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Most of what DRM does in the ebook market is force vendor lock-in and add an additional cost that's passed on to the consumer. It can't stop piracy because the pirates can and will just OCR dead tree editions. All it really does is inconvenience paying customers.
The suggestion has been made that publishers just go back to paper. The only thing that will do is guarantee they don't make any money from ebook sales. All the Harry Potter books are available electronically, none have ever been released as ebooks. Going backwards won't work unless you criminalize scanners and OCR software. Bad idea.
While I'm sure some downloads are lost sales, I'm also sure that others aren't and that NO ONE can or will ever know the exact proportion.
However the idea that every download is a lost sale is ludicrous. It may be a potential lost sale by some metrics, but the idea that every person who downloads a book would have bought it if they had not downloaded it simply staggers belief.
There's no way that Peter Pirate who downloads a torrent of ten thousand books would have bought every one of those books. He might have bought one or two - but not ten thousand, he probably couldn't afford it even if they were available.
Or maybe he's a bit more selective, and just downloads a series that looks interesting. He reads the first couple of books and dislikes them, so he deletes the rest. If it's a six book series the first volume might be a lost sale, and possibly the second, but the rest of them aren't. He never would have bought them because he didn't like the first two.
I'm not denying that there are lost sales due to illegal downloads. Some are the obvious ones of the person reading the book without buying it, others may be the result of the downloader telling their friend at the bookstore - "Don't buy that, I've read it and it's crap."
Yes it costs sales. DRM also costs sales, as do high prices and geographic restrictions.
Piracy is only a lost sale if the person who downloads the book would have bought it otherwise. If they weren't going to buy it anyway it's no more a lost sale than the guy walking past the romance aisle on his way to science fiction is a lost sale for Nora Roberts or any other romance author.
Now Peter Pirate may download Nora's complete works in his massive torrent - but he's not a lost sale for her because he would never buy one. He's not a lost sale for Danielle Steel either.
Piracy is a problem.
DRM is not the solution.
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