E-Book Watermarking Gains Traction in Europe

The firm Rüdiger Wischenbart Content and Consulting has just released the latest version of Global eBook, its overview of the worldwide ebook market.  This sweeping, highly informative report is available for free during the month of October.

The report contains lots of information about piracy and rights worldwide — attitudes, public policy initiatives, and technologies.  A few conclusions in particular stand out.  First, while growth of e-book reading appears to be slowing down, it has reached a level of 20% of book sales in the U.S. market (and even higher by unit volume).  This puts e-books firmly in the mainstream of media consumption.

Accordingly, e-book piracy has become a mainstream concern.  Publishers — and their trade associations, such as the Börsenverein des Deutschen Buchhandels in Germany, which is the most active on this issue — had been less involved in the online infringement issue than their counterparts in the music and film industries, but that’s changing now.  Several studies have been done that generally show e-book piracy levels rising rapidly, but there’s wide disagreement on its volume.  And virtually no data at all is available about the promotional vs. detrimental effects of unauthorized file-sharing on legitimate sales.  Part of the problem is that e-book files are much smaller than music MP3s or (especially) digital video or games; therefore e-book files are more likely to be shared through email (which can’t be tracked) and less likely to be available through torrent sites.

The lack of quantitative understanding of infringement and its impact has led different countries to pursue different paths, in terms of both legal actions and the use of antipiracy technologies.  Perhaps the most surprising of the latter trend — at least to those of us on this side of the Atlantic — is the rapid ascendancy of watermarking (a/k/a “social DRM”) in some European countries.  For example:

  • Netherlands: Arbeiderspers/Bruna, the country’s largest book publisher, switched from traditional DRM to watermarking for its entire catalog at the beginning of this year.
  • Austria: 65% of the e-books available in the country have watermarks embedded, compared to only 35% with DRM.
  • Hungary: Watermarking is now the preferred method of content protection.
  • Sweden: Virtually all trade ebooks are DRM-free.  The e-book distributor eLib (owned by the Swedish media giant Bonnier), uses watermarking for 80% of its titles.
  • Italy: watermarking has grown from 15% to 42% of all e-books, overtaking the 35% that use DRM.

(Note that these are, with all due respect to them, second-tier European countries.  I have anecdotal evidence that e-book watermarking is on the rise in the UK, but not much evidence of it in France or Germany.  At the same time, the above countries are often test beds for technologies that, if successful, spread to larger markets — whether by design or market forces.)

Meanwhile, there’s still a total absence of data on the effects of both DRM and watermarking on users’ e-book behavior — which is why I have been discussing with the Book Industry Study Group the possibility of doing a study on this.

The prevailing attitude among authors is that DRM should still be used.  An interesting data point on this came back in January when Lulu, one of the prominent online self-publishing services, decided to stop offering authors the option of DRM protection (using Adobe Content Server, the de facto standard DRM for ebooks outside of the Amazon and Apple ecosystems) for ebooks sold on the Lulu site.  Lulu authors would still be able to distribute their titles through Amazon and other services that use DRM.

Lulu announced this in a blog post which elicited large numbers of comments, largely from authors.  My pseudo-scientific tally of the authors’ comments showed that they are in favor of DRM — and unhappy with Lulu’s decision to drop it — by more than a two-to-one margin.  Many said that they would drop Lulu and move to its competitor Smashwords, which continues to support DRM as an option.  Remember that these are independent authors of mostly “long tail” titles in need of exposure, not bestselling authors or major publishers.

One reason for Lulu’s decision to drop DRM was undoubtedly the operational expense.  Smashwords’ CEO, Mark Coker, expressed the attitudes of ebook distributors succintly in a Publishers Weekly article covering Lulu’s move when he said, “What’s relevant is whether the cost of DRM (measured by fees to Adobe, [and for consumers] increased complexity, decreased availability, decreased sharing and word of mouth, decreased customer satisfaction) outweigh the benefits[.]”  As we used to say over here, that’s the $64,000 question.

2 comments

  1. Bill,

    Indeed interesting the subject of watermarking use. I think you are right about the lack of qualitative understanding of the problem. Perhaps this is why some solutions are used in a ‘we’d better do something, whatever that is’ mode.
    One thing is interesting though, what about variation in business model like gifts, rental (library) etc.? There needs to be a solution enforcing those. Watermarking cannot, DRM can but is not in favor. Any thought on that?

    Regards

    Piotr

  2. Hi Piotr,

    I agree. The use of DRM is largely “faith-based” in the publishing industry. (The same is not true for movies & games, where the big studios/publishers study the effects of some anti-piracy technologies in detail.)

    Watermarking is not useful for models other than purchase. Notice that all of the examples I cited in that report — and there are others in the US, UK, and elsewhere — are trade books sold through retailers. For these, users want an experience that’s as close to physical ownership as possible, which means downloads without DRM.

    Other areas of book publishing such as higher ed, professional, and STM (scientific, technical, medical) are moving away from straight purchase to subscriptions and rentals. Subscription models are growing in popularity. I suspect they are going to evolve to resemble interactive streaming music services like Spotify and Deezer: normally you access e-books through “cloud reading” that displays a page at a time but requires network connectivity, but there will be options to download content to your device, and that content will be encrypted.

    If libraries (or more accurately, library service providers) move to a similar model it will be more slowly and gradually, for a number of reasons including licensing complexities and cost constraints.

    P.S. how is life at Wipro?

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