: How to prevent ebook piracy from stealing your livelihood? I'm a part-time writer, still working on my novel (with a long term goal to make a living as a writer). My partner is also a writer,

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I've been giving this some thought, and while I don't have a complete answer to this problem here are my current thoughts as a fellow IP creator (different industry, same problem):

Bear in mind that DRM can (counter-intuitively) result in lost sales. If an author isn't willing to give me a permanent, fungible, standards compliant, and infinitely transferable copy of their work in exchange for my hard-earned cash, then I refuse to pay them anywhere near what their work would normally be worth. I don't care how good that work is, I'll find a way to get it that doesn't involve paying more than the few pennies a rental is worth (e.g. via a library.) Then, if I can't find it that way, I'll find another author -- copyright is already restrictive enough, and ideas are rarely so unique as to justify paying you and your great grandchildren leasing fees in perpetuity.

NOTE: I take a hardline stance on this largely due to the information hole that the 120+ year copyright term plus DRM has created. From my perspective, you absolutely should be paid for your work, but that work must become a permanent part of society, beyond you or your publisher's ability to recall. Basically, by creating and publishing a work, you have actually removed something from society as a whole -- specifically, there is no way to "delete" your work from the minds of people that read it, and you have prevented others from creating that type of work for over 120 years.

This, in turn creates a sort of debt to society that copyright has attempted to balance (fairly successfully) in the dead-tree era (think rare book shops for the most valuable works), but that balance has been massively upset with the introduction of DRM to the point where many authors are no longer satisfying this societal debt. Remember, copyright is effectively a (old and very long-standing) contract between consumers and producers, and the rise of piracy in the modern age is partly due to perceived breach of this contract in favor of the content creators.

tl;dr on this section: Your readers have rights too. Piracy can be looked at as a reaction to perceived violation of their rights, and DRM can actually make the monetary situation worse as a result.
Stepping back and looking at the dead-tree era, unauthorized copies existed there too. One could argue that the specialized equipment needed to produce the fakes made prosecution easier, but this is hardly a new problem.

In that era, a fake would be worth less than an authorized copy as anyone picking it up could (theoretically) tell it was a fake, and then be liable for infringement. What if we replicate that model using blockchain technology; that is, each authorized copy is made unique and has a permanent, verifiable "provenance"? The idea being, you release the basic rights people have with dead-tree copies, but at the same time you are the only person that can generate real, authorized copies, and anyone receiving a copy can easily check if it is genuine or not. Essentially, this makes the whack-a-mole of copyright enforcement somewhat easier since anyone can check if a copy is pirated or not.

Going down this hypothetical route, you would watermark each official copy of your work to make it unique, then record that in the blockchain as being created in exchange for currency. This becomes a permanent record of the fact that you have created an authorized copy, and the current owner can prove that they are authorized to own that copy. That owner can then sell it to another person, losing their right to own that copy (again, publicly recorded). Essentially this prevents you or your publisher from recalling the work, while still retaining the concept of a copy of a work that has some intrinsic, unremovable value, and is therefore worth paying for.

tl;dr on this section: Don't fall for the existing, centralized DRM model that is making people angry and encouraging piracy. Look for a non-intrusive DRM solution and use the extensive legal options in place to stop piracy on a large scale.
Make purchase easy, and offer value adds! Extending on the above concept, with parallels to the dead tree era, why not offer a "signed" edition for more money? Surely enough people will enjoy a good work enough to want a personal touch from the author -- this costs you very little and helps the bottom line.

Purchase should be as easy as "select item, send money, get license to use item". It should not include additional steps like "purchase authorized reader hardware, agree to restrictive EULA, install insecure reader software", etc.

Consider a sale every now and again -- e.g. 25 standard copies at a discount, when they are sold out you have to pay full price again.

tl;dr on this section: Make it easier to pay for your work than to pirate it. Offer a product that is more valuable than the pirated version. Make the work accessible even to those that don't have a lot of money.

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Is there a practical, effective way to prevent this IP theft?

Yes.

As someone who has pirated countless books, I might give you some insight into my frame of mind. There's a very simple way you can counteract this "theft":

Put a donation link on your website.

You'd be surprised if I told you how many times I wanted to donate to an author after reading their book but couldn't because they didn't take the simple step of enabling it.

Prefer a easy to use payment method - paypal and bitcoin are good candidates. You don't have to phrase it as "paying for pirating". "Supporting my writing" would be appropriate.

As a reader, here's things I care about, in order of importance:

I want to read your book
I want to finance your future books (so I can read them as well)
I want to get a sense of contributing to the development of culture and society

Here's some things I don't want:

complicated DRM schemes that at best make my e-reader slow, or at worse, don't work with my model at all, or make me unable to read on my computer.
lose access to my book when I migrate to another book publisher service, e-reader or computer.
I don't care about exclusivity agreements. I won't create a new account in a new publisher again just because your book is there.
I don't care about middlemen like amazon profiting at your and mine expense in an age where data distribution is virtually free.
I don't care about the price of your e-book being virtually identical to the price of a paper copy. No matter what the actual production costs are, I feel I'm getting ripped off.

