Amazon Kindle FreeTime: ‘Give me a Child……’

Amazon have once again shown their astute marketing awareness, ability to drive the market and have announced Kindle Freetime Unlimited. FreeTime delivers what it says on the can and serves up unlimited access to thousands of preselected books, games, apps, movies and does so by a monthly subscription. The target audience is in not adults, or the teens, but young children aged between 3 and 8. The service recognises who owns the purse in this area and offers full parental control. The service itself is tied to the new Kindle Fire and what is fast becoming a pivotal tool and marketing differentiator and jewel in the crown, Amazon Prime.

So parents can now by a single subscription give their children access to thousands of digital materials. No more having to buy individual books, films, games, just one monthly subscription gives the children hours of entertainment. No ,more do parents have to be worried what their children can see or how they spend their time as parents are given full control. As an appetiser Kindle Free Time now comes for one free month with every new US Kindle Fire and FireHD.

So Amazon have not only created the service, locked it to Prime but also are to make the service available to all to be sampled by every parent who buys a Fire. If the children and parents like what they see, they can simply convert to the full service in ‘one click’.

The service is not exclusive to Amazon Prime users, but they benefit by a substantial subscription discount. The service is $4.99 a month for one child without Prime and $2.99 with Prime. Up to 6 children can have access for $9.99 a month, but again enjoy a discount with Prime with the subscription dropping to $6.99. So FreeTime starts to become a 'no brainer' for Prime parents and could add that extra value to convert parents to Prime and for them to enjoy the benefits of the overall Prime service. This use of a ‘blanket service’ offer that ties added value benefits across many of the Amazon services is a very clever and effectively starts to further lock in customers to Amazon and becomes an added value attraction to attract more consumers to Prime.

FreeTime will serve up only hand picked content and media which itself assures parent that material is controlled. Freetime is itself attractive to content providers who don’t want to miss out on this audience. No other book publisher or retailer can easily match the overall offer. So it becomes a double lock in.

 Amazon has built in parent controls that enable them to set limits on categories such as video and games, appealing to parents sensitivities and enabling them to give their children more time to read. Parents can also build individual child profiles which can control what each child can access and the time that they are on the individual service elements. Gone are the dry industry based categories and book shelves,  the content is design to engage children with colour, graphics and child orientated navigation. Amazon is making the digital book work and not simply creating wizardry.

By starting with young children Amazon have also played another clever card.  It starts to enrich its appeal to parents, adds even more value to Prime and importantly creates a model which can be easily reproduced to appeal to older or specialist groups, or even grow with the young user, appeal to the educational market and become a ‘must do’ for content providers.

In the words of the Jesuits, ‘ Give me a child until the age of seven and I will give you a man’.  In the words of Amazon, ‘Give me a child until the age of eight and I will give you a family of Amazon customers for life.’

Finding Digital Needles In Digital Haystacks

Remember those dark days before ONIX standards, search inside the jacket, or even picture of the jacket?

Contextual data , or as it in know, Metadata, is produced to help consumers find the book, validate it and also to promote it. When the physical bookshelf was the only option, then we relied heavily on the touchie, feely approach and the promotional sell was to the bookshop. After all,'if it isn’t on the shelf you can’t sell it' and bookstores often have finite shelf space at all levels. Then came the internet and it wasn’t so much about getting it on the shelf, but making it visible amongst the hundreds of thousand others. The onus shifted from supplying the retailer with basic information to supplying the consumer with rich information.  Now we are entering a new phase where the book starts to promote itself and it only the consumer that counts.

The new industry metadata standard (ONIX), has helped define the basic metadata and also its adoption across the supply chain. It served the intermediary world well , but is it enough in a consumer only world where titles are effectively on consignment and don’t have to be sold to the retailer? 

Many will argue that standards and agreed data structures are a must and without them books will just be lost in the new virtual space. Others will counter saying that they all too often act as a straight jacket and are still supply chain focused and not consumer orientated. Somewhere in between lies the reality, the challenge and the opportunity.

One of the greatest constraints the standards give us is on genre classification. We appear to have created the standard ‘tree, branch, twig’ hierarchical approach to genre classification. This was great when you had one book and only had one slot in a bookstore to display it, but is it really as relevant in a virtual bookstore with infinite shelf space where the book can sit in literally thousands of relevant slots? Is it relevant when digital content itself can define in which genres it belongs? Is it relevant to the consumer who is constantly finding and redefining genre and can’t wait for the standards bodies to endorse the name? After all, by the time new vocabulary is defined in the authoritative dictionaries, it already has been widely adopted and used.

So we now have a truly ‘mixed’ economy comprising, physical books sold through physical stores, physical books sold through digital stores and digital books sold through digital stores. Should the same construct serve all three channels, or should the physical model act as a loose base, but we adopt more appropriate and consumer facing methods for the digital world?

Amazon Kindle only allows two ‘dry’ classifications and seven keywords, Kobo is more tolerant and PubIt is only just about to finally go international.

Are genres truly hierarchical or now lateral? Are keywords now more important than the headline genre? Do we find ‘books like’ through sales or more sophisticated means? Do we enable keywords to be excluded as well as included? How do we express multiple demographic appeal? How do we rate relevance? How do we rate or harness genuine reviews? How do we use the content itself to define its appeal? Do new books always come before older ones?

We don’t have the answers, but we do realise that today’s cumbersome expressions are frustratingly restrictive and far from being engaging and in some cases relevant. They provide a base in the digital world, but sadly not much else.

Today, finding a new unknown title in these silos, is like finding a digital needle in a giant digital haystack.

Sumo Wrestling: WalMart Vs Amazon

This week, Reuters broke the news that the world’s largest store, Walmart, had taken the decision to no longer carry the world’s largest etailor’s Kindle tablets and eReaders once the existing inventory and purchase commitments had been honoured. It was reported as being a merchandising strategy and a recognition that Amazon is a real competitor across all media content. Is more about who owns the customer, who is providing the service and whose brand is actually being built than dropping some devices?

