The consensus prediction in the tech industry is that tablet computer sales will swamp sales of ebook readers. The Huffington Post is taking bets on which e-readers are dead meat (link), and Informa predicts that e-reader sales will start declining in 2014 as tablets out-compete them (link). I've seen similar (and more pessimistic) private forecasts from other analysis firms. They all argue that it's just a matter of time until general-purpose tablet computers displace more limited e-readers.
Yes and no. I think tablet features will eventually take over, but it would be very premature to assume that tablet computer companies will be the long-term winners. They're actually at a huge disadvantage that almost no one is talking about.
What brought this home to me was a brief hands-on experience I had last week with the Barnes & Noble Nook Color. I usually think of Nook as the poor stepchild to Amazon Kindle, and in unit sales it certainly is. But Nook Color isn't just an ebook reader. It's a full tablet computer, or at least it will be if Barnes & Noble allows it to be. And it sells at a great price.
The easiest way to explain my reaction to Nook Color is to compare it to the Samsung Galaxy Tab. The first thing I noticed was basic ergonomics. As I wrote recently, when I first picked up the Galaxy Tab it worried me because it was hard to hold -- its slick plastic surface felt like it was going to slip out of my hand, and so I couldn't hold it comfortably without putting my thumb on the screen (link). The Nook Color is almost identical to the size and weight of the Galaxy Tab, so I expected to have the same problem. But the Nook has a brushed metallic-feeling surface that's much easier to grip. Attention to detail has a huge impact on mobile products, and Nook Color shows far more attention to detail than the Galaxy Tab.
The Galaxy Tab definitely has more features than the Nook: two cameras, 3G options, and an accelerometer. But Nook Color has all the basics, including Android OS, a touchscreen, and very nice color display that I think is the equal of Samsung's. And it has one important feature that The Galaxy Tab lacks -- an affordable price. A Nook Color with WiFi is $249, literally half the price of a similarly-equipped Galaxy Tab.
That's a stunning difference, especially considering that Samsung usually tries to be a price leader in new technologies. At $499, I think the Galaxy Tab will be a very difficult purchase for the average consumer. At $249, Nook Color isn't cheap, but it's a mainstream consumer product.
So how in the world does a book-seller get a 50% price advantage over a major consumer electronics company?
The difference isn't mostly due to features. I bet the accelerometer and cameras in the Galaxy Tab don't add more than $20 to its cost, probably less. The Tab probably has a faster processor as well, but no way does that justify the cost difference. I think two other factors are involved. The first is that B&N owns its own retail stores, and so it doesn't necessarily have to mark up the price of the Nook with the full traditional retail margin. In contrast, Samsung will be expected to fork over the usual 20 points or so of margin to its dealers, plus additional comarketing dollars to buy shelf displays and Sunday newspaper ads. Second, since B&N makes money from the content it sells to Nook users, it can afford to sell the hardware at lower cost.
In other words, the Nook is a subsidized product, like a cellphone. So is Kindle.
I think the people predicting that tablets will swamp e-readers haven't thought through the economics of the situation. As long as e-readers are based on e-ink displays, they can't compete directly with tablets, because the displays are grayscale and are too slow to display animation and video. But an e-reader with an LCD display is physically a tablet, at a much more attractive price.
Subsidized products usually beat unsubsidized ones. Even Apple had to move the iPhone onto subsidies after it first launched it without.
The only thing stopping Nook Color from competing directly with tablets is software. Although Nook Color runs the Android OS, same as Samsung, Barnes & Noble is reportedly planning to severely restrict the applications that will run on Nook Color. The idea is to keep the device focused as an e-reader rather than allowing it to become a general-purpose tablet.
It's unusual for a company to artificially restrict what you can do with a computing product, but there is a perverse logic to what Barnes & Noble is doing. If someone buys Nook Color as a tablet and doesn't buy any books or other content for it, Barnes & Noble will make less money. By restricting the apps, Barnes & Noble can chase away those lower-margin customers who aren't hardcore readers.
But I think that's a very short-sighted policy, for two reasons:
First, as a dedicated e-reader, Nook has important drawbacks. Its battery life is much shorter than an e-ink device, and it's a lot more expensive. If the apps are restricted, Nook Color is a tweener. It's inferior as an e-reader and as a tablet.
Second, B&N is missing a huge opportunity. It's not like they're losing money on Nook Color sales (the hardware cost is probably in the $150 range, or lower). As long as you're making some money per unit, I think it makes sense to grab as many customers as you can now, while you have a structural advantage in the market.
The ultimate payoff for an ebook distributor like B&N is to displace the publishers and start selling ebooks (and other content) directly to the public. To get to that goal, B&N should be trying to grow the e-reader installed base as quickly as possible. Instead of restricting Nook Color to people who already want ebooks, B&N should sell it to everyone and then entice them into becoming e-reading users.
Historically, some of the most successful computing products were sold first as single-purpose devices that then blossomed into multipurpose devices. PCs were first adopted in volume to run spreadsheets, and the first successful PDAs were sold as electronic calendars. Nook Color could be the e-reader that ate the tablet market.
And it's easy to do -- all B&N has to do is say yes to all types of third party apps. Get out of the way, and the customers will take care of the rest.
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Selasa, 09 November 2010
Selasa, 16 Maret 2010
The future of publishing: Why ebooks failed in 2000, and what that means for 2010
This post is adapted from a speech I gave at the O'Reilly Tools of Change publishing industry conference in February.
It's a great time for ebooks. There are at least six ebook reader devices on the market or in preparation. A major business magazine predicts that up to seven million of these devices will be sold next year. A major consulting firm says ebook sales will account for ten percent of the publishing market in five years. And an executive at the leading computing firm predicts that 90 percent of all publishing will switch to electronic form in just 20 years.
But the year isn't 2010 -- it's 2000, and the ebook market is about to go into hibernation for a decade. What went wrong, and what can the failure tell us about the prospects for ebooks in 2010?
I had a front row seat for the last generation of ebooks: In 1999 I was at Softbook (one of the early ebook reader companies), and later I interacted with the folks at Peanut Press (an ebook publisher) after they were bought by Palm. My short summary of the lessons I learned: Although some of the barriers that stopped ebooks in 2000 have been reduced, most of them are still in place. So I think the market isn't likely to grow as quickly as many optimists are predicting. However, the economics of traditional publishing are very vulnerable to a paradigm change. That change is likely to happen later than most people expect, but once it happens it'll probably move very quickly indeed. So stay out of the avalanche zone.
Here are the details on why, and how to avoid the avalanche when it does happen.
Why ebooks failed in 2000
I know I'm going to get some comments reminding me that ebooks didn't ever completely fail. They've been around for a long time, and some people read books on their computers every day. Granted. But the market for ebooks and ebook reader devices utterly failed to take off the way that most observers expected in 2000. It's important to understand why, or we may be at risk of repeating history.
I think the failure of ebooks ten years ago was due to five problems:
1. Not enough ebooks. The core customers for an ebook reader are reading enthusiasts, meaning they like to read a lot of books. If you ask them how many books they'd like to have available for their reader, they'll look at you funny and say, "All of them, of course. What's the point in paying for an ebook reader device that doesn't let you any book you want to read?"
In 2000, we had a huge problem with ebook availability. They were expensive to convert to ebook format (hundreds of dollars per title), and publishers were reluctant to make that sort of investment. I don't have any statistics on the number of ebooks available back then, but I remember that it was an ongoing, major problem for the company.
Today, the situation is better but not ideal. Looking at the New York Times bestseller list for February 28, all but one of the top 10 books in hardcover fiction and nonfiction were available in ebook format. However, there is still a problem with the timing of availability. Barnes & Noble had 15 books on its "Coming Soon" list for March 10, but only six of them were to be released as ebooks at the same time as they came out in print. That's a poor ratio, and would be a significant annoyance to an ebook user.
Looking at older books, availability seems to be hit or miss. Many more books are available in ebook format today than in 2000, but there are weird gaps. For example, many of the most popular works of Robert Heinlein (one of the leading science fiction authors of all time) are not currently available in the Kindle store, but are available for Barnes & Noble's Nook device. For Isaac Asimov (another all-time great), only a small subset of his work is available electronically from either Amazon or Barnes & Noble.
This sort of confusion frustrates many ebook users.
2. Ebooks were too expensive. Many book buyers feel they get extra value when they buy a hardcover book. It's more substantial than a paperback, and has a nice slipcover. The pages don't turn yellow, and the printing is generally very clear. If they like the book, they can put it on a bookcase somewhere to show their friends how tasteful they are. An ebook has none of these benefits. To many users, it feels more like a paperback -- disposable, intangible, slightly cheap. But in 2000, many ebooks were priced the same as hardcover books.
Combine high book pricing with limited availability, and most people didn't feel ebook readers were a reasonable value. The market stalled right there.
The problem with ebook vs. hardcover pricing is that publishers bundle two sorts of value when they create a hardcover book: The physical product is more impressive, and you get earlier availability of the book, often a year or more before the paperback version comes out. Unfortunately, book buyers think most of the extra value they're paying for from a hardcover is the physical book. Meanwhile, publishers (and authors) often think the main value of a hardcover is early availability. Many authors and publishers don't want to say this to the public, but hardcover books are a tax on the most enthusiastic fans of an author.
E-publishing breaks that cozy little arrangement, by separating the early availability value from the better production value. Publishers couldn't figure out what to do about that in 2000. So they often did the conservative thing, pricing ebooks the same as hardcovers. To ebook customers, that felt like exploitation, if not outright fraud.
It still feels that way today.
The situation now is somewhat improved, in that ebook prices are often somewhat lower than hardcover prices. But it has not been resolved. For example, Amazon lists Payback Time by Phil Town as a hot new release. Its list price is $26.99 and the ebook price is $13.36, so that looks like a huge discount. But the hardcover version is already being discounted to $14.57. So the ebook price is about the same as the hardcover's street price. That's not acceptable to a lot of ebook customers.
Until very recently, Amazon had been subsidizing down the price of most ebooks to $9.99 in an effort to deal with conflicts just like this, but that arrangement broke down when challenged by Macmillan. The result was a very nasty public spat in which Amazon briefly pulled all Macmillan books (paper and electronic) from its online store. That drove many book authors into a frenzy, with most of them siding with Macmillan (examples here and here and here).
What is it about the tech industry and authors? Both Amazon and Google have shown a unique ability to make authors bond with publishers, people they otherwise tend to view as parasitic scum.
The relationship between Amazon and Macmillan is very complicated, and I don't want to get into the details of their contracts here. There's ample evidence for labeling either one of them a villain and/or idiot if you want to. But my point is that ebook pricing remains screwed up today. Maybe not as uniformly screwed up as it was in 2000, but it's still a mess.
3. The hardware form factor was wrong. When ebook readers failed to sell well, ebook producers tried to focus on other electronic devices -- PCs, PDAs, and smartphones.
The trouble is that for most people, the ergonomics and psychology of reading are wrong on computers and smartphones. A laptop is the wrong size and weight to create an immersive reading experience, and the backlit displays on most laptops create eyestrain compared to reading ink on paper.
PDAs and smartphones are too small for immersive reading for most people, and besides people are usually in a different mindset when they use a pocket device. They use it briefly, in short spurts throughout the day, when they are bored or need to find a bit of information. It's like the information equivalent of snacking. A reference book might be useful in this context, and holy books like the Bible sell well in electronic form because some people take comfort in reading a bit of them every day. But for most people, a pocket device isn't something that you'd curl up with for a couple of hours, the way you would with a book.
This is an area where we're obviously making a lot of progress. Amazon and Sony have both been willing to subsidize their tablet devices for years while the ebook market develops, and Apple and other big computer companies are now entering the tablet market, not to mention a host of smaller startups.
Just remember that most electronics companies are sheep. If tablets don't sell well, they will exit the market as quickly as they entered it.
4. Periodicals weren't ready. Although we call these devices "ebook readers," if you look at user attitudes and usage patterns, in many ways they are a better fit for reading periodicals (newspapers and magazines) than they are for books. Most printed magazines and newspapers are viewed as disposable, so many people don't object to paying the same price for an e-version as they do for the printed version. And most periodicals can be read in short bursts, which fits the usage pattern for mobile devices.
Even better, an e-magazine can get to the reader faster than a printed version, because it doesn't have to be printed and mailed.
When I was at Softbook, there was a lot of user interest in getting magazines on our devices. Unfortunately, very few were available, and the effort to get them converted started too late to save the company.
Today, there are electronic versions of a number of publications targeted at the ebook readers. But a couple of additional problems have surfaced. One is that often the e-versions are inferior to the printed versions. On the Kindle store, 64% of the reviews for the e-version of The Economist magazine are a single star (the lowest possible rating). Here are some sample comments:
Time Magazine, 46% of reviews are one star:
Wall Street Journal, 50% of reviews are one star:
In fairness, some other publications are better-reviewed. The Kindle version of the International Herald Tribune has an average rating of four stars, as does the New England Journal of Medicine. But overall, there are a lot of teething problems as the publishers figure out how to produce their e-versions and how to price them. This is likely to hinder customer adoption until the problems get sorted out.
