Monthly Archives: January 2010

The real agenda of Apple’s ebook partners: death to ebooks

The head of one of the big book publishers, MacMillan CEO John Sargent Jr., is out with an “open” letter about his dispute with Amazon over the pricing and timing of electronic books. It’s telling that this “open” ebook letter wasn’t released publicly and isn’t directed towards readers, book lovers and customers. It was placed as an ad in a small publishing industry trade rag and the message is for publishing industry insiders. Sargent’s message, despite a bunch of misleading surrounding verbiage, is simple: let’s strangle the growth of ebooks.

If you want to understand where Sargent and other major book publishers are coming from, I strongly recommend watching this online footage from a conference New York University hosted last September. Here you can see Sargent and a couple of fellow old media dinosaurs whine and complain about the digital world, dismiss Facebook, Craig’s List and Twitter as irrelevant non-businesses that will never make money and generally explain their plans to charge everyone for everything at every opportunity.

The real critical portions come towards the very end, in part three, as Sargent grows more animated about his opposition to giving away ebooks for free, even for promotional purposes. Despite being in charge of one of the largest publishing conglomerates in the world, he’s pretty pessimistic about the future of books. Challenged by Wired editor Chris Anderson to use digital distribution and new business models to attract new readers and expand the book market, Sargent is in full rejection mode:

“As the Internet grows, as all the other types of entertainment grow, it’s hard to imagine sitting here how we are going to convince everybody in this room to spend an extra six hours every week to consume another book. So in a way, if you look at the overall demand for books, it’s pretty hard to make that grow. We’ve tried. A whole bunch of people worked very hard to try and grow that. It’s pretty hard if you look at the demographics, how people read, to actually convince yourself that we have a growth business in books.”

In other words, what we have in books is a dying audience, a shrinking audience. And the way you extract the most revenue and profit from a shrinking audience isn’t with creative promotions and new ideas. It’s with ever higher prices. As Sargent says at a another point, in a barely veiled swipe at Amazon’s $9.99 ebook price:

“What we need is variable pricing. I think you guys would agree with this, variable pricing for content. You want a range of price points. You want to find a place — what you don’t want to do is give the consumer something for less than what they’re willing to pay for it in the rush to a new business model. Because once you get it out there it’s dangerous and hard to go back.”

Again, challenged to charge less because producing ebooks cost less, Sargent obfuscates, fixating on just one bit of savings, the printing costs of books (ignoring distribution, returns, overage, lost sales from out of print etc):

“Guys I can walk you through this. How much do you think a hardcover book costs us? A buck sixty. What are we saving? Not enough for the price point to drop from $22.50 down to $8.”

Amazon has been saying that its Kindle customers buy more total books – electronic and print – than they bought previously. It’s certainly been true in our household. I don’t have the figures at my finger tips, but I’d imagine that the whole creation and growth of Amazon.com has enlarged the book market, as well. But that’s not really happening in John Sargent’s world of mega-best sellers.

So keep in mind what Sargent was saying a few months ago when you read passages like this in his letter:

“In the ink-on-paper world we sell books to retailers far and wide on a business model that provides a level playing field, and allows all retailers the possibility of selling books profitably. Looking to the future and to a growing digital business, we need to establish the same sort of business model, one that encourages new devices and new stores. One that encourages healthy competition. One that is stable and rational. It also needs to insure that intellectual property can be widely available digitally at a price that is both fair to the consumer and allows those who create it and publish it to be fairly compensated.”

Leave aside for a moment the completely dishonest portrait Sargent paints of the old print book-selling world, and remember that he doesn’t believe the there will be any growth in book sales in the future. He’s not interested in a fair price for anybody — he’s interested in making sure that he never gives the consumer something for less than what they’re willing to pay for it.
He wants to extract the big bucks from the big sellers and move on.

