In Part I of this post, I discussed the nature of two-sided networks and how network effects leads to the success of a small number of companies in e-book distribution. Part II of this post analyzes how the use of DRM in e-book distribution magnifies these network effects. There has been a lot of discussion as of late regarding the role of DRM in the e-book industry. Many publishing companies have pushed for strong DRM in order to protect their rights as copyright holders. Because replication of digital files is so easy, many fear that unprotected e-books will lead the proliferation...

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Scott Lowe (photo) is a graduate student at Boston University, where he is earning a master’s degree in Information Systems and an MBA degree. His academic concentration is in marketing and technology. He can be reached through his Publishing Tidbits blog. Welcome to the ranks of TeleRead contributors, Scott! – D.R. A few days ago, I posted a blog on the benefits of horizontal markets. In researching the post, I came across a large number of e-book distributors---some vertical and some horizontal. However, nearly all were small, most with a very limited number of titles. It...

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