5. Poor marketing. In my opinion, the right way to create a technology product is to identify a group of customers who have a major problem, and to solve that problem decisively. It's not clear that ebooks, especially as they are constituted today, do that. Paper books simply aren't broken, from the perspective of most users. S. David Mash had a good quote on this (link):
A lot of the investment in ebook devices today seems to be driven more by strategy than by user needs. E-books are believed to be an important future business opportunity, and companies are maneuvering to be in position when that opportunity takes off.
The problem is, unless they solve a user problem, and communicate it to the users, the market won't take off in the first place. This tripped up the ebook companies in 2000, and I think it is still true today. Check out Amazon's pitch for why you should buy Kindle:
Can you spot the problem? It's a list of features, not a list of benefits. Now let's look at Sony:
They're doing a tiny bit better, in that they do list a user benefit. Unfortunately, how many people do you know who want to carry 350 books at one time? I call this situation "phantom value," and it's something that happens a lot to tech companies. They've made a product without really thinking through the value proposition. When it comes time to market it, they pick one feature of the product and try through brute force to persuade customers that they should care about it. Usually the only people they convince are themselves.
This same thing happened when the music industry was first trying to defend itself from MP3 players. There was a huge fuss over the superior audio quality of CDs, and a lot of people in the music industry put a lot of effort into talking up the quality aspect of CDs. The only problem was that the average music listener couldn't hear the difference and didn't care about it.
What it means for ebooks in 2010
Although ebooks are doing much better than they were in 2000, there are still very significant structural barriers to the broad adoption of ebooks. We're in a chicken and egg situation where the content isn't fully ready for use because there aren't enough device users to force investment, but people won't buy more devices until the content gets better. As long as Amazon and Sony continue to subsidize the market, I think it will continue to grow moderately. And I think the iPad and related tablet products may help. But overall, the prospects for near-term explosive growth don't look good.
What happens next, and what can we do about it?
First, let's talk about a couple of opportunities. Paper books published today are not broken, but there are a couple of notable places where the publishing industry as it works today really is breaking down, and ebooks could help.
Save the short story. The first problem is the market for short stories. I wrote about this several years ago at length (link), so I won't repeat the whole situation here. But a quick summary is that the magazines that used to produce a lucrative market for short stories have mostly gone out of business or moved on to other sorts of content. As a result, authors have relatively little incentive to write short fiction these days.
Speaking as someone who grew up reading and appreciating short fiction, this is a loss for readers and an opportunity for e-reader devices. Short fiction is a great fit for e-readers because it can be consumed in small bites, and if authors could sell directly to their readers, the revenue could eventually be good enough that people would go back to writing short fiction. Plus it would give e-reader devices a real benefit -- content that you can't get anywhere else.
What's missing is the marketplace to make that happen. We need the equivalent of an iTunes store for short stories, tied to a mass market tablet device.
Free the backlist. At the O'Reilly conference I heard a fascinating statistic from Brewster Kahle of the Internet Archive: 70% of all the books ever written in English are out of print but still under copyright. In other words, you can't legally make copies of them, but there's not enough demand for them that the publishers can afford to reprint them. They are orphans.
These aren't just obscure books. In science fiction, my favorite category, award-winning books from the 1950s and 1960s are frequently out of print, and forget about finding less-known books even from major authors. The best you can do is a used book search, which if you're lucky will get you a smelly and dog-eared paperback in the mail. And those are the famous authors! Books from many others are unavailable in any form.
In my opinion, this is appalling. And it's also an opportunity.
Kahle is working on a project to let universities lend out electronic copies of the books in their stacks, which include many of these orphan books. As I understand it, the idea is that the library owns the right to lend out one copy of the book. If a central server keeps track of that single electronic copy, it's possible to legally read e-versions of orphaned books. It sounds like an incredibly cumbersome approach -- and it is. But it's better than nothing, and once again it's producing content for e-readers that can't be obtained any other way.
The project is called BookServer, and 1,000 more books are being digitized every day (link). It's the most hopeful thing I've heard about the future of libraries in years.
Rethink the periodical
The Internet is flooded with videos of prototype electronic magazines that publishers have been working on. Most of them look pretty similar -- there's an electronic image that looks just like a printed magazine page. The user moves from page to page by swiping a finger back and forth on the device's screen. You can zoom in to look at a graphic more closely, and zoom out to a thumbnail view that shows several pages side by side. The pages include both ads and stories, just like the magazine. In some prototypes, static pictures are replaced by videos and animations. Most of the demo is made up of page swiping and zooming, and you're left thinking, "hey, that looks just like a print magazine on the screen."
I am reminded of this:
It's called the Horsey Horseless Carriage. Time Magazine wrote about it in 2007 (link). It was supposedly an early automobile design in which a horse's head (thankfully a carved wooden one rather than stuffed) was mounted on the front of an automobile. The idea was apparently to make the car look more like a horse-drawn carriage, so the real horses would not be frightened by it. Just as striking as the horse's head is the rest of the car's design. From the wheels to the body design to the weird tiller the driver uses to steer, it is a basically a horse-drawn carriage that has a motor affixed to it.
We laugh now because we know the carriage needed a total rethink to translate it into a car -- everything from the wheels to the controls to the seat designs had to change radically. And yet when it's our turn to create something new, we create electronic magazines that look just like printed magazines.
It's a failure of the imagination, in my opinion. Most of the design of a magazine was driven by the economics of printing and mailing a paper publication. Why are the ads and text arranged the way they are? Because in a paper magazine, you can force people to skim past the ads while they look for the articles. Why is a magazine that particular size? Because that's what the post office will deliver, it fits easily in mailboxes, and it's a paper size we're used to handling. Why does it come out once a month or once a week? Because you have to bundle up a critical mass of content and ads before it makes financial sense to mail it. And on and on and on.
None of those assumptions apply to an electronic publication. They are all rules that we've absorbed from the print world, so deeply that we don't even think to question them. Some of those assumptions may still make sense in the electronic world, but many of them won't. One area where I feel strongly that our assumptions are faulty is advertising.
People reading paper magazines are used to fumbling past ads while they read. It's a standard part of the experience. But people using an electronic device have been conditioned by the web to expect to click and jump directly to the content they want. Making them flip through simulated electronic pages full of ads simply won't work. That means the ads in an electronic publication probably can't be as numerous as they are in a print publication. What's worse, the ads that pay the most money -- the inside front cover and the back cover -- don't even necessarily exist in an electronic publication.
I think some magazines believe they can force the current ad experience on users. Some of them even have persuaded themselves that readers see the ads as part of the value of the magazine (see my discussion of phantom value, above). But publications need to understand that they'll be competing with a new crop of publishers who grew up online and are not hamstrung by the same thinking.
The best example of this new thinking is Yahoo. It's very trendy to dismiss Yahoo these days because it's not Google, but in reality the company is a very different beast. Google is all about search and direct-response advertising associated with it. Yahoo is basically an electronic publisher supported by "display" ads -- brand-building ads created by large national advertisers, targeted at the specific demographic groups Yahoo delivers.
Yahoo today runs a hugely successful electronic newspaper. It has a news section:
A finance section:
And a sports section:
All of them are totally supported by ads, with no subscription fee.
If you're a magazine or newspaper publisher, you may think that e-publishing finally gives you a path out of the free-web-content trap. But ask yourself what happens when companies like Yahoo realize they too can create electronic publications for ebook readers. Will they charge for subscriptions, or will they create completely ad-supported publications? What does that do to your business model?
I think the periodical has to be rethought much more thoroughly than it has been to date. At its core, the thing that makes a magazine or newspaper valuable to readers is its editorial staff -- a group of writers, editors, and artists who work in synergy to produce a unified product. Rather than asking how to make a magazine electronic, we need to ask what must be built around an editorial staff to make it viable in the electronic world. I don't know what the result will be, but I'm pretty sure it won't look like a print magazine scanned and transferred to a screen.
Publishers: Rethink your value
Although publishers today are focusing on what ebooks do to their distribution channels, the real threat to them, in my opinion, is the likelihood that in the future authors will publish their books directly to the public, bypassing the entire publishing value chain. To understand this challenge, it's necessary to look at the current value chain for books...
An author typically gets about 12% of the list price of a book. The rest of the revenue is consumed by the distribution channel -- the publisher's overhead, the cost of printing and shipping books, the expenses of the bookseller, etc. This is not to say that publishers and booksellers are getting rich. Typically a small number of bestselling books generate the revenue that covers the losses a publisher takes on everything else it publishes. Something similar happens to bookstores. The reality is that the whole publishing value chain is grossly inefficient -- it absorbs a lot of cash, and almost no one gets rich from it.
This distribution chain was stable only when it was the sole way to get a book to a customer. It's already under attack by Amazon, which avoids the overhead of a physical bookstore; and by discount retailers who skim off the best-selling books, absorbing the revenue that formerly supported local bookstores. But that's only a prelude to what's coming.
Because authors get such a small percentage of the sales price of a book today, any system that let them capture more of the revenue from a book sale will be very attractive to them, even if it sells a lot fewer books.
The chart below illustrates my point. For simplicity, I've assumed a best-selling author who gets 15% of the book's revenue, a bit more than usual. The author's new book is going to sell 100 printed copies through the traditional retail channel at $20 each. That means the total revenue for the book will be $2,000, of which the author gets $300.
But if the author sells the book direct to the public as an ebook, he or she will be able to keep 70% to 80% of the revenue (because that's what the online content stores are typically returning). If the store's cut is 25%, the author will make $300 after he or she sells only 20 books.
The red and blue bars show the author's revenue as ebook readers reach various levels of penetration in the book-buying population. The chart's kind of complex, but its main message is that once e-readers are in the hands of about 20% of the book-buying public, an author has a financial incentive to sell direct rather than selling through a publisher.
Fortunately for publishers, e-readers are far below 20% penetration today. They're probably at about 2%. So the business is stable for the moment. In fact, it's probably a little more stable than a lot of publishers believe. We're likely to have a latency period of at least several years while the e-reader installed base gradually grows. During this time nothing terribly dramatic will happen to publishers, and they may think they have the situation under control. But then we'll reach a tipping point, and suddenly established authors will have a financial incentive to go direct rather than bothering with paper publication of their books. Once that happens, all book buyers will have a very strong incentive to get e-readers -- some books by bestselling authors simply won't be available in paper form, or will be available first electronically. This will drive more rapid sales of e-readers, which will give authors even more incentive to bypass the publishers.
Once the dam cracks, the water will move very quickly.
Some notes on this scenario:
--I simplified the pricing story by assuming that ebooks are priced the same as hardcovers. They aren't, so the tipping point is probably a bit higher than 20%.
--On the other hand, Macmillan's move to raise the price of ebooks actually brings the tipping point closer. Every time ebook prices go up, that creates more incentive for an author to go electronic.
--The authors most likely to switch to electronic publication are the established names who don't need a publisher's help in marketing. Those authors are also often the most profitable for a publisher. That means the impact of the switch may be even greater than what I laid out here.
--Products like the iPad bring the tipping point closer, because they are tablets that do other things than just reading books. This bypasses the chicken and egg situation that killed e-readers in 2000. Every time Apple convinces someone to buy an iPad to do browsing or watch videos, that's another potential book-buyer who's ready for ebooks.
--The competition between Apple and Amazon will also probably bring the tipping point closer, because it holds down the cut charged by the online ebook stores. In January, anticipating the iPad announcement, Amazon cut its charge on self-published ebooks to 30%, matching Apple's terms on the iPhone app store (link).
Six critical questions for book publishers
Are publishers doomed? Not necessarily. I think we're going to end up with a range of situations in which some authors sell direct on their own, some use selected services to help them self-publish, and some partner with publishers for services similar to the things they do today. But the publishers will be dealing with new competitors and new economics, and they'll need to rethink who their customers are, and what unique value they can add from the perspective of those people. The time to do that thinking is now, before e-readers reach the tipping point. Here are the questions to ask:
1. Who is my customer, the author or the book-buyer? Most publishers today would say "both," and might add the bookstore to that list as well. But that reflects the print publishing channel structure. In the electronic world, those audiences do not have to be bundled together. There may be some publishers who partner primarily with authors, and are more or less invisible to readers. There may be other publishers that play a very prominent role in the eyes of readers (examples below). The point is to understand which type of publisher you are, and adjust your business accordingly.
2. How much value do my editing services add from the reader's point of view? I've seen quotes from publishers saying that ebook consumers will want to pay more for ebooks that are properly edited. If you believe this, I invite you to re-read the discussion of CDs vs. MP3s above. If a book is poorly edited, people will just blame the author. That means editing is actually a service for authors, not readers. Which brings us to the next question...
