Txtr RIP?

Provisional administrator Christian Köhler-Ma has been appointed to German ebook service provider Txtr.

Txtr provided ebook solutions to retailers such as Foyles, device makers and mobile operators such as Deutsche Telecom. They developed a large international repository of ebooks which they serviced through a cloud based white label ebookstore and a comprehensive set of apps. Their service was based on Adobe ACS4 DRM and they sold ereaders based on eink technology.

At the time Foyles pinned its flag on Txtr in 2012, Sam Husain, CEO said, “Our new eBook store and apps, ‘Foyles powered by txtr’, make buying and reading eBooks as easy as possible, without the added expense of having to buy new hardware. It is the next step in our on-going journey to serve our customers with a choice of books, across the widest possible range, in every format.” The question now is whether their customers will still be serviced from a bankkrupt cloud?

Txtr developed ‘The Beagle’ which they launched in 2012. The 5" device was designed to be paired with a smartphone and to be a "companion reader" with smartphones and subsidized by new mobile contracts. However despite the fanfare, the low price, it was too late to market and came at a time when the smartphone and tablets were replacing the old eink technology.

The txtr team launched Blloon, a new ebook subscription service, which was set up as a separate entity and therefore should not be impacted by the current situation. At its launch last summer txtr founder Thomas Leliveld, said that, ‘Blloon aspires to offering a lower cost ebook service in a market already crowded by Scribd and Kindle Unlimited.’

Blloon's subscription model is different and is based on pages and a lower subscription price. Leliveld said at the time, ‘We aren't offering an expensive ‘unlimited’ service simply because that isn’t the demographic we are targeting. And people can only read so much. We’re welcoming young people, the majority of whom currently read up to 12 books a year. Providing a package that allows them to expand to two or three a month makes it an attractive and affordable offering - without any compromise on the quality of the titles. In time we hope it will encourage them to read even more.’

So as Blinkbox follows Sony and bites the dust it is now to be followed by Txtr. The question is not how many more will follow but what the impact these collapses have on consumer confidence not in ebooks but in ebook services who may leave them and their purchases in the cold. These events also strengthen the case for subscription services. However subscription services may be able to be switch off like a tap and impact the consumer less as he merely moves his subscription to another service

Blame it All On Amazon

The papers are full of anti-Amazon rhetoric which some may suggest is being whipped up into a feeding frenzy within the publishing marketplace. Amazon is being portrayed as the biggest bully ever to have stepped into the publishing arena. But is this the case or is it another attempt by the publishing majors to wrestle back some of the control they happily gave the Seattle company, or a genuine grievance? How do consumers feel about the latest public spat, do they really care and how do they actually perceive Amazon? Do authors side with the retailer who has more than any single entity extended their market, or do they side with the publishing majors and those A list authors  who may be suffering in this conflict? 

The issues facing the ebook publishing marketplace are wide ranging and often interrelated, but often these only get raised and discuss as individual issues. Some would suggest that the book supply chain is adversarial by nature and can often be seen not as a supply chain, but as a ‘blame chain’. Yesterday it was the book chains and their greed to secure additional discounts, today it is Amazon’s same battle at a time when some major publishing houses are declaring profit rises due to digital sales and growth. It’s somewhat ironic to wind to the clock back just a few years to when publishers were claiming the true costs of digital were far greater than many envisaged and they were losing out and couldn't pay authors more.

The digital market has shifted significantly and mainly thanks to Amazon and its continual exploration of the marketplace. They have given us and invested in Marketplace, Creative Space, KDP, Audible, ABE, Goodreads, Singles, Kidsspace and much more. They have raised the bar re author royalties and whilst many publishers have started to raise the digital royalties, they all too often pale into insignificance compared to those offered by Amazon and followed by their competitors. Publishers claim that they can make the difference and ‘make a book happen’, but although this may be true in the physical market the digital one is effectively owned by Amazon. Interestingly Amazon have also opened up the digital honesty box through KDP and in doing so have given authors transparency on daily sales by title and region and paid them monthly, again with total transparency.

If we step back and look at some of the digital issues some would suggest that we often have little appetite to change and more easily accept the status quo, often letting others take the risk and waiting to see if they fail or succeed. We have lurched from knee jerk to knee jerk with the likes of the ill-conceived Google book Settlement and Agency moves. Some would suggest that these were primarily aimed at bringing in Google and Apple to compete with Amazon but on their terms.

Today we have a marketplace that is still fixated with front list in a digital world of virtual shelves that provide equal space to all content, irrespective of its age. We have no, or few price points that are recognised by consumers and this just promotes discounting across titles that should not be discounted. We have continue to pour the physical into the digital container and believe the job is done and in doing so undermine the physical product and marketplace. We have generally failed to create new digital content that encourages reading and compliments the physical book as Charles Dickens and others did in the early age of mass reading and have choosen instead to stick with the 256 page model fits all?

