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Friday, January 22, 2010
Amazon Kindle has always been an odd duck of a platform, a proprietary e-book reader that bundled wireless access with a device that offered a very limited range of functionality. But as the first major e-book platform with an integrated ecommerce function, it gained early followers and a lot of media hoopla. Enter Apple, which is trying to become the default delivery mechanism for a galaxy of mainstream media content sources via its soon-to-be-released whiz-bang iSlate platform, including book content from Harper Collins. All of a sudden last year's bright, shiny thing from Amazon seems not so bright and shiny after all, prompting a late move by Amazon to open up its Kindle platform more aggressively to software developers.

As noted by CNET, though, this is way too little at a time in which software developers are inundated with platforms begging for appplications to make them stand out from the crowd. To boot, premium applications will have to pay a healthy chunk of their revenues to Amazon, presumably to cover the cost of downloads, which is bundled into the Amazon service from a consumer perspective. Kindle readers on iPhones and other platforms may help to buoy Amazon's overall e-book strategy, but it is highly doubtful that the Kindle itself has much of a lifespan as a multi-functional content delivery platform. In turn, this puts pressure on Amazon's overall sales picture, as a generation attuned to iTunes downloads may be more willing to add books to that list of items to cram into their portable devices than to shift to downloads on the Kindle platform that's centered around yesterday's content formats.

The vision of the Kindle was myopic from day one, too bent on luring timid publishers into the e-book era before others became premium e-book download kings. While this did leverage Amazon into an early advantageous position for e-books, its focus on a pioneering device locked it in to formats and concepts that reflected the fears and limitations of the book publishing industry more than it did the realities of a Web-enabled world of a multitude of content formats, publishers and delivery channels. Its onerous cut of Kindle e-book revenues also gave publishers a good reason to work with other platform providers to get a better piece of the action. The net result is that Amazon is in strong danger of becoming a book distribution channel that fails to lock in a new generation of book readers on emerging mobile platforms.

With Apple setting itself up as a primary download competitor, the question becomes whether Amazon wants to continue to try to be the Microsoft of e-books via its proprietary approach or to become the Google of e-books in response to this challenge. In other words, is Amazon willing to admit that it made a huge mistake in not aligning itself more with a cross-platform, open standards approach in preparation for the inevitable platform battles that required stronger technology partners? There may not be a black-and-white answer to this question, but clearly Amazon needs to focus more on channel strategies and content publisher relations than on multi-function platform development. This is especially important in light of media companies that manage multi-channel products - "Avatar" lives as a movie, as a game, and, inevitably, as videos, books and so on. Amazon should be focusing more on the question of how to be a download king for content of all kinds rather than a gizmo king.

The logical leading partner in this would seem to be Google, with its emerging Android and Chrome OS platforms, options that weren't on the table in any serious way a couple of years ago but which are now coming to market aggressively. Microsoft will certainly be in the mix also, but it's playing catch-up in mobile platforms at a time in which Google is preparing to soar past many established vendors with its cross-platform Android operating system. In February the Barnes & Noble Nook e-book reader will be the first model delivered to consumers based on Google's Android operating system, opening the door to thousands of applications that could be integrated with e-books easily on that device, as well as on other Android-based devices. While there are notable flaws in the Barnes & Noble strategy - too few books, no reader yet for other mobile devices - its use of the ePub standard for its downloads and an incorporated lending model is closer to what will help book publishers to integrate with many other kinds of content and platforms quickly and profitably.

Book publishers have, predictably, dug themselves into an early hole in the race for digital markets by rejecting standards that would make cross-platform use of e-books a simple thing for consumers. One of the great things about books traditionally is that they didn't require a special technology to use them. Why would publishers go out of their way to balkanize their market into dozens of different proprietary formats that can only discourage people from picking up books in general? While it will take some time to undo this damage, there is still time for book publishers to avoid the mistakes of the music and video industries and decide on formats that will encourage cross-platform use of e-books as simply and inexpensively as possible and which encourage developers to create functionality around e-books that enhances their value and their integration into Web-based content, collaboration and community services.

While there may be some sucking up of pride in Amazon's C-suite to make these things happen, they are absolutely necessary if Amazon is to extend its early ecommerce successes based on Web standards into mobile markets. Perhaps Amazon forgets that if it weren't for Web standards, the world would not have discovered its leading ecommerce services in the first place. Amazon needs to re-discover its appreciation of the power of Web-oriented industry standards for e-books and re-establish itself as a company that can carve out the broadest opportunities for content ecommerce via the widest array of content platforms. While this may not always sound like music to the ears of its publishing partners, it's the only way in which it will be able to offer a sound alternative to media companies that are locking themselves into proprietary platforms that will inevitably place Amazon in an awkward relationship with them. I don't put much hope on this happening in the short term - some changes at the top in Amazon may have to occur for this to happen - but it's likely their best road to success in the years ahead.