3. How much value do my editing services add from the author's point of view? Many authors acknowledge that their editors add tremendous value to their books; others hate their editors. But the key question is, could they hire a freelancer to do the same thing? Question for a publisher: What if some of the people you just laid off form an editing cooperative and then contact your authors with a cut-rate offer?
4. How much demand generation do we really do? This is a place where the perspectives of authors and publishers often differ. Publishers tell me that they do a lot to create demand for books. Authors typically say the publishers just shovel books onto the market and wait to see which ones sell themselves. If the publisher doesn't generate demand, then an author might as well self-publish electronically as soon as it pays more money.
5. Which brand are the readers buying? This varies tremendously from publisher to publisher. In fiction, the author's name is generally the brand that readers respond to. No reader cares who published Steven King's latest book; they just buy Steven King. But in other fields, especially nonfiction, it's more common for a publisher to control the brand. Think of the For Dummies franchise, or Sunset's How-to books, or the role that O'Reilly plays in technical books. I think e-publishing may make those brands even more powerful. A traditional publisher can help a paper book sell well by working behind the scenes to get bookstores to promote it -- put it on the table out front, place it on an endcap, and so on. Most of that promotional opportunity doesn't exist in an online store. Instead, your product is just tossed out there in a sea of other products, and it has to succeed or fail on its own. In that world, a recognized brand naturally floats to the top. That's why the Madden football game on iPhone costs $7 while many other iPhone games sell for 99 cents.
6. What sort of book am I selling? Writer/publisher Craig Mod wrote a splendid essay discussing the difference between books that have form and books that do not have form (link). Books that have form get some value from the physical book itself -- maybe it's the arrangement of text and images that creates a certain impression, or maybe it's the need for something physical (think of a coffee table book or a gift book). Those books are not going to be cannibalized easily by electronic publishing.
On the other hand, formless books (those that don't get any special value from the physical form of the book) are ripe for the picking. Think paperbacks and general-consumption fiction and nonfiction.
I'll leave you with Craig's hopeful picture of what this all means for the future of books:
When we're confronted by all the downsides of change, it's important to remember that change also brings progress. If publishing gets a lot more efficient, we should see greater diversity of new sorts of publications, as well as the rebirth of a lot of old books and stories that we can't get to today. That's a future to look forward to -- as long as you can figure out how to keep your job during the transition.
It's a great time for ebooks. There are at least six ebook reader devices on the market or in preparation. A major business magazine predicts that up to seven million of these devices will be sold next year. A major consulting firm says ebook sales will account for ten percent of the publishing market in five years. And an executive at the leading computing firm predicts that 90 percent of all publishing will switch to electronic form in just 20 years.
But the year isn't 2010 -- it's 2000, and the ebook market is about to go into hibernation for a decade. What went wrong, and what can the failure tell us about the prospects for ebooks in 2010?
I had a front row seat for the last generation of ebooks: In 1999 I was at Softbook (one of the early ebook reader companies), and later I interacted with the folks at Peanut Press (an ebook publisher) after they were bought by Palm. My short summary of the lessons I learned: Although some of the barriers that stopped ebooks in 2000 have been reduced, most of them are still in place. So I think the market isn't likely to grow as quickly as many optimists are predicting. However, the economics of traditional publishing are very vulnerable to a paradigm change. That change is likely to happen later than most people expect, but once it happens it'll probably move very quickly indeed. So stay out of the avalanche zone.
Here are the details on why, and how to avoid the avalanche when it does happen.
Why ebooks failed in 2000
I know I'm going to get some comments reminding me that ebooks didn't ever completely fail. They've been around for a long time, and some people read books on their computers every day. Granted. But the market for ebooks and ebook reader devices utterly failed to take off the way that most observers expected in 2000. It's important to understand why, or we may be at risk of repeating history.
I think the failure of ebooks ten years ago was due to five problems:
1. Not enough ebooks. The core customers for an ebook reader are reading enthusiasts, meaning they like to read a lot of books. If you ask them how many books they'd like to have available for their reader, they'll look at you funny and say, "All of them, of course. What's the point in paying for an ebook reader device that doesn't let you any book you want to read?"
In 2000, we had a huge problem with ebook availability. They were expensive to convert to ebook format (hundreds of dollars per title), and publishers were reluctant to make that sort of investment. I don't have any statistics on the number of ebooks available back then, but I remember that it was an ongoing, major problem for the company.
Today, the situation is better but not ideal. Looking at the New York Times bestseller list for February 28, all but one of the top 10 books in hardcover fiction and nonfiction were available in ebook format. However, there is still a problem with the timing of availability. Barnes & Noble had 15 books on its "Coming Soon" list for March 10, but only six of them were to be released as ebooks at the same time as they came out in print. That's a poor ratio, and would be a significant annoyance to an ebook user.
Looking at older books, availability seems to be hit or miss. Many more books are available in ebook format today than in 2000, but there are weird gaps. For example, many of the most popular works of Robert Heinlein (one of the leading science fiction authors of all time) are not currently available in the Kindle store, but are available for Barnes & Noble's Nook device. For Isaac Asimov (another all-time great), only a small subset of his work is available electronically from either Amazon or Barnes & Noble.
This sort of confusion frustrates many ebook users.
2. Ebooks were too expensive. Many book buyers feel they get extra value when they buy a hardcover book. It's more substantial than a paperback, and has a nice slipcover. The pages don't turn yellow, and the printing is generally very clear. If they like the book, they can put it on a bookcase somewhere to show their friends how tasteful they are. An ebook has none of these benefits. To many users, it feels more like a paperback -- disposable, intangible, slightly cheap. But in 2000, many ebooks were priced the same as hardcover books.
Combine high book pricing with limited availability, and most people didn't feel ebook readers were a reasonable value. The market stalled right there.
The problem with ebook vs. hardcover pricing is that publishers bundle two sorts of value when they create a hardcover book: The physical product is more impressive, and you get earlier availability of the book, often a year or more before the paperback version comes out. Unfortunately, book buyers think most of the extra value they're paying for from a hardcover is the physical book. Meanwhile, publishers (and authors) often think the main value of a hardcover is early availability. Many authors and publishers don't want to say this to the public, but hardcover books are a tax on the most enthusiastic fans of an author.
E-publishing breaks that cozy little arrangement, by separating the early availability value from the better production value. Publishers couldn't figure out what to do about that in 2000. So they often did the conservative thing, pricing ebooks the same as hardcovers. To ebook customers, that felt like exploitation, if not outright fraud.
It still feels that way today.
The situation now is somewhat improved, in that ebook prices are often somewhat lower than hardcover prices. But it has not been resolved. For example, Amazon lists Payback Time by Phil Town as a hot new release. Its list price is $26.99 and the ebook price is $13.36, so that looks like a huge discount. But the hardcover version is already being discounted to $14.57. So the ebook price is about the same as the hardcover's street price. That's not acceptable to a lot of ebook customers.
Until very recently, Amazon had been subsidizing down the price of most ebooks to $9.99 in an effort to deal with conflicts just like this, but that arrangement broke down when challenged by Macmillan. The result was a very nasty public spat in which Amazon briefly pulled all Macmillan books (paper and electronic) from its online store. That drove many book authors into a frenzy, with most of them siding with Macmillan (examples here and here and here).
Hey, you want to know how to piss off an author? It’s easy: Keep people from buying their books. You want to know how to really piss them off? Keep people from buying their books for reasons that have nothing to do with them. And you know how to make them absolutely incandescent with rage? Keep people from buying their books for reasons that have nothing to do with them, and keep it a surprise until it happens. Which, as it happens, is exactly what Amazon did. As a result: Angry, angry authors. Oh so very angry.
Amazon apparently forgot that when it moved against Macmillan, it also moved against Macmillan’s authors. Macmillan may be a faceless, soulless baby-consuming corporate entity with no feelings or emotions, but authors have both of those, and are also twitchy neurotic messes who obsess about their sales, a fact which Amazon should be well aware of because we check our Amazon numbers four hundred times a day, and a one-star Amazon review causes us to crush up six Zoloft and snort them into our nasal cavities, because waiting for the pills to digest would just take too long.
These are the people Amazon pissed off. Which was not a smart thing, because as we all know, the salient feature of writers is that they write. And they did, about this, all weekend long. And not just Macmillan’s authors, but other authors as well, who reasonably feared that their corporate parent might be the next victim of Amazon’s foot-stompery.
--Science fiction writer John Scalzi
Hey, Amazon. When cutting off publishers, don’t start with the one that has the most science fiction writers. We will blog you dead!
--Science fiction author Scott Westerfield
What is it about the tech industry and authors? Both Amazon and Google have shown a unique ability to make authors bond with publishers, people they otherwise tend to view as parasitic scum.
The relationship between Amazon and Macmillan is very complicated, and I don't want to get into the details of their contracts here. There's ample evidence for labeling either one of them a villain and/or idiot if you want to. But my point is that ebook pricing remains screwed up today. Maybe not as uniformly screwed up as it was in 2000, but it's still a mess.
3. The hardware form factor was wrong. When ebook readers failed to sell well, ebook producers tried to focus on other electronic devices -- PCs, PDAs, and smartphones.
The trouble is that for most people, the ergonomics and psychology of reading are wrong on computers and smartphones. A laptop is the wrong size and weight to create an immersive reading experience, and the backlit displays on most laptops create eyestrain compared to reading ink on paper.
PDAs and smartphones are too small for immersive reading for most people, and besides people are usually in a different mindset when they use a pocket device. They use it briefly, in short spurts throughout the day, when they are bored or need to find a bit of information. It's like the information equivalent of snacking. A reference book might be useful in this context, and holy books like the Bible sell well in electronic form because some people take comfort in reading a bit of them every day. But for most people, a pocket device isn't something that you'd curl up with for a couple of hours, the way you would with a book.
This is an area where we're obviously making a lot of progress. Amazon and Sony have both been willing to subsidize their tablet devices for years while the ebook market develops, and Apple and other big computer companies are now entering the tablet market, not to mention a host of smaller startups.
Just remember that most electronics companies are sheep. If tablets don't sell well, they will exit the market as quickly as they entered it.
4. Periodicals weren't ready. Although we call these devices "ebook readers," if you look at user attitudes and usage patterns, in many ways they are a better fit for reading periodicals (newspapers and magazines) than they are for books. Most printed magazines and newspapers are viewed as disposable, so many people don't object to paying the same price for an e-version as they do for the printed version. And most periodicals can be read in short bursts, which fits the usage pattern for mobile devices.
Even better, an e-magazine can get to the reader faster than a printed version, because it doesn't have to be printed and mailed.
When I was at Softbook, there was a lot of user interest in getting magazines on our devices. Unfortunately, very few were available, and the effort to get them converted started too late to save the company.
Today, there are electronic versions of a number of publications targeted at the ebook readers. But a couple of additional problems have surfaced. One is that often the e-versions are inferior to the printed versions. On the Kindle store, 64% of the reviews for the e-version of The Economist magazine are a single star (the lowest possible rating). Here are some sample comments:
"I was very happy and interested in the Economist on Kindle despite the cost until I learned that the subscriber content on the Economist web site is not included....For the cost involved the Kindle subscription should at least equal the print subscription benefits."
"Why does it take a week to make the Kindle version available. I find it very convenient to read and search but do not want to be a week behind in reading."
"I only receive part of the magazine. Overseas users don't get images -- including the cover image and graphs/charts."
"Many of the charts and graphs are so small the legend is unreadable which in turn renders the displays meaningless."
Time Magazine, 46% of reviews are one star:
"This is a rather embarrassing electronic version of Time Magazine. There are NO pictures, no charts, no illustrations. Instead whenever you run into an article that has these in any decent amount, they've inserted an entry telling you to go get a PDF or print version....It looks and feels like some cheap RSS reader collected this rather than being an electronic version of the magazine."
"I'd like to read some parts of Time but not others, so I very much miss having a convenient table of contents. As it is, we have to (slowly) leaf thru all articles to find out what's of interest."
Wall Street Journal, 50% of reviews are one star:
"The pricing makes absolutely no sense: $99/year for the WSJ print edition with the Online Web edition included. $119.88/year ($9.99/month) for the Kindle edition.... That makes no sense because I could buy the Web edition and read it through the Kindle Browser for no additional charge."
"I also subscribe to the print and wsj.com which shows how the Kindle edition is very limited in his layout and pizzaz....Compared to the NYTimes Reader or even the wsj.com it is a sad commentary on their apparent lack of effort. There should be a more detailed table of contents instead of just very general catagories of articles. To find a specific article is sort of a blind proposition...being forced to go through the all article until you find what you're looking for."
In fairness, some other publications are better-reviewed. The Kindle version of the International Herald Tribune has an average rating of four stars, as does the New England Journal of Medicine. But overall, there are a lot of teething problems as the publishers figure out how to produce their e-versions and how to price them. This is likely to hinder customer adoption until the problems get sorted out.