There are only two entities that truly matter in the value chain; the author who puts in the creative content and the consumer who puts in the cash. All the others have to add value and not just cost but also have to often co-exist to maximise the efficiency across the chain.

Kobo Takes Over Sony's North American eBook Business

Today, two days after Takahito Aiki, took over the reins as CEO of Kobo, he has announced the effective consolidation of the Sony ebook business under Kobo in North America. It is almost certain that this is the final and long overdue retreat of Sony from a market that they expected to win and sadly lost from beginning. It also sends a strong signal to the market that the dominance of Amazon in this sector is real and is giving even those with potential credentials and market presence a hard time.

Sony entered the market some 8 years ago with huge fanfare, fancy ebook readers based on eink and were the early adopter and major driver and influencer on Adobe’s ACS4 DRM service. I remember meeting their senior players once in San Deigo and listening to how they were going to dominate the academic and educational markets. But their offer and market understanding was always someway behind their words. It’s also somewhat ironic that this death knell has occurred at the same time that Adobe has also gone through the PR mangle and has had to retract so publicly on their ACS5 statements.

So we have Sony ready to preinstall Kobo on its smartphones , laptops and other devices and to hand over their customers and business to Rakuten  and its Canadian ebook subsidiary Kobo. It’s also interesting as it comes at a time when devices matter little and the platform is what counts. How smooth the takeover will be for those who backed Sony and bought their devices and ebooks remains to be seen, but transferring encrypted DRM licences is not always as easy as you would expect. All this is without considering how they are going to deal with those Sony BBeb licences.

Some accept that Sony has been facing many challenges across its business and they may still come back, but with many bases to cover this seems highly unlikely.

So we read the usual hype and words on what this means, and how it is going to make the difference, but the reality is that another door is shutting and real consolidation is happening. The obvious next candidate is Nook, which on the face of it would be destined for Microsoft, the discussion on this are already in play as Barnes and Noble grapple with the same issues and facts of life. Now if we just look at the North American market at a potential combination of Nook, Kobo and Sony that would certainly give Apple a challenge and wake them up from their apparent complacency. This sort of consolidation works best in the established and dominant North American market where it can be honed before it goes global.

So what’s the betting on Nook going somewhere soon?

So What Does Nook Want To be When It Grows Up?

The news that Barnes & Noble’s losses in its Nook Media division will be higher than the previous year and that revenue projections for 2013 will come in significantly below forecast, raises the question of whether it is positioned to slug it out with the technology giants, expand internationally, or whether at some time soon it will have to exit the device market and focus on its content?

Only last year it secured an attractive partner and cash from Microsoft and later Pearson bought a 5% stake in Nook Media. So is this a blip, or a serious issue?

This dilemma was covered by the New York Times in their article ‘Barnes & Noble Weighs Its E-Reader Investment.’ They questioned whether the losses signalled ‘that the digital approach that Barnes & Noble has been heavily investing in as its future for the last several years has essentially run its course.’

The question is whether a move away from, what after all, was never their core competency or strength - technology engineering, to what is their core strength - trading content, will work with the market, their partners and the consumers?

If we look at the market Nook appear to have the bases covered with their platform and devices and content on offer, but have they?

First, we have said before that neither the Barnes and Noble or the Nook brand is well know outside of the US and their launch into Europe last year was too low profile and far too late. The ebook business is a global business and sitting in the US and expecting instant recognition could prove a fatal error of judgement.  If we were to ask consumers on the main city streets of Europe even today if the knew of Nook or Barnes and Noble, what would be the response? If we asked the same people the same question about Apple and its iPad, Amazon and Kindle and even Samsung and Galaxy the results are almost certain to be very different.

This would not be the same in the US, but although Barnes and Noble have dominated the book market, they have failed to dominate the ebook or device market. Is there any reason to believe that, if they can’t do it at home, they can did it abroad? Being a follower isn’t always good in a rapidly changing and costly market. Barnes and Noble are not technology innovators and also do not have the deep pockets of their competitors. Apple have their own environment which is constantly being fuelled by ‘fans’ and is about a family of strong global brands. They sell, or facilitate the sale of content and apps on the back of a robust end to end technology range. Amazon is the world’s largest online retailer of ‘stuff’ and have created an effective marketplace and service offer. They sell technology and services to effectively ‘lock in’ consumers to their ‘one stop shop’ marketplace. Samsung are like Apple, but are today’s leader of the significant Android pack and have yet to really score on the content side. They are clear leaders and are heavily tracked by a host of technology players. Blackberry and Sony are fast becoming an ‘also rans’. Microsoft have the ability, but often lack the execution. If the Slate would have been a full Windows 8 device and not yet another deviant the story may be different even today.

We must also remember that Barnes and Noble / Microsoft partnership which married an Android based technology Nook platform with a Windows 8 one with its own Slate device running under Windows 8RT. Not exactly a compatible marriage. Imagine feeding those profiles into an online dating agency and expecting to find the love of your life!