Finally, please consider subscribing to a crowdsourcing/patron platform like Patreon. Or letting donators leave a message. The only thing better than supporting authors you love is doing it publicly.

Summary:

I want to read your book in whatever way I see fit. Please just make it easy for me and take my money.

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Watermarking.

This is common with high-priced (>) documents, such as building codes and scientific journal articles. The downloaded file will include "Purchased by User@Example.Com" in the footer of each page and a unique ID in the meta-data. If the file ends up in the wild or in the black market, the publisher knows from who to seek damages.

Technical solutions can only discourage copying. Once copying happens, your problem is legal, not technical. It's up to you to enforce your copyright, so it's to your benefit to make enforcement as easy as possible. Easy enforcement also discourages anybody who fears litigation.

Watermarking is an option only if the publisher offers the feature, because the file must be dynamically generated for each customer. Also, watermarking relies on customers' identity being authenticated. Credit card transactions may offer a path to an identity, but anonymous payment methods won't work.

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As a blog author and publisher and open source programmer, I feel even more exposed to "IP theft".

But "IP theft" does not exist for me when I write or publish program source codes, even though I earn good money with those.

Why? I ditched that frightening term from my vocabulary. It does not contribute to anything, quite the opposite in fact. If carry fright, anger or anxiety in you, without having the ability to change it, it just takes away creative or entrepreunerial potential and ruins your evening, irreversibly.

How so? Because no practical way to prevent "IP theft" exists, given analog holes. My scanner has no problem scanning from my Kindle device and sending the scan through an OCR program. Even more comfortable and a lot faster: If available, I order your book on dead tree, cut off the binding, and put the pile of sheets into a multi sheet scanner. After a maximum of a few hours, I have "pirated" your book.

The only method I know (and believe in) to minimize the negative effects of content piracy is to maximize the reader's satisfaction.

I lied. Actually there is a way to prevent "theft": Create something that is uninteresting, unhelpful, boring, and that never gets traction.

Also, my consumer persona want to add this: If I have the choice between two equally great books, I choose the one which restricts me less.

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If you want people to be honest, make it easy for them to do so.

Eighteen years ago, there was a hugely popular computer program called "Napster". It let people share their music collections with each other in violation of all sorts of copyright laws. The music publishers were up in arms over this, and filed hundreds of thousands of lawsuits against individual users, software developers, and the occasional ISP. Yet, no matter what the industry did, Napster and similar file-sharing programs grew in popularity.

These days, you almost never hear about music sharing. You know what killed it? A little program called "iTunes". Instead of downloading a file of uncertain contents and unknown quality from a sharing service, people could go to a central location and easily find and purchase exactly what they wanted.

Don't waste your time attacking the pirates head-on, the way the music industry did. Instead, do what Apple did and focus on making your ebooks easy to purchase and easy to use.

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It is sad but true that without strict enforcement of anti-piracy laws, and in the absence of broad cultural perceptions that consider the act of acquiring and reading a pirated ebook as either criminal or unethical (and I am talking society and culture here, not intellectual property laws or their enforcement) any reader who can get an ebook free is unlikely to insist on paying for it or buy a physical copy. They will simply read the book, and use the money saved there for some other purpose, such as buying a memory card for their mobile phone. There might indeed be communities where many people would rather pay for their books or ebooks, but that indicates to me a broad cultural understanding in those communities that pirating ebooks is criminal or unethical. That is however not yet understood in every part of the world.

Circumstantial exceptions that might tempt a reader to choose an unauthorised 'free download': Sometimes the physical book or even a legitimate ebook is unavailable or no longer available for purchase via bookstore or online shopping in the reader's country or locality, or else the reader does not possess electronic payment means such as a credit card to complete the online purchase transaction. [I know many people who do not have any credit cards or debit cards or any other online payment options mainly because they consider it a risk for online fraud.]

In short, a reader reading a pirated ebook represents an actual sale lost only whenever the person had the motive, means and opportunity to buy a legitimate ebook or physical copy, but still chose piracy simply because it was easier, cheaper and socially not unacceptable to acquire and read a pirated ebook, irrespective of intellectual property laws or digital rights.

This is the hard reality for writers in the digital age, but forms of piracy existed even before ebooks and the internet. Also, @Mark Baker in his answer here has made the pertinent point that even in pre-digital eras, the author was not being paid for every time their book got read by a new reader, since many readers would borrow books from their friends, a library or the hotel; get gifted second-hand physical copies; or buy second-hand physical books whose resale does not create royalties for the writer. All of which practices continue in the digital age (even if some studies seem to suggest that reading as a whole is quantitatively on the decline, and even though friends will tend to 'send/receive' digital copies rather than share physical books, whenever digital sharing is the convenient option). Add large scale indiscriminate online piracy to the mix and it's the last straw that can break the author's back!
@Mark Baker also notes that the type of person who reads a pirated ebook is not the type of person who would actually pay for it if it weren't illegally obtainable for free, but I think there are far too many easy ways available at present for even specifically interested readers to read an ebook without needing to pay the publisher or the author in order to get access to the written work, so the widespread "free sharing" of ebooks does represent an additional drain on potential (if not necessarily actual) sales.