In the physical world it was all about filling the shelf and if you didn’t have the product on the shelf everything else could simply fail. The likes of Amazon then created the virtual shelf with vitual inventory and online service and many failed to match the offer. Some even effectively gave their digital business, be it for physical or digital product, to these new virtual traders. Amazon built a significant marketplace which few have been able to emulate, where even when they didn’t get the sale themselves, it was done effectively in their name and they earned a commission on it. Amazon is no longer about books, or digital media, it is a retail virtual market. The Apple store then took this commission approach to a new level and established that doing business through their appstore , on their iPads, be it for purchases or subscriptions, warranted a hefty 30% commission payment. They even tried to force the whole digital market back into fixed pricing with them being the ‘most favoured nation.’

We have gone from digital device and format/DRM lock-ins and transaction charges to platform commission and portal charges and now have to ask what next and how many slices can the pie take?

It is somewhat pleasing to see the emergence of HTML5 as the potential great leveller, but equally interesting to see the browser positions adopted by Amazon Kindle with their Silk browser  and Apple with own browser.  Are these to become the new toll booths and open market restrictions?

If we were to  ask the consumer who is their first choice gateway for music, film, games, TV, radio, news, books, will they select one umbrella service or many separate ones? Are they now looking for a simplified access and a one stop shop and is this driven by a marketplace or merely a platform. We don’t know the answer but unless we ask we will merely assume we know the answer.  The important thing is that what once was the brand everyone thought they bought from may now be changing and the power shifting through technology to others who simple attract consumers and facilitate access.

Walmart may so no to selling Kindles but if all they devices they sell still access Amazon and they don’t have the comparable offer are they exposed to the same risk? By not stocking Kindles are they also just driving their consumers who want one to another store full stop? 

It was a Good Week For Amazon and a Bad Week For The Rest

Well it was a good week for Amazon and a disappointing one for the rest. That may sound a bit harsh but what is becoming clear is that even the strong players and pretenders often lack Amazon’s vision, customer focus, market understanding and delivery and in some cases many of these.

So what was so good for Amazon?

First they raised the device bar and ‘Fired’ everyone up for Christmas. New fire tablets, better Kindle ereader and Fire devices coming to UK. The announcements weren’t earth shattering, but well communicated and sufficient to nullify the opposition. It was if they were being innovative, as the reality was that they were just doing the same as their main competitors in the ereader device market and raising their tablet bar in order to compete better with their real competitors in the tablet arena; Apple, Samsung and Google. They also claimed that the original fire had captured 22% of the US tablet market which should be a significant wake up call for all given its basic features.  

The interesting twist was their media focus. They own: Audible, the leading audiobook player, Lovefilm, a leading European on demand film service, ABE the largest rare and second hand book marketplace, Book Depository a significant global book retailer, are a growing publishing force both for established and new authors and of course are the largest global ebook and physical bookseller buy any measure. They now are clearly starting to intertwine these offers, using ‘Prime’ to generate loyalty and with yesterday’s announcements starting to build a differentiator that will be hard for others to follow let alone compete with. Their new announcements on X Ray and their new serial programme are clear indicators of them pushing the boundaries.

Then we have Judge Cote approving the DOJ settlement with three publishers which some would suggest leaves Apple, who can afford to play hardball and the other two publishers who perhaps can’t afford too, looking exposed.

They also announce that they will be taking on 600 more staff in a new depot at Hemel Hempstead, 3,000 temporary staff over Christmas and creating 2,000 new jobs in the UK. All of which was not lost on David Cameron who welcomed the announcement. How to influence people in high places!

To top it all the share rose 2%.

Nokia never seem to learn. Just when some said that their new Lumia 920 smartphone running the new Windows platform may be one to watch they scored a stupid own goal. It appears that the video which was claimed to have been shot using the new phone was fake and created using a higher quality camera. The result, their share dropped a further 6%.

Having announced three new devices you would think Kobo would have had a good week. However, when you step back, the week will belong to Amazon who clearly upstaged the a poorly timed announcement from Kobo. The one thing you don’t do is beat your chest and declare you are a winner when the opposition is about to wipe the smile off your face. Kobo’s offer is now an also ran and like their service they are seen as having a poor competitive offer. Rakuten need to step up their investment and focus on building a real differentiator if they have any hope of competing in the major markets. It is clear that Kobo now have a narrow media offer and devices are not going to make any difference whatever they price them at. They are competing on the wrong thing, but perhaps like other forgotten pretenders such as Sony, that’s all they have got.

Barnes and Noble now know that they left it too late to venture outside of their comfort blanket – the US. They now have got strong established and committed opposition in the UK and that’s before they even spend a dollar trying to build their profile.

Apple are oblivious to bad weeks but even they must be wondering if agency was wise and why they continue to fight the inevitable. They have their own announcements coming up and the iPad nano (remember they said they would never shrink the screen) and a new iPhone are bound to play to the fans delight, but unless they start to get real on pricing there will soon be a serious price gap with the rest. This was easy to defend when they stood out but as the others improve, like with smartphones, people will start to look seriously at others.

However Apple appears to have bitten the hand that feeds it in their zealous patent actions against Samsung. It is claimed that Samsung is withholding memory chips for the initial shipments of the new iPhone because of a disagreement about pricing. Apple obviously doesn’t like to be dependent on Samsung , but there is only so much volume Apple can get from elsewhere. The Korea Economic Daily reported Apple’s exclusion of some Samsung components earlier today.

It’s a sign that we only have 19 weeks to Christmas. The cards are starting to appear in the shops and despite the potential Indian summer we are starting to think about presents.

97% Discount on ebooks is not Marketing but Madness

If we look at the bestseller lists from Amazon Kindle we may be somewhat confused and wonder if ebooks are going to be free in the future and if so wonder how authors, publishers and everyone is going to make any money from them? Its as if the children are running the chocolate factory.