5. Poor marketing. In my opinion, the right way to create a technology product is to identify a group of customers who have a major problem, and to solve that problem decisively. It's not clear that ebooks, especially as they are constituted today, do that. Paper books simply aren't broken, from the perspective of most users. S. David Mash had a good quote on this (link):
The reading device for the paperback is widely available for free (sunlight). This device can be used for other tasks as well.
A lot of the investment in ebook devices today seems to be driven more by strategy than by user needs. E-books are believed to be an important future business opportunity, and companies are maneuvering to be in position when that opportunity takes off.
The problem is, unless they solve a user problem, and communicate it to the users, the market won't take off in the first place. This tripped up the ebook companies in 2000, and I think it is still true today. Check out Amazon's pitch for why you should buy Kindle:
Can you spot the problem? It's a list of features, not a list of benefits. Now let's look at Sony:
They're doing a tiny bit better, in that they do list a user benefit. Unfortunately, how many people do you know who want to carry 350 books at one time? I call this situation "phantom value," and it's something that happens a lot to tech companies. They've made a product without really thinking through the value proposition. When it comes time to market it, they pick one feature of the product and try through brute force to persuade customers that they should care about it. Usually the only people they convince are themselves.
This same thing happened when the music industry was first trying to defend itself from MP3 players. There was a huge fuss over the superior audio quality of CDs, and a lot of people in the music industry put a lot of effort into talking up the quality aspect of CDs. The only problem was that the average music listener couldn't hear the difference and didn't care about it.
What it means for ebooks in 2010
Although ebooks are doing much better than they were in 2000, there are still very significant structural barriers to the broad adoption of ebooks. We're in a chicken and egg situation where the content isn't fully ready for use because there aren't enough device users to force investment, but people won't buy more devices until the content gets better. As long as Amazon and Sony continue to subsidize the market, I think it will continue to grow moderately. And I think the iPad and related tablet products may help. But overall, the prospects for near-term explosive growth don't look good.
What happens next, and what can we do about it?
First, let's talk about a couple of opportunities. Paper books published today are not broken, but there are a couple of notable places where the publishing industry as it works today really is breaking down, and ebooks could help.
Save the short story. The first problem is the market for short stories. I wrote about this several years ago at length (link), so I won't repeat the whole situation here. But a quick summary is that the magazines that used to produce a lucrative market for short stories have mostly gone out of business or moved on to other sorts of content. As a result, authors have relatively little incentive to write short fiction these days.
Speaking as someone who grew up reading and appreciating short fiction, this is a loss for readers and an opportunity for e-reader devices. Short fiction is a great fit for e-readers because it can be consumed in small bites, and if authors could sell directly to their readers, the revenue could eventually be good enough that people would go back to writing short fiction. Plus it would give e-reader devices a real benefit -- content that you can't get anywhere else.
What's missing is the marketplace to make that happen. We need the equivalent of an iTunes store for short stories, tied to a mass market tablet device.
Free the backlist. At the O'Reilly conference I heard a fascinating statistic from Brewster Kahle of the Internet Archive: 70% of all the books ever written in English are out of print but still under copyright. In other words, you can't legally make copies of them, but there's not enough demand for them that the publishers can afford to reprint them. They are orphans.
These aren't just obscure books. In science fiction, my favorite category, award-winning books from the 1950s and 1960s are frequently out of print, and forget about finding less-known books even from major authors. The best you can do is a used book search, which if you're lucky will get you a smelly and dog-eared paperback in the mail. And those are the famous authors! Books from many others are unavailable in any form.
In my opinion, this is appalling. And it's also an opportunity.
Kahle is working on a project to let universities lend out electronic copies of the books in their stacks, which include many of these orphan books. As I understand it, the idea is that the library owns the right to lend out one copy of the book. If a central server keeps track of that single electronic copy, it's possible to legally read e-versions of orphaned books. It sounds like an incredibly cumbersome approach -- and it is. But it's better than nothing, and once again it's producing content for e-readers that can't be obtained any other way.
The project is called BookServer, and 1,000 more books are being digitized every day (link). It's the most hopeful thing I've heard about the future of libraries in years.
Rethink the periodical
The Internet is flooded with videos of prototype electronic magazines that publishers have been working on. Most of them look pretty similar -- there's an electronic image that looks just like a printed magazine page. The user moves from page to page by swiping a finger back and forth on the device's screen. You can zoom in to look at a graphic more closely, and zoom out to a thumbnail view that shows several pages side by side. The pages include both ads and stories, just like the magazine. In some prototypes, static pictures are replaced by videos and animations. Most of the demo is made up of page swiping and zooming, and you're left thinking, "hey, that looks just like a print magazine on the screen."
I am reminded of this:
It's called the Horsey Horseless Carriage. Time Magazine wrote about it in 2007 (link). It was supposedly an early automobile design in which a horse's head (thankfully a carved wooden one rather than stuffed) was mounted on the front of an automobile. The idea was apparently to make the car look more like a horse-drawn carriage, so the real horses would not be frightened by it. Just as striking as the horse's head is the rest of the car's design. From the wheels to the body design to the weird tiller the driver uses to steer, it is a basically a horse-drawn carriage that has a motor affixed to it.
We laugh now because we know the carriage needed a total rethink to translate it into a car -- everything from the wheels to the controls to the seat designs had to change radically. And yet when it's our turn to create something new, we create electronic magazines that look just like printed magazines.
It's a failure of the imagination, in my opinion. Most of the design of a magazine was driven by the economics of printing and mailing a paper publication. Why are the ads and text arranged the way they are? Because in a paper magazine, you can force people to skim past the ads while they look for the articles. Why is a magazine that particular size? Because that's what the post office will deliver, it fits easily in mailboxes, and it's a paper size we're used to handling. Why does it come out once a month or once a week? Because you have to bundle up a critical mass of content and ads before it makes financial sense to mail it. And on and on and on.
None of those assumptions apply to an electronic publication. They are all rules that we've absorbed from the print world, so deeply that we don't even think to question them. Some of those assumptions may still make sense in the electronic world, but many of them won't. One area where I feel strongly that our assumptions are faulty is advertising.
People reading paper magazines are used to fumbling past ads while they read. It's a standard part of the experience. But people using an electronic device have been conditioned by the web to expect to click and jump directly to the content they want. Making them flip through simulated electronic pages full of ads simply won't work. That means the ads in an electronic publication probably can't be as numerous as they are in a print publication. What's worse, the ads that pay the most money -- the inside front cover and the back cover -- don't even necessarily exist in an electronic publication.
I think some magazines believe they can force the current ad experience on users. Some of them even have persuaded themselves that readers see the ads as part of the value of the magazine (see my discussion of phantom value, above). But publications need to understand that they'll be competing with a new crop of publishers who grew up online and are not hamstrung by the same thinking.
The best example of this new thinking is Yahoo. It's very trendy to dismiss Yahoo these days because it's not Google, but in reality the company is a very different beast. Google is all about search and direct-response advertising associated with it. Yahoo is basically an electronic publisher supported by "display" ads -- brand-building ads created by large national advertisers, targeted at the specific demographic groups Yahoo delivers.
Yahoo today runs a hugely successful electronic newspaper. It has a news section:
A finance section:
And a sports section:
All of them are totally supported by ads, with no subscription fee.
If you're a magazine or newspaper publisher, you may think that e-publishing finally gives you a path out of the free-web-content trap. But ask yourself what happens when companies like Yahoo realize they too can create electronic publications for ebook readers. Will they charge for subscriptions, or will they create completely ad-supported publications? What does that do to your business model?
I think the periodical has to be rethought much more thoroughly than it has been to date. At its core, the thing that makes a magazine or newspaper valuable to readers is its editorial staff -- a group of writers, editors, and artists who work in synergy to produce a unified product. Rather than asking how to make a magazine electronic, we need to ask what must be built around an editorial staff to make it viable in the electronic world. I don't know what the result will be, but I'm pretty sure it won't look like a print magazine scanned and transferred to a screen.
Publishers: Rethink your value
Although publishers today are focusing on what ebooks do to their distribution channels, the real threat to them, in my opinion, is the likelihood that in the future authors will publish their books directly to the public, bypassing the entire publishing value chain. To understand this challenge, it's necessary to look at the current value chain for books...
An author typically gets about 12% of the list price of a book. The rest of the revenue is consumed by the distribution channel -- the publisher's overhead, the cost of printing and shipping books, the expenses of the bookseller, etc. This is not to say that publishers and booksellers are getting rich. Typically a small number of bestselling books generate the revenue that covers the losses a publisher takes on everything else it publishes. Something similar happens to bookstores. The reality is that the whole publishing value chain is grossly inefficient -- it absorbs a lot of cash, and almost no one gets rich from it.
This distribution chain was stable only when it was the sole way to get a book to a customer. It's already under attack by Amazon, which avoids the overhead of a physical bookstore; and by discount retailers who skim off the best-selling books, absorbing the revenue that formerly supported local bookstores. But that's only a prelude to what's coming.
Because authors get such a small percentage of the sales price of a book today, any system that let them capture more of the revenue from a book sale will be very attractive to them, even if it sells a lot fewer books.
The chart below illustrates my point. For simplicity, I've assumed a best-selling author who gets 15% of the book's revenue, a bit more than usual. The author's new book is going to sell 100 printed copies through the traditional retail channel at $20 each. That means the total revenue for the book will be $2,000, of which the author gets $300.
But if the author sells the book direct to the public as an ebook, he or she will be able to keep 70% to 80% of the revenue (because that's what the online content stores are typically returning). If the store's cut is 25%, the author will make $300 after he or she sells only 20 books.
The red and blue bars show the author's revenue as ebook readers reach various levels of penetration in the book-buying population. The chart's kind of complex, but its main message is that once e-readers are in the hands of about 20% of the book-buying public, an author has a financial incentive to sell direct rather than selling through a publisher.
Fortunately for publishers, e-readers are far below 20% penetration today. They're probably at about 2%. So the business is stable for the moment. In fact, it's probably a little more stable than a lot of publishers believe. We're likely to have a latency period of at least several years while the e-reader installed base gradually grows. During this time nothing terribly dramatic will happen to publishers, and they may think they have the situation under control. But then we'll reach a tipping point, and suddenly established authors will have a financial incentive to go direct rather than bothering with paper publication of their books. Once that happens, all book buyers will have a very strong incentive to get e-readers -- some books by bestselling authors simply won't be available in paper form, or will be available first electronically. This will drive more rapid sales of e-readers, which will give authors even more incentive to bypass the publishers.
Once the dam cracks, the water will move very quickly.
Some notes on this scenario:
--I simplified the pricing story by assuming that ebooks are priced the same as hardcovers. They aren't, so the tipping point is probably a bit higher than 20%.
--On the other hand, Macmillan's move to raise the price of ebooks actually brings the tipping point closer. Every time ebook prices go up, that creates more incentive for an author to go electronic.
--The authors most likely to switch to electronic publication are the established names who don't need a publisher's help in marketing. Those authors are also often the most profitable for a publisher. That means the impact of the switch may be even greater than what I laid out here.
--Products like the iPad bring the tipping point closer, because they are tablets that do other things than just reading books. This bypasses the chicken and egg situation that killed e-readers in 2000. Every time Apple convinces someone to buy an iPad to do browsing or watch videos, that's another potential book-buyer who's ready for ebooks.
--The competition between Apple and Amazon will also probably bring the tipping point closer, because it holds down the cut charged by the online ebook stores. In January, anticipating the iPad announcement, Amazon cut its charge on self-published ebooks to 30%, matching Apple's terms on the iPhone app store (link).
Six critical questions for book publishers
Are publishers doomed? Not necessarily. I think we're going to end up with a range of situations in which some authors sell direct on their own, some use selected services to help them self-publish, and some partner with publishers for services similar to the things they do today. But the publishers will be dealing with new competitors and new economics, and they'll need to rethink who their customers are, and what unique value they can add from the perspective of those people. The time to do that thinking is now, before e-readers reach the tipping point. Here are the questions to ask:
1. Who is my customer, the author or the book-buyer? Most publishers today would say "both," and might add the bookstore to that list as well. But that reflects the print publishing channel structure. In the electronic world, those audiences do not have to be bundled together. There may be some publishers who partner primarily with authors, and are more or less invisible to readers. There may be other publishers that play a very prominent role in the eyes of readers (examples below). The point is to understand which type of publisher you are, and adjust your business accordingly.
2. How much value do my editing services add from the reader's point of view? I've seen quotes from publishers saying that ebook consumers will want to pay more for ebooks that are properly edited. If you believe this, I invite you to re-read the discussion of CDs vs. MP3s above. If a book is poorly edited, people will just blame the author. That means editing is actually a service for authors, not readers. Which brings us to the next question...
