Global Ebook Market Report

TOC is dead but I'm glad to see some elements of it live on. A couple of years ago the TOC team launched the Global Ebook Market Report with Ruediger Wischenbart. Ruediger updated the report once or twice a year and we typically released a major update each October for the Frankfurt Book Fair.

The book fair opens this week and I was delighted to see that Ruediger and his team did yet another thorough update to the report for 2013. You'll find all the various formats of it here.

If you're looking for the latest data on ebook momentum by geographic region you'll find all the details in this update. If you want to read what's happening globally regarding popular formats, piracy and pretty much everything else related to ebooks you'll also find it in this report. The best news though is that the Global Ebook Market Report has always been and continues to be free. No cost, no registration, nada.

Do do yourself a favor, download this report right now and start reading. You won't regret it and you'll quickly become an expert on the global ebook marketplace.

Best of TOC

Best of tocIt's challenging keeping up with publishing industry news and analysis. I have way too many content feeds to monitor and I'm sure you do too. We do our best to highlight the most important developments on the TOC website but you're forgiven if you fall behind or miss an article every so often.

Most of analysis on the TOC site is somewhat timeless but the blog format might not make it feel that way. That's why we gathered the best of the best articles and assembled them for you in a handy, to-go version. It's called Best of TOC: Analysis and Ideas about the Future of Publishing. More than 60 of the most thought-provoking articles from the TOC team and community are featured and it's available in EPUB, mobi and PDF formats. Best of all, it's completely free.

If you need to catch up on your TOC reading you no longer have an excuse. Download your copy today and tell us what you think.

Why B&N should abandon hardware

The ebook retailing business consists of three elements: hardware, content, and selling model. Dedicated e-readers (think eInk devices) are losing momentum to tablets. Content is mostly quick-and-dirty print-to-e conversions, or "paper under glass", if you will. The typical selling model is to buy one ebook at a time. Pretty simple. And not a whole lot of innovation happening in any of the three areas by the major players.

Recently there's been speculation that B&N is about to ditch the hardware part of their Nook business and focus instead on content and licensing. If true, that's probably the wisest thing I've heard from Riggio & Co. in a long time. Hardware has been, and will increasingly become more of, a fool's game for B&N.

They can't possibly steal Apple's mojo, so why try? I'll bet more people are reading B&N ebooks on an iPad or iPhone than they are on the Nook tablets.

On the Amazon side, B&N simply doesn't have deep enough pockets to lose money on both hardware and ebooks as long as Bezos can, so it's time to cut bait. Plus, Amazon's goal is to turn the Kindle Fire into a gateway for purchasing much, much more than ebooks. Amazon has a significantly larger product catalog outside of books, so Amazon can afford to lose money on the device if they make it up on the sale of electronics and other goods B&N doesn't sell.

So if B&N completely gets out of the hardware business what can they do to compete in the ebook world? Think app functionality, reader experience, and content sales model.

Today's e-reader apps have pretty much the same functionality as yesterday's. There's basically no innovation happening with the user experience in any of these apps, whether they come from Amazon, B&N, Kobo, etc.

Now is the time for B&N to shift all those resources they have in hardware onto the team that develops their Nook apps. What features are customers asking for? More importantly, what features have readers never even envisioned but would love to have? Channel Steve Jobs. We were all pretty content with our MP3 players back in 2000 and then in 2001 the iPod hit the scene. What a game-changer. What will be the "iPod moment" for e-reading apps?

And while they're working on that, be bold and work with publishers to develop some genre-specific, all-you-can-eat, ebook subscription programs. Romance is a good place to start but look at other verticals as well. What kind of package would compel customers to pay a subscription rate of $5 or $10 per month? They'll need to find the publishers who are willing to experiment here but that's why you focus on just one genre to start and build a success story to create others down the road.

At the end of the day B&N should continue to let Apple, Google, et al, distribute their Nook apps. They don't need to lose any more money selling devices that are viewed as commodities. They should instead focus on dramatically changing the reading experience and content acquisition model. After all, once hardware is eliminated, those are the only two other elements of ebook retailing that matter.

TOC’s Global Ebook Market report

One year ago we published the first edition of our Global Ebook Market report. We focused on the major English language territories but also featured coverage of several other popular languages as well.

A lot has changed in the past year so we recently published a completely revised edition of the report. You’ll find it here. The good news it’s totally free, both in terms of cost and DRM. :-) It’s also available in all the popular formats (PDF, EPUB, and mobi), so you’ll be able to read it on any device you own.


Kindle Remorse: Will consumers ever regret ebook platform lock-in?

If Barnes & Noble doesn't already have a sense of urgency, especially after last week's developments, this quote from a thoughtful piece by Joe Arico should help fire them up:

In the age of the e-reader and tablet, every person that purchases an Amazon Kindle, Nexus tablet or iPad should be viewed as a customer Barnes & Noble will likely never get the chance to serve again.


