What digital lessons can the ebook industry learn from the music industry?

June 2006

A few major issues:

Legal digital downloads only account for around 2% of music sales
Apple has done well with a relaxed DRM system, but it doesn't make a profit on music downloads. They're seen more as a marketing tool to sell profitable iPods.
Other companies, such as Sony and Microsoft, have tried more restrictive DRM and not succeeded. They've had negative publicity and made no money.
The downloads industry has become balkanised, with downloaded songs from one company failing to play on the devices of others.
Incompatibilities and loss of downloaded material is annoying customers of legal downloads and is a major cause of slow industry growth.
Legal digital downloads have made little impact on the reduction in CD sales caused by illegal digital downloads (no space here for the argument on the degree of cause and effect, but it's common sense to assume a major connection exists).
The legal digital download market is increasingly seen as a separate market to CDs. Customers for downloads possibly accept the temporary nature of their collections.

From looking at the digital music download industry as a whole, you might conclude that the five major record companies aren't very keen on it succeeding. Certainly they work at maintaining high prices. It seems they'd prefer to stick with CDs and keep digital downloads as a minority sideshow. And in general music customers are going along with this.

At present, it looks like the book publishing industry will follow the pattern set by the music industry. Ebook prices are high and the big publishing companies don't seem to be especially keen on the digital route. Restrictive DRM and incompatibilities between systems are killing customer demand for eBooks. The eBooks market is panning out as something separate to the regular books market – and low-level. Yet book publishers will inevitably suffer a loss of income due to digital piracy.

For book publishers, like music companies, it's a problem without a solution.

More TinHat articles on Ebooks and Epublishing