Let’s step back and remember what publishers argued was their logic for bringing in their own price maintenance called ‘agency’. At the time Amazon was selling ebooks at $9.99 and that was said to be both a loss leader and unsustainable model. There was the famous Mexican stand off between Macmillan and Amazon and normal service was resumed under the cloak of agency.

Let’s now read the letters submitted to the DOJ, pro and against the agency. They are all about sustainable business, author royalties the market dominance of Amazon etc.

Let’s now look at the best seller Kindle lists on Amazon. If we ignore the free column which in itself raises many questions, but in the main is self published, we are left with the ‘paid for’ column which has prices set originally buy publishers. You would expect to see some lost leaders, new authors, new titles but would you expect to see Ken Follett, Peter James, Ricky Gervais, under these lists and selling books at under a £1 and in some cases for just 20p? Nine out of the top twenty best selling Kindle ebooks are a £1 or under and of these , six which are all in the top 13 are a mere 20p. These  include four Macmillan authors. Peter James’s ‘Perfect People’ was listed at £7.99 in print, £7.16 in digital and is now offered at 20p, or as Amazon have calculated it, 97% discount! A price which includes VAT.

We are not aware who is driving this new wave of ebook summer pricing madness but whoever it is needs to be given a stiff course of social economics.

97% discount is just not worth getting out of bed for and is as good as giving the book away. Those marketers who will be writing their response before reading the rest of this piece will no doubt be using the words promotional, visibility, discoverability, attention grabbing and many more superlatives to justify their insanity.

The truth is that if we all did the same the industry would be finished. There is no coming back from zero and once the consumer is conditioned to paying zero then asking them to pay more is a challenge. Publishers are the first to point out the cost of producing digital material and the overheads that have to be born so how will they do this with zero coming in? Authors may earn out and be happy with print royalties today but as the net sales of digital zero start to come home,will they be so happy. Some will point out the joke that these ‘give aways’ come with DRM just to protect the property in case someone steals it. Hello – how many robbers do you think steal worthless property?

Publishing has always been a 80/20 game with a minority of titles making the majority of money and sales but with these charts there is a worrying change and although the 20% may still generate the volume they may not make the money.

Scarcity raises prices, but on a virtual shelf the only scarcity is in discovery, there are no rare ebooks but just ebooks you can’t find.  

So we wanted to look at other platforms to find out if the madness was confined to Amazon.

We looked at Peter James’s ‘Perfect people’ published in November 2011 in paperback at £7.99 and available at Tesco £3.89 (52% off) WHS 5.99 (25% off) Play.com £5.88, Waterstones £5.19 and Foyles £7.99. We found the hardback at Sainsbury down from £18.99 to £13.99 (30% off). The ebook is a bit harder as it wasn’t on B&N, but it was on Kobo and its affiliate site WHS at £6.47 (19% off). So all a long way from the Amazon kindle price of 0.20p or 97% off.

Groupon and other discount voucher stores have grown a healthy business in spot discounting goods and services over the internet but even they can’t give you 97% off.  

Waterstones: Kissing Their Customers Goodbye

Today we read the opinions of many in the trade and business press on the surprise move by James Daunt to let Amazon in to Waterstones through the front door. It is interesting to note that many state the obvious and then pull back to cover the bases just in case it’s a move that may win. Many talk about the so called capitulation over digital and hand over of that business to Amazon. Many cover the usual hypocrisy of some statements made about Amazon before Daunt’s cathartic moment, when the lights came on and he became a believer.

Irrespective of all the noise, the one fact that one can’t get away from, is that Waterstones is not just handing over their digital futures in terms of sales but more importantly the very thing that drives them - their customers. It’s no surprise to be told that book readers like a mix of physical and digital and that they are often eclectic in their reading taste, but to build a strategy on retaining the physical business at the expense of the digital is at best questionable at worst naive. However, the real issue is about customers, today, tomorrow and for ever. 


Waterstones couldn’t tell you today who walked in their store, what they browsed, what the dithered on, what they bought and even if they had been in the store previously or bought at all in the past. Yes apart from their online business they are relatively clueless unless the customer has a loyalty card and uses it. Amazon will log,  what was bought, what wasn’t bought, what was bought with what, what was browsed, what pages were browsed and literally every aspect of the sale and every related salel. Reusing this information proactively is what the future is about and is what Waterstones is effectively handed over. They have consigned their business to mass marketing with a little direct marketing on the fringe – hardly a wise move or something any retailer should be even considering today. They may know who bought a Kindle and their first purchase but after then they may be kissing them goodbye. Is that giving the customer what they want or just naïve retailing strategy?

So the reality is that the deal is not just about digital, and online it about really knowing what your customers want and not what you think they want.

Waterstones Let The Fox Into The Chicken Hut

Today is a new dawn for UK Booksellling, as its premier retail chain Watersones, effectively handed over its digital if not its future to Amazon. We will read in the press how this is a logical move by Waterstones and is the dawn of a new ebook beginning under its new management, but some will now start to ask whether this is the end of the beginning, or in fact the beginning of the end? 

They first started their digital adventure with Sony. Sony themselves were bullish, gave Waterstone’s an exclusive window and spent heavy on advertising. It failed for many reasons; Sony didn’t have the content, the market wasn’t ready, the price wasn’t right, the stores couldn’t or didn’t want to sell digital, the eink devices by themselves were not the answer, etc. Waterstones then tried to accommodate all the eink ‘lookie likies’ and proceeded to badly merchandise the goods, failed to engage customers in store and as we previously wrote in our article ' Would You Buy an eBook Reader Off This Man?' , they made a hash of the opportunity. Now they have chosen to partner Amazon and their Kindle platform. 

