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Insights and headlines from Shore analysts on trends in enterprise and media content markets.
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| Friday, February 26, 2010 |

 I just sent off some responses for an email-based interview as background for an upcoming article on ebooks in a magazine. I thought that I would share them with you in the raw here to open a discussion on ebooks that we can continue on Buzz or via the comments section of this blog. What are your thoughts about how publishers should approach ebooks?
Questions and my responses:
—It seems like the specifications for e-readers vary widely from device to device, and this year’s offerings look just as varied. Are there particular capabilities or specifications that publishers are really looking for from e-readers right now? What would an e-reader “silver bullet” device need to be capable of?
Some publishers are beginning to consider new content and features for ebooks, such as video interviews with authors and "hooks" into Web content such as social media services. In some instances publishers are hoping that such value-add content may allow them to command higher prices for ebooks than the prices that have dominated for ebooks from major publishers since the introduction of ebooks on Amazon's Kindle platform. To this end a platform such as Apple's new iPad is attractive to publishers, as it offers a device that can work well as a general computer and as a display mechanism for rights-protected content. But there will be relatively few titles that will be targeted for such enriched content. So what is the "magic bullet" platform for ebooks? The one that's been out there for more than fifteen years, I would argue: the Web. Ebooks will do best when they can be linked into Web content effectively, not necessarily on the device on which we like reading book content the best. With dozens of new kinds of mobile devices being introduced every year, now, it would be counterproductive for book publishers to try to target only a handful of devices for commercial success. It's best for ebook publishers to enable their content to "play well" on as many devices as possible and to ensure that what a reader does on one device can lead to a valuable experience for the same person on other devices that they use. For example, if I have just finished reading a chapter in a book about the state of business and economics in China, that's a great opportunity for book publishers to be able to apply metadata and keywords relevant to that chapter to other services that I as a reader may use. Some of those may be integrated into the ebook reader directly, but I'd probably appreciate them in a private email or messaging service delivered on a platform where I can consume or purchase other forms of content easily. Publishers should think of the ebook itself as just one item in a systematic approach to engaging audiences interested in specific authors and topics. Some of that approach may be delivered best via a publisher or a bookseller on their own portal, but their metadata may lead to rich experiences on partner platforms as well, triggered by contextual advertising network technologies or other technologies.
—On a related topic, are there specific capabilities that consumers are now looking for?
One of the key items that consumers ask for consistently is the ability to call ebook content their own and to be able to manipulate it the way that they would other forms of electronic content. Being able to cut, paste, share and annotate book content is key to enhancing its value in the eyes of book-reading audiences. These types of features, though, are the ones that publishers are least likely to offer to consumers without some form of rights management technology controls. While publishers have a right to defend their copyrights effectively, they have to consider carefully how content reuse and sharing can enhance the value of their products. O'Reily Media, for example, is pushing to have DRM controls removed from ebook content that they distribute, so that it can be used more effectively in collaborative environments. Eliminating DRM can also accelerate the ability of ebook content to be used by its purchaser on any number of technology platforms. This will accelerate also the likelihood that someone will actually read a book that they've purchased. In doing so, that reader is more likely to follow up with more purchases of similar content or value-add content associated with that title.
When you think of it, a paper edition of a book has nothing more than the copyright symbol to protect the legal rights associated with its content. Why would publishers want to frustrate consumers who have already demonstrated via music download purchases that they need the ability to transport content that they've purchased to new types of devices easily without the frustration of dealing with incompatible DRM systems? Ebook services need to enforce copyright but also enable the value of ebooks in as many contexts as possible. DRM services as designed today make that relatively hard to do. What is really needed for ebooks is a built-in ecommerce service that enables both the purchase of ebooks on a person-to-person distribution basis and that enables other types of ecommerce for related content and experiences. For example, if someone forwarded me a link to an ebook for possible purchasing or sharing, I should be able to be presented information about attending upcoming book talks by the author near me automatically on an opt-in basis or related titles or videos that are available. In other words, we can use the offering of content sharing as a revenue-generating experience from many angles.
—Are there any particular e-reader devices coming out in the near future (or that came out recently) that really stick out to you as being potentially influential devices?