At the core of this turmoil is the reality, that even tablets as we know them today may well be transient. As the mobile range of devices continues to converge and more intuitive devices such as glasses and watches emerge to connect to mobile servers and the cloud, do we honestly think the Nook has the legs to compete as it stands today?

Nook Media needs to shift itself fully to cover what it says on the can – media. It is still in a strong position to build a retail, library, education offer that is device agnostic and free of the cost of competing with giants, yet agile and canny enough to licence and brand build a true competitor to Amazon. Consumers increasingly want a seamless one stop trusted shop that covers media.  

Although Kobo now has deeper pockets and is backed by a media giant it faces the same challenges and same opportunities. They do have a better global presence, but do not have the right market awareness and perception today. Consumers recognise that technology isn’t for life but they want to know that their chosen platform will be around for some time.

We hope that Barnes and Noble decide what they want to be when they grow up and effectively communicate it and take some fast and bold steps to set the on that path.

Pearson: Is Nook Investment Wise Dot Com?

It’s great that publishers occasionally back technology start ups and invest hard cash. It’s often easier for them easier to ‘sit on the fence’ and wait to see who wins, but by backing technology with cash and commitment it could be said that they are supporting, shaping and developing their future and not merely waiting for someone to do it for them.

We have seen recent publisher investments in self publishing, an area previously shunned and derided by the same people. Self publishing is hardly new, but clearly is potentially very different in a digital environment and offers both the author and reader new opportunities that hardly existed in the physical world.

Now Pearson has purchased a 5% stake in Barnes & Noble's Nook Media division for what would appear a significant $89.5 million.

We ask why, why now and is it 'wise dot com'?

Nook is hardly state of the art technology, nor is it a global device, or even a market leading store offer in its own back yard. Nook Media also faces many challenges ahead on its; relationships, technology, store offer and some would suggest that a 5% stake is hardly going to shake the tree, especially if Pearson is the lone publisher investor.

The relationship with Microsoft is somewhat unclear as Microsoft pin their future on Windows 8 and RT and their own Surface range. Nook has made it abroad, but is often seen as 'that other Kindle' in a market that has killed off many pretenders before it. Technology prices are tumbling and devices continue to consolidate and the Nook only competes in the shrinking ereader and tablet worlds and has no smartphone or higher spec ultrabook offers. Can Nook really compete with the technology giants across such a narrow range and given their shallow pockets?

The Nook, or B&N store, is just another ebook store with little social or discovery pull and importantly it can't leverage what the consumer doesn’t know outside of the US – the Barnes and Noble brand.

We all know that Nook needs the cash, but why now, why Pearson and why only 5%?

The merger of Penguin and Random House makes the move now more confusing and suggests that the play may be more about education and academic than trade. However, Pearson has other investments in this area and a Nook Media offer could be confusing to their Coursesmart partners.

Perhaps, we shall so discover the logic of the investment, but in the meantime B&N will be grateful for some seasonal support, cheer and investment.

Just Give Me The Right eReader?

Technology doesn't stand still and today’s desirable device soon becomes tomorrow’s yard sale or land fill.

When the first eink readers appeared they were novel, functional and expensive. They promised much and helped kick start the ebook movement. We now take them for granted, but they were always very limited in their scope and monochrome in the offer. We often referred to them as the ‘lookie likie’ devices, which  all offered the same experience, the same technology’, all promised to be the next biggest player, but all looked the same. We soon saw the casualties, as one after another they hit the wall and their technology started to follow eight track and cassettes and became history. Forget the recent claims made by IHS iSuppli of reader decline, what remains today are, the Kindle, Nook and Kobo and are becoming less a desirable present,  but more of an  unwanted one.

The tablet changed many people’s perception of mobile computing and playing media on the move. The iPad became the must have device and although many competitors appeared, few could compete with the Apple offer. However, as with all technology the serious competitors are now muscling in on the market and starting to redefine the tablet from their own perspective and in doing so offer real alternatives. Samsung clearly offer convergence from the smartphone through the tablet, ultra book, laptop to the TV, their pen technology is a clear winner and they continue to grow across all devices.  Microsoft have thrown the hat in the ring with Windows 8 and RT plus Surface. It is questionable whether Surface, as it stands today, will attract enough with its limited offer. However, Windows 8 is the key component and if as expected and by being pre installed and performing, it starts to dominate the ultra book and laptop market, it could strongly influence the smartphone and tablet markets and become a serious third player.

They are wild cards out there and Amazon’s holistic offer and Fire is a serious contender. They may appear to be ‘cheap and cheerful’ tablet, but by locking in purchasing benefits to the devices they will remain a contender. However, it is harder to see Nook and Kobo in the same league and playing catch up may be a step to far and maybe this is where they fall out. Nook and Microsoft could re-emerge, but it is hard to see how that will happen in the short term and today is about short term plays.

