Tag Archives: B&N

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.

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.

With growing Apple tablet excitement, misguided Kindle whining returns

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imagesWe’re coming up fast on the 2nd anniversary of the introduction of  Amazon’s Kindle e-reader. Yet despite the many improvements and price cuts in KindleWorld, we’re still subject to the same weird, off-base complaints we first heard back before anyone even had even gotten their hands on one. Recently, my favorite Mac guru, John Gruber, and my favorite, favorite curator of interesting web matter, Jason Kottke, offered their own takes of the same-old, same-old. The usual quality of these fellows’ writing makes their anti-ereader rants all the more puzzling. Gruber’s most recent post was very short, though it’s hardly his first¹. Here’s Kottke at greater length:

But all these e-readers — the Kindle, Nook, Sony Reader, et al — are all focused on the wrong single use: books. (And in the case of at least the Nook and Kindle, the focus is on buying books from B&N and Amazon. The Kindle is more like a 7-Eleven than a book.) The correct single use is reading. Your device should make it equally easy to read books, magazine articles, newspapers, web sites, RSS feeds, PDFs, etc. And keep in mind, all of these things have images that are integral to the reading experience. We want to read; help us do it.

His final point – no good rendering of images – is at least a fair criticism given the lack of color e-ink screens. But the rest is more than a bit off. Mind you, we don’t even really know what the user experience will be like on the Nook or Sony Daily Edition.

Even if you grant Kottke his weird premise that book reading shouldn’t be the primary focus of ereaders², he’s still missing the target, particularly for the Kindle. It’s incredibly easy and pleasing to read magazine articles, blogs, miscellaneous web postings, RSS feeds and PDFs on my Kindle DX. I subscribe to The New Yorker and love how it gets delivered Sunday nights with all the stories and tidbits and even the CARTOONS. I regularly use the included browser and FREE mobile 3G access to read RSS feeds on the mobile version of Google Reader. There’s also the much-loved Kindlefeeder service, though I don’t use it personally.

And have I somehow not raved enough about how incredibly useful Instapaper‘s “Send to Kindle” feature is? Well, some but clearly not enough. Super short version: Find a long article or posting on the web you want to read later on your Kindle. Hit your “Read later” bookmarklet. Turn on your Kindle. That’s it. Brilliant. B-R-I-L-L-I-A-N-T. And p.s. Instapaper (and Tumblr) developer Marco Arment, in his own post shooting down Kottke, mentions that he’s about to unveil a “much better version” real soon now.

So I guess the question is why are they so off? Sure, there’s been a lot of hype around the new Nook and Sony’s revamped ereader line-up and hype naturally draws a backlash. But I think the deeper answer is the rumored, imminent Apple tablet which some people think will slay Kindle and Nook and all their single-focused brethren. It seems like some usually bright commentators have been fixating on how great the tablet will be that they have already decided that it’s is a “Kindle Killer.” And since the tablet is still vaporware, with exact pricing and features unknown, that precognition is seeping out into general dissing of the current crop of ereaders. Too bad, because taken on their own terms, ereaders are a great product. And they’re best suited for avid readers who buy a lot of books and sometimes read on the go. That’s likely not as many people as own iPods or cell phones, but its multiple tens of millions of people.

Prior coverage:

Apple still isn’t going to kill Amazon’s Kindle, or any other ereader (9/12/2009)

Instapaper’s instantly useful for sending articles to Kindles (3/17/2009)

The Kindle is for readers, the Kindle is for readers (6/20/2008)

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¹Gruber’s been wrong about the Kindle since Day One: “After chewing it over all day, I’ve concluded that Amazon’s Kindle is going to flop.” He also pointedly disagreed with my more optimistic view that day.

²I’m not a big fan of the “what about my needs” school of product criticism.

Yes, Virginia, the Barnes & Noble ebookstore is a Good Thing

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Yesterday, I took a whack at explaining why Barnes & Nobles new online ebook store would turn up the competitive pressure on Amazon’s Kindle world and, more than likely, benefit consumers. But now at least two prominent ebook bloggers are disputing the notion that the new Barnes & Noble ebook store provides important competition for the Amazon Kindle store.

