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E-book publishers face piracy panic

Industry Standard

(IDG) -- Not long ago, traditional publishers were poised to take their first tentative steps into the digital age. Now Napster -- evoking the specter of expensive books being traded like so many MP3s -- is slowing them in their tracks. "We paid very close attention to the Napster situation," says Steve Cohen, a senior VP for St. Martin's Press, a unit of von Holtzbrinck. "We take it very seriously."

That's good news for companies that stand to benefit from the piracy panic, such as Gemstar-TV Guide International and digital-rights management (DRM) firms such as ContentGuard, which are rushing to offer publishers security and copyright-protection services that they say will ensure the safe delivery and storage of content. Indeed, to this exploding industry, the emergence of peer-to-peer is a marketer's dream: "The publishing industry stands to lose $1.5 billion through e-book piracy by 2005," warns Gemstar's Web site, which has made its secure, closed-loop sales channel for e-books a major selling point to publishers. "The rise of peer-to-peer file-sharing systems like Napster, Gnutella and Freenet, together with the fact that no digital encryption scheme is immune to hacking, will create widespread piracy of valuable books," the site declares.


David Steinberger, an executive at HarperCollins, has been on the receiving end of this DRM marketing blitz. "We are besieged by companies who all want to work with us. We get a dozen calls a week."

But how serious is the threat, and does it justify the kind of grand security schemes that many DRM companies are proposing? It's hard to imagine that a lot of grown-up readers possess the will or the aptitude to crack even the weakest of encryption schemes. Moreover, no one knows when, or even if, e-books will catch on, so publishers risk spending a lot of money to fend off a threat that may never emerge. In other words, projecting revenue losses for an as yet nonexistent market is guesswork based on a host of uncertain variables. INFOCENTER
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"I could go put up the whole text of The Beatles Anthology, but no one would want to read it," says Jupiter Media Metrix analyst Robert Hertzberg. "It would be like putting up a music file that was scratchy." But, he adds, "this is how companies sell. If someone tries to sell you an alarm system, they're going to show you a bunch of news clippings about break-ins and shootings."

Of course, no one is saying that DRM systems should be forsaken.

Rather, cooler heads suggest that publishing executives learn to resist Napster hysteria and exercise judgment in evaluating when encryption is appropriate. Publishers don't need to build Fort Knox. "We're preventing what's happening in the music industry, which is casual copying," says Richard Sarnoff, president of new media and corporate development at Random House. "[Files] don't have to be unbreakable by the highest standard of cryptography."

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November 17, 2000
Laying down the law on the Internet
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Court hears arguments for and against Napster staying online
October 2, 2000

E-Book industry warned of piracy threat
Forrester: Music, book industry to lose billions
Digital rights management vendor extends reach
Germans tackle digital rights management
E-books get real
Will Gemstar's e-book strategy work?
(The Industry Standard)
Seybold prepares for show
The free e-book market economy
(The Industry Standard)

Gemstar-TV Guide International
ContentGuard Holdings, Inc.

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