A small Dutch company may have just cancelled out one of clubs that Amazon uses to bludgeon the competition.
BooXtream, a startup which is best-known for providing the social DRM used by the Pottermore ebookstore, can now help publishers and indie ebookstores sell DRMed ebooks which can be read on the Kindle.
BooXtream can't help the ebookstores sell ebooks with Kindle DRM, but they do offer a type of DRM that comes in a close second. It's called digital watermarks, and it is a type of DRM is already widely used in audiobooks and mp3 but it's still relatively uncommon in ebooks.
At its simplest, a digital watermark is a string of text or other data that is inserted into a file when it is downloaded by a customer. Unlike other types of ebook DRM, the digital watermark doesn't lock down or control how a file is used. It only identifies the customer who bought it, making it as effective at preventing piracy as any other form of ebook DRM while at the same time giving publishers a way to track down the original customer of a pirated ebook.
Unlike Adobe DRM, a digital watermark doesn't have any effect on the experience of using an ebook, and it won't interfere when a customer converts the ebook to another format or loads the ebook onto their Kindle. The Kindle won't even notice the DRM is there, and that means publishers now have a way to bypass Amazon's Kindle ebookstore and sell DRMed ebooks directly to Kindle owners.
Amazon's exclusive control of the Kindle Store and Kindle DRM is one of the ways that they have maintained a dominant position in the ebook market. But now thanks to BooXtream publishers can start chipping away at Amazon's market dominance while still supporting Kindle owners.
BooXtream was launched in 2010 by Icontact, a Dutch firm that has been providing a similar digital watermark service to Dutch audiobook distributors since 2006. BooXtream has licensed their DRM platform to Epub ebookstores around the world, including in the Netherlands, Japan, the Sony ebookstore in Germany, and the aforementioned Pottermore.
P.S. This new support was actually announced a couple weeks ago, but it looks like I am the first to report on it.