3. How much value do my editing services add from the author's point of view? Many authors acknowledge that their editors add tremendous value to their books; others hate their editors. But the key question is, could they hire a freelancer to do the same thing? Question for a publisher: What if some of the people you just laid off form an editing cooperative and then contact your authors with a cut-rate offer?
4. How much demand generation do we really do? This is a place where the perspectives of authors and publishers often differ. Publishers tell me that they do a lot to create demand for books. Authors typically say the publishers just shovel books onto the market and wait to see which ones sell themselves. If the publisher doesn't generate demand, then an author might as well self-publish electronically as soon as it pays more money.
5. Which brand are the readers buying? This varies tremendously from publisher to publisher. In fiction, the author's name is generally the brand that readers respond to. No reader cares who published Steven King's latest book; they just buy Steven King. But in other fields, especially nonfiction, it's more common for a publisher to control the brand. Think of the For Dummies franchise, or Sunset's How-to books, or the role that O'Reilly plays in technical books. I think e-publishing may make those brands even more powerful. A traditional publisher can help a paper book sell well by working behind the scenes to get bookstores to promote it -- put it on the table out front, place it on an endcap, and so on. Most of that promotional opportunity doesn't exist in an online store. Instead, your product is just tossed out there in a sea of other products, and it has to succeed or fail on its own. In that world, a recognized brand naturally floats to the top. That's why the Madden football game on iPhone costs $7 while many other iPhone games sell for 99 cents.
6. What sort of book am I selling? Writer/publisher Craig Mod wrote a splendid essay discussing the difference between books that have form and books that do not have form (link). Books that have form get some value from the physical book itself -- maybe it's the arrangement of text and images that creates a certain impression, or maybe it's the need for something physical (think of a coffee table book or a gift book). Those books are not going to be cannibalized easily by electronic publishing.
On the other hand, formless books (those that don't get any special value from the physical form of the book) are ripe for the picking. Think paperbacks and general-consumption fiction and nonfiction.
I'll leave you with Craig's hopeful picture of what this all means for the future of books:
You already know the potential gains: edgier, riskier books in digital form, born from a lower barrier-to-entry to publish. New modes of storytelling. Less environmental impact. A rise in importance of editors. And, yes — paradoxically — a marked increase in the quality of things that do get printed.
When we're confronted by all the downsides of change, it's important to remember that change also brings progress. If publishing gets a lot more efficient, we should see greater diversity of new sorts of publications, as well as the rebirth of a lot of old books and stories that we can't get to today. That's a future to look forward to -- as long as you can figure out how to keep your job during the transition.
Kamis, 25 Februari 2010
How many Kindles have really been sold? (And other interesting tidbits about ebooks)
Although a lot of people are excited about ebooks, it's very difficult to get hard information on how the market for them is growing. We don't even know how many Kindles Amazon has sold, let alone more detailed specifics on the market.
So I was very happy Wednesday when the Book Industry Study Group (a publishing industry trade group) gave details from its recent survey of ebook adoption in the US. The survey was first revealed in January, but the press release was very sketchy and sometimes confusing. In its presentation at the Tools of Change conference, the BISG gave much more details on the results. My highlights from the presentation:
Ebook usage is growing fast, but it's still small. Roughly 2% of American book buyers over age 13 are active ebook users, meaning they obtained an ebook or a reader device in the last year. About half of those were first-time ebook buyers, so the usage of ebooks has probably roughly doubled in the last year. BISG is doing multiple waves in the survey, and says it found a 25% increase in ebook usage just over the holiday season, so it was a pretty good Christmas (and Hanukah) for ebooks.
The most-used device for reading an ebook is a personal computer (47%). Amazon Kindle is number two (32%), followed by Apple's iPhone and iPod Touch (21%).
Either there's something wrong with the numbers, or Amazon hasn't sold quite as many Kindles as some people think. More on that below.
What does it mean?
PC leadership is no surprise. There are so many PCs in the US that even a small percentage of PC users reading ebooks will swamp everything else. BISG said that the PC share of ebook reading is declining as other devices grow, also what I would have expected. I bet that in a year (or two at the most), a majority of ebook readers will be on non-PCs.
Apple is closer to Kindle than you might expect, but... A tidbit that jumped out at me was Apple's share of ebook usage. Kindle has gotten all the attention, but Apple has about 2/3 the share of Amazon in ebook usage without even trying. However, before we set off another round of "Apple uber alles" on the web, there are several big caveats:
--BISG didn't report on the number of books bought per platform. Based on my experience at Palm (which had an active e-reading community), I suspect that a lot of those iPhone book readers are pretty casual, buying a few books or publications to kill time when they are bored. I believe Kindle users are probably much more active readers.
(For comparison, about 4% of the Palm OS users in the US were reading ebooks at least occasionally in 2002. That total rose to about 8-10% if you included the Bible -- it was by far the most popular ebook. That amounts to about 1.5-2 million ebook users on Palm OS alone.)
--Apple and Kindle are also different demographically. After the presentation today, BISG told me that Kindle readers are older and more likely to be female compared to Apple readers. What we may be seeing is that if someone already carries an iPhone or iPod Touch, they're less likely to invest in yet another device just to read on it. Or maybe younger people just find it easier to read on a tiny screen. Either way, I think it's pleasant that Apple and Kindle are reaching somewhat different audiences rather than just stepping on each other.
--And of course the iPhone/iPod Touch installed base is a lot bigger than Kindle's. So as is the case with PCs, even relatively low ebook usage on the iPhone will add up to a lot of users.
How many Kindles are really in use? As far as I can tell, Amazon hasn't released any Kindle device sales figures, other than a quote referring to "millions" of users. Several analysts have jumped on the use of the plural as evidence that at least two million Kindles have been sold. But I think the BISG survey doesn't support that. Here's my math:
--About 2% of book buyers have ebooks and/or ebook devices.
--About a third of them have Kindles (that's 0.67% of active book buyers).
--If 0.67% of book buyers in the US is two million people, then there are 300 million active book buyers in the US. That is the entire US population, including infants and people who don't like books. I don't know what the base of active book buyers is in the US, but my guess is it's not over 200 million, meaning the installed base of Kindles would be about 1.3 million.
It's tricky to play with survey results when the percentages are this small -- the margins of error become very significant. But for now I think the BISG survey raises some questions, and I'm not willing to accept the two million figure for the Kindle installed base without some more rigorous evidence to support it.
Other tidbits
BISG is not going to release all of the information from the survey (that goes only to the companies that paid for it). So I took as many notes as I could during the presentation. Here's what I captured:
Ebooks are somewhat cheaper than hardcovers
On average, an ebook costs $6.25 less than a hardcover book. This is a huge issue to the book publishing industry, which worries that ebook sales will cannibalize hardcover book sales. My comment: Of course they do, get over it. The thing publishers should be looking at is the much higher margins they make per ebook sold. I don't know of many industries that resist moving to a higher-margin product, but publishing appears to be the grand exception. Of course, the thing worrying publishers is the decline of independent bookstores, and they're afraid ebooks will accelerate that. But the decline of the bookstore has almost nothing to do with ebooks -- it's being driven by online sales of paper books and predation by retail chains.
Demographics
-Ebook buyers are 51% men (compared to 58% women for paper books).
-Ebook buyers are higher income than paper book buyers. Not a lot, but significantly higher income. No surprise there -- most poor people can't afford several hundred dollars for an ebook reader. Betcha they don't buy a lot of hardcover books either.
Cannibalization
Among ebook buyers, 11% no longer buy any paper books. 8% buy mostly ebooks, and about 30% prefer to buy ebooks. So about half of ebook users prefer ebooks to paper books. That's actually a lower percentage than I expected for something that is supposed to take over the world. But remember, half of ebook users are reading on PCs. What I really want to know is the percentage of Kindle users who prefer ebooks; that'll tell us how satisfied Kindle users are.
Preferred device used to read ebooks
-PC: 47%
-Kindle: 32% (and rising in later waves of the survey)
-iPhone: 11%
-iPod Touch: 10% Hmmmm! iPod Touch really is a PDA.
-Other smartphones (including Blackberry) 9%
-Netbooks 9%
-Sony Reader 8%
-Barnes & Noble Nook 8% (the BISG folks noted that Nook was just starting to sell at this point; they believe some users confused Barnes & Noble ebooks with the Nook device)
Genres of ebooks
-General fiction, 31%
-Mystery 28%
-How To 25% (but #1 over Christmas)
-Science Fiction
-Biography
-Business
I don't know where religion and travel went. I need to learn more about how this question was asked.
So I was very happy Wednesday when the Book Industry Study Group (a publishing industry trade group) gave details from its recent survey of ebook adoption in the US. The survey was first revealed in January, but the press release was very sketchy and sometimes confusing. In its presentation at the Tools of Change conference, the BISG gave much more details on the results. My highlights from the presentation:
Ebook usage is growing fast, but it's still small. Roughly 2% of American book buyers over age 13 are active ebook users, meaning they obtained an ebook or a reader device in the last year. About half of those were first-time ebook buyers, so the usage of ebooks has probably roughly doubled in the last year. BISG is doing multiple waves in the survey, and says it found a 25% increase in ebook usage just over the holiday season, so it was a pretty good Christmas (and Hanukah) for ebooks.
The most-used device for reading an ebook is a personal computer (47%). Amazon Kindle is number two (32%), followed by Apple's iPhone and iPod Touch (21%).
Either there's something wrong with the numbers, or Amazon hasn't sold quite as many Kindles as some people think. More on that below.
What does it mean?
PC leadership is no surprise. There are so many PCs in the US that even a small percentage of PC users reading ebooks will swamp everything else. BISG said that the PC share of ebook reading is declining as other devices grow, also what I would have expected. I bet that in a year (or two at the most), a majority of ebook readers will be on non-PCs.
Apple is closer to Kindle than you might expect, but... A tidbit that jumped out at me was Apple's share of ebook usage. Kindle has gotten all the attention, but Apple has about 2/3 the share of Amazon in ebook usage without even trying. However, before we set off another round of "Apple uber alles" on the web, there are several big caveats:
--BISG didn't report on the number of books bought per platform. Based on my experience at Palm (which had an active e-reading community), I suspect that a lot of those iPhone book readers are pretty casual, buying a few books or publications to kill time when they are bored. I believe Kindle users are probably much more active readers.
(For comparison, about 4% of the Palm OS users in the US were reading ebooks at least occasionally in 2002. That total rose to about 8-10% if you included the Bible -- it was by far the most popular ebook. That amounts to about 1.5-2 million ebook users on Palm OS alone.)
--Apple and Kindle are also different demographically. After the presentation today, BISG told me that Kindle readers are older and more likely to be female compared to Apple readers. What we may be seeing is that if someone already carries an iPhone or iPod Touch, they're less likely to invest in yet another device just to read on it. Or maybe younger people just find it easier to read on a tiny screen. Either way, I think it's pleasant that Apple and Kindle are reaching somewhat different audiences rather than just stepping on each other.
--And of course the iPhone/iPod Touch installed base is a lot bigger than Kindle's. So as is the case with PCs, even relatively low ebook usage on the iPhone will add up to a lot of users.
How many Kindles are really in use? As far as I can tell, Amazon hasn't released any Kindle device sales figures, other than a quote referring to "millions" of users. Several analysts have jumped on the use of the plural as evidence that at least two million Kindles have been sold. But I think the BISG survey doesn't support that. Here's my math:
--About 2% of book buyers have ebooks and/or ebook devices.
--About a third of them have Kindles (that's 0.67% of active book buyers).
--If 0.67% of book buyers in the US is two million people, then there are 300 million active book buyers in the US. That is the entire US population, including infants and people who don't like books. I don't know what the base of active book buyers is in the US, but my guess is it's not over 200 million, meaning the installed base of Kindles would be about 1.3 million.
It's tricky to play with survey results when the percentages are this small -- the margins of error become very significant. But for now I think the BISG survey raises some questions, and I'm not willing to accept the two million figure for the Kindle installed base without some more rigorous evidence to support it.
Other tidbits
BISG is not going to release all of the information from the survey (that goes only to the companies that paid for it). So I took as many notes as I could during the presentation. Here's what I captured:
Ebooks are somewhat cheaper than hardcovers
On average, an ebook costs $6.25 less than a hardcover book. This is a huge issue to the book publishing industry, which worries that ebook sales will cannibalize hardcover book sales. My comment: Of course they do, get over it. The thing publishers should be looking at is the much higher margins they make per ebook sold. I don't know of many industries that resist moving to a higher-margin product, but publishing appears to be the grand exception. Of course, the thing worrying publishers is the decline of independent bookstores, and they're afraid ebooks will accelerate that. But the decline of the bookstore has almost nothing to do with ebooks -- it's being driven by online sales of paper books and predation by retail chains.
Demographics
-Ebook buyers are 51% men (compared to 58% women for paper books).