The great danger to MacMillan is that it’s the authors of those big best-sellers who are becoming increasingly able to cut him out. If ebooks really take off, an author like Stephen King or Nora Roberts can sell a lot more of their books direct to their audience with no publisher at all. And that’s why Sargent’s real goal here is not to increase competition or create a level playing field. It’s to squeeze as much profit out of a dying industry as quickly as he can and hold off the digital future for as long as possible.

UPDATE: Henry Blodget also really gets it in his post today called “Hey, John Sargent, CEO of Macmillan Books, Screw You!” An excerpt:

Did Steve Jobs seduce you with that temporary “charge-whatever-you-want” speech? Well, Steve has been known to seduce people from time to time. Just imagine what will happen once Steve has put the Kindle out of business and Steve owns the ebook platform instead of Jeff Bezos. That’s right: You’ll get held up even worse than Jeff’s holding you up today. Just ask the music industry. Careful what you wish for. So, bottom line, John, take your $15 ebooks and shove them. We’re with Amazon on this one.

Good work.

Apple’s iPad may be the perfect computer for kids

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I’m excited about Apple’s new iPad for a couple of reasons. While a lot of the iPad’s features and services had been leaked in advance, I found myself gasping along with the audience in San Francisco when the price was announced. This is a product that is going to have vastly more impact for under $500 than it would have had at $800 or $1,000. And as I’ve pondered the iPad’s possibilities for the past day or so, one particular use has begun to dominate my thinking and that’s the iPad as the perfect starter computer for my pre-teen kids.

The three kids in our family are a pretty tech savvy bunch, with their iPods and Nintendos, PSPs and Wii. They’re also happy for all the time they can get with mom and dad’s laptops, desktops and the Kindle. They know how to work Tivo, download from iTunes and find stuff on YouTube. They need a lot of supervision and we’re seemingly forever in search of the perfect parental controls and web filters that will let them access all that’s good and fun while protecting them from all the garbage and viruses and worse.

But I have to say, the more I think about it, the more perfect the iPad seems as a solution. One of the biggest problem the kids have is dealing with the complexity and fragile nature of our current computers, running either Mac or Windows. It’s just too easy for the mouse cursor to get lost, file systems to overwhelm and key settings to get munged. On one computer the kids use, flash was somehow disabled one day and won’t come back no matter how much re-installing and uninstalling I’ve done. Another laptop last only a few weeks before they had it unable to boot. It’s not maliciousness or ignorance on their part. Modern PCs just remain pretty darn delicate and temperamental beasts.

The iPad does away with much of this complexity and hides much of what ails the modern PC. Simple is good. No mouse — use your finger. No searching for missing files — they’re all inside each application just when you want them. And no complicated and mysterious settings and system files just waiting to be accidentally deleted. Some people call the iPad/iPhone software platform a “sandbox” due to its limitations but what better metaphor for the kind of computing environment my kids need than a sandbox?

The kids get homework but they hardly need a full-powered copy of Word or Excel to complete it. The iWorks programs look more than adequate. They need a physical keyboard, I’d expect, for the occasional short essay but thankfully Steve Jobs has seen fit — finally — to let use Bluetooth keyboards with the iPad (a feature that would REALLY come in handy with the iPhone, but I digress). And they need a browser but one simpler and safer from malware than the average copy on a PC.

Of course, like all their little digerati friends, the kids are both big consumers and producers of digital media. They take pictures and make movies, record their own songs and even try their hand at blogging. They watch shows downloaded from iTunes or the Tivo or on YouTube or other sites. They play with Ze Frank’s funny frog, use Club Penguin and all the wonderful games PBS has created to accompany its television shows. Flash limitations aside, I think they can do most or all of this stuff on the iPad. And once Amazon ports its Kindle app, they won’t even have to borrow mine anymore. Hallelujah.