We have to ask why they didn’t partner Barnes and Noble, not today but a couple of years ago, when a partnership could have been mutually beneficial. Imagine a situation today when you could have Microsoft, Barnes and Noble and Waterstones, all on the same team and remember Barnes and Noble and the Nook is virtually unknown outside of North America. Both Barnes and Noble and Waterstones could have kept their own customers and shared a Nook platform with a giant partner called Microsoft.

Imagine if they had chosen Kobo before everyone else did? Could they have done any better than WHS? They would have however chosen an international player and one with a heavy weight parent and importantly they could have probably retained their customers or at least limited the damage to digital.

What does Amazon have that Waterstones doesn’t have in the UK? A significant internet store that sells all books (used, rare,new), a growing publishing business, a self publishing business and growing affinity with authors, a customer mail list, demographics and data to die for, a viable audio book business in Audible, a successful internet book business in The Book Depository, an agreement with the major UK supermarket Tesco to sell Kindle,  a digital music offer, a digital on and off line film offer and now a High Street presence across 300 outlets and for what is probably ‘chump change’.

People have asked whether Amazon would open up physical stores, it doesn’t have to as long as stores such as Waterstones open their doors and let them in. Some would suggest that it is like letting the fox into the chicken hut and only time will tell what will happen. Maybe some will see it as a quiet reverse take-over without the exchange of shares and money. It will be interesting to watch how Waterstones shops now step up with renewed enthusiasm to sell themselves out of their digital future, give away their customers and even loose more physical sales. If Waterstones are unable to compete on price will the increased foot fall of folk coming in potentially once to buy a Kindle be enough to save all but a small number of their estate? 

Kobo Unplugged

The one thing that you can say about Kobo is that they remain focused and determined to forge an international offer and pit themselves in the face of some formidable competitors. Their international strategy was eloquently conveyed by their evangelist and Vice president of content, sales and merchandising , Michael Tamblyn, speaking at the Digital Book World conference in New York. Michael said that when you start from Canada you have no option but to go International.

Michael’s presentation is good and well worth a listen and brings home some of the realities of managing a tight roll-out to many countries and the need to segment operations and stick to a template approach. They aim to establish themselves in 12 more countries this year, which may not sound that ‘gun ho’, but is a country a month and will get harder as they break out of the English speaking and ‘western’ markets.

However, international growth, which is heavily reliant on ‘partners’, can have its challenges. Last weekend we visited a large WHS store and saw first hand how a partner can let you down badly. Getting some retailers to treat it better than just an instore franchise is itself a challenge, but this was in what was a ‘hotch potch’ of a ‘pick and mix’ store that frankly made the old Woolworths look good and was hardly aligned to the messages Kobo needs to get across. Yesterday, Asda announced that they would be selling the Kobo touch reader for £87 which is just under the Amazon Kindle price of £89, which enjoys the Amazon brand and is backed by significant mainstream advertising campaign. Simply relying on spot buys, bin end POS and a comparable price isn’t exactly pushing the boat out. We have already seen how the old Waterstones was unable to retail ebook readers in store. Its one thing to have retail partners, its often another thing altogether to control their representation of your offer.

Michael presents some very interesting figures for Kobo sales of self published titles in various countries. Self publishing represents some 7% of US unit sales, this rises to 8% in Asia, 9% in South America, 10% in Australia, New Zealand and Europe and 14% in Africa. He explains some of the reasons behind the local variances but the percentages are somewhat higher that we expected and demonstrate that the opportunity that is potentially starting to blossom under the ebook umbrella.

Michael also shares some interesting insights on local and global pricing which demonstrate how many publishers still see physical and digital pricing locked together.

Kobo are now within the Japanese giant Ratuken, which will give them better backing and they know that they will need it as they race to get themselves established in many countries and across all the continents. This is about raising brand awareness and credibility just as much as it is about service. Whilst Barnes and Noble still today remain largely unknown outside of publishing and the US market, Kobo now has a better street profile in a growing number of countries. It will be interesting to see how the Kobo brand stands up to the potential Waterstones’ adpotion of B&N’s Nook and how they both compete with Amazon in the UK later this year.

To hear Michael's 15 minute presentation

Related posts
Kobo Steps up to go Global (Nov 2011)
Can Kobo Win at the Races? (oct 2011)
Kobo Has to Follow (June 2011)

CES 2012 and Device Rumours

This time of year is not about January sales, but CES in Vagas and the new electronic gadgets and devices on show or rumours afoot. This year may not be so exciting as previously, there are some very interesting developments.

Ultrabooks

There will be more tablets this year, but the question remains as to whether they are seriously going to compete with the iPad at the high end and the Kindle at the low end, or end up as RIM, holding the baby? Are the manufacturers going to avoid the tablet and concentrate on the ultrabooks? The ultra thin 'weightless' models that are now starting to flood into the market to compete with the Macbook Air. Its just as if everyone wants to be Kate Moss! Personally we have been eying the Asus ultra model for a couple of months. With laptops now weighing in at just over 1Kg why do we need a tablet? These models are not new, but the $100 per device incentive from Intel to manufactures to build them is. As a result there are expected to be about 50 ultrabook designs on show, costing around $1,000 and as we all need to upgrade some time, why not with a device that is as light as a feather..

OLPC Tablet

We have always love the One Laptop Per Child project and it is now set to unveil its long-awaited tablet for $100. The tablet will feature an 8-inch 1024x768 screen, a Marvell Armada PXA618 chip and 512MB of RAM, running either Linux Sugar or Android OS. It will be able to be powered by hand-cranking and even has a solar panel optional extra! We love the housing and design and it shows that a $100 tablet is now a reality.

We recommend viewing Engadget’s video review of the device.

Google tablet?

Rumours are rife again on Google introducing a low end tablet early this year. This would probably follow their tie ups with Motorola and partnership with Samsung on Nexus. However do they have the media to make it attractive or will it remain an also ran like many other tablets?

Wii U Media Console?

