Joe Wikert's Publishing 2020 Blog

Why Advertising Could Become Amazon's Knockout Punch

It all started harmlessly enough with Amazon's Kindle with Special Offers. That's the cheaper Kindle that displays ads when the device is in sleep mode or at the bottom of the screen when paging through the owner's catalog of books. It is very unobtrusive and, since it lowered the price of the device, has made that Kindle an extremely popular device.

Now there are rumors that Amazon is selling ad space on the Kindle Fire's welcome screen. That sounds pretty reasonable too as it's a simple way for Amazon to drive a bit of additional income that's pure profit for them.

Given that Amazon's goal is to offer customers the lowest prices on everything, what's the next logical step? How about even lower prices on ebooks where Amazon starts making money on in-book ads? Think Google AdWords, built right into the book. Of course Amazon won't want to use Google's platform. They'll use their own so they keep 100% of the revenue.

The changes the DoJ is requiring for the agency model means a retailer can't sell ebooks at a loss but they can still sell them for no profit, or breakeven. IOW, the 30% the retailer would keep on an agency ebook sale can be passed along to the customer as a 30% discount on the list price, but that's as deep a discount as that retailer can offer.

The rules are different with the wholesale model. Amazon already loses money on sales of many wholesale model ebooks. Let's talk about a hypothetical wholesale model title with a digital list price of $25. Amazon is required to pay the publisher roughly half that price, or about $12.50 for every copy sold, but that ebook might be one of the many that are listed at $9.99 for the Kindle. So every time Amazon sells a copy they lose $2.51 ($12.50 minus $9.99). Amazon has deep enough pockets to continue doing this though, so they're quite comfortable losing money and building market share.

So what's preventing Amazon from taking an even bigger loss and selling that ebook for $4.99 or 99-cents instead? In the wholesale model world, the answer to that question is "nothing is preventing them from doing that." And if selling ebooks at a loss for $9.99 makes sense, especially when it comes to building market share, why doesn't it also make sense to sell them at $4.99, 99-cents or even zero for some period of time? It probably depends on how much pain Amazon wants to inflict on other retailers and how much attention they're willing to call to themselves for predatory pricing.

Make no mistake about the fact that Amazon would love to see ebook pricing approach zero. That's right. Zero. That might seem outlandish but isn't that exactly what they're doing with their Kindle Owner's Lending Library program? Now you can read ebooks for free as part of your Prime membership. The cost of Prime didn't go up, so they've essentially made the consumer price of those ebooks zero.

Why wouldn't they take the same approach with in-book advertising?

At some point in the not too distant future I believe we'll see ebooks on Amazon at fire sale prices. I'm not just talking about self-published titles or books nobody wants. I'll bet this happens with some bestsellers and midlist titles too. Amazon will make a big deal out of it and note how these cheaper prices are only available thru Amazon's in-book advertising program. Maybe they'll still offer the ad-free editions at the higher price, but you can bet they'll make the ad-subsidized editions irresistable.

Remember that they can only do this for books in the wholesale model. But quite a few publishers use the wholesale model, so the list opportunities are enormous. And as Amazon builds momentum with this they'll also build a very strong advertising platform. One that could conceivably compete with Google AdWords outside of ebooks too.

As long as Amazon still has to pay the full wholesale discount price publishers and authors won't suffer. Other ebook retailers will though. Imgaine B&N trying to compete if a large portion of Amazon's ebook list drops from $9.99 to $4.99 or less. Even with Microsoft's cash injection B&N simply doesn't have deep enough pockets to compete on losses like this, at least not for very long.

At the same time Amazon will likely tell publishers they only way they can compete is by significantly lowering their ebook list prices. They'll have the data to show how sales went up dramatically when consumer prices dropped to $4.99 or less. I wouldn't be surprised if Amazon would give preferential treatment to publishers who agree to lower their list prices (e.g., more promotions, better visibility, etc.)

By the time all that happens Amazon probably has more than 90% of the ebook market and a nice chunk of their ebook list that no longer has to be sold at a loss. And oh, let's not forget about the wonderful in-book advertising platform they'll have built buy then. That's an advertising revenue stream that Amazon would not have to share with publishers or authors, btw, and that might be the most important point of all.

What do you think? Why wouldn't Amazon follow this strategy, especially since it helps eliminate competitors, leads to market dominance and fixes the loss leader problem they currently have with many ebook sales?

Another Missed Opportunity for Rich Content

I recently finished reading a terrific ebook. It's about the 1975 World Series between the Reds and the Red Sox and the title is Game Six. Even though I thoroughly enjoyed reading Game Six there was something missing. I remember watching that series, just like I watched every postseason baseball game growing up. The image of Carlton Fisk willing his game winning drive to stay fair is iconic. I can almost see Luis Tiant's herky-jerky windup and Bernie Carbo hitting that earlier homerun to tie the game up.

I say "almost" though, because 1975 was a long time ago and my memory is far from perfect. Game Six was fun to read but the author and publisher missed a huge opportunity to make it a much richer experience for their customers.

Why doesn't this book have a ton of links built in that point to related video clips and interviews? They're all over YouTube and many other sites but they're not curated in any manner. Search for "1975 world series game six" or "bernie carbo 1975 homerun" and you get all sorts of interesting results but there's no one guiding you to be sure and watch this one but don't bother with that one or watch this one before you watch that one. I would have gladly paid more for a richer edition of this book with all those links curated by the author included.

I should note that I read Game Six on my Kindle Touch. It's the last one I'll be reading on that device as I've moved on to the new Nook with GlowLight. The video links I'm talking about would have been useless on either device, but if they were integrated with the ebook I would have gladly read it with the Kindle app on my tablet. And just to repeat: The publisher could charge me more for this web-enabled version.

Notice I didn't say anything about selling or embedding these videos with the ebook. All I'm talking about is adding links to the videos that are all over the web, so there are no rights issues to worry about. This enhancement doesn't work for every book either, btw. Game Six is just begging for this enhancement though.

Publishers often complain about the prohibitive cost of creating apps out of books. Rather than going that far and spending a fortune, why not start with the inexpensive option of simply enhancing the ebook by curating everything related to it that already exists on the web?

B&N's Nook with GlowLight: Why I Still Use an eInk eReader

My new eInk reader, B&N's Nook with GlowLight, arrived last Thursday. I'm winding down my use of a Kindle Touch and wanted to move to another ebook retailer's platform going forward. This, of course, is a major headache since I've already bought dozens of DRM-protected ebooks from Amazon. I figure I'll read the last couple I bought on my Kindle and all future purchases will be from B&N...until some other device catches my eye. :-)

So what do I think of the Nook with GlowLight? It's just like my Kindle Touch, but with a built-in light. That pretty much sums it up. eInk eReaders have quickly become a commodity. Sure, B&N was the first to build a light source into their device but I'm sure Amazon and others will be close behind. When you're buying one of these devices it's less about the device and more about which retailer you want to commit to. That's an unfortunate byproduct of DRM.

I'm happy with the Nook so far but it's not wowing me. Then again, I didn't really expect it to. The benefit I see for the GlowLight isn't for reading in bed but for reading on a plane. About half the time I press that overhead light button on a plane nothing happens. The bulb is either burned out or the fixture is broken. I guess that's another sign of the times as airlines continue cutting back on their services. Let's just hope they spend more time making sure the engines are in better working order than the overhead lights.