I’ve got a couple of months to keep thinking about this and I’m interested in your thoughts as well as the likely stream of additional information that will be flowing out of Cupertino. On the parental controls front, for example, I’m disappointed with what Apple offers for the iPhone/iPod Touch platform and I’m hoping for far more on the iPad. For homework, we’re really going to need to be able to connect to a printer, too. So please weigh in if you have any thoughts and stay tuned for more details.

UPDATE: Over on Twitter, Mark Nikolewski says his four- and seven-year-olds mainly use web sites with embedded games and videos that rely on Adobe’s flash plug-in. There’s no flash on the iPhone and so far none on the iPad. This is a problem but maybe Apple and Adobe get with it? Wired, John Gruber and other Mac followers are less than optimistic. Web sites could, however, offer alternatives if the iPad caught on. They already do so in some cases for the iPhone. Why wouldn’t Disney, with Steve Jobs on the board, want to make an iPad app version of Club Penguin, for example?

UPDATE2: A couple of other folks channeling this same idea include Warren Buckleitner over on the New York Times Gadgetwise blog and, surprisingly, Dallas Mavericks owner and frequent Internet buffoon Mark Cuban. He’s right on when he writes:

It will be the product that kids of this generation grow up with and look back on with affection just like we did with the first video games. Video games changed how we grew up. The iPad will change how kids today grow up.

Steve Jobs’ ebook logic: I win, All of you lose

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Soon we’ll know just what Apple’s new tablet will really do, how much it will cost and whether it can save the world from global warming. Okay, just joking about that last bit — I think. In any event, many believe the tablet will shake things up in ebook world where Amazon’s Kindle is the leader followed by improving entries from Sony, Barnes & Noble and others.

Today, The Wall Street Journal has yet another story about Apple’s ebook strategy and efforts to woo book publishers. There’s something kind of wacky about the situation, however. The only party that comes out better under Apple’s apparent strategy is…Apple.

Start with readers, aka consumers, aka you and me. We get to read ebooks on cool Apple mobile devices. Oh wait, we can already do that on the iPhone and iPod Touch. What we do get is higher prices. $9.99 is out and the new normal is $12.99 or $14.99. Sounds kind of like last year when Apple caved to the record labels and hiked music prices across the board. I’m still waiting for all those 69 cent songs I was promised.

Okay, so we lose but what about publishers. They’re bitterly complaining about Amazon and it’s terrible prices that devalue books. So they must make out? Well, actually, no. As the article points out, Amazon pays them half the cover price of a digital book, which in most cases is more than the $9.99 retail price Amazon charges its customers. Say the hardcover price is $24 — Amazon pays the publisher $12. Amazon is subsidizing the ebooks, losing money on most of those sales. But Apple is only to pay publishers 70% of the two price points I mentioned, which means they get $9.09 0r $10.49.

So why would they do that? The Journal coimes up with this nonsensical rationale:

But there is nevertheless a strong draw: In adopting the Apple model, the balance of power would shift at least partly back to publishers, which regain control of pricing. In setting higher prices, they could provide a level playing field for all e-book retailers. The potential for publishers is that the device may generate greater volume for e-book sales.

Now, publishers could generate a greater volume of sales to tablet users through the existing crop of ereader apps, if they wanted to. They don’t need Apple for that. But how would the “balance of power” shift to them on pricing? As the article already noted, Jobs is pushing two retail price points and a fixed 70% payout. It’s also very unclear how this results in a “level playing field” for ebook sellers. In fact, publishers would be charging Apple less than they get from Amazon, Sony and Barnes & Noble. It’s a sweet heart deal that benefits…you guess it, Apple.

If I had to put a stake in the ground, I’d predict that this poorly thought-out pricing model ignores what customers want and does little to help the publishing industry. It will get vast amounts of attention and hype but will end up a dud in the marketplace.

