MeneTekelUpharsin2 I hope TeleReaders will forgive the preponderance of Kindle stories this morning, but it is a pretty newsworthy event in the e-book world. (And besides, David has made two Kindle posts to my one, and I need to catch up!)

Did you know that the expressions “the writing on the wall” and “days are numbered” come from the same Biblical incident? When King Belshazzar of the Persians committed sacrilege, a disembodied hand appeared and wrote on the wall, and the prophet Daniel interpreted the words to mean that God had numbered the remaining days of the Persian kingdom.

I fear that Amazon’s recent actions with its Kindle reader mean that the encrypted Mobipocket format’s days are also numbered.

The Kindle App: What It Can and Can’t Do

I’ve been reading the MobileRead discussion of the Kindle app, and thinking about its capabilities and incapabilities. What it can do: download e-books and sample chapters directly from the Amazon website. (You have to buy them in Safari or the Amazon iPhone app.) What it can’t do: read Mobipocket-format books from anywhere else.

MobileReaders report that if you’ve jailbroken your device, you can upload unencrypted Mobipocket books directly into the Kindle app’s directory—but nobody has yet discovered how to extract your iPhone’s device ID so there is no way to re-lock Mobi DRM’d books from other vendors to work with it, even if you could upload them. (Of course, removing the DRM on them is still as easy as it ever was.)

The Mysteriously Missing Mobipocket App

Ever since Apple first introduced the app store, Mobipocket users have been clamoring for Mobi to release an official iPhone reader for its file format. This would let people who had bought DRM-encrypted Mobipocket books from Mobipocket.com, Fictionwise, or someone else before they bought their iPhone go back into their store account and re-lock those books to work on their iPhone.

Without an officially-blessed Mobipocket reader, only unencrypted Mobipocket books could be read on the iPhone (in readers such as BookShelf or Stanza that had unencrypted-Mobi capabilities). DRM-encrypted Mobipocket books could be unlocked using utilities such as “mobidedrm”—illegal in many places, but since it is something you would do in the privacy of your own home, the chances of being caught are slim.

Last May, it looked as though the legions of iPhone-owning Mobipocket users were finally going to get their wish. Mobi President Martin Gorner announced at an industry conference that there would be an iPhone Mobipocket by the end of the year.

Amazon Sitting on Mobipocket App?

Since then, Gorner and the rest of Mobi have completely clammed up about it. When I phoned him to ask, Gorner would not even confirm or deny what he had said at that May conference. A highly-placed industry source I know and trust who spoke on condition of anonymity claimed to have certain knowledge that Mobi had its app complete and ready to go as of August, but Amazon would not let them release it.

It would be foolish to claim a single anonymous source’s statement as solid fact, so I cannot say with certainty that Amazon stopped Mobipocket from releasing its reader. Still, what else are we to believe? iPhone apps don’t take that long to develop, and Mobi encryption is not that hard to implement. The programmer of BookShelf could add it to Bookshelf within days if he were not afraid of legal repercussions, but Mobi has never gotten back to him about his request.

Amazon is now in the business of selling e-books, and is under no obligation to make things easer for its competitors. Hence, Amazon has taken a page from Microsoft’s book and “embraced and extended” the widely-used Mobipocket format to create a totally incompatible version for its own reader.

Amazon vs. Fictionwise

Compare and contrast Amazon’s actions to Fictionwise’s behavior on buying eReader. Within a year, Fictionwise had released reader apps for several other platforms (including iPhone and Mac OS X), dropped the requirement that other publishers who wanted to use the eReader format must pay royalties, and even licensed its encryption scheme to Lexcycle and set up a separate bookstore for Lexcycle’s Stanza app! And Fictionwise has taken on the mammoth task of upgrading all its reader applications to use a new format based on the open ePub standard by the end of this year.

And let’s not forget that the reason Fictionwise bought eReader in the first place was that it wanted an e-book format it owned, that could not be taken away at the whim of a competitor. This rationale seemed to be borne out earlier this year, when Overdrive stopped processing encrypted Mobipocket books for Fictionwise.

But Amazon’s recent actions in failing to support other Mobipocket vendors’ format for the iPhone suggest Overdrive may only be the beginning. After “embrace” and “extend,” the next step is “extinguish.”

The E-Text on the Wall

Amazon is in a singular position: an e-bookstore itself, it also owns the company whose similar-but-incompatible encrypted format is used by the majority of other e-bookstores. Most of these bookstores outright require a book be encrypted before they will carry it, in fact.

I have little doubt that licensing the Mobipocket DRM brings in a considerable amount of earnings to the Mobipocket subsidiary—but how much could those earnings be compared to what Amazon might earn from selling the whole book rather than licensing on the DRM used by the book?

I don’t know the terms of the licensing agreements between Mobipocket and DRM distributors such as Overdrive, so I don’t know whether Amazon has the ability to pull out of them unilaterally, or simply fail to renew them as Overdrive did with Fictionwise. But I strongly suspect that if Amazon did decide to stop licensing Mobipocket encryption, it could cripple much of the rest of the e-book industry.

It would also put a crimp in the reading habits of people with a lot of investment in DRM’d Mobi books. The books could still be read on whatever devices they were locked to when they were downloaded (up to 4 devices at a time), but without the DRM servers to relock the books as new devices are bought and old ones discarded, readers would not be able to move those books to new devices—even ones that do have official Mobi readers available.

If I were one of Amazon’s e-book competitors right now, I would seriously be thinking about what I could do to limit my dependence on Mobipocket encryption, and looking at formats such as ePub and eReader as alternatives.

And if I bought a lot of books from Amazon’s e-book competitors, I would shift my future purchases to other formats than Mobi—and take whatever steps I could to make sure my existing Mobi library remained accessible to me on any device whether the DRM servers remained available or not.