Two years ago I didn't think I'd be using an eInk reader at all. I had just bought a first-gen iPad and was putting my Kindle in storage. That worked for about a year. I then saw a third-gen Kindle and decided it was thin and lightweight enough to carry with my iPad. In fact, the iPad case I was using had a handy pocket that the Kindle fit perfectly into.

I ditched my iPad a few months ago for an Android tablet and now I'll be taking that plus my Nook with me on the road. Even though I could easily read all my books on that Android tablet I still prefer to do all my long-form reading on an eInk device. Why?

It's not really about the display and how great it is in the sun as I rarely find myself reading outdoors. My eyes never had any problem reading for an hour or two at a time on the iPad display either. For some reason I never ran into the eye fatigue I get with my laptop's display. The reason I'm hooked on eInk displays has to do with battery life and device weight. If I'm reading for more than 20 minutes or so I'd much rather hold a feather-light eInk reader than any tablet out there. I also love it that I can go weeks without recharing an eInk device. It seems like my iPad and now my Android tablet's battery rapidly loses juice when using a reader app on it...much more so than when I'm just watching a video on the device. I end up having to recharge that Android tablet at least every couple of days. That doesn't sound like a big deal but it makes me much more miserly when I'm on a plane for several hours with no power source available.

There's talk of hybrid display devices coming out soon. Think of a tablet with the ability to switch to an eInk-like display that's (supposedly) easier on the eyes and offers a much longer window between charges. It sounds like it will still need a pretty large battery so it lasts long enought between charges in tablet mode. Unless battery technology changes radically between now and then I doubt I'd buy one since it will still probably be a fairly heavy device.

Thankfully these eInk readers are pretty inexpensive and incredibly lightweight. I might be in the minority but I see myself carrying both an eInk reader and a tablet for the forseeable future. And for now, at least, that eInk reader is B&N's Nook.

B&N and Microsoft: Why It's Not About Ebooks

Microsoft's $300 million investment in B&N's digital business is about more than ebooks. Much more. Or at least I hope so. Success in this venture will not be measured by sales of ebooks. Microsoft should instead use this as an opportunity to create an end-to-end consumer experience that rivals Apple's and has the advertising income potential to make Google jealous. But how will that happen by investing in the distant #2 player in the ereader space?

Microsoft has spent billions over the years as it repositions itself from the makers of Windows and Office into a much broader brand. They've done a good job as Microsoft is one of the most recognized brands on the planet. But is it really considered a consumer brand like Coke or (wait for it) Apple? Even though they've built an amazing customer base with Xbox and the innovative Kinect accessory, I'd say the answer to that question is "no."

Barnes & Noble isn't exactly up there with Coke or Apple, but the B&N brand conjures up other images Microsoft could benefit from (e.g., trusted in-person retailer, growing digital content retailer and even a place where you can get answers to your questions about nooks and books). The initial investment with B&N is about the .com world, but who says the larger relationship has to be online-only?

Think about the nook areas in today's B&N superstore and consider what they could become with a broader Microsoft alliance. I'll bet you didn't know that there are almost 20 Microsoft Store locations in the U.S. That sounds a lot like Apple's strategy, right? It remains to be seen whether Microsoft can create the same sort of buzz or ROI in their stores that Apple has managed to achieve, but why go to the trouble and expense of creating a larger standalone presence when a store-within-a-store might be even more effective? What if B&N stores added mini Microsoft Stores in each of their locations? The foot traffic is already there and what a great place to showcase and sell that new Windows 8-based nook they'll undoubtedly create.

This isn't just about selling Windows-based nooks in brick-and-mortar stores though. This new alliance needs to sell devices, ebooks, music, video, apps and more. The nook platform is almost exclusively about ebooks. Compare that to Apple's platform where ebooks are probably a rounding error for iTunes. B&N desperately needs to diversify their business beyond ebooks and Microsoft has the cash to help make it happen.

Let's also not forget about how the Xbox could fit into all of this. Xbox is one of the brightest stars in the Microsoft product portfolio and Microsoft needs to get some mojo in the mobile/tablet space. Given the ongoing decline of print book sales it might make a lot of sense for B&N to reduce their superstore title count inventory and make even more room for that Microsoft section I described above.

The brick-and-mortar presence is something Amazon doesn't have, at least not yet. This is a great opportunity for B&N to use that to their advantage, assuming the deal goes further than the digital investment.

All of this might never happen, of course. As a publisher and a consumer I'm still intrigued by the possibilities though, even if it only means B&N is now funded to be a more serious ebook retailing competitor for Amazon.

BookAnd: A Social, Virtual Bookstore

I must be more of a visual person than I'd like to admit. After all, I use Goodreads to store and share my book reviews/recommendations but I don't use it much to discover what my friends recommend. My behavior is largely because Goodreads is a list-based service and it doesn't offer an immersive experience. Don't take that the wrong way though...I still like Goodreads!

I've also heard plenty of skeptics who say reading/books and social don't mix, reading is a solitary activity, etc. That's true at times, but when it comes to discoverability there's no substitute for recommendations from your friends. And I seem to be interacting more with my friends via Facebook than ever before. So it still seems to me there's a big opportunity to solve the discoverability problem through the social graph.

I recently discovered an interesting approach to book discoverability. It's a service that's still in the very early stages called BookAnd. BookAnd is a platform where you can build your own virtual bookstore (see the sign-up form here). The screen shot at the top of this post shows my bookstore under construction. It's not just about putting covers on shelves though. You can design your store so that it reflects your personality. If it sounds a bit like Second Life for books that's because it is. I can add tables, stands, chairs, plants, lamps, etc., to my virtual store. And while that's kind of fun, the best part of is that I can feature my favorite books, face out on the shelf, just like how you'd see them in a brick-and-mortar bookstore.

OK, this isn't exactly revolutionary. But think about the experience it could create if this virtual world were embedded in your favorite ereader app. So when you finish that next book on your nook and you want to go find something new to read why are you limited to whatever B&N wants to feature? What if you could easily visit your best friend's BookAnd store, right within the nook app?

That app integration is key. I don't even want to have to go to Facebook to discover what my friends are reading. I'm in the reader app so give me the option of seeing it all right there. That's especially important since we live in a world where even the most sophisticated tablets don't like the idea of displaying windows for more than one open app at a time. (Imagine having to work in Windows or on your Mac with only one window displayed at a time -- it's crazy!)

It's hard to say whether BookAnd or a competitor will catch fire but I definitely think it all hinges on that in-app integration. I hope the big players in this space will jump on that soon. It will only lead to better discoverability and therefore more sales, so why wouldn't they be all over this?

What if DRM Goes Away?

TOC Latin America was held last Friday in the beautiful city of Buenos Aires. Kat Meyer, my O'Reilly colleague, and Holger Volland did a terrific job producing the event. As is so often the case with great conferences, part of the value is spending time with speakers and other attendees in between sessions and at dinner gatherings

Last Thursday night I was fortunate enough to have dinner with Kat, Holger and a number of other TOC Latin America speakers. We discussed a number of interesting topics but my favorite one was asking each person this question: What happens if DRM goes away tomorrow?

The DoJ suit against Apple and five of the big six has led to a lot of speculation. One of the most interesting scenarios raised is that if the government is intent on limiting the capabilities of the agency model, publishers need to figure out what other tools they can use to combat the growing dominance of Amazon.