“Jane” at the DearAuthor blog complains that B&N’s effort lacks a dedicated hardware reader (at least until the Plastic Logic reader arrives next year), includes far fewer books people actually want to read and is using a proprietary format that excludes existing Kindle owners. Kassia Krozser, on her Booksquare blog, makes of some of the same points, concluding:

It’s great that Barnes & Noble is offering its customers an ebook option. But to pretend they’re creating serious competition to the Kindle ecosystem is madness. Let’s talk when they have a device and experience that makes the buying and reading of ebooks the best experience technologically possible.

While I certainly agree that B&N’s early ebook effort is somewhat half-baked and rather over-hyped, I find the conclusion that it won’t have any impact on the market puzzling, perhaps even madness. Like I said yesterday, this is a big deal for the ebook market and a net positive for people who buy and read ebooks.

It’s true that B&N does not offer an alternative to people who already own a Kindle (or a Sony eReader for that matter). But it does offer immediate competition for people who buy ebooks to read on mobile devices, like an iPhone — a significant and growing population. And, hopefully, B&N will provide competition in 2010 for people buying a dedicated ereader device for the first time — another significant segment of the market at this early stage. Remember, Kindle store ebook prices are the same for iPhone or Kindle device, so even the limited B&N effort now can have a positive impact on all Kindle users.

It’s also true that the B&N ebook store has far fewer of the most desired books and limits its discounting policy to far fewer titles than Amazon. But Amazon now has to factor in to its Kindle strategy and tactics the current and future existence of a well-heeled, highly-publicized competitor with a top brand name and web site among book-buying consumers. Say Amazon has an undisclosed plan to move typical ebook prices up from $9.99 to $12.50 over the next year (as a recent Wall Street report suggested). Now it has to rethink. Or say Amazon’s ereader app for Blackberry was a very low priority but now B&N is suddenly offering an ereader for that platform. Again, it should prompt some positive movement.

A competitive threat doesn’t have to be perfect or massive to have an impact on the market leader. Netscape was a blip in the market but caused Microsoft to do all sorts of things, good and bad. I would argue Apple, despite its small market share, also has a large impact on Microsoft. And Amazon’s MP3 store, small but fast-growing, put pressure on Apple to cave to the music labels’ demands on pricing.

Finally, there’s some confusion about the competitive landscape and the best strategy for book publishers. If they want to avoid getting pushed around by Amazon in the ebook market, they should do what music publishers did and abandon Digital Rights Management, or DRM, software. That would make their digital products far more valuable and break the proprietary stranglehold of a popular device maker like Apple (in the iPod case) or Amazon (with the Kindle).

[This post started out as comments I made on the two above-mentioned blogs. I thank the two ladies for their stimulating posts.]

Barnes & Noble eBook Store Great News For Consumers

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Book retailing titan Barnes & Noble has been building its electronic book sales effort this year with some haste, likely hoping to slow the growing momentum of Amazon’s Kindle before it becomes unstoppable. In March, Barnes & Noble bought Fictionwise, maker of a popular ebook reader app for the iPhone and proprietor of several popular ebook stores online including eReader.com. Then, earlier this month, B&N slashed prices at the newly acquired ebook vendor. Now comes word in the Wall Street Journal that B&N has opened its own branded major online ebook store:
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This is a fantastic development for people like me who like to read ebooks. I’m a big fan of my Kindle, as you may have heard. But I’ve also been alarmed by some of Amazon’s ham-handed moves in the ebook space, like the recent decision to reach onto customers’ devices and delete a validly purchased book (even if the book was posted improperly in the Kindle store). And I’ve expressed my concerns about ebook prices creeping higher in the Kindle store.

All this has gone on under the nose of Sony, which seems to present little real competition. It still has no wireless mobile play and prices in its ebook store are rarely competitive.

