BROOKE GLADSTONE: Just a reminder:  When we recorded that interview earlier this year, Random and Penguin had not yet merged, expanding their market power. We don’t know what impact that will have, but Matthew Ingram, a senior writer with the website GigaOM, says the publisher’s efforts to tame Amazon are doomed to fail.

MATHEW INGRAM:  I think in some ways they are trying to play King Canute.

BROOKE GLADSTONE:  King Canute?

MATHEW INGRAM:  Yeah, King Canute was the one who tried to stop the tides. There’s some debate about whether he was just an idiot –

  [BROOKE LAUGHS]

- or whether he was trying to show people that you couldn’t do that.

BROOKE GLADSTONE:  Do you think that King Canute could apply to the publishing industry?

MATHEW INGRAM:  They are trying to halt something that can’t be halted.

BROOKE GLADSTONE:  You know that overall book sales are falling. I’m not blaming Amazon for this, but there is a problem.

MATHEW INGRAM:  But, but are higher prices gonna solve that problem? How is that going to help? I know these are just small examples but if you look at self-publishers like J.A. Konrath, when he dropped the price to 99 cents he sold ten times, twenty times, thirty times more books.

You know, Amanda Hocking, she’s a self-publishing phenomenon, she made, I think, close to two million dollars in under a year by self-publishing through the Kindle platform. By selling short books, not incredibly well- written books, 99 cents. How well written does it need to be for 99 cents?

BROOKE GLADSTONE:  [LAUGHS] But haven’t you sort of implicitly made the point that quality costs? What about the kinds of advances that publishers lay out to get authors that may be really good?

MATHEW INGRAM:  I’m not saying that publishers don’t provide value. I think they do. But now, I think they need to show what that value is. A good editor and a relationship that a writer has with that editor is a hugely valuable thing, something that Amazon, at least so far, isn’t providing. But that’s no longer the default.

BROOKE GLADSTONE:  A lot of critics think that the Department of Justice has inadvertently strengthened Amazon’s monopoly in its decision, which was intended to be anti-monopoly.

MATHEW INGRAM:  Amazon’s monopoly has actually decreased from about 90% or so to, I think, the 60% range. Now, I know the publishers would like to argue that that’s because of agency pricing. I think it’s probably in spite of agency pricing. E-books haven’t even existed for that long. Amazon effectively created that market and has, you know, the leading e-reader so, obviously, it’s gonna have a huge market share. But I think over time that is going to decrease. It almost always does.

BROOKE GLADSTONE:  Talk to me about how digital rights management, DRM, figures into this whole argument.

MATHEW INGRAM:  Okay, sure. So digital rights management is anything that protects the content, in some way, prevents you from moving it to another device, prevents you from copying it. There was a fantastic column, I think Charlie Stross wrote it, the science fiction author, about DRM. And his argument was that by agreeing to restrictive DRM, whether it’s Amazon’s or Apple’s, authors and publishers effectively gave Amazon a giant stick to beat them with.

BROOKE GLADSTONE:  I don’t understand.

MATHEW INGRAM:  Well, DRM locks those books into Amazon’s platform, right? You buy Kindle, you buy your books through Amazon, you can only read them on your Kindle.

BROOKE GLADSTONE:  But you have to have one format or another.

MATHEW INGRAM:  Sure, but you should have as many different formats as possible. So, in fact, there is a publisher who is pretty much doing that. O’Reilly has no DRM on any of its books. And Tim O’Reilly has said that, you know, piracy is this huge bogeyman that everybody talks about:  our books are gonna be pirated. In some cases, you actually want your books to be pirated. It’s how people find your content. Paulo Coelho, the Brazilian author, pirated his own books, uploaded them to bit torrent servers so that he could broaden his reach into new markets, never told his publisher.

   [BROOKE LAUGHS]

But, of course, you know, now he has three million readers in Russia and his publisher thinks that’s fantastic.

BROOKE GLADSTONE:  So if you were talking to the Big Six publishers now, what would you advise them to do?

MATHEW INGRAM:  I would say reduce your costs.

BROOKE GLADSTONE:  Fire your editors?

MATHEW INGRAM:  Not necessarily. God knows, there’s got to be some fat in the publishing business.

BROOKE GLADSTONE:  What else?

MATHEW INGRAM:  Get rid of DRM.

BROOKE GLADSTONE:  Would you advise them to just sit back, think of England while Amazon sets the prices?

MATHEW INGRAM:  No, of course not. I mean, they have to negotiate with Amazon.

BROOKE GLADSTONE:  But Amazon holds all the cards!

MATHEW INGRAM:  Amazon doesn’t hold all the cards. Amazon doesn’t have all the content. It wants that content, so that it can offer it to people on its platform. Push Amazon to give up on DRM. They want it just as badly as the publishers did. Instead of trying to protect a specific price point, think about what your business is gonna look like in five years or ten years and how can you get there.

BROOKE GLADSTONE:  Mathew, thank you very much.

MATHEW INGRAM:  Thank you, for having me.

BROOKE GLADSTONE:  Mathew Ingram is a senior writer at the technology website GigaOM.

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