Apple's iPad is bound to be an influential ebook reading device, if but because it introduces color formatting to ebooks in a user-friendly design, but I think that the most influential ebook technology will not be any one specific device but the ePub ebook publishing standard. This standard is gaining wide acceptance as a common format for ebooks, although rights management services may differ from publisher to publisher for ebooks published using that standard. Cross-platform standards will help to make ebooks accessible on more devices more rapidly than any one "magic bullet" device can afford publishers. The Nook ebook reader released by Barnes and Noble features ebook content published in ePub format and has been a very popular unit so far. Other devices such as Plastic Logic's Que device are promising advanced touch-screen devices for displaying ebooks and other types of electronic documents, but they are very expensive compared to consumer devices. Probably the most important devices are mobile phones, which are the most plentiful media-displaying devices in the world today. If you can reach book-reading audiences on mobile phones, then you don't have a very effective ebook strategy.
—Are there any specific markets where ebooks have the potential to make a big impact, yet still remain more or less unexplored?
Ebooks open up the possibility of both new ecommerce models and the re-introduction of older commmercial models for books in new ways. For example, in the 19th century it was fairly common for books to appear bit by bit in periodicals. I think that it's worth considering how popular authors may prove to be a source of subscription revenues for book publishers via Web portals for periodicals sponsoring such bit-by-bit access to a book, or even via email or direct downloads onto mobile devices. Ebooks are also just beginning to touch on some of the potential for creating new opportunities in packaging content for educational markets. —Is Apple’s agency model of ebook selling the new standard? Does Amazon have any hope of holding onto its retail/wholesale model, and maintaining control of the pricing of ebooks on its website?
I think that we will continue to see a mix of retail/wholesale and agency models for ebook distribution, but publishers have a lot to gain from the agency model if they choose their partners wisely. Amazon in a sense has an agency model built in to its model in the sense that it enables people to embed "kiosks" for selling books in Web pages. Whether its an agency model or a retail/wholesale model, the important thing for publishers to do is to make people aware of books in as many contexts as possible where people are likely to have interest in purchasing them. Helping Web site developers and individuals with their own social media presences to "dress up" Web pages with information about and from ebooks will get them in front of people at the times at which buyers are going to be most likely to have their attention. —Related question: If the agency model were to become the new standard, what effect would this have on ebook pricing in general? Are ebooks going to become more expensive all around? And would higher prices benefit the industry in the long run, or potentially harm it?
Publishers are looking for better margins and retail prices from ebooks in general. While the agency model has been held up as a tool to enable better prices and margins, it's not clear that enabling publishers to set their own prices via the agency model is going to support prices and margins in the long run that much better than the retail/wholesale model. The agency model also opens the door to price competition between publishers, as they seek the right balance between unit sales and margins. So it's possible that what we'll see in the agency model is a handful of books at higher price points and a majority of books at lower price points. The main problem that book publishers face is not competition from Amazon or ever other book publishers but rather content that's been born on the Web - including ebooks that have been developed through online services. By managing information about what Web-native ebook content is most popular, this new breed of publisher may develop to become "good enough" alternatives to major publishers that many ebook consumers will be glad to consume their ebooks at price points that will be much lower - and, often enough, better integrated into online content. I think that higher prices via the agency model are fine for established book publishers in the short term, but if they don't use those improved margins to invest heavily in digital-first marketing strategies then they are going to squander the real opportunities to develop profitable ebook publishing strategies for the long run. —It seems like the multiple competing mp3 marketplaces quickly collapsed into just two or three players as the digital music market matured. Are we going to see the same thing happen with ebooks?
Just as the commonly accepted MP3 file format flattened out the music player marketplace, so will the ePub format make it harder for devices to develop proprietary appeal based on file formats alone. In the long run that's a good thing for publishers, since it means that ebooks will be useful on billions of devices rather than millions. Book publishers need to be ready to accept that this is beneficial and to prepare revenue models that are designed to maximize the benefits of rapid and broad dissemination of ebooks, taking into the account the potential power of viral marketing. What could be better than to have someone chatting about a book that they loved at a social gathering and to enable people who hear their praise to experience that book in part immediately via a tap of two mobile phones, as used in the Bump mobile application? Book publishers need to trigger sales based on social interactions far more aggressively - search alone cannot help them to build online revenues effectively.
