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February 2017
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The Amazon Kindle, eBooks, and Piracy

While it is hardly the only place that media piracy is coming up these days, eBook piracy is very much on the minds of publishers and booksellers.  There has been some informed speculation made that possibly as many as 20% of all eBooks currently loaded into devices like the Kindle are pirated rather than purchased.  The number is almost shockingly high for some and seems to demand a response.  The big question is what action could and should be successful.

Since I’m assuming that this reaches a relatively well informed and reasoning audience, I don’t need to spend much time on the fallacy of assuming that every eBook loaded onto a Kindle thanks to piracy is a lost sale.  Naturally this is not the case as studies have shown repeatedly when looking into music, movie, and video game piracy.  Most of these same studies have shown that piracy does not have any strong negative effect on sales at all, but let’s assume for the moment that at the very least it allows the market trends to shift based on where customers see the most value to be gained for their money.

This is where the piracy “problem” gets relevant.  Publishers wish to control the perceived value of their product.  It is problematic for them if customers are able to get the same quality of experience from a $3.99 eBook that they do from a $17.99 hardcover, as this has an adverse effect on a mainstay of traditional publishing.  Unfortunately, this sort of control can only be exercised in a situation where the publishers can regulate the flow of new work being made available to customers.  eBooks naturally render this impossible, especially given how simple it is to choose self publishing these days thanks to Amazon, Barnes & Noble, and others.

Do I agree with the idea that books should lose value in an environment where there are too many of them to possibly read?  Not entirely, but that’s just the way things work.  If you have two similar titles being offered for wildly different prices then the cheaper one is likely to win out, barring dramatically successful marketing efforts.  The only way that piracy really plays into this is in allowing readers to still have access to their favorite authors in situations where they would feel unable to justify paying now-outrageous prices.  This is not necessarily a view of the emotional or philosophical “rightness” of the act, just an awareness of the psychology at work.

When it comes right down to it, you can’t stop piracy.  No matter how restrictive the DRM, there are always more people interested in breaking it than maintaining it.  What you can do is adapt to the market and respect your customers.  Publishers who insist that if they can just shut down piracy sites and force Amazon to set high prices for Kindle books then all will be well are deluded.  The only way to control piracy is to make legal acquisition affordable enough and simple enough that the alternative is too much of a hassle to be considered.  The problem is not that the Kindle allows readers to access files they pick up from anywhere on the net, it’s things like the Big 6/Apple Agency Model implementation that try to freeze an entire form of media into an economic model that no longer functions.

Amazon to Collect Sales Tax in California and Beyond

For as long as eReaders have been around, it seems at times, people have complained that they aren’t available for under $100.  They’re finally getting there, with the Kindle available for as little as $114 new.  We might even see a $99 Kindle by the end of the year.  An important question to ask the people who came up with this number might soon be “Is that before or after tax?”

There is obvious competition between online retailers and the brick & mortar set over taxes.  While it is technically true that somebody buying a Kindle on Amazon.com should be paying the same taxes as somebody grabbing the same product from the local Best Buy, it isn’t surprising that most customers somehow forget to file the forms to pay those taxes at the end of the year.  These stores aren’t the only ones affected, of course.

Most states have begun to take notice of the problem, with some targeting Amazon directly due to its prominent status and high sales figures.  It’s a matter of hundreds of millions of dollars per year in revenue that the state governments rightly feel they should have access to.  Amazon’s response, which is either due to the inconvenience of keeping up with unendingly complex local sales tax interactions and iterations or due to the fact that it makes their store more appealing to customers to be able to avoid sales tax (depending on your current level of cynicism and trust of a major corporation’s word on the matter), has been to withdraw their physical presence from nearly any state that has tried to enforce collection requirements on them.

Now, in an arrangement with the California government, not only will Amazon not be pulling their presence from the state, they will be working openly to resolve the issue of sales tax on inter-state commerce due to the rise of the internet.  There’s a bit of back story to the arrangement, with both the state government and Amazon making threats over the issue, but essentially it seems that a compromise was reached.  Amazon, and online companies in general, will be given until July of 2012 to persuade Congress to adopt some form of nationwide measure for the collection of internet sales tax.  Should this not come to pass, there are fallbacks to allow for California to collect beginning in 2013.

While it would seem at first glance to be not in the company’s best interest to cooperate, they have simply gotten too large to avoid notice at this point.  Increasingly, Amazon will be singled out as iconic of the problem with online retailers.  The only safe path for them will be to seek a system that can catch their competition on all levels in the same net, to keep anybody from getting a major advantage.

The knowledge that this was coming could be one pressure that has pushed Amazon to focus on digital media distribution recently, giving them products that cannot be conveniently purchased locally.  Whether or not that is the case, however, it seems a safe bet that Amazon won’t be driven out of business by the inconvenience of it all or the price bump that customers should be paying for already anyway.