself. Oh, they can claim that their new digital marketing and DRM has shown that profits are increasing while they’re protecting the author, but anyone who works in traditional publishing knows that these books that are bestsellers now have been sitting in the queue for up to five years now. It happens to be fortuitous timing on their parts, and nothing more (well, other than the books being good, that is).
Look, DRM is not going to work. The people who steal ebooks are the people who weren’t going to buy it in any case. I have never had someone tell me that they pirated my book because that $3.99 was just too expensive for their tastes (waiting for my inbox to fill up now challenging this statement…). Yes, HarperCollins was profitable in 2013. That doesn’t mean that making it more difficult on the consumer in order to protect past profits means any sort of substantive growth for 2014 and beyond. If anything, this could cause sales to flatten and even decline.
In the end, all this is going to cause is more people refusing to buy HarperCollins overpriced ebooks. To combat this, they’ll have two choices: raise prices, or get rid of the DRM. And history has already shown us which direction they’ll take.