—E-Ink, color LCD, and other display techs like Pixel Qi: what are the pros and cons of the various display technologies? What seems like the most likely way forward for the e-reader industry?*
While eInk has definite advantages under specific circumstances, such as bright sunlight and limited battery recharging opportunities, the increasing life of mobile device batteries and increasing efficiencies of backlit touch mobile displays are making eInk increasingly a niche device play. The real problem with eInk and similar technologies is not the technologies themselves but the demographics of the audiences that they serve. eInk-like technologies are oriented towards people used to print materials. The younger generation of readers has grown up rarely using paper for reading in general, so being able to duplicate a paper-based reading experience, be it in book, magazine or newspaper format, is far less important to them. Paper-analogous technologies tend to be more important to publishing executives stocked with employees who have skillsets most readily adapted to print-formatted materials. Touch-sensitive displays are particularly appealing to publishing executives for similar reasons, but these technologies will benefit Web-native materials as much as they will traditional media materials, so there's no strong reason to believe that they can develop unique market advantages through touch interfaces either.
—How do you feel about hybrid devices like the enTourage eDGe and iPad, which position themselves as being somewhere between an e-reader and a netbook? Are one-purpose e-readers like the Kindle becoming a thing of the past, or is there still potential there?
I think that there's still definitely a place for limited-function ebook readers. Books are a very personal experience for a reader. Book readers tend to use books as an opportunity to spend one-on-one "quality time" with a particular author, tuning out other stimuli to concentrate on what is usually a very carefully prepared manuscript. With that said, though, people find themselves shifting from a book-reading frame of mind to their online frame of mind fairly rapidly and fluidly. For these situations, having an ebook on a multi-function platform can be very beneficial to publishers, as it may allow them to take those moments of transition to put their book content into more contexts at a time when a reader is most motivated to do so. Publishers have been drawn to simple ebook readers initially because they feel that this replicates their existing relationship with readers more effectively - and they do, by and large. But in limiting their vision of their relationship with readers to their existing models, in part to prevent duplication or sharing of book content, they have shut out books from the billions of people who interact with content and with one another every day on the Web. Standalone ebook readers will continue to have appeal, but these devices must enable readers to interact with the Web through other Web-enabled devices more effectively. For example, though I may not want to do social media sharing of a passage from an e-book via a Kindle or a Nook ebook reader directly, I should be able to build a queue of excerpted passages that I can then manipulate via a mobile phone application to share with others. Labels: agency model, amazon, apple, books, DRM, eBooks, eInk, ipad, publishers, retail, wholesale
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By John Blossom - posted at 4:37 PM |
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| Sunday, January 31, 2010 |

 My wife was bugging me before Christmas for a nice toy that I would like as a gift, so I thought that it couldn't hurt to get Barnes & Noble's new Nook ebook reader, which, at the time, was due for delivery before the holidays. With a hybrid eInk display for text and Android-driven touch interface for navigation combined with ePub-formatted documents, at least it would be a "walking the talk" gizmo that reflected how I saw what publishers should be doing with ebook distribution.
Unfortunately on Christmas day I got a nice new traveling case and screen protector, but only a placekeeper for the unit itself, which finally arrived the day that the Apple iPad was launched. Hmm, interesting timing. There's really no comparison, though, between the "whats" and the "whys" of an ebook reader like the Nook and a device like the iPad. The nook is all about simplifying and in some ways enhancing the process of relating to printed material, where the iPad is about the multi-sense world of Web media, with books a nice part of its capabilities but one not necessarily likely to appeal to many of its core Web-raised customers.
The Nook definitely has a leg-up overall on its Amazon Kindle rival, in the sense that it combines both the sophistication of a touch interface with a very simple and enjoyable page-turning experience via its eInk interface. I had my doubts about this combination, but, while not perfect, it works out pretty nicely overall. You can swipe your finger across a row of book, newspaper and magazine titles like you would on a touch-screen phone interface, tap once and start digging in. A second or two after your text is displayed, the color touch interface powers down and you're enjoying crisp eInk text, which only improves its readability in bright daylight. That's a boon when on a beach or in a sunny train or plane seat where moving to a better spot is not an option.