The real markets to watch are at either end of the mobile platform not in the middle. The Ultra book offered so much, but was upstaged in yesterday’s beauty contest by the bikini clad iPad. The ultra books were over priced, still wedded to the laptop form and burdened with legacy operating systems. However, we are starting to see real changes here with the emergence of hybrid convertibles – an ultra book with full office and PC strength, which flips into a tablet. The Surface was a perfect form, but unfortunately limited itself to the tablet internals. Samsung and others are close to delivering the answer and when it happens and at the right price then the market will change and business not consumers will drive that change. There are enough players out there to fix the price issue and that need to create the right device to ensure their own survival.

At  the other end of the sandwich we have the smartphone, which is no longer a mobile but a computer in the pocket. The Samsung Note II is a classic forerunner for what must happen next – the convergence of the mini tablet and the smartphone. Apple must have one in prototype and finally drop this nonsensical division between two devices, where the only real difference is the ability to make phone calls! The real challenge is getting that something extra inside the box. Voice appears to be a given and Apple have the lead there, whilst Samsung’s pen is both incredible to use and they have the lead there. We see these being the two contenders today and because they play on all the device platforms, they well positioned and are the clear favourites to succeed in the short term.

However, the other emerging driver is the cloud and the opportunities to de clutter the device of everything but the basics. Those ebook readers that boasted they could store thousands of books are fast becoming dinosaurs living in a forgotten time and saying the wrong message. We are now moving to  an on demand 24 x 7 with access to everything and subscription services replace outright purchases for what is an access licence after all. These change not only how we consume media, interact, purchase services but the devices themselves.

Finally, we have the ‘Ray Hammond’ mobile server that we wrote about earlier this month. The smartglasses are almost here, the intuitive gesture detection is still in the labs, the Bluetooth and wi fi connectivity is here. It’s now more about the packaging and creating consumer demand that will be the challenge.

Sacha Baron-Cohen in accepting his Lifetime Comedy Award this week, did so as his character Ali G. He took a humorous retrospective look at the changes since he last played Ali G some ten years ago, ‘there was no iPhone, no iphone 2, no iphone 3, no iphone 4, no iphone 5 and I wonder what is next?’

Perhaps its time for a step change in 2013?      

Nook , Nook, Please Let Me In

We have already asked the question about Barnes and Noble’s international grand venture and whether it will even hit the consciousness of the UK consumer, let alone pass the ‘so what’ test?

As Frankfurt and the Christmas season nears we seen some more of their approach top the UK which is as far as we know still the limit of their ‘international’ programme today. They have announced two further stores Dixons, which is the High Street little brother of yes, PC World, which is out of town shed outlet of the same group Dixons Retail. So some would suggest they have not two but one additional retailer. The deal will not be exclusive so as with their other deals they will find themselves in a beauty contest with all the other wannabees but today with as much consumer awareness of their brand as the best Korean model.

Barnes and Noble have also announced their video offer of blockbuster movies, classic films and original TV shows from major studios including HBO, Sony Pictures Home Entertainment, STARZ, Viacom and Warner Bros. Entertainment, plus favourite movies from The Walt Disney Studios.  They also will integrate a customers physical DVD and Blu-ray Disc content and digital video collection through UltraViolet™. This will enable customers to link their UltraViolet accounts to the NOOK Cloud allowing them to view their content  across NOOK devices and platform. This again in true Barnes and Noble fashion is behind their competitors integration and although competes well with the likes of Kobo does little against Amazon. Would you put your video library in the hands of someone who is not really in that business, is not the market driver or leader in any digital media sector? This may carry more clout if they were still going to launch NEWCO with Microsoft, but this appears to be very quiet today and it is somewhat illogical to launch Barnes and Noble Nook ventures without a big partner at your side.

On a positive note Barnes and Noble did name Patrick Rouvillois vice president and managing director of its international business. Rouvillois was previously chief marketing officer and head of e-commerce for Carrefour , the No. 2 global retailer with 15,000 stores in 30 countries. Prior to that , he was Executive Vice President of Consumer Marketing for Orange Group, one of the world’s leading telecommunications operators, responsible for consumer propositions, product marketing, pricing and commercial investment optimization. Before joining Orange, Mr. Rouvillois has held positions at Vivendi Universal Net, where he managed a content aggregation portal for Vodafone and SFR and also spent six years at The Boston Consulting Group in Europe and Oceania. He will report to Jamie Iannone, President of Barnes and Noble digital products.

Rouvillois certainly has the background to make a difference but some would suggest on paper he may be a bigger hitter than the person he reports to and if Barnes and Noble are serious about international he should be standing in his own right.

The big question today is, how Barnes and Noble will define international success and the timelines they have identified to achieve this? It is often easy to get others to carry your devices, even relatively easy to sell them at a low price point, but it is far more difficult to break into an established market where you offer nothing different other than US reputation as number two.

Related articles:

Aug 12: Nook Nook Who's There?

Aug 12: Barnes and Noble, Nook and NEWCO Come to UK

July 12: Living In A US Centric World?