Evernote is the best note keeper in the cloud and on the ground

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Wall Street Journal tech reviewer Walter Mossberg doesn’t always hit the rights notes, in my view, but he was pitch perfect today in a rave about note-stashing software program and web site Evernote. This is the data storage program that runs on practically every platform — Windows and Mac desktops, iPhone, Blackberry, Palm and Android smartphones — and has a great web site. Here’s Mossberg in today’s paper:

What if you could collect, in one well-organized, searchable, private digital repository, all the notes you create, clips from Web pages and emails you want to recall, dictated audio memos, photos, key documents, and more? And what if that repository was constantly synchronized, so it was accessible through a Web browser and through apps on your various computers and smart phones?

Well, such a service exists. And it’s free. It’s called Evernote. I’ve been testing it for about a week on a multiplicity of computers and phones, and found that it works very well. Evernote is an excellent example of hybrid computing—using the “cloud” online to store data and perform tasks, while still taking advantage of the power and offline ability of local devices.

I’ve been testing Evernote since May and have accumulated some 500-odd notes so far. Search is lightening fast and the synchronization across platforms works like a charm. I wish there was an easier way to clip web articles on the iPhone and get them into the Evernote app but that may be due to Apple’s policies more than any failing of Evernote. Highly recommended.

Will Apple continue to allow competing ebook reading apps?

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There are many, many unanswered questions about Apple’s forthcoming tablet computing device, or the “God tablet” perhaps I should call it. For those of us particularly concerned about the future of electronic books, I have one pointed question for Apple. Will the company, which at times acts against its own customer interests, allow competing ebook vendors like Amazon, Barnes & Noble and Sony onto its new tablet? Or will it boot the competition in favor of its own iTunes ebook store? You know, one ereader to rule them all and in the darkness bind them…

There’s little question among the Mac-erati that the tablet will follow the software model of the iPhone/iPod Touch and not the Mac itself. That is, customers will not be allowed to load any software they want. Customers will be limited to software offered at Apple’s iTunes app store. Apple has been much and rightly criticized for its slow and ham-handed management of the app store approval process.

But at least for right now, Apple is letting all of its potential ebook competitors offer ebook reading apps. The Kindle iPhone app is usually the top-ranked download in the book section and B&N’s app is usually second or third. If Apple sticks with this policy and just adds its own ebook store, likely with its own proprietary digital rights management lockdowned formatting, I don’t think Apple is going to have much impact on the ebook market.

Why no impact? After cozying up to the music labels and granting them an unprecedented 30% price hike last year, Apple now appears to be sucking up to book publishers. Apple will reportedly let publishers set prices and conditions for sales of all ebooks on its new platform. That’s a recipe for disaster with consumers. Publishers want to keep prices high and further reduce the value of ebooks by limiting the ability to share or resell them, prohibit computerized audio reading and generally delay the inevitable as long as possible.

To see just how little traction this kind of strategy is likely to garner, recall Apple’s former darling ebook app vendor, Scrollmotion, and its hideously overpriced Iceberg reader app. Given prime stage time at last June’s World Wide Developer Conference, Scrollmotion charges full print retail prices for ebooks that can only be read on the iPhone. I’ve rarely seen any of their editions on the top 100 best-selling apps in the books category and you don’t even hear them mentioned by Apple or publishers anymore.

But – here’s the big but – what if Apple yanks ebook competitors out of the app store. There’s some slight precedent for that after the Google Voice debacle, when Apple not only declined to approve Google’s app but went back and yanked a few minor apps that also worked with GV. On the other hand, federal regulators are looking into the GV debacle, so there may be too much pressure on Apple to pull another fast one.

If Apple does pull competitors off the entire iPhone platform, then you’d have to give their publisher-loving, consumer-hating ebook strategy more of a chance. I think it would have more of a chance of holding back the whole market than taking over the whole market but who knows.

Publishers could also “help” if they follow what I call the “slow boil a frog” strategy. That was the Barnes & Noble strategy in the 1990s when it was opening new superstores all over the country. Start with big discounts on everything for a few years to wipe out lesser competitors. Once most of the independent books stores are gone, eliminate most of the discounts.