There are the rumours that the Wii U will support a touch screen in the next generation console. The feature will have Ereader features which would allow users to download not only books, but newspapers, magazines, comics but much more. The touch screen will be used in a typical fashion to scroll of flip pages and would make the Wii U a more services orientated console and widen its appeal to be more of a entertainment and media than just a gaming device. There are even reports that Nintendo is secretly building its own Apple-like app store for the upcoming Wii U console.

Reading on Kindle via solar power?

Finally, Gizamo reports on a new leather Kindle case with an integrated reserve battery that can store solar energy to power a built-in pop-up LED reading lamp for up to 50 hours.

Amazon: Fiction Prizes, Japan and KF8

Another day and that great river Amazon keeps on flowing. Today three disjointed pieces of news demonstrate why Amazon continues to chart its own course and is a significant publishing force.

First the fairly insignificant news that France Telecom Orange is co-developing its own ebook store as an alternative to Kindle. Orange intend to partner with rival French cellco SFR and the French Library Union and aim to develop a digital library. They believe that they can achieve their Kindle competing goals by a hosting a wider range of French titles than Amazon and will offer users the ability to pay via the mobile bill. Orange investment is claimed to be around €5m and although the French market may be seen by some as parochial, it is already getting crowded with Kobo teaming up with Fnac. We doubt Orange will make it to prize ceremony, but believe they will help raise the ebook profile in France. Forget the Orange 2011 winner,Téa Obreht and her debut novel, 'The Tiger's Wife', some would give the Fiction Prize to Orange itself.

Whilst Kobo are setting their sights on France and the UK and Orange are planning to ‘tango’ the Kindle in France, Amazon is rumoured to be entering the Japanese e-book market and to set up an online e-book store this year. The rumour is supported by claims that Amazon is in contractual negotiations with publishers such as Shogakukan, Shueisha, Kodansha, Shinchosha and PHP Institute Inc is expected to provide about 1,000 digitized titles to Amazon.

Japanese publishers have been reluctant to provide content to Amazon over concerns that the retailer will sell e-books at a discount. Although the Japanese e-book market in 2010 was estimated at only 65 billion yen ($846.9 million) the print book and magazine market is worth about 2 trillion yen. One could say the Amazon presents a clear replay of the US Black Ships that opened up Japanese trade. It is easy to see this as a clear strategic step for Amazon whilst others scrap and try to play catch up in easier markets.

Finally Amazon has unveiled its next-generation file-format for Kindle books. Kindle Format 8 (KF8) will replace Mobi 7, and it brings support for HTML5 and CSS3. Obviously this is not epub 3.1 and some would say is somewhat behind that standard, but it may be a significant and more timely route for many and better tuned to the market.

KF8 will obviously enable publishers to create better-looking books with richer formatting, which could include fixed and floated elements, embedded fonts and drop-caps, text on background images, numbered and bulleted lists, and much more. Children’s books could now “set on Fire” with imagery, fixed layouts and pop-ups; comics and graphic novels could benefit from ‘Kindle Panel Views’; reference books could be made more attractive by superior diagrams and cookbooks and travel guides cold start to come to life.

Some will say that isn’t enough, but it enables the Kindle Fire to display the enhanced ebooks in play today and if encourages more publishers to develop the content, then it may be a far smarter move than developing standards and expecting everyone to merely adopt them. Amazon’s KF8 formatting capabilities are outlined in full on its website.

Amazon’s Kindle Fire tablet will be the first to support the KF8 with them predicting support on its latest generation of e-ink Kindles “in the coming months”, along with its free Kindle apps for other platforms.

Finally, Amazon are planning enhancements to its Kindle Publisher Tools through KindleGen 2 which will create Kindle content from sources such as HTML, XHTML, and EPUB. This will be complimented by Kindle Previewer 2 which will provide publisher previews on how titles will look on Kindle devices and apps.

The Amazon keeps flowing and appears to be still one step ahead in their planning and execution.

Can Kobo Win at the Races?

Racing it’s not just about the horse, or the rider, the form book , the course and the conditions. The winners and losers are often decided by all these factors and more. Outsiders do win and favourites lose and that’s what makes the ‘sport of kings’ interesting.

So can Kobo steel up on the inside track and get placed or do they remain an also ran?

Kobo has announced, "the People's eReader" called VOX. It intends the VOX to compete head to head with the Barnes and Noble Nook and the Kindle Fire and in doing so attempt to capture the middle ground between a full blown and expensive tablet such as the iPad2 and the cheap eink lookie likies such as the Kindle, Sony reader etc. Vox will retail for $199.99 runs on Android 2.3 and weighs in at a low end 14.2 ounces. They also have the touch which is priced around $139 in the US, or £110 if you are unfortunate to have to buy it in the Uk. They also have the basic WiFi model at $99 in the US and the poor exchange rate of £89 in the UK.

So they have a stable of horses but what about the riders. Kobo is as well know outside of North America, as it part time parent and book retailer Indigo. However, it has struck deals with WHSmiths for them to sell into the UK market and with Fnac to sell into the French Market. Looking at their web site they already have an impressive list of retailers Indigo in Canada, Walmart, Best Buy and others in the US, Angus Robinson and Borders in Australia (perhaps we should scratch that last entry). The franchise strategy is sound, but if it were a winner, one would have expected better market share results in the US, where they even ran the Borders ebook setup.

Perhaps the strategy will work in more fragmented markets such as Europe. However remember Waterstones made a huge leap to the front with Sony, but despite all the hype, some would say that they failed to get past the starting gate and now look to be changing stables.

Perhaps the market is more mature now and willing to back the outsider? The challenge for Kobo is not the size of their repository, nor the cuteness of their reader, but the effectiveness of their rider. Will WHSmith break the mould and actually make a great sale job of promoting it and getting it in the consumer space, or will they expect it to earn its keep and shift itself. It’s one thing to put it on a shelf, it’s often another to sell it.