The physical controls of the Nook are bone simple. An "on" button on the top of the unit, a bar between the eInk display and the color touch display that activates the touch screen, and page-turning buttons on either side of the screen. The page-turning buttons are just about perfect and a joy to use. Each page-turning button has a pinhole-sized protrusion in its middle, which makes it a no-eyes procedure to get your fingers in the right place, and no edges. It's a seamless case, so there's no place for dirt, dust or sand to get into the controls or to spoil the smooth look of the unit. Best of all, the buttons are repeated on either side - a huge plus for righty-lefty usability and for when you get in those wierd positions that feel great put that put your hands at odd angles.
Downloads of new and updated materials are smooth and effortless, with simple and well-designed procedures. It's a no-brainer to use for all of its basic functions. Searching the Barnes and Noble store is simple and easy via a touch keyboard, which overall is no worse than Kindle's weird Chiclet-style physical keyboard but has rather slow typing response and an early-release Android look and feel that leaves something to be desired compared to the Android-based Nexus One phone that hangs next to me most of the time. Barnes and Noble also provides its own content via "The Daily," a daily newsletter that includes a listing of your latest content downloads. You can accelerate download performance by powering up your Nook on your local wireless network, but it will drain your batteries fairly rapidly. Without a wireless LAN connection or a lot of use of the color display, your batteries can last for days, typically, since the eInk display is not powered once a page is displayed.
While I am certainly open to reading book content on powered displays, I really like this "off" nature of eInk. After a day of staring into backlit computer and phone displays, there's an "unplugged" aspect to the Nook that fits the nature of book reading nicely. Reading books is about sharing some "quality time" with the thoughts of another person. The simplicity of the Nook encourages me to tune out many of my typical daily electronic distractions and to focus on one relationship. Want Web browsing? Go to your PC or phone, please. The only other significant function of the Nook is its ability to play downloaded music, which is a nice complement to reading, if I am willing to tax the batteries a bit. Downloading tunes from a PC is easy via the Nook's standard USB cable, which doubles as the charging cord when plugged into a special AC converter. Economy of design and purpose is the theme with Nook, and overall it delivers on that theme well.
However, the Nook is far from perfect. The delay in getting this unit to market was doubtless getting some of the product development kinks out, some of which still shine through. The most glaring problem with the Nook is its overall performance. Loading large books for reading can take several seconds in many instances, and some large ebooks did not load at all (possibly due to being formatted an older proprietary format not compatible with Nook). Page-turning is quick and smooth enough and bookmarking functions simple enough, but the bookmarks themselves cannot be given easy-to-use human names; you're stuck with a geekish, URL-like name based on chapter numbers that is hard to understand. At times it seems that bookmarks were not being saved. The note-taking capability on the Nook is decent but nominal at best, not something that's likely to satisfy a real student or scribbler often. You can bump up font sizes in the eInk display, but there's only three settings overall for font sizes. An extra-large font setting would be nice for those days when your eyes have had far too much work. Combine these rough spots with the touch keyboard issues, and it's a fair bet that the Nook needs a newer version of Android ASAP to improve performance and a few interface tweaks to boot.
 And while the online store interface is smooth and features millions of books from Google Books, Barnes and Noble's own ebook title offerings are still a little bit thin; you'll get most major titles, but don't expect too much peripheral content beyond Google's offerings. Some of the ecommerce for newspapers and magazines is still a little rough also. The online store, for example, lists The New York Times as a $13.99 subscription. For, what, a month? A year? It doesn't say. The subscription provides only a subset of NYT information, which is a bit annoying, but you get at least the highlighted stories that you're likely to want to spend time with in an "unplugged" mode on the Nook.
Finally there's the color touch display, which feels comfortable to use if you're used to touch-screen phones and is generally a pleasure to use, with easy-to-use menus and features that are well-designed overall. The main annoyance here, though, is that after a day of touching the screen of my Nexus One, it feels kind of awkward to look at content in the eInk display that's controlled in the touch display below it. A full-touch display such as in Plastic Logic's new Que document reader would be ideal, but I am not interested in hauling that much hardware around. A Nook slips comfortably into my parka pocket and is not hogging up any significant space on the coffee table next to my favorite reading chair. And again, since book-reading is about getting into the words more than fiddling with features, I am willing to live with the compromise.