However, it can be sobering for every author or potential author to reflect that, if digital rights were strictly enforced, your work would still only be paid for and purchased by somebody who considers it a work worth paying good money to buy and read, even if that person is ethically against piracy and would never read a pirated work. So the free circulation of pirated ebooks actually gives many authors a 'casual' reader base, many of whom wouldn't read the book if they had to pay for it, but at least some of whom could form a dedicated fan base and/or might later be ethically motivated to pay for the writer's hard and honest work.

On the other hand, as also pointed out by @Mark Baker in comments, DRM is always an option. But if enough digital locks (read DRM) are placed on a work to absolutely prevent piracy, could that possibly affect your legitimate sales via legally purchased ebooks and physical copies? Also, is the publisher/distributor who guarantees you complete digital protection really capable of getting your work the best possible exposure and earn for you the maximum possible revenue? That is what you need to work out for your particular case. On the broader societal level, individual readers need to take an ethical stand against helping themself to "free" ebooks and communities need to develop the cultural consciousness that reading pirated ebooks is unethical and a crime.

Most people tend to commit actions that they personally and their community in general don't consider unethical, whatever be the legal position -- and obviously a huge number of people still do not consider piracy unethical. So this trend is likely to continue until cultural values change to reflect the unethicality of piracy, or 'until laws come down harsher on this type of theft and a way to hold people accountable, so this act becomes not worth the hassle', as noted by @ggiaquin in a comment.

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Apparently the following section requires emphasis! :-)
I do not endorse this solution, I do not USE this solution, I am a semi-retired professor in computer science that is aware of this product, I met somebody that uses this product to protect their work and likes it. It is a Windows-only product, but at last report 91.8% of all laptops, desktops and non-phone computers are Windows-based. Thus it restricts your audience.
My specialty is not security, but my informed opinion is that all security is deterrent, not certain, but that said, deterrents do indeed reduce piracy, especially when the price and/or effort and/or risk and/or learning curve required to circumvent the deterrent exceeds the price of the product.
The rest is basic computer science: If an author is intent upon protecting their work then some licensing and restrictive scheme is necessary, either to a device (disk, MAC address, dongle) or requiring an online connect to ensure only X simultaneous users at a time. The latter can be accomplished at some multi-hour checkpoint intervals, to cover spotty network availability.
The hardware type of licensing can be more invisible. Disks have unique serial numbers, network cards have unique MAC [Media Access Control] addresses, and USB dongles can be read-only devices that are difficult to hack. That said it is possible to run software that has an encrypted form of such a signature; and reads that unique signature from a device and then encrypts it, and refuses access to the encrypted content if it does not find a match. That encryption can be a one-way hash; meaning even if the user can see the hashed outcome they are supposed to match, they cannot reverse that to find the hardware signature that would hash to that.
Thus, With no endorsement whatsoever, but awareness of the product, see this eBook Compiler, a commercial product that costs money, but they basically can encrypt your eBook with a licensing thing like commercial games, tied to a specific computer, so it can only be read on that computer. They offer services (for a minor fee) to handle all the licensing communications for you.
The easiest way to steal your book is if someone takes photos of the screen, and then transcribes those to text (there are character recognition programs that could assist in that).
So it isn't as easy as copying a file and a cookie or whatever. The license can be tied to unique hardware on a specific computer. Software is required there. The first time the user gets it they must register and be online, that is the only time they have to be online, and the use (on that machine) can be invisible thereafter.
I don't know how easy it is to use, or how good their support is, or how the whole thing works.
Any form of security is going to inconvenience the consumer. That said, for an author intent upon protection and willing to sacrifice some sales to protect their copyright, strong deterrents exist.
I will leave this answer up despite the negative reception: It is an actual answer to the question instead of a rebuke to the whole idea of protection, and all the negative responses seems to be from people ideologically opposed to any form of protection. But the question was not "should I try" but "How to prevent ebook piracy". This is a potential answer, with the caveat already given: Protection by its nature inconveniences and restricts legitimate customers, which may significantly reduce the number of legitimate customers.

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There is probably no stopping of file sharing in the modern world.

But there is a chance we can make it cool to be backer and investor, sponsor and patron.

Patreon, flattr, kickstarter, indiegogo and many other sites and services exist at this point and then I haven't even searched particularly notoriously after them the last year or so.

There is a certain status in being able to say I helped funding this guy to become this great.

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