April 12: Microsoft return to eBooks via Nook

Jan 12: Do Barnes and Noble Have a Digital Strategy?

Apr 11: Nook Stops Short

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.

Are ABA's Members Ready For Another eRelationship?

The American Booksellers Association (ABA), has already walked away from one ebook marriage it said would solve all its members wishes and no sooner has the divorce papers been filed , it now appears to be teaming up for a new marriage based on Kobo. Is it a shotgun wedding , a marriage of convenience, or simply a marriage on the rebound?

The last relationship engaged with close to 400 stores but failed to work out. Now the same stores have another ‘arranged marriage’ with yet another suitor, but will this fair any better?. Maybe the Google relationship was destined to fail once the honeymoon was over and the reality sunk in. Just as the BA may have discovered in the UK, Google may have had different ideas about what they wanted, or expected from their partnership.

So stores are expected to simply flip from Google to Kobo , start to sell not just ebooks but Kobo devices and become overnight Kobo disciples. The ABA may be excited, Kobo may be excited , but are the stores really geared up to support it? 

In early 2011 we wrote two articles on the UK’s bookshops approach to selling ereaders and ebooks, we have since seen WHS dump Kobo POS displays and await the Waterstones  Amazon in store experience. We accept that Barnes and Noble offered a good in store experience but they were committed and it was their own show.

We must remember that the ABA stores will be basically selling other’s devices and the files will be sold by the service provider. They will not control prices, nor the overall experience and they will receive a commission for what some suggest is potentially handing over their customers to others to exploit. Some would say that it’s like inviting the fox into the chicken hut.

We would ask many questions, some obvious others not so and presume everyone signing up will have the answers:

·         Tax who owns the problem/issue and are equipment sales separated from file sales?

·         Are equipment sales based on sale or return or firm?

·         Who trains the in store staff?

·         Who provides the customer service first and second lines and is it online, offline or by retailer

·         Do stores train all staff or selectively will there by an expert on stand at all times?

·         Will stores sell proactively or passively?

·         If pricing is set by provider how do stores handle competitive questions?

·         DRM is a challenge, but can the customer play a kobo file on kindle, Nook, Sony or must they have a Kobo device?

·         How will staff handle questions about Google?

·         Must customers buy all their files for same store and if not, where else can I buy them and will they then appear as disparate accounts within the Kobo platform?

·         Who owns the customer data?

The important question is, how do stores handle questions about Kindle, Nook, Apple, Sony etc?

These and other questions can be thought through and can be negated, but we must remember this is not within one organisation, but across many different ones and the consumer is likely to be exposed to multiple experiences.

However, the experience maybe tested further with another ebookstore , Zola, setting its eyes on the same market opportunity and claims to be already in discussion with the ABA and have 50 stores signed up. Others such as Copia also can’t afford to be left outside. 

So is the KOBO agreement exclusive, or open to all? If it is open to others and how do the ABA plan to level the experience?

We wrote the Brave new World report some 6 years ago and at the time we strongly believed that there was an opportunity for book retailers to join the ebook marketplace. However, apart from exceptions such as Barnes and Noble, few rose to the challenge and those that did often stumbled and instead of collaborating to jointly develop and hone the opportunity, they choose to compete. Some would suggest that its somewhat ironic that they now find themselves at the same place, but without the same control. Instead of rising to develop their own offer, under their associations, they chose to ‘white label’ others with all the implications that strategy delivers. 

Barnes and Noble, Nook and NEWCO Come to UK

How many consumers know of Barnes and Noble in the UK? True those who have been to the US may be familiar with the stores, but in the main the ‘world’s largest bookstore’ has until now operated within the US and is relatively unknown in Europe. Neither is the Nook any better known outside of the US.

So it was interesting to read that they are finally venturing outside of the US and launching their digital Nook platform and devices in the UK next month.

Then we have that very interesting developing partnership with Microsoft and the new venture currently under the wraps of the name NEWCO. This venture should take over the NOOK and campus store business from Barnes and Noble and enable that other perennial latecomer, Microsoft, to get into the ebook business – again.

The challenge is not finding UK retail partners, and money can always be spent to promote the launch but who is the consumer dealing with? Barnes and Noble, Nook or NEWCO and will they have to rebrand if NEWCO happens?

The press release was brief gave nothing but we can’t help quoting from it on the statements on the NEWCO situation and what must be the longest sentence ever written,

Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble's products, low growth or declining sales and net income due to various factors, risk that international expansion will not be successfully achieved or may be achieved later than expected, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risk that returns from consumers or channels of distribution may be greater than estimated, the risk that the expected sales lift from Borders’ store closures is not achieved in whole or part, the risk that digital sales growth is less than expectations and the risk that it does not exceed the rate of investment spend, higher-than-anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, the potential adverse impact on the business resulting from the review of a potential separation of the NOOK digital business, the risk that the transactions contemplated by the partnership with Microsoft to form Newco, including with respect to any spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco, are not able to be implemented on the terms contemplated or at all, the risk that the transactions do not achieve the expected benefits for the parties. 