Charlie Stross is right. DRM is a club publishers gave to Amazon and then insisted that Amazon beat them over their heads with it. So what if we woke up tomorrow and DRM for books disappeared, just like it has (for the most part) with music?

I was unable to reach a consensus at that dinner, but here's what I think would happen: Initially, not much. After all, Amazon has a lot of momentum. If current U.S. estimates are accurate, Amazon controls about 60-65% of the ebook market and B&N is second with about 25-28%. That only leaves 7-13% for everyone else. And if you've been buying ebooks from Amazon up to now, you're not likely to immediately switch to buying from B&N just because they both offer books without DRM. On the surface Amazon's and B&N's ebooks use incompatible formats, mobi for the former and EPUB for the latter. But that's where it gets interesting.

Converting from mobi to EPUB (or vice versa) is pretty simple with a free tool like Calibre. I've played around with it a bit, converting some of the DRM-free ebooks we sell on oreilly.com. I didn't do those conversions to get our books in other formats. After all, when you buy a book from oreilly.com you're buying access to all the popular formats (mobi, EPUB and PDF, as well as others), not just the one format a device-maker wants to lock you into. I did the conversions because I wanted to see what's involved in the process.

If you've ever used Microsoft Word to save or convert a .doc file to PDF you'd find it's just as easy to go from mobi to EPUB in Calibre, for example. But just because the tool is available does that mean if DRM goes away we'd suddenly see a lot of Kindle owners buying EPUBs from B&N and converting them to mobi with Calibre? I doubt it. Those Kindle owners are used to a seamless buying experience from Amazon, so unless there's a compelling reason to do so, they're not likely to switch ebook retailers. And that leads me to the most important point...

Creating the best buying and reading experience is one way any ebook retailer can steal market share from the competition. Amazon has a pretty darned good one, that's for sure, but there's plenty of room for improvement, IMHO. I'm not convinced any ebook retailer has pushed the envelope on innovation and exciting new features in their devices or reader apps. In fact, these enhancements seem to move at a glacial pace. So what if B&N (or anyone else, for that matter) suddenly invested heavily in reader app functionality that puts them well ahead of the competition? And what if some of those features were so unique and innovative that they couldn't be copied by others? I'd much rather see a competitive marketplace based on this approach than the one we currently have where the retailer with the deepest pockets wins.

Innovation is better than predatory pricing. What a concept. The iPod revolutionized music, an industry that was highly fragmented and looking for a way forward in the pre-iPod days. The iPhone turned the cellular market on its head. Think about how significantly different the original iPod and iPhone were when compared to the clumsy MP3 players and flip phones that preceded them. I believe today's crop of ebook readers and apps are, in many ways, as clumsy and simplistic as those MP3 players and flip phones. IOW, we haven't experienced a radical tranformative moment in the ebook devices and app world yet.

Of course all of this innovation I'm dreaming of could happen today. We don't need to wait for a DRM-free world. Or do we? Amazon has no incentive to innovate like this. They already have a majority market share and it's only going to get larger when the DoJ dust settles.

This is more of a rallying cry for B&N, Kobo and every other device and ebook retailer. If DRM goes away tomorrow nothing much changes unless these other players force it to. But why wait till DRM disappears? It might not happen for a long time. Meanwhile, the opportunity to innovate and create a path to market share gain exists today. I hope one or more of the minority market share players wakes up and takes action.

DoJ: Consumer Hero or Predator Enabler?

Last week I got a better sense for why Clay Johnson, author of The Information Diet, recommends gathering the facts as close to the source as possible. When the DOJ released the final judgment with settlement terms for three of the big six publishers I was on a plane and was formulating my opinion based on what I was reading in the tweet stream.

By the time that plane landed my mind was made up. Or so I thought. At that point I felt the DOJ’s settlement terms were over the top and taking us right back to square one. It appeared that the agency model was going away, the deep-pocketed Amazon could continue selling ebooks at a loss, drive the competition out of business and create an ebook retailing monopoly.

I was also confused and led astray by this Wired article which reported, “Publishers can enter into one-year agency agreements that stipulate that the retailer can sell individual titles at a loss, but must show a profit overall for all the books it sells from that publisher’s catalogue.” That seemed vague since the article didn’t say how much of a profit had to be generated.

Then I read the relevant sections of the settlement terms (see section VI, Permitted Conduct, paragraph B).

The settlement document actually says that there are some restrictions in customer discounts going forward, but that “such agreed restrictions shall not interfere with the E-book Retailer’s ability to reduce the final price paid by consumers to purchase the Settling Defendant’s E-books by an aggregate amount equal to the total commissions the Settling Defendant pays to the E-book Retailer.”

In other words, the retailer doesn’t have to generate a profit on ebook sales and the agency model isn’t really going away. But the DOJ is altering agency so that it once again tilts the scales in favor of the deep-pocketed retailer. According to the settlement terms, Amazon will be able to forgo their cut of the transaction and pass that discount along to customers. So let’s say the agency model includes a 30% cut for the retailer. Instead of the publisher being able to set the final consumer price, as they can under the original agency model, the retailer is now able to discount the consumer price by as much as their 30% cut.

That might seem harmless because it doesn’t let Amazon sell ebooks at a loss under the new terms of the agency model. Once the terms kick in it seems certain Amazon will reprice all these agency titles from settling publishers to 30% off, thereby forcing their competitors to do the same and not make a nickel on ebook sales. That’s OK for Amazon because they’ve got loads of cash and sell a bunch of other products they can make money from. What does it mean for other ebook retailers though?

The wholesale model was accelerating the death of other ebook retailers. Amazon could sell all their wholesale model ebooks at a loss until the last competitor was run out of business. The agency model took control away from Amazon by not letting them sell at a loss. This new agency model is somewhere in between but will definitely put other ebook retailers at a disadvantage, especially if they’re not as diversified as Amazon and unable to make a profit somewhere else. We’re not quite back to square one, but we’re painfully close.

So while the DOJ feels they’re solving a price-fixing problem what they’re really doing is paving the way for a monopolist retailer. And don’t think Apple or Google with their deep pockets are going to save the day. Neither of them are selling that many ebooks, Apple will probably lose interest now that the agency model has changed and Google has already started their retreat.

Even though my employer, O'Reilly Media, doesn't use the agency model, I think it’s perfectly reasonable for a publisher to set the final consumer price, especially if they’re trying to prevent one retailer from selling at a loss to drive competitors out of business. I was also inspired by the letter Macmillan CEO John Sargent wrote about the situation. He feels Macmillan has done nothing wrong and that they plan to fight the accusations.  That makes me wonder about the publishers who have already settled. Either they’re guilty of collusion or unwilling to take a stand at this very important moment. Neither scenario casts them in a favorable light.

When I was on that plane I was ready to grab my own torch and join the lynch mob because the agency model was going away and Amazon could revert to selling those agency titles at whatever loss they wanted to. Now that I’ve read all the facts I’m not so much angry as I am disappointed in the DOJ. They haven’t completely nuked the agency model but they’ve changed the rules enough to all but ensure Amazon’s dominance.

There’s one question I’d love to ask Attorney General Eric Holder: When Amazon’s ebook market share climbs back to the 90% level it once was, and competitors are run out of business, will he consider these settlement terms a success?

