My Beer with Bezos — The Shocking Truth About The Kindle

It was the night before SXSW 2008 kicked off, and Kassia Krozser, Erik Hersman, and I were hanging out at the pre-party at the Six Lounge in Austin. Erik was explaining that the guy in the corner who looked remarkably like Jeff Bezos, actually was Jeff Bezos.

The truth is, there are a lot of guys at SXSW who look like Jeff Bezos. That might be why Bezos wasn’t attracting much attention. He blended seamlessly with the crowd of Web 2.0 geeks, and he looked absolutely in his element.

Eventually, word got out and a small but disorganized receiving line began to form around Bezos. Partygoers were eager to approach him for an autograph or photo op, but everyone seemed to be cautions about making too big a deal about it.

At some point, I realized that we were being sucked into the Bezos Vortex and were actually in line to meet the man. I remember thinking that it was not unlike waiting in line to meet Santa Claus, but better, because Amazon already has my wish list on file. I was certain that when I introduced myself, Bezos would shake my hand and say, “Yes Kirk, you’ll be getting that plasma TV for Christmas. As long as you remember to take out the trash and clean your room.”

Eventually the crowd in front of us dwindled and it was our turn. Bezos Jeff looked at us expectantly.

Kassia went first. She asked about the availability of the Kindle (it was sold out at the time). Jeff, excited by the prospect of meeting a future Kindle owner, promised that more Kindles were on the way and that Kassia would be able to buy one soon.

Then Kassia decided to push her luck and asked about the possibility of a free Kindle — a review copy, so to speak. Jeff suddenly became animated and began shouting, “you have to buy a kindle,” except, it came out more like “You HAVE to buy a Kindle” — think Seinfeld, “You HAVE to see the baby”. It was almost like he was pleading with her to buy a Kindle.

With that settled, there was a brief lull in the conversation, at which point Jeff turned to me.

In that instant I knew exactly what you talk about when you meet a billionaire in a bar. DRM, of course.

A few weeks earlier I had delivered my DRM presentation at O’Reilly’s TOC conference. I explained to Jeff that some people are concerned the Kindle could become an iTunes-like monopoly that locks consumers into a single platform and causes publishers to lose control of their own industry.

Jeff listened attentively, nodding the whole time, and then he said something that shocked me.

“Kindle is DRM agnostic,” he explained.

He went on to explain that publishers have the option of selling DRM-free eBooks for the Kindle and that he believes publishers might do just that once they become comfortable with the idea of digital content distribution. He noted that it took several years for the music industry to become comfortable with DRM-free content, and that he expects it will take a while for publishers to come around to the idea.

Around this time, Erik moved in to ask Jeff about Amazon shipping products to Africa. I think he might have actually been agitating for an African version of Amazon Prime. At any rate, the moment was over and my time with Jeff Bezos was up.

I’ve been pondering Jeff’s claims of DRM agnosticism ever since. The statement can mean a couple of different things. It could mean, “We’ll sell DRM-free eBooks once we’ve gained sufficient market share to convince publishers that we have an iTunes-like monopoly on the eBook market.”

Or, it could mean that Amazon is open to supporting third party DRM on the Kindle. That’s the thought that came to mind when I read about the deal between Fictionwise and Lexcycle, makers of the Stanza eBook reader for the iPhone. By licensing Fictionwise’s DRM, Lexcycle gives Stanza users access to a marketplace of 40,000 eBooks. The deal involves a fraction of the number of titles available on the Kindle, but represents a huge leap forward for the iPhone as an eBook reading device.

In commenting on the deal, Sara Lloyd of Pan Macmillan (another recent Lexcycle partner) hoped that Amazon might learn a lesson about the advantages of open formats (or at least licensed formats, since the Fictionwise format isn’t technically open).

In light of the claims of Kindle’s DRM agnosticism, the Fictionwise/Lexcycle deal raises some interesting questions:

  • Would Amazon make a similar agreement with Lexcycle, allowing Kindle books to be purchased from, and read on, an iPhone via the Stanza software?
  • Would Amazon support third party DRM (non-mobipocket) on the Kindle?
  • Just how DRM agnostic is the Kindle?

I can’t fathom any scenario where Amazon would license the Kindle format for use on another device. Unless I’m seriously misreading Amazon’s strategy, Kindle is intended to be an end-to-end content distribution system. Kindle without the physical reader isn’t Kindle at all.

As for third party DRM on the Kindle device, that too seems unlikely. What would Amazon stand to gain? It certainly wouldn’t gain access to anymore content. Amazon currently has the largest selection of DRM’d eBook titles available, and there are more on the way. At this point, everyone else is trying to catch up with Amazon.

So, that leaves just the DRM-free interpretation of DRM agnostic. Which is likely to raise a few more questions in the very near future.

Are publishers DRM agnostic? If not, why? If so, when?