Price and colours aren’t Kobo’s unique selling points. If Kobo are to succeed with this franchise model, where others such as Sony have failed, then they have to get their franchisees set up to promote, shout, spend serious money and sell, sell, sell. Amazon has been promoting the brand Kindle everywhere, Apple have a brand that sells itself, but is Kobo up to the job and what is its USP (unique selling point)?

Back in the early internet bookshop days I was asked who would win; Barnes and Noble, Amazon or Bol.com. My answer was quick and based on one simple piece of logic. Pick any 100 people on; Oxford Street, London, 5th Avenue, New York, Main Street, Frankfurt and ask them the same question, ‘Have you heard of Amazon, Barnes and Noble or Bol.com and do you know what they sell?’ I could predict the answers then and unfortunately today is not much different.

So as we return to today’s race we have the favourite Amazon Kindle, followed by Barnes and Noble in the US, Apple and then a pack of outsiders lead by Kobo. There is a dark horse in the shape of Google but for all its hype it is still hanging around in the stables.

Kindle Fire is Blazin

When Apple first launched its iPad2 it sold 2.5 million units in its first month and set the bar very high for all that would follow.

Today a leaked sales report on the tech site Cult of Android claims that Amazon’s new Kindle Fire has currently raked up 250K of pre orders in its first week and if that level of demand is maintained it could reach 2.5 million of pre orders alone before it goes on sale on November 15^th.

Irrespective of whether the level of demand is sustained it clearly is going to be the US gift for Christmas this year and a serious Apple contender. Bezos has obviously pitched the price perfect and also has stuck to his ‘keep it simple and focused mantra’ that has enabled Kindle to become a clear contender in the emerging media player market.

It begs the question what the others will have to do to compete as Apple captures the high ticket, design icon end of the market and Amazon the low end no frills media integrated end.

It also begs the question as to how some of the other ereader players will survive not just in competing with these must have devices but also with the impact of their different but closed media and platform offers? What is perceived as an open market for ebooks could quickly change if there are two players who dominate it and this is turn may force players to look at the obvious streaming opportunities and away from downloads as we know them today.

Amazon Overdrive Potentially Lock Up Libraries

It’s ironic the day after we wrote about Amazon joining the dots they take another stride and connect some more.

Today Amazon has announced Kindle Library Lending, that will allow Kindle customers to borrow Kindle books from over 11,000 libraries in the US. Kindle Library Lending will be available for all Kindle devices and free Kindle reading apps. To achieve this monumental step Amazon has aligned itself with Overdrive who have successfully built a business opening up the public libraries to ebooks and now have gone past the US and into Europe.

Today we only know what is in press releases and therefore there is potentially huge opportunity to speculate wrongly on what might be. The one thing that is certain it is a huge wake up call for all bookstores, libraries, publisher and authors. Amazon has once again invented the surprise.

The question we would have today are:

1. Is the Overdrive/ Amazon deal exclusive and what are the terms of any exclusivity as that could others from merely following the party?
2. Is there an intent from Amazon to acquire Overdrive, circumvent it later, or keep it as a partner. It would make a great deal of sense to use Overdrive as sales force into libraries?
3. What will this mean to sales as both Overdrive and Amazon as both straddle the buy and lend markets and Amazon clients now have a clear added value of choice and an opportunity to lend first?
4. Library esupply will become harder for the competitors and Kindle is a massive plus for libraries so what can competitors seriously do?
5. Does this new blurring of lend and buy now offer the libraries the opportunity to become resellers and cash in on this through an affiliate back door?

Some ask how it could work? We see the answer as being fairly simple. The libraries and Overdrive already have the system interfaces to manage membership authorisation and communicate loans etc. All Overdrive has to be able to do is present the titles available via Amazon. When it receives a loan request, it merely fires this off to Amazon to pack and dispatch in real time and conform successful receipt. They may do it differently, but it looks simple to us and probably a no brainer to them!

So we may not like eink, but Amazon have extended this to a platform offer and now are stepping up their consumer awareness. Look in the newspapers and watch TV, they are building a brand and brand awareness and now offer library lending.

The only uncertainty today may be Google, but what’s new

'Smartphone and Free Kindle', Certainly Sir!

If you were a ereader platform and wanted to extend your market in the UK the best option to do it is through bundling it in with mobile providers on a non exclusive basis and to choose Carphone Warehouse who dominate the independent channel. Next to line it up with the traditional consumer electronic devices retailers such as PC World, Currys and Comet, finally make sure its available through the bulk shippers such as Best Buy.

That is what Amazon has done with the Kindle with the Wi-Fi-only version is priced at £111 and the 3G and Wi-Fi Kindle 3G version priced at £152 Kindle 3G. The twist comes when you select a smartphone contract and effectively get the basic Kindle free or the Kindle 3G for a one off cost of £15.

As most book sellers will discover selling ebook readers is not what they do or should expect their staff to do. They are booksellers and as we have pointed out are ill equipped to sell ereaders. The interesting thing now is that the eInk contenders all look sidelined and struggling to compete in a market when a multi platform service such as the Kindle is effectively going for the channel killer.

We have never been a lover of the eInk solution but in the Kindle platform it makes sense and we would even buy into it. This latest move by Amazon clearly gives everyone else a challenge and we believe that unless the service, the reader platform and the reach is multi platform the game could be up in the UK ebook market.

Kindle Direct Publishing Arrives With TED

Today we have the launch of TED Books and the rebranding of the Digital Text Platform (DTP) to Kindle Direct Publishing (KDP). What both ventures are focused on is the redefinition of digital works by the merging of the digital book and digital article. We have argued that for far too long the ‘book’ has straight jacketed authors into an economic print model based on pages and words. This does not make sense in the digital world and is similar to saying that all recording artists can only produce albums. Many authors in the past honed their craft in journalism and magazine articles and stories. They are ideally skilled to hone their work to a shorter format. The attention span of many readers could be better served by shorter works and the digital technology may render shorter works better than longer ones.