Disappointed by Google

Last week Google announced plans to wind down the reseller component of their eBook service. As Google put it, the program "has not gained the traction that we hoped it would", so they're pulling the plug next January. Like any well-focused company, Google is smart to reinvest in successful products and kill ones that aren't working. I don't question Google's decision to end the reseller program but I do question whether they invested enough to give it a chance.

Google seems to have a corporate philosphy of planting a product seed and assuming others will embrace it and help it bloom. That might have worked with a superior search engine but it's not always the best approach in other sectors. Android is a great example.

Carriers and smartphone manufacturers embraced Android as a free alternative to the iPhone. Those carriers and manufacturers have sold a lot of phones but the customer experience isn't always that great. Some of the common frustrations are that Android OS updates are unevenly distributed (if at all) and some apps only run on certain devices. I often complain about Apple's walled garden approach but at least if you have an iPhone you know you'll get the new iOS version on day one and every app in iTunes will run just fine. Tablets have only exacerbated this problem. For example, I recently discovered Next Issue, a new all-you-can-eat e-magazine subscription app, but it's incompatible with both my Android phone and tablet. Very irritating.

I realize the decision to push out a new Android OS is in the hands of the carriers and device manufacturers but I think Google should exert more pressure on them to distribute those updates when they're available. Of course, if you're AT&T or Samsung you'd rather force someone to sign up for a new 2-year contract or buy a new device than just give them the latest OS. Notice how Apple doesn't let that happen in the iPhone world though?

I also think Google should have used some of that mountain of cash they're sitting on to build a better Android app ecosystem. Unlike iOS, Android doesn't have any unique killer apps. All the decent Android apps are simply copies of the iOS ones and most of the better iOS apps aren't even available on Android (e.g., Flipboard, The Elements, etc.) Google may have renamed their Android Market to Google Play but there's still no compelling app to lure customers away from iOS. Most developers will tell you there's no money to be made from selling Android apps; if that trend doesn't change it will definitely affect the long term viability of the Android platform.

Getting back to the Google eBooks reseller program... How much did Google invest in it to ensure success? They basically opened the service to booksellers and assumed it could be a hit. I would argue that the only way the reseller piece could succeed is if the larger Google eBook platform succeeds.

Let me ask you a question: Have you ever bought an ebook from Google? I haven't and I don't know anyone who has. You'd think Google would have become a major ebook player by now since they offer all formats. Well, actually...they offer all formats except for the most popular one. As you can see at the bottom of Google's supported reading devices page, they still don't support the Kindle. Doh!

In Google's defense, the only way they could support the Kindle is by offering DRM-free mobi files. Impossible, right? Even though all of our ebooks at O'Reilly are distributed DRM-free there's no way Google could have gotten other publishers to agree to doing so.

Or could they? Remember that mountain of cash I mentioned before? Wouldn't it have been cool for Google to have approached just one of the big six publishers and said, "Hey, we want to level the playing field so that DRM is no longer a weapon used against you to build an ebook distribution monopoly. Let us distribute your ebooks without DRM for 6 months. We'll use our amazing computing power to measure how much piracy there is of your content before, during, and after the test. If we determine a significant piracy increase on the torrent sites, etc., we'll pay you 10 times what you've earned through our service for that period and we'll immediately shut down the DRM-free distribution." Let's say a 10x payment isn't enough to make the publisher's concerns go away. OK, make it 20x. Or 50x. Google's got the money and could have really proven a point that DRM provides nothing more than a false sense of security.

In reality, I'm not convinced Google even cares about the ebook market. Ebooks were just another item on a product checklist they felt compelled to include so they could compete with Apple. Google eBooks doesn't appear to have any momentum so the reseller program could just be the first sign of a more significant retreat from Google. That's too bad. Google had a chance to do something special with this but, like the Android platform, they've relied too much on others and haven't invested enough of their own resources to make it as successful as it could have been.

Rethinking Samples

I'm bored with ebook samples. I feel like I'm collecting a bunch and then forgetting about most of them. I'm pretty sure I'm not alone and I'm even more certain this adds up to a ton of missed sales opportunities. Although this would be impossible to prove, my gut tells me the revenue missed by not converting samples into sales is a much larger figure than the revenue lost to piracy. And yet the publishing industry spends a small fortune every year in DRM but treats samples as an afterthought.

Think about it. Someone who pulls down a sample is already interested in your product. They're asking you to win them over with the material you provide. Far too often though that material is nothing more than the frontmatter and a few pages of the first chapter. Some of the samples I've downloaded don't even go past the frontmatter. I'm looking for something more.

Let's start with the index. Would it really be that hard to add the index to ebook samples? No. And yet I've never seen a sample with the index included. Sure, many of these books have indexes that can be viewed separately on the ebook's catalog page, but why not include them in the sample? Give me a sense of what amount of coverage I can expect on every topic right there in the sample.

How about taking it up a notch? Give me the first X pages of the full content, include the entire index at the end and in between include the rest of the book, but have every other word or two X'd out? That way I can flip through the entire book and get a better sense of how extensively each topic is covered. Btw, if the entire book is included like this then the index can include links back to the pages they reference.

Next up, why do I have to search and retrieve samples? Why can't they be configured to automatically come to me? After awhile a retailer should be able to figure out a customer's interests. So why not let that customer opt in to auto sample delivery of ebooks that match their interests? I love baseball. Send me the samples of every new baseball book that comes out. I've got plenty of memory available in my e-reader and I can delete any samples I don't want. I've also mentioned this before but it's worth saying again: How about letting me subscribe to samples from specific authors? Again, it would be an opt-in program but I wonder how many interesting books I've missed because I didn't discover the sample.

Finally, this problem doesn't appear till after the sample is converted into a sale but why can't the newly downloaded ebook open up to where I left off in the sample? Seriously, this has got to be one of the easiest annoyances to fix, so why hasn't anyone taken the time to do so?

B&N's Nook Platform is Rough Around the Edges

Now that I've abandoned Amazon I need to find an alternate ebook retailer. Even though I'm switching platforms I have no desire to buy someone else's dedicated e-reader. My plan is to do more reading on my new Asus Android tablet. B&N was my first choice but my initial results have been very disappointing.

The Nook ebook buying experience is similar to Amazon with two exceptions: the number of customer reviews and topic subcategories. Most reports indicate B&N has no more than half the ebook market share that Amazon does. That translates into considerably fewer customer reviews for most titles on bn.com. I don't base all of my purchase decisions on customer reviews but I always feel more confident when I see a larger sampling.

It's more the awkward navigation and lack of subcategory depth in the Nook app that really disappoints me though. I enjoy reading about WWII and the Kindle app lets me drill down with the following menu structure: History->Military->WWII. The nook app, on the other hand, only offers this sequence: History->Military History. That's it. There's no WWII option, so the resulting page shows all wars lumped together. And there's no going back one level with the Nook app. If you accidentally selected Military History when you really wanted another option on the History list you're out of luck and you have to start over.

Also like Amazon, B&N has created a series of reader apps you can use on other platforms. I use a Mac every day, so I try Nook for Mac. No dice. It downloads and installs but won't run on my Mac (running Snow Leopard). It turns out I'm not the only one with this problem. This thread on B&N's own forum features posts from other frustrated users who can't find a solution. The last entry on that thread was from a couple of months ago and was a desperate plea from someone else who's been waiting weeks for a solution. Btw, if you run into this problem you might want to follow that thread's advice about using Nook Study instead. It's apparently intended for students but it looks like anyone can use it. Why don't they just fix the Nook for Mac bug though?