An interesting piece in bloomberg on the relationship and Barnes and Noble -  Barnes & Noble Investor Elation With Microsoft Deal Fades

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? 

Microsoft Return to eBooks Via Nook

The breaking news that Microsoft have bought heavily into Barnes and Noble to create a new venture which encompasses their Nook, digital and college business is shall we say a surprise and a significant move for both parties. Microsoft will invest some $300 million for a 17.6% stake in the new venture which will be valued at some $1.7 billion.

Obviously, the dust has to settle and much has to be revealed, but it has obvious to many that B&N needed a partner with clout and deep pockets and Microsoft certainly can bring that to the table, but they also needed a global partner and Microsoft ticks that box too. Microsoft also needed to get back into the mobile marketplace but had previously walked away from ebooks at  that famous BEA in 2008 when they literally dropped Windows BookSearch.

So B&N divides, its business gets some cash, raises its valuation and gets a big brother with only a minority stake today and potential for more investment in the future. That is certainly good business for B&N and one which must seem like Christmas to their investors.

The questions are now about speed, focus and how Microsoft’s interests are projected onto an Android platform. We still have to see how the international offer develops and the sixty four dollar question remains over Microsoft’s sticking power and whether if the going got tough they would simply walk away again.

US Survey Says… ebooks readers read more and much more

We know that readers are reading more ebooks in the US, but now new research gives us some interesting insights into their behaviour and their use of digital and physical content. Some 30% of those that read econtent claim that that they now read longer, with some 41% of tablet readers and 35% of ereaders readers claiming to be reading more. The research claims one-fifth of American adults (21%) have read an e-book in the past year, which is an increase of some 4% on those who, in December, claimed to have read an e-book in the previous year. This is probably understandable given the amount of devices that were received as presents over the Holiday and Christmas period.

Is it surprising that those who read ebooks, read more books than those who don’t have devices? One would assume that those who have bought the devices would have done so to read and therefore would be readers and gifts would be probably given to people who are know readers, so it’s not surprising that they have used the devices and even have read more as they go through their early adoption phase. The figures make one assume the survey demographic chosen are heavy readers, but the figures given are that the survey included readers who had read; only 1 book (8%), 2-3 books(17%), 4-5 books(16%), 6-10books (19%), 11-20 books(18%) and over 20 books (22%).

The first interesting point is that that those of who read an e-book in the past 12 months, some 42%, did so on a computer. This compared to those who used an ebook reader (43%), a smartphone (29%) and a tablet (23%). This issue is however is whether the high level of computer reading is down to transition and adoption of new devices and if it was consistent over the full year.

The next interesting point claimed by the research was that some 88% of those who read an e-book also read a printed book. Of those surveyed, 14% claim to have read both printed books and e-books. Overall, over the year, 72% of adults surveyed read a print book, 21% read an e-book, and 11% listened to an audiobook.

The research also looked at the reading behaviour and why readers read ebooks. Again we could suggest that 2011 was a transient year in the US and although the research claims book readers are more likely buy their most recent books (48%), rather than borrowed them (24%), or loan themt from a library (14%), we have yet to see the real loan, rental and alternatives such as ‘on demand models’ in the market. DRM still remains a borrowers and consumer nightmare and today will constrain borrowing. However, it was interesting that those how read both physical and digital books preferred e-books when they sought convenience to buy quickly, when travelling or commuting and when they wanted to review a wide range of titles. As for that favourite reading place the result was split with 45% prefer reading e-books in bed, while 43% prefer print.

Book recommendations clearly should be a wake-up call for all those that believe that we are still in a mass market community. The vast majority, some 81% of ereader and tablet owners, get recommendations from ‘friends and family’. This also applies to non ereaders surveyed (64%) too. On line bookstores and web sites were high influencers with 56% and 28% respectively but physical bookstores and libraries had far less influence (31% vs 23%) and 21% vs 19%) respectively. Social networking and usage of friends and family is an obvious pivotal key for all.

The main reasons given by those who do not own ereaders and tablet devices are; they don’t need or want one, they can’t afford one, they have enough digital devices already, or they prefer printed books. Not exactly rocket science but confirms what we probably already knew. The survey found that 19% owned a reader and same number owned a tablet but it didn’t identify how many owned both. Of the tablets 61% were iPad and 14% Kindle Fire 14% with the Nook only registering 1%. Of the reader devices Kindle were 62%, Nook 22% and Kobo and Sony only 1% and 2% respectively. Of the adults who did not own a tablet 10% plan to buy one in the next six months and a further 8% eventually, whilst 8% who don’t have an ereader plan to purchase in next 6 months and 5% eventually. This would indicate that there is still significant device growth and that Amazon is very well positioned in both segments to achieve further growth in the US. What it clearly says also is that the device battles are clearly down to Apple versus Amazon today. How that may shift over time will be interesting to watch and also what happens with the great unread will be even more interesting to monitor.