Those technological and culture promoters have built a huge following and stimulating programme and extending this to ‘TED Books’ makes great sense given Chris Anderson’s background and widens their audience reach further. At less than 20,000 words each they clearly are long enough to covey the messages and can be complimentary to the video. They will be available as Kindle and Kindle Reader apps at a cost of $2.99 each.

TED’s initail three tiles are:
Nic Marks: The Happiness Manifesto: How Nations and People Can Nurture Well-Being
Juan Enriquez and Steve Gullans: Homo Evolutis: Please Meet the Next Human Species
Gever Tulley: Beware Dangerism! Why We Worry About the Wrong Things, and What It’s Doing to Our Kids

Anderson now intends to have regular releases of new TED Books. Many will come from existing TED speakers who will expand topics they have presented others will come from new authors with new ideas. The initiative will certainly keep the future of the book in the minds of the world’s thinkers.

TED Books launch is part of Amazon’s Kindle Singles imprint and rebranding of their previous DTP to Kindle Direct Publishing (KPD). Books self-published through KDP can enjoy the 70% royalty program and are available across the Kindle platform. Kindle’s programme is not just about TED books and has fiction from the likes of Jodi Picoult, Rich Cohen, Pete Hamill, Darin Strauss, and Ian Ayres. Kindle Singles gives all writers the opportunity to publish shorter work that is priced between $0.99 and $4.99. Amazon collects the content, the market initiative and the extra value.

The interesting thing is that Amazon is becoming a true publishing vertical from author to reader and for others to compete they will have some catching up to do.

Ten Digital Reflections

If we look back over the decade of the ‘noughties’ we see ten technology/service step changes which have all in their own way enabled publishing to be digital. They may have not been the first to market, but were first to get it right and change things.

iPhone: The iPhone redefined the mobile, the user interface, the operating system, the application, the look and feel and much more. It combined the best of the iPod and iTouch and brought them to a smartphone. It made reading on a phone acceptable and was adopted by young and old.

Amazon Kindle: It started out as just another eInk device and ended up a multi device platform, leaving many so called pretenders in its wake. The single focus Amazon applied and their determination to evolve and protect their customers investment in Amazon, was what ultimately swept the others behind them.

YouTube: Youtube did for film what iTunes did for music. It became the enabler, the changer, the vehicle that promoted us from video watchers, to video makers. It gave the masses a common platform to express themselves and view alternatives. It was and is a 'starmaker'.

epub: As a standard it unified the industry and effectively became a 'category killer'. It is far from perfect today. Many see it not one standard, but as a mere container, with many issues and variations. However it effectively killed off Mobibook, MS Reader and nullified Adobe ebook. It enabled everyone to believe we had a single standard.

Widgets: They may have been overly engineered by some and lacked a common specification, but they started to make everyone think outside the box. Context started to be used to promote and sell content. We started to use the jacket as a container for content, metadata, bibliographic record and even to be a two way communication vehicle. Unfortunately, widgets were often not understood, lacked industry standards and leadership and remain waiting to be fully discovered.

Facebook: Many will ask why Faccebook? Why not MySpace, Bebo, or even those many publishing only pretend social networks? Facebook wasn’t the best social network, but it was the one that was adopted and accepted by all. It may have started as a narrow college vertical, but it then became inclusive of all and it was this that ultimately separated it from the rest. Why do we need book social networks such as Copia or BookRabbit when we have Facebook that can include all book social connections?

ACS4: When Adobe killed off ACS3 and embraced epub under the intial Adept service many industry players said 'no way'. Adobe quickly adapted it to what is now ACS4 and it soon became the DRM service across multiple devices. Love or hate DRM, it is here today and Adobe continues to be the glue that secures epub and Aebooks (PDF) on many devices. It offers the reader the ability to buy from a wide range of resellers and read files on a wide range of readers. It offers the author and publisher the security.

The Blog: We now have social networks, twitter and a host of ways to express and share our views. Some would suggest that the blog post has had its day and that the 'real time' snippet and interaction of Tweets is more powerful. Others would suggests that 140 characters says little and merely reflects our growing sound bite culture. Whatever, blogs were the vehicle that redefined journalism and writing and enabled many to be able to express themselves to a wider audience.

The Google Book Settlement: We all have an opinion on this audacious attempt to highjack an industry for little more than chump change. It sits still on the shelve awaiting judgement, but it has single handily woken everyone up to the issues facing copyright in the digital age, the challenges of orphan works, the nonsense of territorial rights in global digital economy and the fact that as a rights business, publishing stands exposed without even a basic rights registry.

Lightening Source: LSI came of age during the decade. It quickly became the aggregator and distributor of print on demand titles. First exploited by academia and smaller niche publishers, it has now grown into a vehicle to maintain back lists, produce short print runs and enable ‘lost works’ to be brought back into print. Interestingly it also enabled Ingram to quickly grow its digital offer.

Some may ask why we did not include Android, OLPC or even the iPad. The answer is a difficult one in that they all have had a dramatic impact on the market, but we feel that they and others still to offer or consolidate a step change.

What are your top ten and have we missed the obvious?

Today DRM Tomorrow?

Amazon’s TV kindle advert is both a powerful and compelling one which ticks most of the consumer buttons. It says to the consumer that they may buy any ebook and play it on any platform, Bookmark on one platform and pick up where you left it on another. It is a simple and clean message that resonates with many consumers who fear being locked into a limited life device.

Google , Kobo and the rest have not made the UK TV screens yet and Apple adverts are more about promoting the Apple brand than any reading message. UK retail is apparently bereft of a ebook message and are totally reliant on others to sell the digital dream.

The core of Google’s eBookstore is a claim that its e-book platform was not tied to any device and that its books can be read on many smart phones, e-ink readers, tablets and PCs. Now, Amazon has also announced that they too will have a Web-based application "in the coming months." We are clearly moving towards a cloud based approach that is able to be read ebooks anywhere and on any device.