After all that the Nook app on my tablet partially forgot who I am. Despite having bought a couple of books and downloaded a number of samples the app suddenly showed absolutely nothing in my library. This, despite the fact that when I went into the settings it still showed me logged in as well as my AMEX card info. I had to play around a bit with the app and finally got it to recognize my content again after a few screen refreshes.

The reading experience in the Android app is very similar to what you find with Amazon's Kindle app for Android. At least that part of the Nook experience was free of any annoying problems. But, if B&N is really trying to compete with Amazon for a leadership role in the ebook space it's clear they've got a lot of work to do with their Android and Mac apps.

Thoughts on eBook Pricing

With all the buzz about the agency model, the Justice Department, allegations of collusion, etc., I figure the time is right for a post about ebook pricing. Here are some quick thoughts as both a consumer and a publisher:

Eliminating waste is always a good thing -- Walmart has mastered this for years. They squeeze every bit of waste out of the supply chain and generally end up with the lowest prices. I'm a frequent Walmart customer and I greatly appreciate this. In fact, the only people who don't like this are (a) other retailers who can't match those prices and (b) ecosystem players who are part of the waste that's being eliminated, including suppliers. 

Loss leaders are a great retail model -- Selling some products at or below cost is a great way to bring customers in the door, regardless of whether that door is physical or virtual. I'm sure I've bought many cartons of milk at a loss for the retailer who made it up by selling me other items at a nice profit. It's a model that works, but have you ever seen a store that sells most of their products at a loss, every day?

Taking loss leadership to a new level -- Remember when Amazon first launched the Kindle and pretty much every ebook was $9.99? It's no secret that Amazon was losing money on the majority of those sales. In fact, they still are. Prior to the agency model Amazon was free to set whatever customer price they wanted for ebooks, even if it meant they were selling every single one of them at a loss. That brings up the razor/blades model, where it's not unusual for the razor to be sold at a loss but the profit is made on the sale of the blades. So if ebooks are the razors what are the blades? The ereader device? According to iSuppli, the Fire's manufacturing cost is slightly higher than its retail price. How long can a retailer stay in business when they're losing money on both the razors and the blades? Presumably they're making some money on other products they're selling (e.g., shoes, electronics, etc.) Perhaps. Then again, if they have deep enough pockets they can continue selling all their products at a loss till the cash dries up. In the mean time, competitors will find it difficult, if not impossible, to compete, so they'll disappear. What happens after that? Do prices remain low as products are still sold at a loss? Not if that company wants to stay in business.

The agency model prevents brand erosion -- Think of the premium products you've bought or admired. Oftentimes their prices are higher than most of the competition's. What would happen if those prices were suddenly significantly reduced? Would those products retain the full value of their premium brand? Highly unlikely. And shouldn't the owner of that brand have a say in what price is associated with it? Again, it's OK for a short-term loss-leader model but I'm talking about selling something at or below cost for years and years, not just for a day or two. Over time the value of that brand is affected. That's why I think publishers should definitely have the option to go with the agency model so they can manage retail prices and not let their brand lose value. Btw, consumers will ultimately vote with their wallets. If they feel the publisher's prices are too high they'll stop buying and that publisher will either need to make adjustments or go out of business.

Fixed prices vs. price-fixing -- In the U.S. we're so used to competitive retailer discounts that we're surprised to hear of the fixed price models used in other countries. For example, in Germany the price you pay for a book doesn't change from one retailer to the next. They're all required to sell them at the same price. Obviously there's a huge difference between Germany's fixed price law and the price-fixing the Justice Department is alleging. Germany's model doesn't lend itself to squeezing out waste like the U.S. model but I'll bet it prevents one deep-pocketed retailer from putting their competitors out of business.

I don't work at a big six publisher but I believe publishers should have the option to choose between the agency and wholesale models. The key issue though is that the Justice Department has suggested that Apple and a number of publishers colluded to keep prices high. I think this article by Gordon Crovitz in The Wall Street Journal sums it up quite nicely, particularly in the closing two paragraphs. Read that piece and ask yourself if the Justice Department's efforts will actually fix or merely add to an existing problem.

What's your opinion of the pricing questions and allegations currently facing the book publishing industry?

My iPad Replacement

The name is a mouthful: Asus Eee Pad Transformer Prime. Don't confuse that with the Asus Eee Pad Transformer. Yes, the Prime is the newer generation device. Maybe they should have just called it "Prime." Either way, it's the new tablet in my life and, for the most part, I love it. If you're interested in buying one all I can say is "good luck." They're extremely hard to find. I got mine at my local Fry's. It was the last one in stock and it had already been opened. They gave me the same warranty as an unopened one though, so I was delighted to get it there.

After a few weeks of use here are the pros and cons I've found to owning an Asus Transformer Prime:

Pros

Android -- Jumping from iOS to Android is a liberating experience. You definitely have the sense that you're getting more access to the device's capabilities and that you're more in control. Also, I've downloaded and installed a few dozen apps on the Prime and my Android phone (Samsung Galaxy S II) and I've never spent a penny on a single one. There's a downside to that too, of course (see below).

Unique device combo -- The Prime comes as a tablet in a box, just like the iPad. But Asus takes you a step further by offering a keyboard accessory that fits the Prime like a glove. It's a $150 option, which means that buying it makes the Prime a higher-priced option than an iPad, but it's worth it. Those who say a tablet should exist without a keyboard are wrong. I find the combination of keyboard and touch screen outstanding and, of course, you can always disconnect the keyboard if you want a standalone tablet.

Battery life -- The battery in the Prime lasts longer than the one in my first-gen iPad. But if you get the keyboard accessory you suddenly have access to much more power. That's right. The keyboard has a battery inside as well. Asus claims the two together will give you 18 hours of power but I'm finding it to be more like 12-14 hours, max; and that's while using wifi and actively using the device, not letting it drop into sleep mode. So if you're looking for a powerful tablet that won't run out of juice on a long overseas flight it's hard to find anything better than this one. (Bonus: I can recharge my Android phone from the keyboard battery, so it's like having my own tiny power plant on a plane. I wonder if I could start selling charges to other desperate passengers...)

Expandability -- Where's the SD slot on the iPad? That's a trick question, of course, as Apple doesn't want you to add memory to it. I had to make plenty of compromises on my iPad because of this limitation. The amount of video I could keep on it was limited and I never bothered putting my music on because it would have taken up more than half the iPad's memory. That's no problem with the Prime. In fact, Asus goes a bit overboard here. You'll find a microSD slot on the tablet and a full SD slot on the keyboard. The memory upgrade options on the Prime are endless.

Speed -- Can you say "quad core processor"? That's what you get with the Prime and that means it's a screamer. You'll notice the impressive speed while you're downloading apps or running a whole bunch of them at the same time. 

Cons

Android -- OK, Android has it's plusses and minues. As I mentioned above, I haven't paid for a single app. There are plenty of paid ones out there but none that I need. And even some of the paid apps in the iOS ecosystem are free (or have free equivalents) in Android. So if developers aren't making much money on Android what's the incentive for them to continue building on that platform? That's an important problem that needs to be fixed. At this point though, I'm starting to feel like I should never have to pay for an app; that's not a good model for Android's long-term viability, at least if the goal is to have a rich app ecosystem.