One final aside: as I’ve said before, book publishers are clearly following the music industry’s template for getting leverage against an entrenched, market leading digital retailer. Amazon won’t do what they want to they’re going to try and help some smaller players with the ultimate aim of getting Mister Number One to cave in to their demands. Ironically, in the case of music, Apple was the leader under attack and the industry made a sweet heart deal with Amazon.

UPDATE: As the always useful Teleread blog just pointed out, GearDiary’s Carly Z was on this topic yesterday. She sounds a touch more optimistic than I am:

So who wins when Apple gets involved in ebooks? Overall, the consumer with no library tie-ins is probably going to be very happy. Assuming the pricing is reasonable, Apple will no doubt pull a rabbit out of their hats and ebooks for some time now, it’s probably going to be a mixed bag. As great as it is to see a tech giant like Apple involved in ebooks, it means big changes are no doubt in store, and it is going to be a very bumpy ride along the way.

Google slashes price of online storage vs. Apple, others

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(Update April, 2012: Google finally opened its GDrive service and promptly raised the price of storage. Doh!)

In a much-commented-upon announcement today that I first saw on Rex Hammock’s blog, Google said it would start selling online storage space for keeping any kinds of files. Previously, the company’s cloud-based storage was limited for use with specific Google apps Gmail, Google Docs and Picassa Web Albums. Here’s the explanation from the Google Docs blog of the new offering:

We’re happy to announce that over the next few weeks we will be rolling out the ability to upload, store and organize any type of file in Google Docs. With this change, you’ll be able to upload and access your files from any computer — all you need is an Internet connection.

Instead of emailing files to yourself, which is particularly difficult with large files, you can upload to Google Docs any file up to 250 MB. You’ll have 1 GB of free storage for files you don’t convert into one of the Google Docs formats (i.e. Google documents, spreadsheets, and presentations), and if you need more space, you can buy additional storage for $0.25 per GB per year. This makes it easy to backup more of your key files online, from large graphics and raw photos to unedited home videos taken on your smartphone. You might even be able to replace the USB drive you reserved for those files that are too big to send over email.

Obviously, this is good news for digital packrats everywhere. But it may be even better news for digital cheapskates. That’s because the pricing isn’t just lower than what competitors were offering — it blows them out of the water, or maybe out of the cloud in this case.

Take a simple case of storing 50 gigabytes of data. That’s about the amount of space needed to hold a good sized library of digital photos and a couple of thousand MP3 tracks. Your mileage may vary (my music library is about 25 GB and my photo library is so big it’s embarrassing). In any event, on the new Google storage platform, that would cost just $12.50 a YEAR.

How does that compare to the competition? Start with Apple’s overpriced MobileMe service. Ignoring for the sake of simplicity that you get a few other services, you only get 20 GB of storage for $99 a year and another 20 GB is going to cost you another $49. And you can buy one more 20 GB chunk to hit 60 GB for another $49 or a total of $198. To get to 50 GB, which you can’t exactly choose, let’s interpolate and call it $174. That’s almost 14 times more expensive than Google. Or put another way, for that price on Google, you could store two-thirds of a TERABYTE. We’re getting up towards Library of Congress sizes now.

Okay, well everybody loves Amazon’s S3 service. How much does that cost? 15 cents per GB per MONTH. Whoops. So 50 Gb is $7.50 a month or $90 a year. That’s about 7 times Google’s pricing. S3 also charges an additional fee for transferring data of 17 cents a GB but they’ve suddenly decided to waive that charge for uploading at least through the end of June.

What about DropBox? It’s a majorly cool service with lots of good reviews. But again, the pricing can’t compete with Google. It’s $10 a month, or $120 a year, for a 50 GB allotment. That’s almost 10 times the price of Google’s new service. SugarSync is a little better but not much at $100 a year for 60 GB (equal to about $83 adjusted down to 50 GB).