-Ebook buyers are higher income than paper book buyers. Not a lot, but significantly higher income. No surprise there -- most poor people can't afford several hundred dollars for an ebook reader. Betcha they don't buy a lot of hardcover books either.
Cannibalization
Among ebook buyers, 11% no longer buy any paper books. 8% buy mostly ebooks, and about 30% prefer to buy ebooks. So about half of ebook users prefer ebooks to paper books. That's actually a lower percentage than I expected for something that is supposed to take over the world. But remember, half of ebook users are reading on PCs. What I really want to know is the percentage of Kindle users who prefer ebooks; that'll tell us how satisfied Kindle users are.
Preferred device used to read ebooks
-PC: 47%
-Kindle: 32% (and rising in later waves of the survey)
-iPhone: 11%
-iPod Touch: 10% Hmmmm! iPod Touch really is a PDA.
-Other smartphones (including Blackberry) 9%
-Netbooks 9%
-Sony Reader 8%
-Barnes & Noble Nook 8% (the BISG folks noted that Nook was just starting to sell at this point; they believe some users confused Barnes & Noble ebooks with the Nook device)
Genres of ebooks
-General fiction, 31%
-Mystery 28%
-How To 25% (but #1 over Christmas)
-Science Fiction
-Biography
-Business
I don't know where religion and travel went. I need to learn more about how this question was asked.
Rabu, 27 Januari 2010
iPad: The (attempted) Windows killer
(Well, you've got to admit, that's not something you'll be reading on most other weblogs today.)
Ten hours after the Apple iPad announcement, my overall reaction is that the product wasn't necessarily better or worse than I expected, but it was definitely different.
I expected an upsized extension to the iPod Touch, with a focus on watching videos, browsing, and playing games. The device can certainly do all of that, but Apple spent a huge amount of time demonstrating features I didn't expect -- e-mail management, productivity applications, and typing with the on-screen keyboard.
I know many of you think those are just checkoff items, and you may be right. We're all trying to read Apple's strategic intentions from a single product announcement, and that's hard to do. But here's how I view it: I believe Apple is serious when it spends five minutes demonstrating a feature, and I believe they actually said what they meant to say during the announcement. Specifically:
--Apple's identity is as a mobile device company.
--Netbooks suck and Apple can do something better.
--It's amazingly comfortable and easy to type on a touch screen.
(I'm not sure I agree with the last one, by the way, but we're talking about what Apple believes, and Steve sold the onscreen keyboard thing hard.)
If they really believe all of those things, then the iPad starts to look like Apple's idea of the next logical stage in the evolution of personal computing. It takes everything Apple learned from iPod and iPhone and applies that to a redesign of the low-end personal computer. It's Apple's vision of the netpad done right -- not a PC accessory, but a lightweight portable device that can replace the PC for many basic usages. The idea wouldn't be to kill the PC outright, but to nudge it toward the workstation space, in the process gradually eating away at the market share of Windows.
Yes, I believe killing Windows is still very high on Steve's personal to-do list. Always.
If you start from that assumption, a lot of the other things Apple said today make more sense. Why did they spend a year rewriting iWork for the tablet? Because you need an office suite in order to displace a PC (you don't need it for a media tablet). Why price that suite at just ten bucks a module? Because that profoundly screws up the pricing for Office on netbooks (the only way Microsoft can match that pricing is to destroy the value of its cash cow).
Why didn't we get a more comprehensive media store? I was expecting an entertainment tablet, and so I thought there would be a much more aggressive push for third party media developers. Apple did create the iBooks store, but they don't seem to be reaching out to individual authors the way I expected. And other media (video and animation) remains in iTunes rather than getting its own purchasing experience. To me, the iPad feels more like a netbook replacement that also does books, rather than a media tablet that also does spreadsheets.
Will it work?
If Apple's plan really is to displace netbooks, it faces some interesting challenges. One of the greatest appeals of a netbook is that it is a fully functional Windows notebook computer (cramped and awkward, but fully functional). Computer users have historically been very resistant to compromising on some core features. Will they accept a netbook that doesn't have a physical keyboard or a hard drive, and that can't run Flash and Java? And as Chris Dunphy (link) asked me today, will Apple give iPad applications more freedom to multitask than they have on the iPhone?
I don't know. And so I really don't know how the product will sell.
It doesn't help that the marketing for the iPad feels muddled. Apple's website tonight reads, "Our most advanced technology in a magical and revolutionary device at an unbelievable price." Ugh, it's a big bag of features. As I asked in my pre-launch post yesterday, who is it for and what problem does it solve? The question hasn't been answered crisply.
At least Apple got the base price of the product right. It's still above what I think most consumers will pay for a tablet, but Apple's within the realm of believability, and over time I hope the price will come down further. If it does, and if Apple markets it strongly, the product may be able to find its own market.
Meanwhile, I'm sure the iPad will have an important impact on some other companies. Namely...
Nokia: Step your game up. Several years ago, Nokia said it was re-creating itself as a computer company. Now Apple says it has re-created itself as a mobile company. Not just a mobile company, but supposedly the world's biggest mobile device company as measured by revenue. Whether that statistic is actually meaningful or something Apple manipulated through clever accounting, it must have driven the Nokia management team nuts -- which was undoubtedly Apple's intent.
Now Nokia has to decide whether it wants to compete with Apple in yet another product category, at a time when it already seems a bit overwhelmed. It's a very tough decision. (And please don't tell me the N900 is an iPad competitor. It's too small.)
Is Kindle in trouble? Not yet. The Amazon Kindle vs. iPad competition is going to be very interesting. My first reflex was to say that Kindle is in trouble -- iPad is a much more capable device, and the convergence advocates will tell you that a general-purpose tablet will eat a single-purpose e-reader. But Kindle is half the price of the iPad, even less when you factor in the cost of 3G for the iPad plus a service plan. Plus its screen, although only black and white, produces less eyestrain than a backlit LCD display. I don't think Kindle takes a big hit in the near term. In the long term, I am worried about Amazon's ability to compete with general-purpose tablets, but maybe Amazon's goal is to own the bookstore rather than the book reader. In that case, they should make sure the Kindle app works really well on the iPad.
The one thing I'm sure Amazon should not do is attempt to compete with Apple in the general-purpose tablet business. That's like challenging the Australian national rugby team to a drinking match.
The mobile operators: Pay attention to your pricing plans. I think this will be one of the most interesting floats in the iPad parade. Apple is now making its second attempt to bypass the subsidy model used by the operators. If Apple had been willing to bundle a two-year wireless contract with the iPad, it probably could have gotten the device subsidized down to about $299 or $350. But the downside would have been a $60 or higher monthly service plan, with soft caps on the amount of video someone could browse. It will be interesting to see how customers react to Apple's choice, especially when other companies sell subsidized net tablets for very low initial prices. In the phone market, Apple had to give in and accept the subsidy. We'll see if history repeats itself.
It will also be interesting to see how AT&T makes out with the revenue from iPad subscribers. At first glance, $30 a month for unlimited data sounds like a bad deal for AT&T. But keep in mind that data plans usually include several hundred dollars for the subsidy; the operator supposedly doesn't even turn a profit until sometime in the second year. With these plans, AT&T makes money from day one. So it may be able to make a better profit than you'd expect. Still, it seems a bit odd for a company with a network as congested as AT&T's to be adding a device designed to stream high-quality video from the web.
PC application developers: Pain. If the iPad really is Apple's vision of the future of personal computing, it's an ugly world for today's PC application developers. By pricing the pieces of iWork at $9.99 each, Apple has effectively created a price ceiling for major productivity applications. How many PC app companies can make money at that price per unit? And remember, that's the ceiling. It's time to start rethinking your business model...
No matter how well the iPad sells, it's a very interesting experiment worthy of the Apple brand, and I'm sure it'll drive a legion of imitators from Asia. I wish we had a few more hardware companies like Apple who were willing to mix up the market like this; innovation would move a lot faster.
Ten hours after the Apple iPad announcement, my overall reaction is that the product wasn't necessarily better or worse than I expected, but it was definitely different.
I expected an upsized extension to the iPod Touch, with a focus on watching videos, browsing, and playing games. The device can certainly do all of that, but Apple spent a huge amount of time demonstrating features I didn't expect -- e-mail management, productivity applications, and typing with the on-screen keyboard.
I know many of you think those are just checkoff items, and you may be right. We're all trying to read Apple's strategic intentions from a single product announcement, and that's hard to do. But here's how I view it: I believe Apple is serious when it spends five minutes demonstrating a feature, and I believe they actually said what they meant to say during the announcement. Specifically:
--Apple's identity is as a mobile device company.
--Netbooks suck and Apple can do something better.
--It's amazingly comfortable and easy to type on a touch screen.
(I'm not sure I agree with the last one, by the way, but we're talking about what Apple believes, and Steve sold the onscreen keyboard thing hard.)
If they really believe all of those things, then the iPad starts to look like Apple's idea of the next logical stage in the evolution of personal computing. It takes everything Apple learned from iPod and iPhone and applies that to a redesign of the low-end personal computer. It's Apple's vision of the netpad done right -- not a PC accessory, but a lightweight portable device that can replace the PC for many basic usages. The idea wouldn't be to kill the PC outright, but to nudge it toward the workstation space, in the process gradually eating away at the market share of Windows.
Yes, I believe killing Windows is still very high on Steve's personal to-do list. Always.
If you start from that assumption, a lot of the other things Apple said today make more sense. Why did they spend a year rewriting iWork for the tablet? Because you need an office suite in order to displace a PC (you don't need it for a media tablet). Why price that suite at just ten bucks a module? Because that profoundly screws up the pricing for Office on netbooks (the only way Microsoft can match that pricing is to destroy the value of its cash cow).
Why didn't we get a more comprehensive media store? I was expecting an entertainment tablet, and so I thought there would be a much more aggressive push for third party media developers. Apple did create the iBooks store, but they don't seem to be reaching out to individual authors the way I expected. And other media (video and animation) remains in iTunes rather than getting its own purchasing experience. To me, the iPad feels more like a netbook replacement that also does books, rather than a media tablet that also does spreadsheets.
Will it work?
If Apple's plan really is to displace netbooks, it faces some interesting challenges. One of the greatest appeals of a netbook is that it is a fully functional Windows notebook computer (cramped and awkward, but fully functional). Computer users have historically been very resistant to compromising on some core features. Will they accept a netbook that doesn't have a physical keyboard or a hard drive, and that can't run Flash and Java? And as Chris Dunphy (link) asked me today, will Apple give iPad applications more freedom to multitask than they have on the iPhone?
I don't know. And so I really don't know how the product will sell.
It doesn't help that the marketing for the iPad feels muddled. Apple's website tonight reads, "Our most advanced technology in a magical and revolutionary device at an unbelievable price." Ugh, it's a big bag of features. As I asked in my pre-launch post yesterday, who is it for and what problem does it solve? The question hasn't been answered crisply.
At least Apple got the base price of the product right. It's still above what I think most consumers will pay for a tablet, but Apple's within the realm of believability, and over time I hope the price will come down further. If it does, and if Apple markets it strongly, the product may be able to find its own market.
Meanwhile, I'm sure the iPad will have an important impact on some other companies. Namely...
Nokia: Step your game up. Several years ago, Nokia said it was re-creating itself as a computer company. Now Apple says it has re-created itself as a mobile company. Not just a mobile company, but supposedly the world's biggest mobile device company as measured by revenue. Whether that statistic is actually meaningful or something Apple manipulated through clever accounting, it must have driven the Nokia management team nuts -- which was undoubtedly Apple's intent.
Now Nokia has to decide whether it wants to compete with Apple in yet another product category, at a time when it already seems a bit overwhelmed. It's a very tough decision. (And please don't tell me the N900 is an iPad competitor. It's too small.)
Is Kindle in trouble? Not yet. The Amazon Kindle vs. iPad competition is going to be very interesting. My first reflex was to say that Kindle is in trouble -- iPad is a much more capable device, and the convergence advocates will tell you that a general-purpose tablet will eat a single-purpose e-reader. But Kindle is half the price of the iPad, even less when you factor in the cost of 3G for the iPad plus a service plan. Plus its screen, although only black and white, produces less eyestrain than a backlit LCD display. I don't think Kindle takes a big hit in the near term. In the long term, I am worried about Amazon's ability to compete with general-purpose tablets, but maybe Amazon's goal is to own the bookstore rather than the book reader. In that case, they should make sure the Kindle app works really well on the iPad.
The one thing I'm sure Amazon should not do is attempt to compete with Apple in the general-purpose tablet business. That's like challenging the Australian national rugby team to a drinking match.