So what is the difference between these two giants and where do others sit?

The file formats may be different but inherently they are very similar and are based on epub. Some would say that Google, Apple, Kobo, Barnes and Noble have all opted for epub whilst Amazon has opted for its own proprietary standard. We would suggest that that this doesn’t really matter as the files submitted by the publisher can be epub in all cases and Amazon merely modifies these behind closed doors. There is not one interpretation of epub but a number which are all valid but may effect the rendition on some devices.

The clear differentiator is still that thorny DRM. We have three distinct DRM camps; Adobe ACS4 which supports Google, Sony, Kobo, B&N and many if not all eInk devices capable of DRM, Amazon who has its own DRM and Apple who again do their own thing. Forget the rest as they are mere also ran’s.

So as we move closer to the cloud approach and towards on demand streaming will DRM still matter or will all files be readable via a browser on any device and the security be effectively dealt with by the centre? This brings us back to the question of ownership of digital titles and whether ownership means perpetual access or physical local storage. The questions of; library versus retail, ownership versus on-demand and outright purchase versus rental remain, but is DRM now at its peak of influence and about to decline as things go cloudy?

Foxit eSlick eReader the Latest Exit

Another ebook reader has hit the exit button today. Following the demise of iRex and the Cooler ereader, a lesser known eSlick device from Foxit became the latest casualty of ‘lookie likie’ wars and tough competitive market. Foxit will also shut down is European branch and focus work in its California headquarters and licencing its software.

At $199, the eSlick was once a cheap reader but as price wars developed and everyone headed towards that inevitable $99 price point , they just couldn’t compete.

We believe that more will follow and that by next year only a handful of players will remain and they will all find it increasingly difficult as they get squeezed by price, functionality, tablets and iPad, Android devices, etc. The consolidation will have an impact on Adobe and its ASC4 DRM platform who depended heavily on a wide spread of devices and interoperable market. It will help consumer confidence by reducing the choice and price. It should help consolidate the current epub challenges.

The winners will be those who are aligned with content revenues and can cross subsidise their programmes or those with strong nerves and deep pockets. Will believe that we will still see a big casualty or pull out? Its hard to see the likes of Sony making it without digging deep into their corporate pockets, as they are not dominating the trade market and they clearly miss the education market needs. It is also hard to see News Corporation making it with Skiff and others such as Copia may have expert advice and lots of publishing knowledge behind them but just lacks that magic that makes social networking a pull and its device offer is too spread. Barnes and Noble are a technology company so it easy to see them flipping to any device. Kobo looks toi be in a strong position but is it strong enough to compete with Amazon head to head?

So who will be the next ‘lookie likie’ to fall?

Sony: Anything You Can Do We Can Do Too

We saw Amazon drop their price of the Kindle to align to the Nook and now Sony has dropped the prices on its Pocket Edition from $169 to $149, the Touch Edition from $199 to $169 and the 3G Daily Edition is now $299 from $349.

Our take is that this, is too little too late and they have to break the $99 price point to be attractive. Will anyone be prepared to cut to the bone, or run a loss leader to capture the market? The problem with so many ‘lookie likies’ is that they don’t make money on the sales of books, only on the devices and as the price wars heat up then some will go to the wall. It is hard to see anyone but Kobo, Amazon and B&N surviving these wars if they get as hot as they must do soon. Forget the social networking, forget they fancy add ons and split screens, for eInk readers to make it through winter, they have to make money out of content sales.

How long before one starts to give them away to schools, institutions etc. Remember they also will soon face OLPC tablet offer at the low end and more Android tablets at the top end and after all said and done, they are still one channel black and white TVs, in a multi channel, Technicolor and HD world.

Amazon Continue On Their 'Mission'

Remember those early Amazon days when people said they wouldn’t make profit and that they could continue to run at a loss. Amazon stuck to their task and came through and those of us who believed and the understood what positive cash flow meant, customer service and virtual inventory, the power of global branding and what a golden egg was knew they would. They then moved into ebooks and Kindle and once again the doubters surfaced. Even we hated the Kindle device but could see past its limitations to what Amazon was doing. It was if every step that Bezos makes there is an army of publishing cynics trying to pull him down.

So it was interesting to read the interview with Jeff Bezos in Fortune this week.

Bezos quite rightly says that he ‘thinks there are going to be a bunch of tablet-like devices. It's really a different product category. The Kindle is for readers and his strategy is one of 'buy once, read everywhere.' Bezos says , ‘ We think of it as a mission. I strongly believe that missionaries make better products. They care more. For a missionary, it's not just about the business. There has to be a business, and the business has to make sense, but that's not why you do it. You do it because you have something meaningful that motivates you.’

This is a very sensible strategy and clearly sets Amazon apart from the real contenders Google and Apple.

However the interesting points Bezos makes are with respect to pricing where he understands the market is diverse and there are ‘as many opinions about what the right thing to do is as there are publishers.’ He believe that proactive low pricing will prevail and those with low pricing will win share over those who elect to keep the prices high through the agency model. He claims it’s already happening and it no surprise that Amazon wins. Then there is his self publishing offer and compelling case to the authors locked into a royalty model based on preserving the status quo.
The status quo is somewhere Amazon doesn’t live. This week they announced e-books that come embedded with audio and video and a free Kindle application for Google Android phones. Now it continues it news by announcing “Kindle Previewer for HTML 5″ that will allow readers to view samples of books directly from within a Web browser via a “Preview” button on a books Amazon Web page. When the button is clicked a window will open enabling customers to read the sample chapter of a book. They then have the option to purchase the full book for a Kindle device or platform.

Amazon claim that the pages will offer “complex layouts and graphic design, embedded audio and video where useful, and enhanced user interactivity.”

We wait to hear their next move but are certain that they are not going to be rolled over easily by Google or Apple.