Missing key apps -- Speaking of apps, I really miss both Zite and Flipboard. Zite is definitely an app I'd gladly pay for on Android. I feel like Google is asleep at the wheel on this aspect of the platform. They seem to want to let the app world develop on its own but I think it desperately needs an injection from that mountain of cash Google is sitting on to push it over the top. Would it really cost Google that much to pay developers to port some of the key apps from iOS to Android? No, but it would make a world of difference in the platform's app experience. And while they're at it, why not invest in a couple of totally new apps that don't exist on iOS. Isn't it worth Google's time/money to create a killer Android app or two? I think so.

App glitches -- This is probably where Apple shines the brightest. Every so often I'll open an app that thinks I'm in portrait mode when I'm really holding the tablet in landscape mode. Sure, some apps require one mode or the other and that's fine. What I'm talking about is a situation where certain app operations flip the orientation for no good reason. It might be when I'm tweaking the settings or doing something else and I have to awkwardly hold the Prime (with keyboard attached) at a 90 degree angle to read it. Silly. I guess there's a good reason why Apple has a review process for their apps while pretty much anything can get into the Android app Market.

Do I miss my iPad? A bit. But I still have visitation privileges on evenings and weekend when I'm home so I still get my Zite fix from time to time. Do I regret spending more for this Prime+keyboard than a comparable iPad? No way. I'm thoroughly enjoying the experience and trying to figure out how I can move all my docs to the cloud and start leaving my MacBook Pro at home.

 

Why I'm Breaking the Amazon Habit...And Why You Should Too

Kudos to Mark Suchomel and the stance he's taking with Amazon at IPG. As Don Linn mentions here, this is indeed a gutsy move but I hope Suchomel holds firm. I've written before about Amazon's formula and how it's slowly locking me into their platform. Interestingly enough, if you take a closer look at that formula post you'll see I was Mr. Amazon Advocate in a fun Apple vs. Amazon debate I had with Kassia Krozser.

A lot has changed since that friendly debate last fall. In a few short months I've gone from Amazon fan to Amazon critic. One reason I've become disenchanted has to do with Amazon's Kindle Owners' Lending Library. As Amazon stated in the Lending Library press release, compensation to publishers for "the vast majority of titles" is on a "fixed fee" basis. I strongly feel this should be an uncapped, pay-for-performance model similar to what Safari Books Online and Books24x7 offer. Unless you have a perfect crystal ball anything less than a pay-for-performance model risks underpaying publishers and authors. And yes, it also risks overpaying but I seriously doubt that's happened up to now.

Then there was last December's showrooming debacle. Even though bookstores were excluded, did Amazon really need to take such an over-the-top approach and poke brick-and-mortars in the eye with the price check incentives on December 9th? This, after all the years of having a built-in price advantage over many of those brick-and-mortar stores because of state tax deals and loopholes. I'm glad my home state of Indiana is addressing this issue but I think it's ridiculous it won't take effect till 2014.

And now Amazon is reportedly leaning on IPG for even more favorable terms than they've agreed to in the past. Good for you, Mark Suchomel, I just became a big fan of yours.

Many of you are probably shrugging your shoulders and saying this is all about choice. Publishers can remain out of the Kindle Owners' Lending Library program if they don't like the terms. And customers were showrooming long before Amazon released their app; if I don't like it, I shouldn't do it myself and/or I should buy from other vendors. IPG's choice was to take a stand and now their Kindle editions aren't available on Amazon.

You're right. This is about choice. I've been choosing Amazon for all my ebooks up to now and it's time to put my money where my mouth is.

It's unfortunate that when you buy an eInk reader you're pretty much locked in with that vendor's content library. But that's not the case with a tablet, at least the ones that aren't tied to a single e-bookstore. Now that I have this terrific new Asus Transformer Prime Android tablet I'm beholden to no single ebook retailer. It's time to start buying ebooks from bn.com, Kobo, or anyone else with an Android reader app. It's less than optimal to manage an ebook library across retailers but it's also very liberating.

So as of today, Monday, February 27, 2012, I'm officially breaking my Amazon habit. How about you?

Is Color eInk a Game-Changer?

My answer to that question is "no", and here's why...

Approximately 3 years ago I got a tour of eInk's facility in Cambridge, MA. During that tour I got to see a few prototypes of future eInk products. One of them featured a standard greyscale display but a quarter of the surface area was able to show simple animations. (And by "simple" I mean moving stick-men, not videos!) Another one was a color eInk display but it looked very washed out. The colors were there, sort of, but they weren't anywhere near as vibrant as what you see on a backlit display like an iPad or your laptop screen.

Last week's TOC NY event featured a "digital petting zoo" where we showcased almost 40 different devices for attendees to test drive. One of those devices (from Ectaco) featured a color eInk display. I can honestly say that the color display I saw last week looked pretty much the same as the prototype I saw three years ago. It's still quite washed-out.

Is color eInk today better than gresyscale eInk? Absolutely. I'd much rather have some color on the screen than none, even if it's not as crisp and bright as a backlit display offers. But is it worth a premium over greyscale eInk? I don't think so.

Rumors are floating around about Amazon supposedly getting ready to release a color eInk device. My question is simply this: Why? If it's going to replace their existing greyscale eInk devices, like the Kindle Touch, that's great. But if they're planning to have a color eInk device sit between the Touch and the Fire it seems like they're splitting hairs. On the one hand, I'm sure some customers would love to have a color device with the longer battery life eInk offers. On the other hand, don't kid yourself into thinking a color eInk device will replace a tablet. After all, the only animation I've seen on an eInk display was on a prototype that apparently never saw the light of day...so that means color eInk won't support many of the games and other apps that have become so popular on a tablet. It's just a dedicated e-reader with washed-out colors.

It's entirely possible color eInk technology has progressed in the last year or so. If that's the case all bets are off. But if the Ectaco device is any indication I don't think a color eInk device from Amazon will be a game-changer.

Why TOC NY 2012 Will Be Our Best TOC Ever

I've been to several of O'Reilly's Tools of Change (TOC) conferences before but this is my first experience as one of the conference chairs. Now that I've had a first-hand view in preparing for next week's TOC NY 2012 I can tell you that Kat Meyer and the rest of this team are nothing short of amazing. As we put the final touches on pre-conference prep I wanted to point out a few of the reasons why I believe next week's event will be the most inspiring, unique and memorable TOC ever:

Executive Roundtable -- We've partnered with Publishers Weekly to host an executive roundtable on Monday, 2/13. It's separate from TOC itself and is a by-invitation-only gathering of approximately 100 industry CxO's and other influential leaders. We've received more requests than we can accomodate for this initial roundtable but we're planning for this to become a quarterly event. If you're interested in receiving an invitation to future executive roundtables email me with your name, title and company so I can add you to our list.

Top Secret Announcements -- One of the perks of being a conference chair is that you get the inside scoop on announcements some of the speakers are planning to make at TOC. I'd like to share each of them with you now but I'm sure Kat would ban me from the conference. You'll just have to wait till next week to learn the details. If you won't be there, be sure to tune into our Twitter hastag (#toccon) to keep up with all the news.