A strong move into the market by Barnes & Noble should force Amazon to do more to wow and delight its customers. And it may hasten the day when book publishers wake up and realize just how damaging it’s been for them to lock down all ebooks with cumbersome Digital Rights Management (or DRM) software.

I do think that the Barnes & Nobles ebook store starts out with a few important weaknesses. The company has no hardware reader and apparently won’t have one compatible with its format until the Plastic Logic ereader hits the market hopefully in early 2010. So for starters, its ebooks can be read only on mobile devices like the iPhone and Blackberry plus Mac and Windows computers. While there’s an argument to be made over whether dedicated ebook readers and their high-contrast, low-eyestrain screens will remain popular (as I think they will), there’s little doubt that people who own one are hardcore, frequent ebook buyers. Not reaching that group of shoppers will hurt.

Finally, initial selection and pricing may lag well behind Amazon’s Kindle store. Barnes & Noble says it will have 700,000 ebooks for sale but that includes 500,000 public domain books from Google and only 200,000 recent editions. And while it will copy Amazon’s $9.99 price point, that will only cover “hundreds of new release and bestsellers”  — a far cry from the thousands of ebooks priced under $10 at Amazon.

As a sidenote, the chatter among publishing industry types about ebook pricing continues to grow more frantic. I recently found myself asking skeptical questions in the comments of posts by publishing consultant Mike Shatzkin’s ruminations and Evan Schnittman, who works for Oxford University Press. I wonder what impact Barnes & Noble’s $9.99 pricing will have on the industry’s views?

Amazon Kindle competitor EReader slashes ebook prices

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I’ve been pretty tough in the past on the high prices at Amazon Kindle competitors eReader.com and Fictionwise.com, the twin pillars of Steve and Scott Pendergrast’s ebook empire. The Pendergrasts sold the company to Barnes & Noble back in March and now things seem to be changing in a hurry. The other day they announced new, cheaper prices across the board at their eReader.com site:

# All new titles are $9.95 or less for the first week after release at eReader.com.
# After one week, all new titles are set to the publisher list price but will not exceed $12.95.
# No title is priced over $12.95.
# All titles on the New York Times best seller list at eReader are $9.95. The New York Times best seller list at eReader is updated every week.
# All titles receive 15% eReader Rewards.

This actually could be better than Amazon’s previously unmatched Kindle ebook pricing. I had hoped eReader’s move would generate some pressure on Amazon to reverse the trend of prices creeping higher for Kindle books. But on a closer examination, it looks like the competition might not be generating any pressure on Amazon at all. Well, at least no more pressure than a 4 cent discount creates.

That’s because I had trouble finding any of the best-seller type books Amazon is currently selling for more than $9.99 in the EReader store. Brad Thor’s Apostle: A Thriller costs $14.57 as a Kindle book but it’s not among the seven Brad Thor ebooks offered by eReader.com. Breaking Dawn, the most recent volume of Stephanie Meyer’s Twilight series, is $11.38 as a Kindle book and $12.95 at eReader.com. Finger Lickin’ Fifteen by Janet Evanovich, which came out on June 23, is $15.37 in the Kindle store but not available from eReader.com.

And amongst the back catalog books, my admitedly cursory survey found Kindle still offering much better prices. Twilight, the first book in Meyers’ vampire series and available as  a paperback for $6.59 from Amazon, is $6.59 at the Kindle store but a whopping $10.99 from eReader.com. And, p.s., can I just say again how it is really annoying and customer unfriendly that Amazon has stopped showing the prices of other editions and formats on Kindle book pages.

Of course, there’s no way to compare comprehensively the selection and pricing policies across the two sites. Please feel free to post counter-examples in the comments. I also dropped a line to the Pendergrasts to see if they wanted to respond.

Prior coverage:

As feared, Kindle prices appear to be rising (6/22/2009)

Apple gives stage to overpriced ebook developer Scrollmotion (6/9/2009)

Fictionwise improving its e-reader and web site for iPhones and iPods (8/27/2008)