Why Are Apps Only on Tablets?

I read on my Glowlight Nook much more frequently than I read on my Asus Transformer tablet. I'd say there's at least a 10 to 1 differential, so for every hour I read on my tablet I read at least 10 hours on my Glowlight Nook. I'll bet I'm not alone and people who own both an eInk device and a tablet probably do much more reading on the former. So why is the apps ecosystem limited to tablets? Why are there no add-on apps for eInk devices in general?

In a recent TOC newsletter we asked readers "what do you wish your ereader could do?" (Btw, if you're not already receiving our free newsletter you need to sign up right now. I'm confident you'll enjoy each and every issue.) We received quite a few replies from readers but one of the more interesting ones said they'd like to have apps like Flipboard, Zite and Pulse on their eInk device. I found that interesting because those are the apps (along with News360) I use almost every day on my tablet. If there were Nook eInk versions that 10:1 ratio noted earlier would probably become 50:1 as there would be less reason for me to switch to my tablet for reading.

So why aren't there apps like this on eInk devices? One reason is tied to eInk's capabilities. Apps like Flipboard, Zite, et al, offer nice graphics and even a bit of animation. eInk is limited to grayscale and no animation, of course. So why not create those apps without the animation and just show the images in black-and-white? That leads to reason #2: Amazon, B&N and the other eInk device vendors aren't encouraging third-party app development. That's probably because they want those devices to have the highest walled gardens of all, which is a shame and a loss for consumers.

Is it too late for these vendors to reconsider and encourage third-party app development? Maybe. After all, the momentum has already swung towards tablets and away from eInk readers. Nevertheless, as long as tablets weigh more than eInk readers, their displays aren't as easy on the eyes and they don't offer significantly longer battery life I'll remain a two-device reading consumer. I suspect I'm not alone, so I hope an eInk app ecosystem takes root at some point.

Why Aren't E-Reading Devices Smarter?

I'm sinking in ebook samples. I've stored so many articles that I cringe when I open Instapaper. I almost forgot I'm only halfway through Walter Isaacson's book about Steve Jobs. In fact, there are at least three other ebooks I started and pretty much forgot about finishing. They've just fallen off my radar.

What's wrong with this picture?

I'm drowning in econtent and I'll bet you are too. My nook's user interface is similar to the Kindle's. Virtual shelves are considered a revolutionary content management technique. Really? Why are we so focused on replicating the physical world in the e-reading world? Shelves work fine for print books but why should we limit ourselves to that solution for ebooks? These devices we're reading on are capable of so much more!

Today's e-reading devices are the equivalent of yesterday's dumb terminals. Let's make 'em smarter! I want one with an econtent manager that has the following capabilities:

  1. Let me create a reading schedule and help me manage it. I'm currently in the middle of reading at least 4 different books on my nook. The problem is I only seem to focus my attention on 2 or 3 in any given week. This econtent manager should let me tell it what books I want to prioritize on my reading list and nudge me every day to tend to each one. Let me configure it to text me on my phone if I fall too far behind, for example. Rather than presenting me with a set of shelves and an ordering of the most recent ebooks I've opened I want something that's far more powerful and helps me stay on top of all of my econtent.
  2. Don't let me forget about samples. Sample content management is pathetic on all the major ebook platforms. Seriously. I've told B&N that I'm interested in a title and they're content to simply toss the short sample my way and never follow-up. I've got samples that are really old now and I've forgotten about them. Let's have a feature in this manager that knows when I downloaded every sample and, based on how I configure it, reminds me to check them out. For example, I'd love it if my nook would tell me I've got 4 samples that are now a month old and I've never even opened them. You'd think the ebook retailers would see the benefit of this service, especially since it would only lead to more conversions from free downloads to purchased ebooks. And let me subscribe to samples! I love baseball. Go ahead and send me the sample for every new baseball ebook as it's published. Don't worry...I'll delete the ones I don't care for.
  3. Tap into my Instapaper acount. Why do I have to go from ebook reader app to Instapaper app to read all the interesting web pages I've saved? Can we please just do this all in the ereader app?! And be sure to integrate this with the reading schedule feature outlined in point #1. So let me prioritize which Instapaper articles I need to read today, this week or this month. Better yet, how about we just cut out the middleman and just give me a "Send to..." option in every browser on every device and platform I use? A quick click of that button in my browser means that page will be pushed to my nook's new content manager and ready for me to read the next time I turn it on.

Today's ebook platforms are pretty hard to distinguish. I switched from a Kindle to a nook earlier this year and didn't notice any difference. This is an opportunity for everyone who's not in first place (B&N, Apple, Google or Kobo) to rise above all the others. They should push aside the physical world metaphors, leverage the capabilities of a digital device and help their customers manage their content and achieve their reading goals.

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 I didn't do those conversions to get our books in other formats. After all, when you buy a book from 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.

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?

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, 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?