An Introduction to the Future of Books

Amazon's Kindle has become one of the most popular e-readers.

The book world is facing a systemic reorganization. The electronic-book’s climb into public acceptance has forced nearly every publishing company to consider an e-book future, and two distributors — Amazon and Apple — (possibly three including Google Books) are currently vying for dominance in this emerging market. The implications for one of man’s oldest media traditions are massive, and to a large extent, the outcome remains speculative. However, examining contemporary power struggles between e-book publishers and retailers and recent market innovations provides a glimpse of what the e-book market may someday become.

Conventional book production has become a well-known formula: publishers sponsor and collaborate with writers before passing on the finished product to retailers, who ensure they reach customers. However, as with nearly all innovations, e-books have disrupted the status quo.

E-books and e-readers (devices that display e-books) eliminate many of the costs associated with distributing books, such as shipping, printing and storing. Similar to news media’s current transition to online content, in theory e-books remove the need for massive retailers and thus empower publishers.

Paradoxically, however, e-book retailers have shown they still exert plenty of power over publishers—though publishers have begun to fight back.

The recent pricing battle battle between Macmillan and Amazon last January illustrates this relationship perfectly. Since beginning to distribute them, Amazon has reserved the right to price e-books, typically at $9.99. Many publishers have pressured Amazon to raise the price in order to increase profit margins and avoid devaluing physical books; however, Amazon’s massive market power enabled it to resist. In addition, publishers themselves relied too heavily on Amazon for book sales to risk damaging their lucrative relationship.

Macmillan’s victory over retail giant Amazon could start a trend of publishers fighting back.

Finally, Macmillan CEO John Sargent saw a leveraging point. Shortly after announcing it would enter the e-book market with its new iBooks store for the iPad, Apple met with publishers to discuss a new pricing model now called the “agency model.” This model affords publishers much more power by enabling them to set the price of a book. In exchange, the retailer, i.e. Apple, takes a cut of this price for sales much like an agency would get a cut of commissions. Sargent saw the new model would give his company the power it needed and approached Amazon with an ultimatum: either Amazon follows Apple’s lead and adopts the agency model or Macmillan would restrict the publications of its e-books.

Macmillan CEO John Sargent

“The agency model would allow Amazon to make more money selling our books, not less. We would make less money in our dealings with Amazon under the new model. Our disagreement is not about short term profitability but rather about the long-term viability and stability of the digital book market.” — John Sargent, Macmillan CEO.

Amazon refused, ceasing all sales of Macmillan books. Two days later, however, Amazon caved after rumors spread that several other big publishers —  Simon & Schuster, HarperCollins, Penguin, and Hachette — were planning to follow Sargent’s example. The retail giant could not afford to lose so many titles and had no choice but to capitulate.

Apple released the iPad primarily as a media-consumption device.

While certainly dramatic, the Amazon-Macmillan battle is most likely a harbinger of bigger struggles to come. Since then, Apple has taken more steps to erode Amazon’s market dominance, including releasing the iPad primarily as an e-reading device.

Here, critics will disagree, but its functionality suggests the iPad was conceived of primarily as a media-consumption device, which fits right into the e-reader market. Up for debate is whether the iPad’s other functions will give it an edge on competing e-readers. Its higher price could also serve to fracture the market into tiers in much the same way as laptop computers — separate sub-markets for cheep, low-end readers and high-powered expensive readers.

Steve Jobs annouces iAd, an app-based advertising service.

Perhaps even more exciting for true media geeks was Apple’s announcement of iAd, an app-based advertisement service that could revolutionize the e-book revenue model. Some bloggers have already discussed the implications embedded advertisements could have in e-books — and not all are bad. In fact, this new revenue source could open up more flexibility and innovation. For example, ads could allow authors without an expansive infrastructure to finance a book through ad revenue. It could also lead to multi-version e-books  — ad supported versus consumer supported — displacing or decreasing the price readers are currently required to pay.

These revolutions in both corporate power structure and media functionality have far-reaching implications for the future of media consumption. However, current day-by-day advances and struggles are plowing the ground for that future today.

'the people formerly known as the audience…'

If you are even remotely plugged into the digital media debates of our time, you’ve probably encountered Jeff Jarvis, author of What Would Google Do and a persistent openness extremist. Despite my description of Jarvis’ views, I happen to find much of what he says compelling, and I particularly liked the way he recently expressed his dissatisfaction over the iPad.

