Last week’s blog entry on Amazon’s ebook strategy went around the net like a dose of rotavirus. And, as we can now see from Tor’s ground-breaking announcement I was only just ahead of the curve: people at executive level inside Macmillan were already asking whether dropping DRM would be a good move. Last week they asked me to explain, in detail, just why I thought abandoning DRM on ebooks was a sensible strategy for a publisher. Turns out my blog entry on Amazon’s business strategy didn’t actually explain my full reasoning on DRM, so here it is.

Note that I am not responsible for Macmillan’s change of policy. An internal debate was already in progress; this move was already on the cards. I caught their attention and was given a chance to offer some input: that’s all. The final decision to drop DRM on ebooks from Tor/Forge was taken by John Sargent, CEO of Macmillan, who ultimately has to account for his actions to the shareholders.

Along the way, he explains why I may be shopping somewhere other than Amazon, for my SF reading material.

[C]urrently Amazon have swamped the midlist among ebooks in a sea of self-published rubbish. It’s impossible to find anything worth reading in the Kindle store that isn’t a very obvious bestseller. This offers an opportunity for specialist bookstores to offer a curatorial role. I believe the voracious genre consumers are picky enough about what they read that they dislike Amazon’s slushpile approach, and will preferentially shop in better organized outlets.

I just hope he’s wrong about e-ink readers disappearing within 5 years. I vastly prefer my non-backlit e-ink display to any backlit LCD display.

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Digital Rights Management (DRM) is the name for a software lock that publishers apply to movies and e-books that you’ve purchased. When something is “protected” by DRM, the publisher is protected from the risk that you’ll copy it or use it in any way that they don’t like.

DRM prohibits you from doing bad things, like distributing something to 1 million of your closest friends. It also prohibits you from doing good things, like copying your new DVD to your iPad or loading your Kindle e-book into your Barnes & Noble Nook.

It’s worse than that though. It gives the publisher veto control over your devices—if you can’t transfer your existing library to a new device, you’ll be much less likely to buy it. With DRM, your e-books last only as long as the publisher does. If the publisher goes out of business (or leaves the market, as Wal-Mart did with digital music), you’ll lose the ability to load your DRM files onto new devices. For the customer, there’s absolutely nothing to like about a DRM lock.

With Tor’s announcement, the e-book industry finally begins a move that I’ve been predicting for a couple of years now.

It’s a move I’ve been predicting because of what I observed with digital music. In 2003, when the music publishers first made songs legally available through iTunes, they insisted that Apple wrap each track in a DRM lock. Their goal was to prevent widespread music piracy. Given the overwhelming popularity of the iPod, they succeeded in making Apple’s store practically the only legal source of music for most customers.

For six years Apple gobbled up an increasing share of the music market. The music labels finally realized that their insistence on DRM was making them dangerously dependent on Apple. In January of 2009, the publishers agreed to let Apple—and other online retailers—sell music tracks without any DRM wrapper whatsoever.

For the first time, customers were able to legally buy digital music from Apple and play it on a non-Apple device. And, for the first time, Apple customers were able to legally buy digital music from Amazon and play it on their iPods. It took six years but the music labels finally realized that digital music without a DRM lock was better both for them and for their customers.

A similar situation has been playing out in the e-book market. Amazon was the first company to produce a mass-market e-book reader, introducing the Kindle in 2007. Publishers were slow to embrace the new platform but gradually began putting more of their catalog into Kindle format. As they released Kindle versions of each book, they insisted that Amazon wrap the e-books with a DRM lock.

The firs true competitor, the Nook from Barnes & Noble, wasn’t introduced until 2009. At this point, digital music had already been DRM free for most of a year. E-books, however, were still DRM locked. As a result, Amazon was able to leverage their early start, large customer base, and solid hardware into a commanding market lead.

As Amazon grew, the publishers grew increasingly dependent on sales from Amazon. Each Kindle customer had a library that was locked to their Kindle device, through DRM. As long as those customers were locked to the Kindle hardware, they were also locked to the Kindle bookstore, making it hard to grow sales elsewhere. Amazon continued to grow Kindle and Kindle e-book sales, through aggressive pricing and discounting of e-books.

The publishers were aware of the trap that the music labels had fallen into with Apple. They were determined to avoid it but they were equally determined to ship e-books with DRM locks. The publishers decided to neuter some of Amazon’s advantages by removing Amazon’s ability to compete on price. In April, 2010 the publishers forced Amazon to purchase e-books through an “agency model“. Amazon would no longer be free to price e-books as it saw fit. Instead, the publisher would set the price and Amazon would get to keep a flat 30% fee.