The mobile operators: Pay attention to your pricing plans. I think this will be one of the most interesting floats in the iPad parade. Apple is now making its second attempt to bypass the subsidy model used by the operators. If Apple had been willing to bundle a two-year wireless contract with the iPad, it probably could have gotten the device subsidized down to about $299 or $350. But the downside would have been a $60 or higher monthly service plan, with soft caps on the amount of video someone could browse. It will be interesting to see how customers react to Apple's choice, especially when other companies sell subsidized net tablets for very low initial prices. In the phone market, Apple had to give in and accept the subsidy. We'll see if history repeats itself.
It will also be interesting to see how AT&T makes out with the revenue from iPad subscribers. At first glance, $30 a month for unlimited data sounds like a bad deal for AT&T. But keep in mind that data plans usually include several hundred dollars for the subsidy; the operator supposedly doesn't even turn a profit until sometime in the second year. With these plans, AT&T makes money from day one. So it may be able to make a better profit than you'd expect. Still, it seems a bit odd for a company with a network as congested as AT&T's to be adding a device designed to stream high-quality video from the web.
PC application developers: Pain. If the iPad really is Apple's vision of the future of personal computing, it's an ugly world for today's PC application developers. By pricing the pieces of iWork at $9.99 each, Apple has effectively created a price ceiling for major productivity applications. How many PC app companies can make money at that price per unit? And remember, that's the ceiling. It's time to start rethinking your business model...
No matter how well the iPad sells, it's a very interesting experiment worthy of the Apple brand, and I'm sure it'll drive a legion of imitators from Asia. I wish we had a few more hardware companies like Apple who were willing to mix up the market like this; innovation would move a lot faster.
Minggu, 06 Januari 2008
Mobile Device of the Year, 2007
It's very difficult to say what's the best mobile device in a given year, because different people have different needs and desires. The ideal device for me might be repulsive to you, and vice-versa. But most of the computer publications try to make a call anyway. If you read the end-of-year reviews online, you'll probably conclude that the best mobile product of the year was the iPhone. It was cited by the Washington Post, Wired, Business Week, and Tech Republic (which strangely listed it as a business technology product, alongside Salesforce.com and LinkedIn).
Other mobile products getting mentions from major publications included the Nokia n95, iPod Touch, Razr 2, and Blackberry 8800. Amazon's Kindle was the only one that showed up on both best-of and worst-of lists. The best-ofs generally liked the wireless features and screen, while the worst-ofs disliked the closed business model and "eye-poking" industrial design.
I don't agree with any of those choices.
Since people have different needs, I think the best product of the year ought to be the one that best meets needs the needs of a particular group of users. It should be utterly compelling to its own audience. There are several questions to ask:
How efficient is it? Since people use mobile devices on the go, it should do just what the user needs, without any confusion or unneeded features. But there can't be any critical features missing, either.
How well does it trade off size vs. power? Because it's carried on your person, where size and weight are at a premium, it should balance tiny size with reasonable battery life.
How does it look? Because it's effectively a part of your wardrobe, it must look great (or whatever the target customer thinks of as great).
By that standard, I think the best mobile device of 2007 -- in fact, one of the best mobile products of all time -- was the third generation iPod Nano.
Don't get me wrong, iPhone fans. The iPhone is a very interesting and provocative device. There are some beautiful features in the user interface, and I love the turmoil it's causing in the industry. Several years from now we may look back on it and call it the most influential mobile device of its time. But that doesn't mean it's the best product.
To me, the iPhone is more an intriguing statement of direction than a completed product at this point. The lack of 3G is a huge compromise, and Apple obviously didn't think through the third party application thing. If you want a slow mobile browser that also plays music and videos and doubles as a somewhat awkward phone, then the iPhone is great. But for all of the cool highlights in the iPhone, I don't think it's enough to crush the phone industry in its current version. Future versions, maybe. We'll shortlist the iPhone III for product of the year in 2010.
The n95 is also a remarkable product in its own way, and I know it inspires a lot of technolust, especially in Europe. But in my opinion, it's just the latest Swiss Army Knife of the mobile world. Next year there will be another one from Nokia or Samsung or somebody else that has an even higher-resolution camera or maybe an electric toothpick or something, and people will be fawning all over that one. Like a lot of Japanese consumer electronics products, it's not a marvelous product as much as it is a marvelously ingenious bag of features.
By contrast, in third generation Nano is not just the latest model from Apple, it's an elegant culmination of the design work they've been doing for years.
The Nano doesn't look all that great in photographs. It's wider than its predecessor, which produced some criticism when it was announced (Engadget nicknamed it "fatty," which is asinine when you see it in person). In real life, the Nano's shape is compelling. It's much thinner than you'd expect from the pictures -- shockingly thin for something that has a color screen and plays videos. With its heavily rounded corners and brightly colored case, it feels a bit like a high tech chocolate wafer. You're almost tempted to take a bite out of it.
Physically, the Nano is almost all user interface -- the screen and thumbwheel take up the entire front of the device. Until we get flexible screens, the Nano is about as small as you can possibly make a device with its features. This is the endpoint, a form factor that's going to be with us for a while.
The biggest surprise to me about the Nano is the usability of video on it. When it was announced, I thought video was a throwaway feature -- who would ever want to watch video on a screen that small? But the reality is that when you're sitting down, you'll hold a Nano about 18 inches (45 cm) away from your face. At that distance, the screen is about the same apparent size as a 20-inch television (50 cm) at the other side of the living room. It's not like watching a flat panel monster screen, but it's very usable.
I'm not sure yet how much video will be used on the device, or what sorts of video, but that's a general question about mobile video rather than anything specific about the Nano. What I've observed so far is teenage girls using the Nano to watch music videos together, commenting on how cute the drummer is.
And that's just another sign that Apple made a great design for its target audience.
The new Nano doesn't have Bluetooth built into it, or Wi-Fi, or a camera, or a phone, or a hard drive. That probably accounts for why the technophiles online have been so dismissive of it (link). But to me, it's an almost perfect balance of functionality and art. Come back in ten or twenty years and I think you'll find it in design museums, when most of today's mobile devices will be long-forgotten and mildly embarrassing.
What do you think? Do you agree with my choice? If not, what do you think was the best mobile device of 2007?
Other mobile products getting mentions from major publications included the Nokia n95, iPod Touch, Razr 2, and Blackberry 8800. Amazon's Kindle was the only one that showed up on both best-of and worst-of lists. The best-ofs generally liked the wireless features and screen, while the worst-ofs disliked the closed business model and "eye-poking" industrial design.
I don't agree with any of those choices.
Since people have different needs, I think the best product of the year ought to be the one that best meets needs the needs of a particular group of users. It should be utterly compelling to its own audience. There are several questions to ask:
How efficient is it? Since people use mobile devices on the go, it should do just what the user needs, without any confusion or unneeded features. But there can't be any critical features missing, either.
How well does it trade off size vs. power? Because it's carried on your person, where size and weight are at a premium, it should balance tiny size with reasonable battery life.
How does it look? Because it's effectively a part of your wardrobe, it must look great (or whatever the target customer thinks of as great).
By that standard, I think the best mobile device of 2007 -- in fact, one of the best mobile products of all time -- was the third generation iPod Nano.
Don't get me wrong, iPhone fans. The iPhone is a very interesting and provocative device. There are some beautiful features in the user interface, and I love the turmoil it's causing in the industry. Several years from now we may look back on it and call it the most influential mobile device of its time. But that doesn't mean it's the best product.
To me, the iPhone is more an intriguing statement of direction than a completed product at this point. The lack of 3G is a huge compromise, and Apple obviously didn't think through the third party application thing. If you want a slow mobile browser that also plays music and videos and doubles as a somewhat awkward phone, then the iPhone is great. But for all of the cool highlights in the iPhone, I don't think it's enough to crush the phone industry in its current version. Future versions, maybe. We'll shortlist the iPhone III for product of the year in 2010.
The n95 is also a remarkable product in its own way, and I know it inspires a lot of technolust, especially in Europe. But in my opinion, it's just the latest Swiss Army Knife of the mobile world. Next year there will be another one from Nokia or Samsung or somebody else that has an even higher-resolution camera or maybe an electric toothpick or something, and people will be fawning all over that one. Like a lot of Japanese consumer electronics products, it's not a marvelous product as much as it is a marvelously ingenious bag of features.
By contrast, in third generation Nano is not just the latest model from Apple, it's an elegant culmination of the design work they've been doing for years.
The Nano doesn't look all that great in photographs. It's wider than its predecessor, which produced some criticism when it was announced (Engadget nicknamed it "fatty," which is asinine when you see it in person). In real life, the Nano's shape is compelling. It's much thinner than you'd expect from the pictures -- shockingly thin for something that has a color screen and plays videos. With its heavily rounded corners and brightly colored case, it feels a bit like a high tech chocolate wafer. You're almost tempted to take a bite out of it.
Physically, the Nano is almost all user interface -- the screen and thumbwheel take up the entire front of the device. Until we get flexible screens, the Nano is about as small as you can possibly make a device with its features. This is the endpoint, a form factor that's going to be with us for a while.
The biggest surprise to me about the Nano is the usability of video on it. When it was announced, I thought video was a throwaway feature -- who would ever want to watch video on a screen that small? But the reality is that when you're sitting down, you'll hold a Nano about 18 inches (45 cm) away from your face. At that distance, the screen is about the same apparent size as a 20-inch television (50 cm) at the other side of the living room. It's not like watching a flat panel monster screen, but it's very usable.
I'm not sure yet how much video will be used on the device, or what sorts of video, but that's a general question about mobile video rather than anything specific about the Nano. What I've observed so far is teenage girls using the Nano to watch music videos together, commenting on how cute the drummer is.
And that's just another sign that Apple made a great design for its target audience.
The new Nano doesn't have Bluetooth built into it, or Wi-Fi, or a camera, or a phone, or a hard drive. That probably accounts for why the technophiles online have been so dismissive of it (link). But to me, it's an almost perfect balance of functionality and art. Come back in ten or twenty years and I think you'll find it in design museums, when most of today's mobile devices will be long-forgotten and mildly embarrassing.
What do you think? Do you agree with my choice? If not, what do you think was the best mobile device of 2007?
Senin, 19 November 2007
Amazon Kindle: Not a home run, but an interesting start
By now I assume you've read about Amazon's Kindle e-book device. I think it's interesting and important, but more for its business infrastructure than for the device itself. And I'm not at all sure that it'll be a commercial success, unless it gets a lot more content quickly.
What they announced
Kindle's hardware is a lot like that of the Sony and Iliad e-book readers. I won't bother repeating all of the specs; you can find a good summary on Engadget here and here and in a lengthy Newsweek essay here.
The industrial design of the device looks uninspiring to me. It's made of white plastic, a color scheme that most people associate with ease of use, low price, and limited features. Considering Amazon's strong emphasis on ease of use in its announcement today, I guess the color makes sense, but it's at odds with the $399 price.
I haven't touched a Kindle yet, so maybe it looks nicer in person. But in the photographs its sloping edges and slant-key keyboard do nothing for me. It looks a bit like a badly-carved wedge of Parmesan cheese. There are a total of 54 buttons, controls, and keys on the face of the device, so naturally it looks cluttered. There's virtually none of the lust-inducing elegance of the iPhone; the design screams "utilitarian."
The design is not necessarily a bad thing; the device is going to live or die based on its usefulness, not its looks. But the lack of a lust factor makes people much more willing to nit-pick its features and price. So far Kindle is rated 2.5 out of 5 stars on Amazon's own website, with most of the negative ratings coming from people who have never even touched the device.
Clever wireless, vulnerable business model
Interesting use of the network. Things get a lot more elegant when you look at the services attached to Kindle. Amazon has built in a radio that talks to Sprint's EVDO data network. Wireless is used to deliver almost all content to the device (except for MP3 files, which sync via a USB cable). This is both attractive and disturbing.
The attractive part is that Amazon can pre-test each Kindle device to make sure they connect to the Sprint network before they get shipped to the customer. This is a huge advantage over WiFi. One of the dirty little secrets of WiFi is that non-PCs often have a lot of trouble connecting to WiFi routers in homes and offices. I don't know why this happens, but I suspect it's because the router vendors test their hardware mostly against PCs, and never find the bugs in connecting to other devices. Trouble-shooting a Kindle that couldn't find the network would be a nightmare, and Amazon has bypassed the whole issue by leaving WiFi out of the device.
I also like Amazon's decision not to hit its users with a monthly fee to access the network. Instead, the charges are embedded in the cost of downloaded content. This means that users who buy a lot of content will be subsidizing the ones who read only a little, but Amazon has hidden the charges so well that I don't think anyone will notice. Kindle makes the wireless network do what it should do: Disappear.
I have two worries about the use of EVDO. The first is that if someone lives outside of network coverage (like at my house) their Kindle won't work properly. I would have preferred to see WiFi included as a backup. The second problem is that because Amazon has to pay for that wireless connection, it has to tax virtually any information transmitted to the device. You can load documents onto the device by sending it an e-mail, but you'll pay 10 cents for every message. That doesn't sound like much, but it's annoying to have to pay anything at all for something that's normally free.
