Retailers Are Stepping Up to the Digital World

The news that Barnes & Noble is back in the digital ebook business is no great shock, nor one that is likely to be a repeat of its last entry and exit. Our ‘Brave New World’ report clearly put down the case for retailers to play a major roll in ebooks and digital sales and today, 3 years on, the shoots of our findings are starting to be seen. In the UK Waterstones went with an exclusive Sony deal and have now been joined by more open offers from Borders UK and Blackwell and will soon be joined by many others. In Australia Dymocks have long championed their offer. So the return of B&N is both welcome and a sensible move.

We can ignore the public posturing of ‘my repository is bigger than yours’ this is just mere schoolyard bragging that when stripped down soon becomes irrelevant. However, we can’t ignore the acquisition of Fictionwise, nor the market strength and brand that Barnes and Noble now reintroduces to the market. Will the offer dethrone Amazon – unlikely? Will it increase the battles over ebook pricing – almost certainly? Will it make more publishers create ebooks – almost certainly? Will the impact be restricted to the US – no?

What is certain is that consumers will want choice of what the buy and where they buy it. With offers from Barnes and Noble, Borders and Amazon will US consumers seriously select a device that restricts choice and one which shot itself in the foot last week with its Orwellian actions? Do publishers really believe that they can make the step change from producer to retailer and offer both range and depth? Some will succeed but many will realise what their core strengths are and that retail may not be one of them.

What is clear is that ebooks will go global and geographic restrictions on devices, their support or exclusive deals are not the way forward. It is perfectly feasible today for all retailers to participate and to sell physical alongside digital. The more retailers that take up the challenge, the healthier and more diverse the market and the offer will be. Retailers do not need a reader device or to buy a Fictionwise, or to strike up an exclusive deal, or even to set up a complex technical infrastructure, they just need to offer the consumer what they want , at the right time and at the right price – no different than today. They need to have one that offers physical and digital side by side in a single basket, one that is technologically inclusive not exclusive, one that fully exploits digital marketing and promotion and many will be surprise to find a more level playing field than they think.

Barnes & Noble Launch Iphone Bookstore

Barnes & Noble have announced the launch of its iPhone and iPod touch app. , promising users access to millions of titles. The Bookstore app enables users to access millions of titles, click on a jacket and within seconds they receive product details, editorial reviews, and customer ratings. Consumers may find and reserve a copy at the nearest B&N retail location, or make purchases via their BN.com account. The Bookstore also offers details on upcoming Barnes & Noble events, directions to their 777 bookstores in 50 states, bookseller recommendations, video clips and author interviews.

Earlier this year B&N acquired digital ebook retailer Fictionwise for $15.7 million and announced that they were is collaborating with Sprint and an unidentified manufacturer to develop an ebook device to rival Amazon.com's Kindle.

Amazon Swoop Strategically

A potentially very strategic acquisition was made yesterday by Amazon when they bought the e-reader application start-up Lexcycle. Lexcycle’s iPhone application Stanza is probably the most popular mobile ebook application platform and has been a huge success on the iPhone, claiming half a million hits in the first months after it app launch and 1.5 million users. Stanza is a ereader and book store application that is also available on Mac and PCs and was working closely with Adobe to make its ACS4 DRM service available to mobile platforms.

Repeating the message that B&N gave when it bought Fictionwise less than a month ago, it is reported that Lexcyxle will continue to operate at arms length from Amazon. Lexcycle’s company statement said, 'Customers will still be able to browse, buy, and read ebooks from our many content partners. We look forward to offering future products and services that we hope will resonate with our passionate readers.’

So on one hand Amazon is gathering up the digital options and placing them quietly in ‘fortress Amazon’; Booksurge (POD), Audible (audio), ABE (long tail and rare books), Mobi (DRM) and now Stanza (ebook platform). In all cases their moves have taken out either a rising star or narrowed the options within the market. They have built a very impressive family that covers all the bases between author/ publisher and readers. The acquisitions have not been expensive but are clearly strategic in their nature. Sometimes, like with Audible, they have been in conflict with Amazon’s position and this latest one certain could be seen at odds with their Kindle application.