I am not really sure that you can call the Nook clearly superior to the Amazon Kindle as a machine, but it's definitely a sleeker and more flexible unit overall with better design and more potential for improvement via its Android underpinnings, as well as more potential to get your content to play nicely in other ebook readers via its use of the ePub formatting standard. I was unable to test out the book-sharing feature yet with another Nook user, but this is certainly an important first that deserves at least a nod of appreciation for the many efforts that Barnes and Noble has put in to replicating some of the most important parts of the book-reading experience. Nook's titles are a little pricier than those found in the Kindle store, but that's a small price to pay for the ability to use content on other ePub-compatible readers. Lock-in to the Kindle system is the price to pay for it's cheaper titles, a price that I am not willing to pay.
And I suppose that's the point of the Nook at the end of the day. It's a great little reader that will allow one to prepare for any number of great new ebook-displaying products that will be coming out in the years ahead. With the Kindle, or, for that matter, materials on the iPad purchased via Apple's online store, you're likely to have a more restricted range of technology options moving forward. It's not clear that standalone ebook readers will be with us much longer, but for those wanting simple functionality in a rugged unit with great battery life that will be highly usable in any number of conditions that would be daunting to many advanced display units, the Nook offers a good reading experience and the ability to escape without hauling around a pound of books - or Jeff Bezos' business model hangups, either. That's good enough for me today, at least. Labels: Android, apple, barnes and noble, eBooks, eInk, epub, Google, ipad, nook, readers, wireless
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By John Blossom - posted at 4:01 PM |
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| Wednesday, January 27, 2010 |

 With the media industry salivating over Apple CEO Steve Jobs' announcement of the new iPad as if it were awaiting an injection of Viagra, you'd think that the machine would do everything except change a flat tire. Well, the hoopla is over, and the iPad is...a large iPhone, essentially. Nice, sexy, though functionally not really a breakthrough device compared to the impact that the original iPhone had on mobile markets. However, then the other shoes started to drop after the klieg lights on the announcement stage began to cool off a bit. The two key factors: price and e-book packaging.
First, the price. At $499, the iPad is coming out at a blow-away price point that will make its purchase an attractive and simple alternative for many people who would otherwise be considering a PC or Mac as their next step-up from a mobile phone - or a slightly more pricey unlocked Google Nexus One superphone. This matters in a big way to global markets, where billions of people who are experiencing Web content for the first time on mobile phones will be looking for their next step-up device for content consumption.
Keep your eyes open also for possible subsidies on this price point as mobile network-enabled versions of the iPad hit the market. Just as King Gillette figured out how to give away razor handles to sell disposable razor blades, Apple will find many ways to lower the cost of hardware acquisition to lock people into their software and ecommerce services. Since the iPad technology and apps are largely warmed-over iPhone components, one assumes that not much R&D was required to launch this model, so there must be a good amount of "wiggle room" in the iPad's pricing for such deals.
Its aggressive price point also pegs the iPad as a highly attractive alternative for educational markets, the original market that launched Apple's growth years ago as a scrappy alternative to then-crude PCs. Given the average college student's expenditures on textbooks, an iPad equipped with ebook versions of those texts that they can use for most other schoolwork along with their favorite entertainment will be a very appealing option. It's also a price point that pretty much resigns most existing ebook readers to also-ran status as cost-effective platforms for people on the go. What do you want at your train or airline seat as a light PC alternative, an ebook reader or something that can also play movies and help you get some emails done? Problem solved.
The other factor that is very appealing on the face of it is Apple's decision to deploy an iTunes-like eBook store with content formatted in the ePub open-standards ebook and emagazine format championed by the International Digital Publishing Forum for several years. Having an ebook reading software package that will, in theory, be compatible with content purchased from any ecommerce service using ePub-formatted content will be a great boost to ebook, enewspaper and emagazine sales. However, the caveat with Apple's use of ePub standards is that ePub leaves the door open for the optional use of proprietary DRM tools, such as those used in Apple's iTunes store and Barnes and Noble's online ebook outlet.