It was a pity that the question of DRM appears to have not been covered, along with the question of perceived ownership versus licence and the lack of ‘first sale doctrine’. These are perceived consumer issues and this would have been a great opportunity to gauge consumer perception.

Finally, the survey also claims that although econtent is relatively easy to find, 23% of those who read ebooks, digital newspapers, magazines, etc. can’t find what they are looking for or its not available in the format they require it. Although the detail is somewhat ambiguous the message should be noted.

The research may not be news to many but what is important is that we monitor these social changes in reading habits and understand the market trends.

The research was prepared by Princeton Survey Research Associates International for the PEW Research Centre’s Internet and American Life Project and the Gates Foundation. The project was underwritten by the Bill & Melinda Gates Foundation.

Does The Kindle Touch Pass the So What Test?

Amazon is launching its Kindle touchscreen e-reader in the UK, Germany, France, Spain and Italy on 27th April but there is still no news on its Fire tablet.

The Kindle Touch will not be discounted with adverts and users will still not be able to lend ebooks as in the US. So for some £20 more you can touch but no lending, so is it worth it when the existing Kindle does the basics well and we all know Fire will arrive soon?

The touch device does have a new web browser, which works with wi-fi and lets users to find related passages in a book as well as more detailed information from Wikipedia and Shelfari. It also allows books to be read in both portrait and landscape mode.

So maybe it’s a buy for those who desperately need an ereader and can’t wait for Fire, haven’t heard of Barnes and Noble and its Nook, can’t work out what WHS is selling amongst the ‘stack ‘em high’ shelves, don’t believe Waterstones can or will effectively deliver digital and don’t want the often redundant luxury of the iPad.

Are Sony's Days in eBooks Numbered?

Sony once aimed its sights at being a big player in digital publishing. It created its own ebook format, was one of the major drivers behind Adobe updating the neglected ACS3 with the ACS4 DRM service, were the early backers of the ePub format and of course introduced several eink ereaders. It even entered into one of those ‘exclusive trade deals’ with UK retailer Waterstones. However it failed to deliver the list, didn't not develop a plausible platform and lost the eink world to Kindle. Some five years on and how times have changed. Sony were around at the begining of the digital reading chapter, but this may be one ebook that will remain unfinished and is in danger of slipping from the front list and going out of digital print.

Sony’s problems would be small if they were just about their ill fated venture into ebooks. However, today Sony have just announced a 159 billion yen ($2bn) net loss for the last quarter of 2011 and have slashed their full-year forecast to a loss of 220 billion yen ($2.8bn). Hard times, require hard action and Sony have reacted and announced that in April ex-PlayStation exec, Kazuo Hirai will take over from Howard Stringer as Sony president and CEO.

The reasons for the challenges facing Sony are as many as the different markets they deal in. They include the implications of the losses it made on selling its S-LCD display shares to Samsung. Also there is the cost of the migration of Sony Ericsson back to Sony with the associated creative accounting on deferred tax assets and a fickle electronics market,where Samsung have eaten into Sony’s once strong market share and it has dropped some 15.7% in the last quarter. Then we have the floods in Thailand a strong Yen and a sales drop of some 24.4% in its consumer products and services sector. Even Sony Music and Sony Pictures didn’t lift the gloom with Picture only registering a modest profit and Music seeing a sale year on year decrease of some 11.7%.

Its hard to see Sony making a comeback into digital publishing and its offer would require some serious investment and change of fortunes at a time when the business obviously reqires to focus on its core operations.So as Waterstones look set to announce another partner is Sony's ebook venture at the end of the road?

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)

Digital Content Is Different

Yesterday we sat down with someone who is starting a new digital venture. As we discussed the potential, the market, the options and much more, it became apparent to us that there are a lot of things that applied to the physical book market, that simply do not apply, or should be questioned in the digital market. Walking blindly into the digital world assuming that all remains the same is in danger of establishing a set of urban myths that we have written about in the past but that continue to dog all our thinking and real digital opportunities.

We would like to take the opportunity to offer a dozen points as to why we believe digital content is different.

1. Size - 256 pages and x thousand words were mere economic parameters that prevailed and mattered in the physical world. They become meaningless and irrelevant in the digital world. The author is free to write as little, or as much as they feel appropriate and that convey his story and that the consumer can digest. One would argue that small starts to become beautiful and large may be present a page turn too many. Short stories present a great digital opportunity, but may only happen if they are thought through economically and cost is taken out. After all many successful authors started their writing with short stories and articles. We still have still to adopt and adapt the Keitai model in the West, but if Dickens could write and sell by instalments why are we waiting for the finished tome?