An overreaction? Probably. But I can certainly get behind his rationale. Jarvis believes the iPad’s limited ability to create content is a deal-breaker. I agree. The new Web is all about creating and sharing, not passively consuming. In particular, I like the way Jarvis’ expresses this sentiment in his resent talk at re:publica 2010 in Berlin (about 37:00 on the timeline):

“The problem with the iPad is I couldn’t see a use for it…That scares me: that we move back from a world where we, the people formerly known as the audience, become an audience again.”

Also, check out his comments on why the media loves the iPad (read: because it gives them back the control that the Internet has democratized).

Don’t get me wrong; I’m not a Jarvis fanboy in every respect. However, I do think he forces us to consider our preconceived notions about digital media, and his arguments, if not compelling, at least serve a provoking pedagogical function.

It's finally here…

It’s finally here. After all the hype and anticipation, after months of collectively holding our breaths, the future of e-reading has arrived, and this blog just wouldn’t be worth its salt if I didn’t cover it. I am, of course, referring to the recent debut of the Kobo e-reader!

What? It’s not like anything else came out this weekend?

But regardless of my interminable love for all things Kibo, all this weekend’s iPad noise hasn’t gone unnoticed. The initial reactions seem positive, though I’d say at least 30% less fan-boy crazy than with previous Apple releases. I — and probably most people — am a bit wary of the iPad, staying home on opening day to lurk on geeky tech-review websites and determine what Apple’s new product is really about.

For myself, iPad aesthetics were a given. I was more concerned with the pad’s functionality. Can you blog from it? (via Mashable: apparently so.) What apps will be available? How will this fit into, or improve, my life?

Less helpful though sometimes comical, I even succumbed to the ubiquitous man-on-the-street interviews.

Your mileage may vary, but after a quick tour of the tech-geek blogosphere, I’m still firmly on the fence. Sure, the iPad looks sexy. The thought of consuming media from the sleek tablet while relaxing in a sphere chair is appealing. But that seems to miss much of the power of web devices: the ability to create in-depth web content, not just consume it. For my current needs — always away from home, all the computing power I can get, quick reliable word/media processing, able to run Adobe products, never a spare moment — this device just doesn’t fit.

But then, I may be atypical. The reviews are far from over.

NYTimes & iPad: A conflict of interest?

From the beginning, the relationship between The New York Times and Apple’s iPad could be characterized as cozy. However, looking back on the nuances of both Apple’s iPad marketing and the Times’ Apple coverage, one has to ask: What’s really going on here? At the very least, both companies seems to afford a number of favorable-coverage coincidences. At most, it could be a case of outright cooperation — just short of quid pro quo.

The following images were captured from www.apple.com:

Among all the rotating slides, The New York Times seems to be the only content displayed that isn’t an Apple application. Similarly, listen to this glowing review of The New York Times iPad application:

Apple seems to have been struck by Times fever, but then, Apple is a company. Companies regularly strike promotion agreements with each other. The more concerning question is: How will a purportedly independent news company deal with all this promotion?

New York Times coverage of iPad.

Catching any bias in The Times’ coverage of the iPad takes more subtlety, and it’s difficult to tell if and when coverage might have been affected. However, there does seems to be a dearth of negativity surrounding the iPad, and surprisingly little coverage of Apple’s recent censorship of a German photographer’s website. One would think a media company looking to start a substantial distribution deal with Apple would be more concerned with the company’s stance toward censorship.

Kindle on your iPad?

Last week, Amazon rolled out two more Kindle applications to bring their e-book distribution to more platforms — an app for MacOS and a plan to bring it to the iPad.

A Kindle application for the iPad.

At first glance, it seems counter intuitive for Apple to allow its biggest competitor in the e-reader market to develop distribution applications on its own platform. The company has been in negotiations with media conglomerates to supply content for the iPad, but Amazon’s application would steal users away from the company’s new iBooks store.  Apple’s locked-in philosophy has become infamous, best exemplified by its iTunes-iPod strategy. By controlling both the content distribution and platform, Apple dominated the competition. Why let Amazon break the chain?

It’s time for some speculation. Even though it goes against traditional Apple ethos, allowing Amazon’s app on the iPad could still hold benefits. For years, Apple users have railed against the company for locking them into proprietary platforms and services. Relaxing that legacy of control could hold more appeal in the e-reader market, where market segments are still developing.