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By John Blossom - posted at 11:10 AM
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Thursday, May 07, 2009
The landscape of Europe is dotted with the ruins of hundreds of castles and city walls dating from the Medieval era of feudal rule, when local kings, dukes and other land-owners defended their claims to farms and forests through their ability to repel invaders from behind their castles' walls. Castle defenses worked reasonably well for several centuries, but eventually the use of castles as power bases became obsolete. Was it improved war technology that made castles charming antiquities? To some degree, perhaps, but the larger force that made castles irrelevant was the rise of a new way to store and protect wealth: banking. Once the rise of wealthy merchants made the marketplaces of towns and cities the real battlefields for proving out power, castles protecting farmlands became far less important for securing power than having an economic system that could enable efficient trade. Yet those old castles still stand, and, darn, they do look rather nifty even today.

Fast-forward to 2009, as Amazon introduces its Kindle DX, the latest iteration of their wireless ebook reader that offers a larger screen with eInk technology. Just as those kings and dukes were thrilled to build ever-larger battlements against their enemies, publishers are flocking to the Kindle as the wonder machine of choice, now with a screen size that lends itself to larger materials such as magazines and newspaper articles. With a USD489 price tag, the Kindle DX is hardly an economy model digital device; in fact, many new netbooks with similar screen sizes go for hundreds less and offer color displays with Web and PC functionality. But as the copy from the Amazon catalog page reminds us, this new Kindle is slim, "Just over 1/3 of an inch, as thin as most magazines." Why even compare a Kindle to a netbook when it offers such obvious advantages and comforts to print readers? And if the price is a little to steep for some people, a few of them may be able to rejoice (a little): some major newspapers such as The Washington Post, The New York Times and The Boston Globeare offering a discount off of a USD400-plus annual subscription to their papers via the new Kindle - if you live beyond the delivery range of their paper editions. This new-fangled technology does allow some miraculous breakthroughs, doesn't it?

It's not as if the Kindle does not have its own unique virtues - or its own promising revenue streams. Sales of smaller Kindle units have been brisk, and the affluent older people buying them online are also fueling skyrocketing ebook sales. Silicon Alley Insider notes that Amazon CEO Jeff Bezos brought a stunning statistic to light during the Kindle DX intro show: when Kindle-formatted books are available on Amazon, about 35 percent of those books' sales are now through Kindle editions. There was no breakout as to how many buy a print edition as well, but the chart behind Bezos at the intro showed this percentage hockey-sticking from only 14 percent in February of this year. Based on my own experience with getting my Content Nation book into a Kindle edition, much of this growth is actually publisher-driven: titles are being pushed into Kindle format as quickly as Amazon can handle the conversions and postings. In a year in which print book sales are sluggish, the reduced price of Kindle-edition books offers publishers a discount-bin pricing strategy with zero inventory or print-on-demand cost exposure.

In other words, in a year in which the slowly-moving denizens of print are trying to salvage some semblance of sensible quarterly earnings, the ability to charge a premium for access to content on electronic platforms - or any platform, for that matter - has to be a strong plus. Yet in doing so many of these publishers continue to invest minimally in developing a more competitive stance in the more competitive markets of online publishing that are able to reach younger and broader audiences far more effectively than Kindles. Kindle is attractive to newspapers and magazines as a platform that can be used to appeal to older and more affluent audiences who are the targets of their advertisers, a fact that fuels hopes that a larger Kindle will enable them to sell display ads at good rates for this elite group. Yet where will tomorrow's older and more affluent audiences be congregating? Kindle, we hardly knew ye.

Kindle is an important content delivery platform that has enabled the book industry to begin its slow transition to the online era and that has offered a shelter for premium content sales in the face of an online content industry that largely baffles most publishers. Yet for the most part it is a transitional proprietary platform, much as Prodigy, Compuserve and America Online were proprietary transitional services for premium online content prior to the emergence of the Web as a dominant content delivery network. Publishers are welcome to continue to build short-term profits on Kindle as part of their transition away from the printed versions of their content, but the rush to Kindle at this very late stage in the online game is ultimately yet another indication that many publishers are ill-prepared to compete in the Web world of highly distributed content production and aggregation.

If there were a commitment by publishers to use some significant portion of their revenues from Kindle sales to invest in making a more effective transition to Web revenues, then perhaps there would be reason to think that Kindle will represent an effective transitional strategy. But with a soft economy making profits in publishing more elusive, it's more likely to turn into a strategy that yet again kicks key decisions about Web strategies down the road. In the meantime billions of people around the world are going to be equipped with very affordable netbooks over the next few years - many of them being about as slim as a magazine, no doubt.

My book royalty checks say "Thank you" to Kindle for the time being, but underinvestment in advanced Web strategies is making publishing via traditionally print-oriented publishers an increasingly unattractive option for authors trying to reach both mass audiences and affluent audiences. The skyscrapers that house major media companies will stand for many years, no doubt, just as Europe's feudal castles still stand today. But unless those companies start to gear themselves for the reality of a market-driven content economy, instead of a property-driven content economy, we may see those glass buildings as tourist attractions displaying the hubris of a bygone era sooner than one may imagine.
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By John Blossom - posted at 12:46 AM
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