Digital Petting Zoo -- Don't you love that name?! Kudos to Kat for coming up with the idea and the name, btw. Where else can you go to test drive almost 40 tablets and dedicated ereaders? Nowhere. We've spent a great deal of time and effort gathering a wonderful assortment of devices for all attendees to tinker with, so if you've wanted to take a closer look at the ereading hardware landscape be sure to swing by the petting zoo on Wednesday. It's not just hardware on display either, btw. We've got a few content providers spending the day there to showcase the latest in content development and presentation.

Attendee Diversity --  We always encourage attendees to connect with one another and that's one of the key reasons for the Attendee Directory. If you're registered for the show be sure to get the most out of that directory. And as you look through it, I'll bet you'll discover the same thing I did: We have an incredible array of players from all areas of the content industry. Attending TOC means you have the opportunity to meet and mix with folks from every sector of publishing as well as other media industries. It's sort of like Woodstock's "three days of fun in the mud", but without all the mud.

Startup Showcase -- Back by popular demand, this was one of the most popular aspects of TOC 2011. This year we once again received way too many outstanding startup submissions. It was extremely difficult narrowing down the field but we came up with a list of 11 finalists that I think you'll be impressed with.

Change/Forward/Fast -- In case you missed it, "change/forward/fast" is the theme of TOC 2012. The message it conveys is that our industry is moving forward at an incredible pace and, in order to keep up, you better be experimenting with new forms of content development, delivery and pricing. That's the heart of TOC 2012 and our goal is to provide a platform for those who are leading change and provide an opportunity for the entire community to learn more about what's working and what's not.

Have you signed up to attend TOC NY next week? We're running ahead of last year's attendance levels but we've still got a few slots left. Don't wait till the last minute though. Sign up now and reserve your spot at what undoubtedly will be an outstanding experience!

Barnes & Noble: It's Time to Disrupt the Industry!

Three articles have sparked my thinking on this post. The are:

• The Charlie Stross piece entitled Cutting their own throats,
• Joseph Esposito's insightful post on How B&N Can Take a Bite Out of Amazon, and
• The New York Times article, The Bookstore's Last Stand

Stross talks about how the publishing industry has allowed Amazon to use DRM as a tool against itself. Esposito suggests "B&N needs an MCI solution" while the Times piece encourages B&N to have a sense of urgency in avoiding the same fate as Borders.

Rolling all of these together I have a radical, three-step suggestion for William Lynch, CEO of B&N:

1. Get publishers to understand they need to get out of their comfort zones before one player in the publishing ecosystem establishes what could become an irreversibly dominant position.
2. Start distributing ebooks not only in EPUB format, but also in mobi format.
3. Do it all DRM-free.

Yes, I realize I'm asking for a lot here, but I think it's time for bold moves from the brick-and-mortar leader. If Lynch implements what I've described above then suddenly bn.com is able to sell content to those millions of Kindle owners (not to mention owners of pretty much every other ereading device). More importantly, bn.com becomes the content destination for every smart consumer who doesn't want to get locked in to any particular hardware device or content vendor.

The risk to B&N? They lose some nook sales along the way...maybe. I'm not convinced that would happen though. What B&N would really do is radically expand their base of potential ebook customers and earn some serious goodwill as they break down the walls of DRM and platform lock-in. And so what if they were to lose some nook sales? All reports indicate B&N represents less than half Amazon's ebook device market share. Whatever they stand to lose in hardware sales could easily be made up in ebook sales to all those Kindle owners who want the peace of mind that they'll be able to read their library on any device in the future.

In today's world the winner is the company with the deepest pockets who can afford to sell devices and content at a loss longer than the competition can. In the world I'm describing the best device and content provider wins. I like the world I'm describing much better than the one we live in today. How about you?

iBooks Author: Appreciating Apple's Intent

Apple's recent announcement and release of their iBooks Author tool was met with plenty of controversy. This HuffPost article pretty well sums things up.

My question is simply this: Why all the fuss? Apple's intent has never been to improve the book publishing industry. Just like Amazon and any other ebook vendor, Apple's goal is to capture share of this rapidly growing segment. In Apple's case, they've simply decided to offer an authoring tool that's capable of creating some pretty darned cool products. If Amazon were to do the same thing and create a terrific authoring tool for mobi or KF8 format would the industry be as upset? I don't think so.

How is this any different from the App Store model itself? Developers are creating apps for the App Store and they know they'll only run on an iOS device. They also realize they'll have to go through Apple's approval process before getting into the App Store.

Prior to the release of iBooks Author the content creation and distribution model looked like this:

1. Author writes material in favorite word processor.
2. Author/publisher edit and convert that content into mobi format for distribution on Amazon, EPUB format for distribution through iBookstore and others, etc

The exact same model still exists today, even with the introduction of iBooks Author. That's right. Apple's EULA doesn't really lock you into their distribution channel for your content. That restriction only applies to a "book or other work you generate using [the iBooks Author] software." All they're really trying to do is prevent you from tweaking the output of their tool to create content for other distribution channels. OK, that's kind of annoying but far from the lock-in nightmare so many people are describing it as. Based on my interpretation, you're able to use the same content as input to the iBooks Author tool as you'd use for a mobi-formatted product you want to sell on Amazon.

(I should also point out that I'm far from an Apple fanboy. Anyone who knows me realizes I dumped my iPhone last year for an Android-based Samsung Galaxy S II (and yes, I love it). I also tried to dump my iPad for a Kindle Fire but found the Fire user experience to be very disappointing. I'll probably make the jump to another Android tablet later this year, once key apps like Zite are available. In the mean time though, I want to make it clear I'm not here to shill for Apple. If anything, I'm currently in a stage where I'd prefer to buy devices that aren't made by the content providers. Samsung is high on my list, for example.)

Apple doesn't have an objective to move the publishing industry forward. They see an opportunity to reinvent this industry and they feel they can do so within their own, closed ecosystem. It's as simple as that and it's consistent with everything the've done in the App Store up to now.

Let's also not forget that the iBooks Author tool is free. It's not like we paid Apple $50, $100 or more for some authoring tool that we thought could work for all content formats and distribution channels. If the tool's feature set is compelling enough I'd like to think the other ebook vendors (e.g., Barnes & Noble, Amazon, Kobo, etc.) will have to come up with something at least as powerful for their own platforms. If not, they get left in the dust and Apple gains share. Seems pretty fair to me.

In the mean time, I plan to do some hands-on testing with iBooks Author. At first I was discourged because you can't download iBooks Author unless you're running Lion. I'm still on Snow Leopard but an O'Reilly colleague sent me this link which shows you how to tweak a couple of settings so you can download and run iBooks Author on a Snow Leopard system. I just tried it and it works fine. (You just have to carefully read and interpret the steps since it's a translation from French to English!)