Its also interesting that the dust has hardly settled on the Fictionwise acquisition by B&N that this move has been swiftly executed. It also comes as many waited for Adobe’s ACS4 DRM to be ported via Stanza to the iPhone effectively opening up secure epub and AeB formats to the mobile.

We have to wait and see how Amazon move forward but what is certain by this acquisition is that the ebook agenda is clearly moving onto the mobile platform and maybe despite the sales of K1 and K2 Amazon has seen the competitive threat that Adobe/ Stanza / epub / AeB poses if left unchecked.

B&N ebook Noise?

Scott Moritz, writing in The Street.com has started a rumour that, dependant where you stand, may have legs. The rumour is that Barnes and Noble hot on the back of buying Fictionwise is now working on bringing their own Kindle type device to the market.

The article ‘Tech Rumor of the Day: Barnes & Noble’ goes on to list all the usual and obvious partner suspects on the wireless side and the revenue that Amazon is expected to turn over on the Kindle, but fails to deliver any real substance on what, when and how the rumour would turn to fact.

It does remind us that Barnes & Noble has been through the ebook tablet before in 2003. In fact there isn’t much that B&N hasn’t tried at one stage or another and they also are not just a bookseller but also a sizable publisher, packager and reprint business.

The big question is whether it is wiser to strike out by yourself and trade off the B&N brand, which only really has resonance in the North American market, or hook up with others that may offer a bigger pool, protection from risk and the ability to exploit its own assets. Waterstones achieved a UK exclusive with Sony and although that particular door may be shut in the US, it may not be shut on a wireless or new model. They also now have to build Fictionwise into the offer and importantly, does it make sense to pin too much on ebook only devices when the mobile is grabbing all the attention, the netbook is coming down fast and you have Fictionwise?

So it may be a choice between exclusivity, which may be offer short term benefit but long term exposure or collaboration and openness which certainly would get them attention to be seen by many as far more logical than the current ‘aggregator centric’ market model and give them the flexibility to move quickly with the flow in the future. Why invest in tin when there are some big outsiders hovering to move in and one eink device, netbook, mobile isn’t much different from another and consumer is fickle? Lining up with Newscorp or Hearst would make more sense.

The one thing that is certain is that any move really should be made in 2009 while the market is finding its feet.

iPhone App eBook Readers

o the new world is about who has the smartest mobile application. It may appear that these have been around for ever but the reality is they haven’t. We have yet to really see the RIM, Android, Palm, Symbian applications and what once was the territory of Microsoft is now clearly owned by Apple and its ‘I’ family. Its interesting to note that some apps are free whilst others charge a nominal fee. Perhaps with such a low entry point the consumer will download the lot and then choose which they like today and user churn will happen around upgrades. So where is the glue that will retain user loyalty or is it just open season for all?

Nintendo is even reported to be eyeing up the iPhone and success of the Apple Apps Store and looking to compete using its stable of game developers. Nintendo already has its DS Shop and DSi Ware services, to accompany DSi when it launches next month in the US. However is it now seeking non-gaming applications for the DSi to complete head to head with Apple? Alternatively are they now also aiming to try and head off the likes of Apple and Android off from their games market?

So who are the ebook mobile application players today?

The free Stanza reader from Lexcycle is the reader of choice of many and now is fully integrated with Adobe’s ACS4 so offering DRM protected Adobe eBooks and epub files. It has a very customisable user interface especially with the type font and a landscape library view. The app also sorts books by title, author, subject and your latest reads. Stanza enables you to download books from many different sources including Fictionwise and also import your own library using their desktop application and interfaces with Digital Editions.

The Kindle app is part of Fortress Amazon and can only read books from Amazon’s 250,000 titles but offers the best price value and widest range of titles. If current content is what you are after then the Kindle is probably the answer today. However, it offers minimal type customisation other than sizing and its files can’t be transferred anywhere other than to a Kindle.