2. Price – Some would suggest that prices must relate to the physical book and that any major price reduction on digital could cannibalise physical sales and the market. Some also suggest that digital is a huge investment and that the costs of the physical product are still incurred in the pre production and marketing activities. The problem is all too often this thinking is based on ebooks being just ‘another rendition’ and that each must stand economically on its own two feet. Why aren’t ebooks ‘given away ‘as aperitifs, lost leaders and to stimulate and drive physical sales? Why doesn’t digital content adopt simple price points like other media? Finally, digital content must be different as demonstrated by the differentiation given to it by the vast majority of governments.

3. Age - The consumer may want the ‘latest book’ but this is often driven by media and promotion. How many consumers do you see opening a book at the copyright page to check when it was published before they buy it? Amazon’s advanced search has a publication date field which is missing on The Book Depository, Waterstones and Blackwell’s who has a ‘published between two dates’ option. We may be thick, but we couldn’t even find an advanced search at Barnes and Noble or Kobo. The eWorld now has to compete with, not just the remaining books on the shelf, or in the store, but all books ever published.

4. Rights - When you buy an ebook, it may be literally just for Christmas! eBooks do not have a second life, no first sale doctrine and being able to lend them to friends. Therefore, to say they are merely just another rendition is like saying there is no difference between a taxi and a car, both get you from A to Z, both are driven by an engine but both are very different .

5. Media - Today we see books, music, film, games, being offered separately on some sites and collectively, as a one stop media shop on others. Dedicated media offers will work as long as they offer the consumer value, but when the vast majority of digital media is now supplied through white labelled channels this makes the one stop shop attractive. As some start to ‘enhance ebooks’ the synergy between media sectors could further erode and the one stop shop appear even more compelling. As we have seen it isn’t difficult for supermarkets, associations or in fact anyone to sell white label stock off their brand with no inventory cost.

6. Taste – It used to be said that you could judge a person but the books on their bookshelf. However, when their collection is no longer visible, no judgement is possible. Some would advocate that this merely flips into a social network opportunity, where readers share their book experience, favourite reads and what they have bought. However, we would suggest that this is a different and ignoring the hype has still to be proven between strangers.

7. Device – The ebook evolution was born out of a combination of digital content and reading devices both being widely available. Today we have now passed that stage and replaced the device with a device agnostic platform. Importantly mobile devices have not stood still and we now have smart phones with sufficient power, Amoled screens, apps and broadband connectivity to challenge ereaders, games machines, laptops, and even the emerging tablet itself. Multi media devices have arrived to your hand and technology is going only one way – smaller, cheaper and smarter. We would suggest that the ereader device is fast becoming irrelevant.

8. Leadership – The largest players always dictated the game and the book market has been no different. Amazon has established itself as the largest driver and influencer in the market today and will be for some years and the largest retailers are no longer defined by square footage or constrained physically. Will tomorrows leading retailer be that with the best mailing list and management? As the retail internet offers become somewhat indistinguishable does this open the door for smaller specialists and innovators to survive and thrive? We also assumed the largest publishers will drive the market but is this a given? Will again the innovative and agile score over those who will find it hard to tack and change course in what will be choppy seas?

9. Re reading the novel - People often say that they re read their favourite books and its true, but they often do this after a long period of time. Guess what, the ebook format, device, technology may have changed by the time you get round to re reading it! It may be like going back to cassette, vinyl and eight track.

10. Metadata – We used to cringe when the dreaded ‘m’word was raised and often found ourselves in the uncomfortable position of having to use a word which itself was an instant turn off. Great strides have been made to rationalise the communication between trading partners and improve the physical supply chain and standards and metadata where pivotal to this. However, when you have all the content digitalised and the associated material and information is fully indexed the game starts to change. Some 80% of what you need to know about the book is retrievable from the digital content itself and some other information exists in real time. This must change how we communicate and what we communicate as we move from a transactional and physical supply chain to one that is driven by media content and social interaction. The library world has finally accepted that the old MARC record is past its sell by date and maybe it will be followed by others we regard as essential today. We now have to radically rethink information, access and retrieval and equally who is best to lead us through this revolution.

11. Rental and the public Library - We strongly believe that ebook sales are going to move from downloads as we know them today to online and cloud based rentals. Netflix, Last FM, Pandora and our favourite Spotify are among those leading the way. Many may see this as a huge threat but is this real or more based on the challenge it poses to the existing business model . We have written much on this radical change and on the redefinition of the library tomorrow. Some may resist the move to online and rental, but it will happen and it may well not be a top down driven but a bottom up revolution.

12. External agents –5 years ago, when we wrote the Brave New World report, we recognised that the digital world was going to be heavily shaped, not from inside but from the outside. Today we have all seen the impact that the likes of Amazon, Apple, Google and others continue to have on the market and the evolution of digital publishing. These new entrants have bothered to invest in the physical channel and when some suggest that they should acquire Borders, B&N etc the answer is obvious and negative.

There are many thoughts we all have as to how the market will evolve. It is important that we start to see digital content as different and free it from the physical book spine that will continue to choke it.