Jason Calacanis Shares His Thoughts on Amazon's Dominance

Jason Calacanis, co-founder of Weblogs, Inc. and currently host of This Week in Startups is never afraid to voice his opinions. One of his recent articles entitled The Cult of Amazon Prime caught my eye because it paints such a vivid picture of Amazon's growing market dominance. I appreciate the leadership role Amazon has played over the years but I'm also concerned about the dangers of one vendor controlling too much of the market. Jason agreed to discuss my concerns in this interview. Key points include: 

• Does Amazon Prime spell the end of the local mall?  -- It won't happen immediately, and there will always be some need for in-person shopping but Amazon Prime is already having an impact on the local shopping experience. [Discussed at :40]
• Serendipity is overrated-- Jason makes a good point about how what you discover at a brick-and-mortar store is often what the vendor or their supplier want you to discover and this experience can easily be recreated with the "people who bought X also bought Y" model. [Discussed at 2:40]
• Coming Soon to a Location Near You: The Amazon Store? -- Rather than continuing to use BestBuy and other stores for showrooming, Jason talks about the possibility of Amazon creating their own specialty retail presence where you could touch and feel big-ticket items and have them shipped to you the next day. [Discussed at 4:01]
• The instant gratification problem won't exist forever -- Amazon has already implemented same-day shipping in some locations and it's possible a resolution to the state sales tax issue Amazon is currently in the midst of could lead to broader same-day delivery service. [Discussed at 6:01]
• AmazonBasics is a preview of what's to come -- We're all familiar with private label goods at the local grocery store. AmazonBasics is a similar program. Today it only offers gadget accessories but it could easily lead to the Amazon toothpaste or Corn Flakes down the road. [Discussed at 7:22]
• Don't fear the controlling, manipulative market leader -- I'm skeptical of this but Jason believes that technology and other efficiencies make barriers to entry so low that a market leader who exploits their position will get knocked off by a new startup. [Discussed at 14:24]
• Walmart vs. Amazon -- Who will compete with Amazon to keep them honest? Jason believes Walmart is the only serious threat. [Discussed at 18:34]

Tools of Change (TOC) Executive Roundtable

Large conferences like Tools of Change (TOC) New York are a wonderful way to learn about new developments in publishing as well as spend time with many of our peers. And while the networking and idea exchange that happens at TOC is second to none I believe there's an opportunity for us to do more, especially for the executive community. That's why TOC is about to launch a new series of periodic meetings for publishing executives.

We're calling these the TOC Executive Roundtables and they're a way for CxO's and other senior level leaders to discuss and, more importantly, take action on the most pressing issues we face. Our first roundtable takes place on Monday, February 13th in New York. Even though that's the first day of TOC NY it's important to note that the Executive Roundtable is completely separate from the larger conference.

We'll have speakers and a schedule for this first Executive Roundtable meeting, but this will be a much smaller gathering. And the speakers won't just be standing at a podium offering one-way communication. After all, there's a reason we're calling them "roundtables." The speakers will be leading the discussion and encouraging all the attendees to share their point of view.

We've got a couple of terrific speakers lined up for this first event. Attendance at the TOC Executive Roundtable is limited to maintain an intimate setting and foster dialogue among all participants. As a result, registration is by invitation only.

If you're an executive in the publishing industry and you'll be in New York on 2/13 please email me your name, title and company so that I can tell you more about this unique opportunity.

Kindle Fire Lessons Learned

I don't regret spending the $200 I paid Amazon for my Kindle Fire. I tried it out and decided it wasn't for me, so I gave it to my daughter instead. Even though I no longer use the Fire I wanted to share the things I learned about the device and myself over the past several weeks. Let's start off with the good side of things.

Kindle Fire Pros

• Form factor -- I prefer the Fire's size to the iPad's. It's nice being able to wrap your hand around the entire device and the lighter weight is a big plus for the Fire. Of course, it's the same form factor as RIM's Playbook, and given how poorly that device has performed it's clear you need more than just a great form factor.
• Meets the needs of typical consumer -- The Fire wasn't for me but my daughter really likes it. That's why you see so many good and bad reviews of it. Consumers who want a cheap tablet are OK without all the bells and whistles of the iPad, for example. Early adopters, or those who want to push the technology to the limit, are disappointed though. More on the early adopter in a moment...
• Connection to Amazon content -- There's no question Amazon is using the razors and blades economic model here and the Fire is clearly the razor they're willing to sell at little to no profit. Connectivity to Amazon's ebooks, video and audio content is second to none with the Fire. And tying in the Prime membership program will only lead to more Amazon products being sold.

That's it as far as pluses go. Now let's talk about the minuses.

Kindle Fire Cons

• Connection to Amazon content -- As easy as it is for Fire users to access Amazon content it's just that difficult to access anyone else's. If there's one thing I've learned from the Fire it's that my next tablet will not be locked in to one provider's content. That probably means I won't be buying from the typical content providers, of course. I don't mind paying more for that capability, btw. So if Samsung comes up with a terrific tablet that meets all my needs, and it's $100 or so more than the Fire, I'm in.
• Awful for the early adopter/tinkerer -- As noted above, the Fire is pretty good for the typical consumer. But if you're buying it to root and open it up you'll be disappointed. Even if you go through the rooting process you'll quickly find some of the apps in the Android Market simply won't run on it (e.g., NHL Gamecenter App, the swipe keyboard, etc.) And if you do root it, watch out for those unsolicited auto-updates...
• Auto-updates -- This one's ridiculous. How in the world can Amazon think that forcing OS updates on every Fire owner is the right thing to do? Amazon, take a page out of the Apple book and let your customers decide when and if they want the update. I couldn't help but feel the auto-update was intended more to penalize rooters than to fix problems and offer more functionality. It also reminded me of the unfortunate "1984" debacle Amazon brought upon themselves a few years ago. Really stupid.
• "Silk" browser -- This has to be the biggest embarassment of all for Amazon. Remember how excited Bezos was when he demo'd the Fire's lightning-fast browser at the press event last year? It turns out the browser isn't that fast after all. In fact, in my totally unscientific side-by-side testing, the Fire almost always loaded pages slower than both my iPad and my RIM Playbook. Even with all these other issues I figured the Fire would offer a browsing experience that's second to none. The results were considerably weaker than promised. I'm disappointed that Amazon hasn't come out and admitted their failure here. It's remarkable that they still prominently feature the Silk browser on the Fire's product page. They seem to be in denial about it as they haven't even hinted it will be fixed in a future software update. As much as I criticize Apple, this is something Steve Jobs never would have let happen.
• Missing a "killer" app -- This is the reason why I had to keep my iPad handy throughout my Fire use and am stuck (for the time being) on iOS. Zite is my go-to app. I use it every single day. It's outstanding. It's a free app but I'd gladly pay as much as $10 or $15 for it, especially now that I'm totally addicted to it. There's no Android version of Zite...yet. I can't even consider another Android tablet till Zite is available. Flipboard is a close second and it too doesn't exist in the Android world. Amazon should have invested some money with the developers of apps like Zite and Flipboard to make sure they were available when the Fire launched. Better yet, wouldn't it be nice if a Fire-specific app or two came out that made the device irresistable? I'd love to be talking about a Fire or Android app that's unbeatable but not available on iOS. I can't think of a single one.

I realize I'm a fairly unique user and that plenty of Fire owners are perfectly happy with their purchase. That's great, but I'd also love to see Amazon step up, act like the market leader they're trying to be and address these shortcomings.

I'm convinced that my next tablet will be an Android-based one. The only Android tablet I'll consider though is one that gives me access to all types of content, not just content from the company who sells the hardware. Heck, as closed as they are, even Apple lets you install e-reader apps from Amazon, B&N, etc. One of the reasons they can do that is they're confident they've got a terrific piece of hardware and you'll want to buy it over the competition. They also charge a premium for it. I've learned it's worth paying a premium, as long as it's not ridiculously high, for the ability to choose from multiple content providers.

So while my next tablet won't be the cheapest on the market, I won't make the same mistake twice and limit myself to one source of content for it.