Pottermore Uses Social DRM Methods

Yesterday saw the opening of a new kind of "bookstore":  Pottermore.

At first glance, it's the online home for all the Harry Potter books by JK Rowling.

Looking a bit more deeply, it represents something that is truly revolutionary in the world of books and publishing.  It is run by the author and it sells directly to consumers.  There is no publisher involved.  There is no Apple or Amazon or Barnes & Noble unless needed for fulfillment purposes.

The purpose the site serves is to become the social hub of everything related to the classic book series.  While no one knows exactly what that will mean (only registered users can enter), the site is now selling and distributing the works in e-book and audiobook formats.  This by itself is big news because it is the only place where these books have been made available in digital form.

Traditionally, an author writes a manuscript, and a publisher produces the final product and ships it off through distributors to retailers who sell to consumers.  While these e-books are actually digital copies of the physical books produced by Scholastic in the US, they are not available on Amazon, iTunes or other online retail sites.  Amazon visitors are greeted with this notice:

Harry Potter Kindle books are now available on Kindle! All seven books in the series can be purchased at J.K. Rowling's Pottermore Shop, a third-party site. Clicking on "Buy at Pottermore" will take you to Pottermore Shop, where you will need to create a separate account. Like all Kindle books, books purchased from Pottermore are "Buy Once, Read Everywhere" and will be delivered to your Kindle or free Kindle reading apps.


Kindle and iOS users can simply purchase from the site and download to their device.  How can this be?

The answer is in how Pottermore is handling the files they distribute.  In order to deliver a purchased file, the site dynamically "watermarks" each file it delivers so it can be traced back to the purchase.  This means the e-book can be read on any compatible device.  It also means that the purchaser is exposed if "rogue" copies of their copy surface in other e-book stores or torrent sites.  For Kindle and iOS users, Pottermore appears to handshake with Amazon and Apple servers during the fulfillment process.

We will be watching this effort closely, as will many publishers and authors.  The practice of selling direct from producer to consumers has taken a big step forward.

Having developed a unique method to ensure that only one file is delivered for each purchase, Bitmenu enables any author or publisher to do as JK Rowling,  Louis CK and others have done:  engage and sell direct.

UPDATE (5/23/12):

Digital Book World interviews the CEO of Pottermore, Charlie Redmayne.  The piece includes this about their their approach to confronting pirates:


Pottermore DRM Effect

According to Redmayne, the company observed an interesting phenomenon when it released its digital rights management-free e-books to the world.

At first, piracy spiked, as new Pottermore buyers put the DRM-free books on file-sharing sites. But soon after, the “digerati” in the book community commented that they were stupid for doing so because it punished a behavior that the community had asked for (stripping DRM from e-books). The commenters also pointed out that the files were watermarked making the piracy trackable.

After a short while, many of the files were removed and, ultimately, piracy overall of Harry Potter e-books, some of the most pirated e-books, fell by 20% to 25%, according to Redmayne.

The New Decade: Social + Global

Every decade is stamped by the cultural trends driving change during the period:  the 60s were influenced by rock n roll, for instance.  It takes a few years for a new decade to take shape, for its mark to appear.  It's becoming clear that the 2010s will be moved by "the post PC era" (to use Apple's words).

To really delve into what this means, we recommend reading this Harvard Business School blog series by Nilofer Merchant (Rules for the Social Era, Social Means Freedom, Why Porter's Model No Longer Works, and Why Social Marketing Is So Hard are the first four pieces in her series).

Bottom line:  social means manufacturing for dynamically targeted groups of consumers based on their own preferences.

"When companies figure out how to shape their design, production, and manufacturing cycle from rigid planning and production systems to unique customer-driven experiences, they’ll design a way to respond in smaller bursts of more profitable cycles."


Think about how Facebook manufactures your news feed just for you, in real time.  Think how your Apple Store has the product you want even though you configure it and use it differently from anyone else.  Think about Amazon opening up a retail store near you carrying the products you want, for you to pick up post-purchase.


Merchant's series resonates with our earlier posts about the Lean Startup movement, selling in social streams and the Louis CK experiment.