From now on, e-books would be priced at $7.99, $9.99, $12.99, $14.99, $16.99, or even $19.99, as the publisher dictated. These prices would apply identically across all stores (Apple iBooks, B&N Nook, Amazon Kindle). The publishers hoped that by removing Amazon’s price advantages, they could entice customers into other stores and prevent Amazon from gaining an effective monopoly over the e-book market.

It was an interesting tactic but one that I didn’t expect to succeed, long term. Eventually one publisher would undercut another and the lock step pricing would fall apart. I continued to predict that publishers would eventually be forced to remove their DRM locks, if they wanted to have an open market with lots of sellers.

The agency model gambit hung together for 2 years and largely worked, until the publishers got sued. On April 12, the Department of Justice sued five publishers, under anti-trust law, alleging a conspiracy to fix prices. The DoJ sued HarperCollins, Simon & Schuster, Hachette, Macmillan, and Penguin. All but Macmillan and Penguin immediately settled and agreed to stop using the agency model.

Macmillan, one of the two holdouts, is the parent to Tor Books. Tor publishes science fiction books. These books are written and purchased by tech-savvy people. Both groups have been begging for DRM free e-books for years. Tor has wanted to oblige them, but Macmillan has always set the rules and Macmillan has always said no.

Yesterday, watching the agency model go down in flames, Macmillan apparently relented, and Tor announced that, by early July, their entire catalog would be available DRM free. They’ll continue to sell e-books through Amazon and B&N but those e-books will now be DRM free. In addition, Tor will look to expand their reach by selling through additional retailers. (Until now, those other retailers have been off-limits because they only sell DRM free e-books.)

This policy shift will open up new opportunities for Tor. Because I believe it signals the beginning of an industry wide shift, it will also open up new opportunities for customers as well. No longer will you be locked into one e-book reader or one e-book store. You’ll have the freedom to buy e-books from any store and read them on any reader. You’ll have the freedom to switch readers, without needing the publishers to approve of your new device. You’ll have the freedom to loan the e-book to a friend, without that friend needing to use the same device as you.

I’m excited about the shift and I’m excited about what it means for the future growth of the e-book industry.

Now, when is the movie industry going to finally going to catch up and quit putting DRM locks all over their DVD and Blu-Ray discs? Are we going to have to wait another 3 years for that shift to occur? Or another 10?

Caro began “The Years of Lyndon Johnson,” his multivolume biography of the 36th president, in 1976, not long after finishing “The Power Broker,” his immense, Pulitzer Prize-winning biography of Moses, and figured he could do Johnson’s life in three volumes, which would take him six years or so. Next month, a fourth installment, “The Passage of Power,” will appear 10 years after the last, “Master of the Senate,” which came out 12 years after its predecessor, “Means of Ascent,” which in turn was published 8 years after the first book, “The Path to Power.” These are not ordinary-size volumes, either. “Means of Ascent,” at 500 pages or so, is the comparative shrimp of the bunch. “The Path to Power” is almost 900 pages long; “Master of the Senate” is close to 1,200, or nearly as long as the previous two combined. If you try to read or reread them all in just a couple weeks, as I foolishly did not long ago, you find yourself reluctant to put them down but also worried that your eyeballs may fall out.

That about sums up the books. This is from a New York Times Magazine profile of Robert Caro. He’s a very interesting man and a tireless biographer. If he had another 50 years to live, I’d love to see who we’d profile next—and what we’d learn about them from him.

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With the supporter’s permission, I’m reprinting it here.

You need to understand something about 702 Vermont Street and Wise Ahadzi. Firstly, Mr. Ahadzi left his home in early 2009. According to neighbors, the home became rodent-infested and was being used for criminal activity. Neighbors were very upset to be living next to an abandoned house. Mr. Ahadzi went into hiding. He was being chased by creditors, not just Countrywide Mortgage, but the utilities, credit cards. His business was trading in and writing about penny stocks. That was bankrupt as well…and god only knows who he owed money to from that business.

The house, being abandoned, was ransacked for anything valuable. Long before Occupy moved in, the appliances were stolen. There was no kitchen on Dec 6, 2011. There was lots of water damage in the kitchen. Occupy removed heavily damaged drywall from the kitchen.