The move may also appeal to users already using Kindle software. Amazon already has a substantial user base. Wired reported that Kindle books outsold real books on Amazon last Christmas. Offering the service on the iPad platform could give Apple an opportunity to reach users that have already bought into Kindle, enticing them back to the fold with glossy screens and color display — perhaps before ultimately cutting the umbilical.

Of course, all this is just speculation. Amazon’s new Apple applications remain a mystery. And the development could highlight a greater controversy in the making: Who distributes e-books and who makes e-readers? Currently, it looks like that battle will converge on the iPad, with retailers all fighting for the vaunted platform.

News media's pre-launch love affair with Apple's iPad

Media companies have big plans for Apple’s iPad. Just ask Wired Magazine and Adobe.

Of course, Wired is far from the only publication seeing dollar signs in the iPad’s glossy reflection. The New York Times Media Group has been struggling over the best subscription price to offer for their iPad distribution system — anywhere from $10 to $30 a month. The Associated Press recently announced “AP Gateway,” a division focused on developing new content and distribution models for mobile devices, and you better believe an iPad app is top on their to-do list. The Wall Street Journal and Condé Nast also have plans to harness the tablet’s potential using custom applications.

Media companies seem to think the iPad holds the answer to what ails them, namely the trouble getting people to pay for content. On the iPad, they propose, people will be willing to subscribe again.

Time for good-news, bad-news. On the positive, news media seem for once to be anticipating a trend. Perhaps as a result of the lesson they learned from their belated entry onto the Web (link to 10,0000), media companies have picked up the pace, announcing iPad applications before the device even hits stores this April. Traditional media is not known for experimentation, and any willingness to innovate is refreshing.

The bad news is, even though they’re lined up behind an Apple device, there’s no guarantee big media’s dreams of a workable subscription model will come to fruition.

Wired seems to be a good example of what I’ll call the “enhanced content” model. They propose offering subscribers an enhanced reading experience — whether through value-added content or better content management — will justify the monetary exchange. Most people, myself included, believe this to be a good approach. Traditional news content has become undervalued, so it falls to news media to find ways to increased content’s value to readers. Of course, there are other approaches, but this seems to be the most straight-forward and the one well represented by Wired’s current iPad strategy.

In the case of The New York Times,  the application they plan for the iPad will reportedly be something similar to the New York Times Reader currently available for personal computers. However, the company may charge twice as much for the same functionality on the iPad. While moving the same content to a different device may qualify as innovation, I believe it does so in definition only. The move to iPad does not justify, in my eyes, such a jump in quality, and does not fall under the enhanced content approach.

In the end, I think — and hope — many companies will take the initiative to enhanced content. However, this means radical shifts in the way news media operates, bringing in new innovators, programmers, and designers. Legacy media’s ethos — and wallets — may not fit the change. At least for a Wired subscriber like myself, it’s refreshing to see the edgy tech-magazine continuing to innovate on what could be the future of magazine content. As for the rest of the news media, without innovation, their love affair with the iPad may be a one-night-stand.

Penguin's plan to 'reinvent' books on the iPad

During a presentation today in London, Penguin CEO John Makinson showed a video of how the publisher plans to utilize the iPad in the coming age of e-books. The presentation looks great, but it left many asking the same question: Can we even still call it a book?

Are the interactive reading experiences Penguin has in mind even books?  Makinson says the publisher will develop games, online communities, and multimedia content that corresponds to these new ebooks. According to The Huffington Post, Makinson said, “The definition of the book itself is up for grabs.” That’s a hard one to swallow, considering books have arguably been published for more than 600 years.

The shift in conceptualizing books — from text on paper to fully integrated applications — is a startling one.

Makison’s remarks made obvious his vision for increased e-book sales in the future. According to paidContent: UK (the origin of the videos as well), Makison said he expects e-book sales to hit 10 percent next year, rising from just four percent in the U.S. this year. He also hinted that his focus on the iPad could be just as much a function of Apple’s new “agency model” and the chance for a paid distribution model as the increased functionality of the device over other e-readers.

What does this mean for Penguin? The announcement has already received criticism from some (see: Slate’s Big Money) as a “we’re still relevant” cry from struggling publishers.

What does the mean for the future of books as we know them? That could much more complicated. Still, the move to revolutionize one of our oldest traditions — as old as the written word itself — will surely attract debate.

AP Gateway goes mobile, plans to serve iPad content

The Associated Press announced Friday it will soon create a new business unit called “AP Gateway” to focus on distribution of content to mobile platforms such as e-readers. Here’s a copy of the full press release via Tomorrow’s Book.