At Bitmenu, we were struck by these words contained in a report put out by the Anderson School at UCLA in 2009:

"U.S. exports are the potential driver of a successful economic recovery and 'we will need to turn our shopping malls into factories.'"

This forecast seems to be coming true.  But, it will look much different than anyone could have imagined even three years ago.

New Wallet On The Way: PayPal and iCache

It's easy to think about a smartphone as a cash register.  It's not so easy to see how that will come to pass.

Google's Wallet, while available as an option in local retailers, just doesn't have much use since it was launched in August.  Google bit hard on the widespread adoption of Near Field Communications systems in smartphones.  My phone doesn't have NFC, does yours?

Last week, PayPal introduced their wallet plans at SXSW.  It will bring a whole new interface to the 106 million PayPal users and enables several different payment instruments and methods to work via smartphones and other mobile devices.  As a "wallet in the cloud" it can go anywhere a user can sign into their PayPal account, even if their smartphone is not available.

What is not mentioned in the video demos is anything about POS interactions.  Most "heavily engaged"PayPal users consider the service as safer than supplying credit card information to e-commerce web sites.  We would like to see PayPal generate QR codes for merchants to display in stores, along with an enhanced smartphone app that enables scanning and purchasing without a cash register.

To spice things up, iCache has launched a brilliant card-holding wallet that promises to make your smartphone into any card you like.  The Geode is currently seeking $50k to move into the manufacturing phase.  It is actually a smartphone case that includes a small e-ink screen that displays your card of choice via barcode, and a slip-out read/write card that can be swiped as needed.  The case includes a bio-metric scanner that will only open the app when the correct finger is presented.

Until these visions come to pass, Square seems to be gaining traction with their combination of Card Case and Register systems.

Bitmenu's system design anticipated consumer acceptance of "safer than plastic" solutions for purchasing. Buyers use their existing Amazon or PayPal accounts to purchase and can choose how to fund those accounts without worrying about sharing their financial information with individual Bitmenu Sellers.  For their part, Bitmenu Sellers benefit from the massive theft and fraud protection they get from these two services.

UPDATE:  3/16
Today PayPal introduced the PayPal Here POS system for iPhones.  This is going head-on with Square.

Pinterest, Pin-boards and Copyright

Default Bitmenu coupons now automatically include little red Pinterest "Pin it" buttons, right alongside Google+, LinkedIn, Twitter and Facebook.

While these viral buttons release the coupon into the various social streams, Pinterest goes a step further.  Anyone who is a fan of a given publisher can create a "pin-board" of their favorite coupons.  The image pinned can come from the Bitmenu coupon or the Seller's landing page(s).  Each pinboard has a very easy to read (and pass along) web address, such as:

http://pinterest.com/duhring/acoustic-guitar-lessons/

The result is attractively presented options for friends and fans.  For Pinterest, the results have been staggering.  They are growing faster than any other social network, including Facebook.  In fact, Pinterest integrated deeply with Facebook in January, and their growth has skyrocketed since then.

Of concern to any Seller are copyright issues related to sharing both Pins and Bitmenu Offer pages.  Since the image on the offer coupon is purely the property of the Seller,  Pinterest's terms are very similar to Bitmenu's.  They have taken pains to make the act of "pinning" effortless and freely available.

“YOU ACKNOWLEDGE AND AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE ENTIRE RISK ARISING OUT OF YOUR ACCESS TO AND USE OF THE SITE, APPLICATION, SERVICES AND SITE CONTENT REMAINS WITH YOU.”

Stock on Hand: Why Apple's Stock is Soaring

You can't sell what you don't have.

For years, Apple suffered from chronic supply shortages that sabotaged their lead in new markets.  Steve Jobs was a master of demonstrating products that were ahead of their time only to see others catch up by the time Apple had produced an adequate supply of product to meet demand.

Times have changed under the leadership of Tim Cook.  Apple's recent announcement of the iPhone 4S might have seemed pedestrian compared to the technical rabbits Steve Jobs pulled out of hats when he was on-stage.  But, subsequent financial performance and stock price show the benefit of making retail availability a core competency.