To be sure, Google’s new service may turn out to have some limits or catches that haven’t yet been disclosed. For example, files can’t be bigger than 250 MB which rules out big media pieces. And taking full advantage of the space may require other software developers to jump in and write some middleware apps (as happened with Amazon’s S3).

But so far, it looks like Google’s new service is once again resetting the playing field and pressuring prices all throughout the clouds.

UPDATE: InformationWeek has Google product manager Vijay Bangaru quoted saying this is not the mythical “GDrive” service.

Most popular and favorite posts of the year here

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Another year is in the books, so here’s a quick look back at some highlights of the last 12 months of posts at the Gravitational Pull dot net blog. I was proud to see that total page views doubled in 2009 from the prior year to about 44,000 and total visitors also doubled to about 36,000. The growing audience came even as the total number of posts shrank by more than half to just 42.

My top 10 most-read posts during 2009 (not necessarily written in 2009) as measured by Google Analytics were:

1. How to fix stuck keyboard backlight on Macbook Pro
2. God is god: Ron Moore’s most excellent end for BSG
3. Stay away from Circuit City’s bogus “sale”
4. Apple’s Time Capsule Plays nice with Verizon’s FIOS
5. Verizon Mifi connects laptops, iPods, whatever to broadband
6. Page: Physics of Gravity
7. Reading Infinite Jest on Kindle
8. Amazon Kindle competitor eReader slashes ebook prices
9. Best way to sync Mac and Google contacts? There isn’t one
10. Mac users should stick with online backup Mozy

(The list excludes my front page, which got about 10% of total views for the year.)

No surprise that the simple how-to on unsticking the keyboard backlight written in September 2008 is my most popular feature. That’s the kind of thing that search engines spit out to endless queries from frustrated users all the time. The Time Capsule-FIOS post is also a vintage 2008 inclusion.

It’s a credit to my friend Shabbir Safdar that my ruminations on the last episode of Battlestar Galactica came in second. His post linking to mine sent over about 75% of the traffic, and continues to send a steady stream of 3 to 5 visitors a day. Amazing. Also, many thanks must go to a couple of aggregation blogs that sent a lot of traffic my way led by the irreplaceable Teleread.org and super- comprehensive MacSurfer.com. Thanks!

I’m glad to see such a mix of topics and post styles in the top 10. In addition to a couple of how-to’s and a couple of reviews, there are also a few of my newsier posts and some cranky ones, too.

There’s also a lesson about the power of domain names. The phrase contained in my domain name obviously is most directly associated with physics and gravity and all that. So I get a fair number of hits every year from key word searchers hoping to find out why the moon orbits the earth, how fast you’d get sucked into a black hole and so forth. I created a fixed page for those visitors and it’s on the top 10 list every year.

A different way to view the year is by my favorite posts of the year, regardless of traffic. Here’s my list:

1. God is god: Ron Moore’s most excellent end for BSG
2. Reading Infinite Jest on Kindle
3. Best way to sync Mac and Google contacts? There isn’t one
4. Apple gives stage to overpriced ebook developer Scrollmotion
5. Nook Delays: Why Barnes & Noble hates its customers
6. The messy, the missing and the mistakes: Adventures in iTunes Plus upgrading
7. Too many black boxes, too many power cords
8. Stay away from Circuit City’s bogus “sale”
9. Page: Messing with and canned

And since my traffic-based top 10 includes some 2008 posts, I’ll throw in one on my hand-selected list, from November 2008, that I’m still quite proud of:
10. Facebook isn’t a web site (or a spaceship), it’s a time machine

A couple of other fun stats for the year included that 51% of visitors were on machines running Windows, 44% Mac, 2% iPhone and 2% Linux. Browser usage was a little more varied, with 35% for Firefox, 35% for Safari, 23% for Internet Explorer and 4% for Chrome. Visitors mostly came from the United States followed by the United Kingdom, Canada, Australia, Germany and India.

Hope your 2009 was fun and see you around in the year to come!