The free eReader from Fictionwise, or should that now read Barnes and Noble, clearly has the right name and has been around longer than many. It supports many file types, including its own and with it new eager parents, is certainly going to be around for the long haul. It is not clear how the exclusive deal with Ingram now pans out, but like their recent tiff with Overdrive, it will probably get sorted in the background. The eReader application wins many over with its navigation, highlighting, annotations and search. Some would argue that it doesn’t offer the same level of font customisation as others but it still remains very user friendly. The only negative appears to be on performance especially when an ebook is downloaded from another source and read on eReader. This may be seen by some as a feature, not really recognised by others and a pain and frustration to many who have seen comparable readers.

As we have seen through their emailing programme, it often pays to wait until the weekend, or for a discount offer, when buying from Fictionwise as they seem to have one every few days to celebrate nothing except a discount offer.

Bookshelf is not a free app and is from Zachary Bedall. It uses Apple’s networking to let readers set up and manage their own “shelf servers” and supports a wide range of e-book formats. Although it does offer more than 20 scalable typefaces, a range of background colours and its scroll feature works well the application isn’t that consumer friendly in its appearance and feel.

The iFlow reader is a reader in a book as opposed to a book you apply a reader to. They offer tens of different book collections. So you buy multi-volume sets of books with a reader, priced anywhere from free to $10. The text scrolls like a teleprompter that you control by tilting the screen. You cannot import your own books and there isn’t a single instance of the application.

The Classics reader launches a bookcase, you simply tap a jacket and the book opens, tap a page and the page turns. Today there are only a few titles but you can arrange the shelves to your taste. On finishing, a crimson bookmark slides down the left side of the page and the book closes. Fun but limited.


So what will determine the winners from the losers and can a free reader that is not tethered to content make it. Alternately why pay a few dollars for a reader when another is free? Apart from Fictionwise, today there still appears to be many features missing such as annotations, highlighting and personalisation. The mobile platform offers so much and if the larger iTouch becomes a reality these readers will certainly be the ones to watch.

A Different Marketing Appeal

We thought we had heard nearly every marketing angle, but obviously we were wrong. The following promotion was put out by Fictionwise last week.

LAST CHANCE TO HELP US IMPRESS OUR NEW BOSSES SALE!

As you may have heard, Barnes & Noble acquired Fictionwise last week. Thank you all for your support over the years and for all of the "congratulations" emails and posts we've been receiving. It is very appreciated! And now it is time for our first special promotion since the acquisition. We're calling it: "Help us Impress Our New Bosses" Sale! Use the coupon below for a 10% discount on every title in our store! But hurry, the coupon is only valid through Sunday, March 15th. Thank you! Coupon Code: BN2009

Perhaps we should have a competition for the worst marketing angles; ' Help Us Impress Our Bank Manager'. 'Help Us Increase our Profit', 'Quick Grab a Bargain before We Go Bust', or perhaps we leave bad marketing to experts such as Gerald Ratner.

Barnes and Noble Acquire Fictionwise

The ebook reseller Fictionwise has acquired by Barnes and Noble for $15.7 million.
The news and an exclusive interview with Fictionwise’s Scott Pendergrast was covered by TeleRead. Fictionwise will continue as current, be managed by its current team and operate as an independent entity under Barnes & Noble. Barnes & Noble state in the general press release that it plans to use Fictionwise as part of its overall digital strategy, which includes the launch of an e-Bookstore later this year.

Apparently the business was shopped around to a number of buyers with the understanding that the ‘current philosophy toward e-books would survive’. So DRM free, the ereader format and many other features remain. Some will jump up and down and believe that this will offer a competitive position to Amazon, others may ask the question if this is what prompted the recent Overdrive spat and its impact on its exclusive DRM agreements with Ingram.

Whatever ,the important outcome is that B&N now are firmly in the ebooks business, albeit at arms length for now.

ePricing - Be Careful What You Wish For

Fictionwise the ebook specialist retailer appear to be monopolising the publicity machine of late. In one breath they claim to have "one trillion words served" mark recently and the other they have had the interesting but unexplained fall out with Overdrive.