Mr. Ahadzi showed up one day after the big hoopla on the news. He had been unreachable by Occupy and by Bank of America, successors to Countrywide. That’s why they hadn’t yet foreclosed. He is still the rightful owner of the property and could have asserted that right on December 7, but he is “negotiating” with Occupy, and with Countrywide.

Don’t get sucked into the simple narrative of hippies trashing stuff. There’s more at work here.

I’ll just say that even with all of that information—OWS still didn’t actually manage to do much with the house. By this account, OWS managed to remove some drywall from the house. Given that Habitat for Humanity can manage to build a house in a matter of days (or hours, in some cases), that’s not especially impressive.

The United States’ rapidly declining crude oil supply has made a stunning about-face, shredding federal oil projections and putting energy independence in sight of some analyst forecasts.

After declining to levels not seen since the 1940s, U.S. crude production began rising again in 2009. Drilling rigs have rushed into the nation’s oil fields, suggesting a surge in domestic crude is on the horizon.

… By the EIA’s forecast, the United States will challenge Saudi Arabia as the world’s top oil producer when crude and other forms of liquid petroleum are included. But the U.S. is also the world’s top oil consumer, demanding nearly 20 million barrels a day. So even with an oil boom, the nation still falls far short of its energy demands.

I’d love to challenge Saudi Arabia as the world’s top oil producer. I’d love to weaken the power of those terrorist sponsoring, women abusing cowards.

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I took my camera out and started snapping some photos. “No pictures!” I was politely, but firmly, admonished by a pretty young flight attendant. Though still sitting on the tarmac in Beijing, I figured it would be best to follow DPRK rules as being inside the Air Koryo plane already made me feel like I was under the watchful eye of the Dear Leader.\

You could easily tell who the North Korean citizens were. Each had a pin on his or her shirt, right over the heart, featuring either the beaming smile of Kim Il Sung, the Great Leader and Eternal President of Korea—the only official head of state who is dead—or a more innocuous pin with the North Korean flag on it.

Interesting. I’m looking forward to part 2.

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PW has learned that the overwhelming majority of publishers with titles featured in the program did not reach any agreement with the retailer. Rather, these titles were taken without publishers’ knowledge or consent.

… As has been reported already, titles from the big six houses were not included in the Lending Library because these publishers sell on the agency model. The books featured in Amazon’s Lending Library are all either self-published, published by Amazon (under one of its imprints), or published by houses that sell on the wholesale model. Amazon was able to include publishers’ titles without their consent because the e-tailer is treating the borrowing process as a sale—each time a Prime user borrows a book, Amazon pays the publisher as if the book was bought.

Apparently, some of the publishers (and some authors) are quiet upset about this. Legally, I’m not sure how this works. If Amazon is essentially buying a book, each time it’s checked out, the publishers are still getting sales and Amazon is eating costs. This seems to financially hurt Amazon far more than the publishers. But, intellectual property contracts and law can be very slippery things and there may be legitimate ways that this hurts publishers and authors.

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In my favorite of these studies, children were divided into two groups. All of them were given a sugar-free beverage to drink. But half the parents were told that their child had just had a drink with sugar. Then, all of the parents were told to grade their children’s behavior. Not surprisingly, the parents of children who thought their children had drunk a ton of sugar rated their children as significantly more hyperactive. This myth is entirely in parents’ heads. We see it because we believe it.

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In an extraordinary hearing in June 2010 ordered by the U.S. Supreme Court, Davis’ attorneys were finally allowed to present evidence of his innocence to a federal judge. In statement after statement, witnesses from the original trial avowed that they had been coerced by police to implicate Davis in the shooting or had lied in order to secure lenience for their own troubles with the law.

…

Emanuel also noted the prosecutors’ reliance on two hearsay confessions at the original trial, including one allegedly given by Davis to a cellmate shortly after his arrest. Both confessions were later recanted by the witnesses in affidavits.

“At the original trial, you’ve got very dubious eyewitness identifications and a lot of hearsay,” Emanuel said. “It’s appalling for a death case.”

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They are a cornerstone of Chrysler’s unlikely comeback: 900 employees turning out a Jeep Grand Cherokee sport utility vehicle every 48 seconds of the working day at an assembly plant here. Working for Less

Nothing distinguishes them from other workers at the Jefferson North plant, except their paychecks. The newest workers earn about $14 an hour; longtime employees earn double that.

With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries.

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