If you're happy using iTunes on whatever platform you're using, then chances are Jeff Bezos over at Amazon just bought himself a huge headache after having alienated publishers with onerous revenue share agreements to get content in Amazon's proprietary Kindle format. I've said it often that the proprietary Kindle format was a dead end, but no more so than today. In a sense I wonder if the publishing industry went along with the proprietary Kindle early on as a ruff of sorts to keep the combination of Amazon, Google and open standards from running away with the entire premium content ballgame while they developed a more palatable alternative. That may be giving the people involved too much credit, but it's curious. Perhaps it's not too late to dust off some of those "GoogleZon" memes, after all.
Now that the book industry and other media producers have an alternative to Amazon's stranglehold on them, it will be interesting to see whether they will find themselves in a new Catch-22 situation. Have they run from Amazon's dominance only to discover that the grip of Apple's DRM on ePub-enabled content winds up being an even worse stranglehold in the long run? Time will tell, as will the details that unfold over the next few weeks regarding the iPad's compatibility with premium content purchased from non-Apple outlets. If it's easy-peasy to pull up content purchased elsewhere in ePub format on the iPad, then publishers will have done themselves a great favor. If they drank too much of Steve Jobs' Kool-Aid and allowed it to be hard to use other DRMed or non-DRMed content via Apple's ePub reader, then it will be a more-of-the same dilemma for publishers overall.
While the media industry seems ready to declare Steve Jobs the next David Sarnoff, their "homeboy" genius of content, technology and human insight, the overall reaction to the iPad by consumers so far seems to be warm but not necessarily hot. If you love Apple products already, then you're probably going to plunk down your five Franklins as soon as you can. If you're a person who's already equipped with a decent PC, an iPhone or Android-enabled mobile device, then you're probably saying, "Oh, a big iPhone, neat" - and then going back to surfing the Web. iPad as a gizmo is nifty, but it's not grown new capabilities that people haven't seen before in one form or another. If you're an enterprise I.T. manager, you're probably saying, "Oh, brother, another device to deal with, thank goodness it's basically just an iPhone" - which may simplify adoption at schools and universities especially.
And if you're a book or magazine publisher, then you're probably feeling pretty good at the moment - but then, perhaps, realizing that Jobs spent most of his demo showing how great it was that the iPad rendered Web pages and YouTube movies so well. Sorry, dear publishers, the Web is not going to disappear just because there's a handy new netbook that does DRM the way that you want it to. The iPad will definitely be a boost for print-formatted electronic content, but this is highly unlikely to address key revenue and cost issues that are ultimately the enemies of many publishers. By the time that iPads start coming out in March (and in April in mobile network-enabled configurations) , competitors will be that much further down the road towards their own cost-effective tablet and touchpad interfaces that are likely to be committed to open standards more aggressively.
Yes, this means that Google is still very much in the mix for premium content. Google's Chrome OS will be available in the next year, and rest assured that this next-generation computer operating system will have some deployments that will be remarkably iPad-like. Already its Android operating system is the basis for Barnes and Noble's Nook ebook reader being shipped in a few days, equipped with ePub-formatted content. Could this alliance form the basis for another end-run around Amazon for book and magazine publishers? It seems that not too long from now we will start thinking of Google and Apple the way that we used to think of television and radio networks, with Microsoft striving to get its own new-generation devices into the mix as well.
In the meantime, there are TiVos, Playstations, mobile phones, ereaders and a galaxy of other gizmos that will keep both the iPad and any other particular device from being a "magic bullet" that will solve the distribution problems of media companies definitively. All hail Jobs, today's knight in shining armor for a content industry still struggling with the realities of the Web some fifteen-plus years after the launch of HTML-based graphic browsing on the Internet. Then let's look at how many gray hairs some of us have gained since that time - and accept that the iPad is just another beautiful, functional tool from Apple that cannot stave off the effects of the Web indefinitely. Even with Viagra, you have to come down to life size eventually, after all. Labels: amazon, apple, eBooks, epub, Google, ipad, iPhone, standards, Web
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By John Blossom - posted at 3:05 PM |
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