While the scope of AP Gateway will extend beyond e-readers, the predominance of the iPad in its announcement is certainly a vote of confidence in the new Apple platform.

Also notable was AP CEO Tom Curley’s statement on the nature of mobile content:

“Rather than just repurpose our content across formats, we now have a real opportunity to innovate and create differentiated experiences of the news across formats that will excite all of us, from producers to consumers of news.”

Now, I’m not so naive that I don’t recognize this is standard boiler-plate for news ventures today. No one endorses simply repurposing content anymore. However, as the iPad and e-readers gain importance in the eyes (and wallets) of news companies, the possibility of reader-specific content could soon become reality. In my opinion — and arguably the AP’s opinion — the iPad may have the market draw to kick of that trend.

NYTimes: Who gets the iPad — print or web?

Can NYTimes replicate iTunes?

There’s nothing media-rumor sites hate more than blatantly generalizing people who read the New York Times (read: sarcasm). But that said, it’s long been a foregone conclusion that NYTimes readers overlap considerably with the iPad market. Thus, the Times became a major proponent of the new platform — and the potential for new subscription revenue.

However, according to reports coming out of Gawker and various other Apple-rumor sites, the print and digital newsrooms over at the Times disagree over who gets to claim this new territory. The print division calls dibs on the ground that the iPad will do nothing more than distribute the same paper format offered through physical media. It argues subscriptions should cost $20 to $30 a month — presumably equal to a print subscription — to avoid a massive exodus from the paper to the pad. (I guess we’re just ignoring that the paper is available free online until 2011 and that the iPad eliminates all printing and distribution costs?)

The digital operation has proposed a more-reasonable $10-per month subscription, and is promising interactive post-paper features regardless of the final pricing outcome.

Obvious questions aside, what seems like a prima-facie “turf war” could actually be a deep philosophical question for the future of news media on e-readers. What is the product? Is it simply another way to distribute the paper, similar enough with traditional print to justify higher pricing? Or is it something new, requiring a new pricing model and marketing focus?

My inclination — and what I suspect will be others’ as well — is to view subscription apps as something new. Fancy new distribution models for the same product won’t justify use, in my opinion.

However, as is Apple’s legacy, premium distribution and software might make a difference, e.g. iTunes. The music industry was struggling to combat illegal downloads before Apple’s music infrastructure completely reversed the trends, proving that people will pay for music downloads if it is wisely priced and convenient. Could the New York Times pull off the same thing on Apple’s new platform? I think it’s possible, but it will take precision marketing, content design, and a leap of faith.

iPad an iReader?

Apple released the long-anticipated iPad last week to tremendous hype. From Apple fanatics to juvenile humorists, we all held our breath as Steve Jobs revealed the device that months of rumors had promised would be the end-all device and the new hip tool to tote around.

But as the tweets and blog reviews came to a boil, the blogosphere seemed decidedly mixed. Publications like Wired released a lists of problems that come down to the realization that Apple left so many features out of the iPad — not to mention compatibility with all those adapters — that many people viewed the devise as a huge step backward.

However — and here I’m getting to the meat of the story — there is one feature debuting on the iPad that struck me off guard: iBooks. Apparently, Jobs means for the new iPad to become a prominent e-reader device. With its larger, glossy screen and the new iBooks store (an iTunes-esque download store), the iPad could be in a great position to bring convenient e-reading to consumers. Of course, Apple insists the iPad offers much more than e-reading, but this striking feature has many publishers and news organizations drooling over possibilities.

Will the iPad work as an e-reader? Price is certainly an obstacle. Even the cheaper, wifi-only version will run consumers a cool $499, the G3 model $829. The extra price may be justified by the fact that, after all, the iPad is more than an e-reader. However, because the device can only run one application at a time, it might as well be just another e-reader while running iBooks.

Compatibility is another potential problem. Apple has cultivated an infamous reputation for locking users into proprietary hardware and software. I can only imagine the frustration of trying to transfer my downloaded e-books to another platform.

One thing the iPad has that Amazon’s Kindle and other competitors never quite grasped is the all-important cool factor. Owning the latest Apple gadget will always be a priority for some, and that market impetus may be enough to grab dominance.

In addition, many publishers seem eager to have their content associated with the iPad. Print news media in particular will be looking for a way to monetize content on a platform of users they suspect will be willing to put up with the extra expense. Of course, answers will have to wait until the official release date, April 2010, but that won’t stop speculation.