Friday, February 22, 2013

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

By  - paidContent - Feb 20, 2013

Three independent bookstores have filed a class action suit against Amazon and all of the big-six publishers, alleging that the proprietary digital rights management tools Amazon uses on ebooks serve to create a monopoly. The indies, represented by Los Angeles antitrust firm Blecher & Collins say publisher contracts calling for the use of this DRM, which like most forms of DRM prohibits readers from copying ebooks or reading them on non-authorized devices, restrain ebook sales and that Amazon “has unlawfully monopolized or attempted to monopolize the market for ebooks in the United States.”

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 and was first noticed by the Huffington Post Wednesday afternoon. The named plaintiffs are Manhattan-based Posman Books, Book House of Stuyvesant Plaza and Fiction Addiction of Greenville, South Carolina; they seek to represent “all other similarly situated independent brick-and-mortar bookstores.”

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, but Posman, Book House and Fiction Addiction all sell Kobo ebooks through the company’s partnership with the American Booksellers Association.

To be clear, Barnes & Noble, Kobo and Apple also sell ebooks with DRM on them. Barnes & Noble and Kobo use Adobe DRM, and Apple uses its own proprietary DRM on ebooks — but that appears not to be at issue in this case because of Apple’s reportedly small ebook market share. (The filing does mention that Apple doesn’t use DRM on music.) Rather, the 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 names only the big-six publishers as defendants, Amazon places its DRM on nearly all of its ebooks from all publishers.

Full story at patdContent

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