20 Responses to “My Beer with Bezos — The Shocking Truth About The Kindle”

  1. Kat Meyer says:

    Great post, Kirk! Personally, I can’t see Bezos ever truly opening up Kindle, period. I always assumed by “DRM-agnostic,” he simply meant that if an individual Kindle owner can figure out how to put non-Kindle DRM’ed content on their Kindle, they were welcome to do so. Things may change in Bezos-land, but he doesn’t seem open to sharing. Maybe if the consumer demands it, he’ll have to listen, but he’s built up much sight-as-yet-unseen public kindle lust, by the time most consumers have their Kindle in hand, it’s too late for them to start making demands about what they want their shiny expensive e-reader to do.
    So, I’m asking Santa for that iphone. Which, if i can come up with the cash, Santa can actually deliver on and I’ll be e-reading my Stanza-y books (or even possibly on other soon-to-be-available-via-itunes-y type books).
    Merry Xmas and Happy other winter holidays (i’m holiday agnostic!) 🙂
    ~Kat

  2. Mike Cane says:

    As much as I hate the K, what Bezos said is plausible.

    They sell MP3s free of DRM.

    Publishers, agents, and writers need to be educated.

  3. Karen T says:

    “The deal involves a fraction of the number of titles available on the Kindle, but represents a huge leap forward for the iPhone as an eBook reading device.”

    Apologies, but this meme is driving me crazy. This is not a new development, much less a “huge leap forward” — the eReader app for iPhone has been tied into the Fictionwise store since the dawn of third-party apps. All the Lexcycle deal does is allow Stanza to do what eReader already does. I’m not sure why this keeps getting reported otherwise, and repeated ad nauseum, but I apparently feel compelled to battle this particular bit of misinformation.

  4. Mark says:

    A couple of days ago I tried to “rip and burn back” some iTunes music I own and was surprised to discover that is no longer possible in iTunes8. I guess it is naive of me to think they would keep this DMCA loophole open forever but for somereason I thought Apple’s DRM plans were benign. This and the latest mini display port news says otherwise.

    Amazon is in the same boat. They are backing DRM ‘just because they have to’ . It recalls Job’s anti DRM manifesto. I don’t doubt the kindle could have launched without it, but that doesn’t mean the pressure to keep DRM will lessen. It will get worse. And Bezos will stick with it.

    And I am with you, they won’t partner with a 3rd party. Amazon likes affiliates. It doesn’t like partners.

  5. bowerbird says:

    here’s the situation in a nutshell.

    you’re one of the smarter people
    in the publishing industry, and
    that just goes to show that even
    the smarter people in publishing
    aren’t too bright sometimes, and
    that’s the situation in a nutshell…

    amazon loses money on the kindle
    as hardware. not a lot, but a little.
    but they are in it for the long run…

    amazon loses money on kindle books.
    sometimes just a little, but often a lot.

    but they are in it for the long run, so
    they’re willing now to let the books be
    loss-leaders to build long-term future.

    amazon sells some e-books for $9.99
    that they are buying from the publisher
    for $10.99, or 12.99, or even $14.99…

    amazon just eats the loss on those books.

    but we can’t really expect amazon to offer
    those same books at those same prices to
    other book-sellers. that would be ridiculous.

    so your first option is simply stupid.

    and your second option — 3rd-party d.r.m. on
    the kindle — is equally stupid. amazon knows
    that d.r.m. costs money, i.e., raises prices, and
    amazon also knows that d.r.m. reduces demand.
    so amazon knows d.r.m. is very bad for business.
    as a book-seller, they’d love to get rid of d.r.m.

    repeat: amazon would _love_ to get rid of d.r.m.

    but the publishers insist on it, so amazon uses it.

    however, they’re not going to be so stupid as to
    pay the cost of _somebody_else_ doing the d.r.m.
    like any self-respecting middleman, they will do it
    themselves, so they pocket the profit for doing it.
    they’re already controlling the hardware, meaning
    it’s that much easier to control the software too…
    thus, they have no incentive to give somebody else
    the “secret” of their d.r.m., since that would mean
    that the “secret” would get out that much sooner.
    (the essence of steve jobs’ letter to the music biz.)
    likewise, they have no incentive to tell someone else
    how their hardware implements their d.r.m. scheme.
    crackers will figure out all that, and much too soon.
    no sense giving up the secrets before then, though.

    so that only leaves your third route — the question
    about “just how d.r.m. agnostic is the kindle?”

    bezos was answering your question philosophically,
    in the sense that there is nothing about the kindle
    that would _require_ it to utilize d.r.m., and — as i
    have just explained — as a book-seller, bezos even
    prefered that his system did _not_ include any d.r.m.

    but the publishers wouldn’t play ball without d.r.m.

    just like the music biz didn’t play ball without d.r.m.

    so steve jobs gave them their d.r.m. — the only way
    you can, with a “secret” formula on a locked platform
    — and lo and behold, eventually the music biz came to
    accuse jobs of creating a monopoly on that platform,
    one that cut them out of their own industry. bullshit.
    those recording companies cut their own throat when
    they demanded d.r.m. and the publishing houses will
    make the very same mistake, because the concept of
    scarcity is deep within their d.n.a., and that means that
    they seek to control distribution in a way that is simply
    _impossible_ in today’s world — let alone undesirable…

    > Are publishers DRM agnostic? If not, why? If so, when?

    stupid questions.