Now all this week through to the 25th, they are offering a 60% micropayment rebate when buying with a credit card or PayPal. This is not a cash rebate but a credit to be set against future purchases. They are now actively promoting their own format both for those caught in the fallout with Overdrive and as part of this latest offer by giving an additional 5% rebate for titles bought in the format.

The market issue of what the digital price point should be for ebooks remains unclear. Although Amazon has boldly ventured with setting a $9.99 price point on their Kindle store, few have followed and there have been limited digital discounts to date. What offers have been visible are on special limited time window offers which are usually focused a promoting specific titles.

Some may say that publishers are trying to reduce the digital margin given to resellers and using this to offset their digital costs. Others would argue that there is a reluctance to get dragged into the current discounting fiasco on physical books that is rife in markets such as the UK. However, given that the ebook is often a carbon copy of the physical book with no extras what is the price comparison with it and the price to the consumer? Why would the consumer pay more for an ebook than a discounted physical book? If libraries are going to lend ebooks for free with no obligation to visit the physical library why would the consumer pay to own and ebook?

Pricing is important to the consumer and often when there is uncertainty things fall to the lowest common denominator and on price that’s often free.

Overdrive and Fictionwise Fallout Publicly

This weekend we started to read blogs and commentary referring to Fictionwise, its ereader, Overdrive and DRM which referred us back to a page on Fictionwise’s site ‘OverDrive and the eReader Replacement File Program FAQ’.

Overdrive, one of the largest digital aggregators has apparently given Fictionwise, one of the largest ebook retailers notice that they would cease serving files to Fictionwise customers as of January 31, 2009. In itself that is not an issue and may be just a commercial blip. However, Fictionwise report that they have sold some 300,000 ebook units via Overdrive and customers must take action to protect their investment, which makes this not an insignificant blip.

The files are DRM-encrypted and delivered by Overdrive’s servers and not stored on Fictionwise itself, this means that customers who purchased them will no longer be able to download those files as of the end of the month.This means that anyone who sells an ebook that is automatically licensed on download by another party, has no control over that licence. Their customer is totally dependant on that third party in the future. They now need to download the eBooks to make sure they are up to date for your current devices, and make backup copies. A process that is not exactly going to give the consumer confidence.

Fictionwise has taken a whole page on their website to explain the situation and steps they have taken to ‘protect their customers investment in eBooks’. Fictionwise has now ceased selling Overdrive eBooks and they can't provide the files in the original file formats have begun to negotiate with publishers to allow eBooks previously purchased from Overdrive to be substituted, where possible, with Fictionwise's own eReader format files.

The timing of the situation is not good. It comes less than one week after Apple effectively put DRM to rest in the music sector, as the ebook market appears to be showing signs of genuine growth and DRM free files are making news on the iPhone. Some would say that this bad publicity for DRM and again questions why consumers would want to buy files that may become obsolete with time or locked into technology that is transient.

Yesterday Discounts -Today Exclusivity

We read so much now about the magic word ‘exclusive’. It is used as if it is something clever that a Marketing wiz kid has discovered to make the offer more compelling. The reality is that it is often born out of pure self interest and is inherently a bad trading practice. Like discounting it can work well in the right place and for the right reasons but if abused or over used it like others can become destructive.

We have Waterstones having a two week exclusive deal on the Sony reader. These are at a time when the market is starting to develop not restrict consumer digital awareness, choice and confidence. We have long wished that Audible adopted an open approach that enabled their DRM to be used under licence by all and not just by them. There are other deals, such as that between Ingram and the Fictionwise to restrict the usage of their new iPhone application. However, many of these such deals don’t restrict the title only the channel and delivery. Some would argue that they are bad practice, others that it’s market forces etc., others that its mere testosterone!