Likewise weblogs: You have to pay $1-2 per month for every weblog that you want delivered to your device. That's understandable if you look at Amazon's expenses, but it's astonishing for something that's free on a PC. What's worse, the most enthusiastic readers -- the people most likely to buy Kindle -- are the people likely to be scanning 20 blogs a day. They won't pay $20-$40 a month just to read blogs.
One workaround would be to subscribe to an e-mail blog aggregator like Feed Blitz and have it send a daily digest to your Kindle. That'll presumably cost 10 cents a day -- $3 a month, for unlimited blogs. That is, assuming Amazon doesn't put a size limit on the messages sent to Kindle.
The relatively closed nature of Kindle has led to some angry commentary on ebook enthusiast sites that you'd expect to cheer the product. For an example, there's an essay on Mobile Read here.
Self-publishing: Nice idea, but...
I was delighted to see that Amazon is allowing authors to self-publish e-books for the Kindle. You just submit them to the Amazon Digital Text Platform, set the suggested price, and Amazon adds them to its catalog (link).
The catch is that Amazon pays you only 35% of the suggested price of the book (link). They keep 65% -- for the amazing service of adding your book to their catalog (basically, they shift some bits around on a server). And by the way, if there is any bad debt, Amazon doesn't pay you any royalties at all on that sale, even though they're the ones who failed to collect.
By comparison, Apple takes 30% of iTunes revenue, and NTT DoCoMo takes about 11% of revenue from content and apps sold over its network.
I'd love to hear from the folks at Amazon if there's a reasonable business justification for keeping such a huge cut of self-publishing revenue, but I think it's probably for two reasons:
--Amazon is greedy, and/or
--They don't want to completely undercut the royalty structure of print publishers (who typically pay up to 15% royalties on a printed book)
Either way, Amazon's royalty structure is outrageous. And it won't last. One of the most important aspects of electronic publishing is its ability to change the wretched economic structure of the industry so authors get the majority of the revenue for their work (I've written about the economics of it here). The change is inevitable, and if Amazon tries to hold its current royalty structure it'll eventually just drive people to other e-book platforms that don't rip off authors.
Will it succeed? It's the content, dummy.
All of the issues covered above will affect the success of Kindle, but ultimately the sales of an ebook reader depend on having a huge library of reasonably priced content -- books and periodicals. Lack of sufficient books is what killed the last generation of ebook readers, Rocket eBook and Softbook (I worked at Softbook for a short while, so I saw the situation there first hand).
Judged by that standard, Kindle is off to a surprisingly mediocre start. There are some promising signs. For example, people don't like paying hardcover prices for intangible ebooks, so Amazon is pricing current best-sellers at $9.99, compared to about $15-$16 for hardcover. There are hints in some articles that Amazon is even subsidizing some books to hit this price. The price difference isn't big enough to make people buy Kindle, but it helps to overcome resistance. Good move.
The problem is in the library of other books. Or I should say the non-library. There are supposedly about 90,000 books available for Kindle currently, which sounds like a lot but actually makes for a poor selection. To get an idea of what was available, I took a quick look at the titles available from several prominent science fiction authors -- Niven, Brin, Asimov, Simak, Vinge, etc. (hey, I work in the tech industry, that's what I read). The selection is quite bad -- for many authors, the only Kindle editions are their second-rate books. Or there are a bunch of individual short stories available for 99 cents each, but not most of the novels. I strongly suspect that Amazon is counting each of those short stories as one of the 90,000 "books," because they are all labeled as books in the website. If true, that means the actual number of real books for the device has been heavily exaggerated.
Try the test yourself -- go to the search page here and type in your favorite author's name. Let me know what you find. Maybe fields other than science fiction have a better selection. I hope so.
There's nothing that makes an ebook customer angrier than paying $400 for a device and then finding that most of the things they want to read on it are not available. The iPod succeeded even though a lot of songs were missing from iTunes at first -- but remember that people could rip their own CD collections, and install MP3s for free. Amazon doesn't have a base of content that its users can shift to the reader, and it charges money for any document transferred to the device. So it has to fill the library on its own, quickly.
I think Amazon has a lot of work to do here.
I'm intrigued that about 16 newspapers and magazines are available for Kindle. Unlike books, newspapers and magazines are viewed as disposable, so people are less resistant to buying them electronically. And getting instant delivery of a weekly magazine is a significant advantage over waiting a few days for it to appear in the mail.
Judging by Amazon's price to receive the San Jose Mercury News (Silicon Valley's Incredible Shrinking Newspaper) on Kindle, prices are about 40% less than print subscription. That's not bad. What I don't know is whether the Kindle editions of the papers and magazines will be the full text of the print version, or just excerpts. If anything's left out, people will be turned off.
Amazon must get a critical mass of content -- meaning a lot more magazines and newspapers, and rapid growth in books. If it can do that, Kindle may finally jump-start the ebook industry. It won't explode overnight, but Amazon has a long history of forcing its investors to wait years for the full payoff on investments. If Amazon can maintain that patience, I think it Kindle has a chance.
But I sure hope they make the next version of it look nicer.
What they announced
Kindle's hardware is a lot like that of the Sony and Iliad e-book readers. I won't bother repeating all of the specs; you can find a good summary on Engadget here and here and in a lengthy Newsweek essay here.
The industrial design of the device looks uninspiring to me. It's made of white plastic, a color scheme that most people associate with ease of use, low price, and limited features. Considering Amazon's strong emphasis on ease of use in its announcement today, I guess the color makes sense, but it's at odds with the $399 price.
I haven't touched a Kindle yet, so maybe it looks nicer in person. But in the photographs its sloping edges and slant-key keyboard do nothing for me. It looks a bit like a badly-carved wedge of Parmesan cheese. There are a total of 54 buttons, controls, and keys on the face of the device, so naturally it looks cluttered. There's virtually none of the lust-inducing elegance of the iPhone; the design screams "utilitarian."
"Is it just me or is that thing one hell of an ugly thing to walk around with?" --Comment posted to Newsweek's article on the Kindle
The design is not necessarily a bad thing; the device is going to live or die based on its usefulness, not its looks. But the lack of a lust factor makes people much more willing to nit-pick its features and price. So far Kindle is rated 2.5 out of 5 stars on Amazon's own website, with most of the negative ratings coming from people who have never even touched the device.
Clever wireless, vulnerable business model
Interesting use of the network. Things get a lot more elegant when you look at the services attached to Kindle. Amazon has built in a radio that talks to Sprint's EVDO data network. Wireless is used to deliver almost all content to the device (except for MP3 files, which sync via a USB cable). This is both attractive and disturbing.
The attractive part is that Amazon can pre-test each Kindle device to make sure they connect to the Sprint network before they get shipped to the customer. This is a huge advantage over WiFi. One of the dirty little secrets of WiFi is that non-PCs often have a lot of trouble connecting to WiFi routers in homes and offices. I don't know why this happens, but I suspect it's because the router vendors test their hardware mostly against PCs, and never find the bugs in connecting to other devices. Trouble-shooting a Kindle that couldn't find the network would be a nightmare, and Amazon has bypassed the whole issue by leaving WiFi out of the device.
I also like Amazon's decision not to hit its users with a monthly fee to access the network. Instead, the charges are embedded in the cost of downloaded content. This means that users who buy a lot of content will be subsidizing the ones who read only a little, but Amazon has hidden the charges so well that I don't think anyone will notice. Kindle makes the wireless network do what it should do: Disappear.
I have two worries about the use of EVDO. The first is that if someone lives outside of network coverage (like at my house) their Kindle won't work properly. I would have preferred to see WiFi included as a backup. The second problem is that because Amazon has to pay for that wireless connection, it has to tax virtually any information transmitted to the device. You can load documents onto the device by sending it an e-mail, but you'll pay 10 cents for every message. That doesn't sound like much, but it's annoying to have to pay anything at all for something that's normally free.
Likewise weblogs: You have to pay $1-2 per month for every weblog that you want delivered to your device. That's understandable if you look at Amazon's expenses, but it's astonishing for something that's free on a PC. What's worse, the most enthusiastic readers -- the people most likely to buy Kindle -- are the people likely to be scanning 20 blogs a day. They won't pay $20-$40 a month just to read blogs.
One workaround would be to subscribe to an e-mail blog aggregator like Feed Blitz and have it send a daily digest to your Kindle. That'll presumably cost 10 cents a day -- $3 a month, for unlimited blogs. That is, assuming Amazon doesn't put a size limit on the messages sent to Kindle.
The relatively closed nature of Kindle has led to some angry commentary on ebook enthusiast sites that you'd expect to cheer the product. For an example, there's an essay on Mobile Read here.
Self-publishing: Nice idea, but...
I was delighted to see that Amazon is allowing authors to self-publish e-books for the Kindle. You just submit them to the Amazon Digital Text Platform, set the suggested price, and Amazon adds them to its catalog (link).
The catch is that Amazon pays you only 35% of the suggested price of the book (link). They keep 65% -- for the amazing service of adding your book to their catalog (basically, they shift some bits around on a server). And by the way, if there is any bad debt, Amazon doesn't pay you any royalties at all on that sale, even though they're the ones who failed to collect.
By comparison, Apple takes 30% of iTunes revenue, and NTT DoCoMo takes about 11% of revenue from content and apps sold over its network.
I'd love to hear from the folks at Amazon if there's a reasonable business justification for keeping such a huge cut of self-publishing revenue, but I think it's probably for two reasons:
--Amazon is greedy, and/or
--They don't want to completely undercut the royalty structure of print publishers (who typically pay up to 15% royalties on a printed book)
Either way, Amazon's royalty structure is outrageous. And it won't last. One of the most important aspects of electronic publishing is its ability to change the wretched economic structure of the industry so authors get the majority of the revenue for their work (I've written about the economics of it here). The change is inevitable, and if Amazon tries to hold its current royalty structure it'll eventually just drive people to other e-book platforms that don't rip off authors.
Will it succeed? It's the content, dummy.
All of the issues covered above will affect the success of Kindle, but ultimately the sales of an ebook reader depend on having a huge library of reasonably priced content -- books and periodicals. Lack of sufficient books is what killed the last generation of ebook readers, Rocket eBook and Softbook (I worked at Softbook for a short while, so I saw the situation there first hand).
Judged by that standard, Kindle is off to a surprisingly mediocre start. There are some promising signs. For example, people don't like paying hardcover prices for intangible ebooks, so Amazon is pricing current best-sellers at $9.99, compared to about $15-$16 for hardcover. There are hints in some articles that Amazon is even subsidizing some books to hit this price. The price difference isn't big enough to make people buy Kindle, but it helps to overcome resistance. Good move.
The problem is in the library of other books. Or I should say the non-library. There are supposedly about 90,000 books available for Kindle currently, which sounds like a lot but actually makes for a poor selection. To get an idea of what was available, I took a quick look at the titles available from several prominent science fiction authors -- Niven, Brin, Asimov, Simak, Vinge, etc. (hey, I work in the tech industry, that's what I read). The selection is quite bad -- for many authors, the only Kindle editions are their second-rate books. Or there are a bunch of individual short stories available for 99 cents each, but not most of the novels. I strongly suspect that Amazon is counting each of those short stories as one of the 90,000 "books," because they are all labeled as books in the website. If true, that means the actual number of real books for the device has been heavily exaggerated.
Try the test yourself -- go to the search page here and type in your favorite author's name. Let me know what you find. Maybe fields other than science fiction have a better selection. I hope so.
There's nothing that makes an ebook customer angrier than paying $400 for a device and then finding that most of the things they want to read on it are not available. The iPod succeeded even though a lot of songs were missing from iTunes at first -- but remember that people could rip their own CD collections, and install MP3s for free. Amazon doesn't have a base of content that its users can shift to the reader, and it charges money for any document transferred to the device. So it has to fill the library on its own, quickly.
I think Amazon has a lot of work to do here.
I'm intrigued that about 16 newspapers and magazines are available for Kindle. Unlike books, newspapers and magazines are viewed as disposable, so people are less resistant to buying them electronically. And getting instant delivery of a weekly magazine is a significant advantage over waiting a few days for it to appear in the mail.
Judging by Amazon's price to receive the San Jose Mercury News (Silicon Valley's Incredible Shrinking Newspaper) on Kindle, prices are about 40% less than print subscription. That's not bad. What I don't know is whether the Kindle editions of the papers and magazines will be the full text of the print version, or just excerpts. If anything's left out, people will be turned off.
Amazon must get a critical mass of content -- meaning a lot more magazines and newspapers, and rapid growth in books. If it can do that, Kindle may finally jump-start the ebook industry. It won't explode overnight, but Amazon has a long history of forcing its investors to wait years for the full payoff on investments. If Amazon can maintain that patience, I think it Kindle has a chance.
But I sure hope they make the next version of it look nicer.
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