    > Are publishers DRM agnostic?

    the corporate publishers? no, of course not.

    > If not, why?

    they can’t be, because it’s not in their d.n.a.

    they were born and bred out of a world where
    resources are scarce, and that scarcity is how
    they made their fortune, and they simply don’t
    know how to operate in a world without scarcity.
    and scarce resources _demand_ you lock ’em up,
    “because otherwise everyone will just take them”.

    > If so, when?

    never. the corporate publishers will go out of business
    before they learn. the mammal publishers will take over,
    the ones who knew that it was smarter to make copying
    work _for_ them instead of _against_ them, and therefore
    tried to _get_ their customers to make copies, instead of
    trying to make it _impossible_ for them to make copies…

    -bowerbird

  6. Joe Hunkins says:

    I’m still really skeptical about the future of the Kindle as well as book readers in general. For me a small PC offers so much more in terms of free online content as well as all the stuff I want on hand at all times like email, blogging, etc.

    The Kindle marketing approach seems nothing short of bizarre to me – sold out a month before Christmas? This after earlier “sell outs” which were hyped to suggest popularity, but suggest to me that this is an unusual strategy to build demand by falsely suggesting they are “flying off the shelves” when in fact Amazon is just producing a small number.

    However Jeff is one clever guy and if he can get the dying newspaper industry to shift a lot of focus and subscription strategies to this device it’s possible – though still unlikely in my view – that the Kindle will kindle enough interest to become a profit center for AMZN.

  7. Kirk says:

    @Kat, Good luck on the iPhone. Hopefully Santa comes through. I’m still not convinced the iPhone is a mainstream platform for long form reading, but if it works for you, great.

    @Mike, > Publishers, agents, and writers need to be educated.
    Exactly, but especially agents and writers. As it is now, publishers are using agents and writers to rationalize their use of DRM.

    @Karen, Thanks for the clarification. You’re right, of course. I suspect you’ve been seeing the same mistake elsewhere because Lexcycle seems to be very sharp about marketing, and there’s a lot of buzz around the Stanza reader.

    @Mark, Your iTunes 8 problem is a new one to me. Are you saying that there are new limits on the number of times you can rip DRM protected iTunes music? At any rate, such are the problems DRM inflicts on honest consumers (in an attempt to keep honest consumers honest, no less). When it comes to DRM there is no such thing as benign.

    @Joe, The small PC you describe could also be an iPhone. As the eBook market matures I think we’ll find that there is no one answer. Some consumers will prefer a multi-purpose device, while others will prefer a dedicated reader.

    As for the Kindle being out of stock for the holiday shopping season, I have my own suspicions about that one. I think it’s likely that Kindle 2 was supposed to be out well in advance of the holiday season. That obviously hasn’t happened yet. We’ll know for sure when the Kindle becomes available again. If the next Kindles to ship are version 2, then that was very likely the reason for the current shortage. If they’re version 1.0, then it could have been poor planning on Amazon’s part — which would be very surprising, or possibly some manufacturing constraint.

  8. Kirk says:

    @bowerbird,

    I’ll say this as delicately as I possibly can. Sometimes I wish you weren’t such an ass. Actually, most times I wish you weren’t such an ass. The fact that you’re an anonymous ass makes it that much more frustrating.

    The other ‘Lopers will tell you that I love a good argument. I thrive on dissenting opinions. The problem is, you and I rarely disagree. We have the same world view on DRM, and very similar world views on the future or publishing.

    Unfortunately, most of the time you express your views in a way that does no justice to the case you are attempting to make.

    Over the past few months I’ve watched you hijack conversations on Booksquare, the TOC blog, and other publishing related blogs as well. In the process you’ve offended readers, called bloggers names, and added little substance to the discussions in progress. By the way, I’m not the only one who’s noticed your behavior.

    I’ll be honest, it’s gotten to the point where I skip the Bowerbird comments on other blogs. Unfortunately, I can’t do that on my own blog.

    What I can do is boot you off of this blog for being a nuisance. And that’s exactly what I’m going to do.

    I realize that this may seem like an extreme reaction to your most recent comment, but this isn’t based exclusively on that comment. It’s based on the fact that you’ve proven time and time again that you simply don’t interact well with others, you disrupt conversations, and you add little to the discussion. I’m not going to allow that to happen here.

    If you’re looking for a platform I suggest that you start your own blog. I have no doubt that you’d have plenty to write about, and it might help you make a connection with readers who share your opinions.

    Best of luck Bowerbird. As you know, there’s never been a better time to start a new digital publishing endeavor.

  9. Thanks for a great post and the mention of your DRM presentation. I thoroughly enjoyed it and it sparked a few thoughts, http://www.ferrogate.com/2008/12/why-publishing-industry-needs-drm-free.html

  10. Hello, I am pretty impressed by your blogging expertise. I am a blogger myself.

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