The joke about the exclusive book deals that Amazon has started to do and that others will surely now follow is that Amazon already has an exclusive. A Kindle tile can only be served up by them, over their exclusive connection, to their exclusive reader. So why does the title also have to be a digital exclusive? When we look at Booksurge and POD, we see similar desire and intent to restrict the channel, but not exclusivity today. If the publisher wishes their title to also be available via LSI or Rowe they merely have to do so. Some may agrue that Amazon has now seen a way to become the exclusive digital publisher of that title in perpetuity? Some may say that this is a cleaver and another cheap back door into acquiring digital rights?

Any publisher who enters into an exclusive distribution and retail agreement on digital content that is tied to an exclusive channel and technology needs to think about what they are trying to achieve and the potential risk versus short term reward. Authors and agents should also think about such ‘special deals’ both in terms of rights ownership and reversals.

As we move forward into this Brave New Digital World we must think not once but twice and avoid stumbling into practices that have long term potential dangers to all that may not have been thought out by those seking shortterm self gain.

Size Does Matter!

This week we read that Hewlett Packard are to release two new laptops that are lighter, thinner and have extended battery life. The EliteBook 2530p, weighs just over 3 pounds and the EliteBook 2730p is an ultra-thin computer that converts to a touch-screen pen-based tablet computer with a twist of its screen and weighs 3.7 pounds. They recognise that travellers demand true portability not lug-ability. We have already written about the iPhone applications and the ebook reader developed by Fictionwise and today read that Lonely Planet is to make its content available via Nokia mobiles.

Not only is the world shrinking through technology but the technology is also shrinking and converging. So what about the content itself? Today we joined a email discussion group supported by Peter Brantley the force behind the Pubfrontier.com.

The points we made were:
If we all agree that the short story or serialised novel or reference work is the ideal form for mobile and e content and I would venture that only a few and the brave would venture to read war and peace digitally, we have several fundamental challenges to face.

1. The economics of publishing today is skewed toward a print economic model best described as a ‘strightjacket’ binding 250 pages and x thousand words. This is economic to develop, print, market and shift. Why on earth do we simply see this shifting like a hardback to a paperback and to digital. Even the video guys saw merit in additional material! The audio guys realised that unabridged didn’t always make sense! So why not like the Keitai novels, Dickens, S King think again and also think of the consumer experience not merely replicating formats?

2. Payment models are not an issue. There are many examples of models that work on wallets, subscription, micropayments. The issues that may be more relevant are tax and price points. Consumers don’t want to know about tax so inclusive pricing helps. Price points are very interesting given iTunes and the track revolution in music – 99c a short read?

3. Marketing is not an issue as it is more about selling collections, series, brands than individual stories. Again think music and tracks, think Dickens and King and serials.

The main and difficult challenge is to generate content that is worthy and a demand for it that generates sales. Do authors write the book and then serialise it into chunks or write it in chunks? Is writing a short story the same skill set as the long novel and do we have the short story brands. Can you imagine if Harry Potter had been written and released in digital chunks first then as a book second? We would not be here today discussing the obvious! Some may ask why do publishers insist on digital experiments with first timers and unknown authors and not the block busters?

Fictionwise Make a Wise Move

We have written many times about Smartphones and the convergence of technology and applications to this platform. The recent iPhone application program demonstrated that there were both developers queuing to bring applications to the phone and users ready to use them.

We now read in Publishers Weekly that ebook retailer Fictionwise not only jumped the queue when it released the first version of a free ebook reader for the iPhone devices but that it has been installed on 130,000 devices and generated 35,000 bought downloads.

The eReader has already been upgraded to a version 1.1 and now enables users to download books from any site that sells or offers e-books in the eReader PDB (Palm Database) format. The new features include ‘ reverse-video’ or white text on black background, along with lock screen orientation both aimed at helping readers at night lying on their sides in bed! Watch at YouTube.com

They now plan another upgrade this month with yet more features. We can soon expect them enable users to purchase eBooks from eReader.com or Fictionwise.com right from their iPhone or iPod touch device.

This sort of enterprise move is what is great about the digital revolution. It is not down to the Gorillas to squash and own the market but smaller and more nimble companies to capture the imagination.