U.S. book publishing industry stats from Nielsen

Business-925900_1920Frankfurt Book Fair 2015 is in the rearview mirror but there were a few noteworthy tidbits gleaned from the event. Some of the more important facts and figures were shared by Nielsen’s Jonathan Stolper his state-of-the-U.S.-market presentation.

Although you can argue Nielsen’s data isn’t complete and it’s therefore far from perfect, it’s one of the few resources available for market trends and analysis. With that in mind, here are the most interesting points I saw in Jonathan’s presentation:

Self-publishing and the Big Five are crowding out everyone else – According to Nielsen’s data, from Q1 2014 to Q1 2015, self-published books have grown from 14% to 18% of the overall market. In that same period the Big Five’s share has grown from 28% to 37%. Meanwhile, the rest of the market, all the large, medium and tiny publishers, have seen their share decrease from 58% to 45%.

The print/e split is now roughly 74%/26% – Plenty of articles have been written about the plateauing ebook market. Most publishers report ebooks represent anywhere from 15% to 30% or so of total revenue. According to Nielsen, the current state of equilibrium is closer to a 74%/26% split. That ratio varies widely by genre, btw, but it’s worth looking at your own rate to see how it compares to the overall industry average.

Price drives ebook interest – According to Nielsen’s consumer survey, almost 60% of respondents said they’d choose e over p if the savings is at least $4 for the former. Additionally, approximately 50% said they’d do the same even if the ebook is only $2-3 cheaper than the print version. So as publishers wrestle back consumer pricing via the new agency model, driving ebook prices up, it’s clear they’re inadvertently (and sometimes deliberately) nudging consumers back to print.

Consumer prefer print and e, not or – 49% of consumers surveyed said they bought print and ebooks in the past 6 months vs. 42% who only bought print and a paltry 9% who only bought e. Just because a consumer buys ebooks doesn’t mean they’ve abandoned print. This is a huge opportunity most publishers are overlooking. Why aren’t there more digital products that complement print rather than assume the ebook is replacing the print one?

Amazon dominates subscriptions too – It’s been hard to find data on the all-you-can-read ebook subscription market but Nielsen is finally shining some light on the model. And just as they do pretty much everywhere else, Amazon is crushing it. First of all, according to Nielsen only 5% of consumers have signed up for any ebook subscription solution, so the market remains small. Kindle Unlimited led the way with the largest chunk of market share, jumping from approximately 40% in January 2015 to almost 60% in April. Scribd and Oyster were tiny players by comparison in that period, and they’re only getting smaller. Given their teensy share of a small segment, it’s no wonder Oyster is going away soon.

Btw, this was the first year for the Fair’s Business Club option and I hope it’s not the last. The Business Club was a terrific location for quiet meetings, away from the traffic and noise of the hall floors. It ranked high in serendipity value as well: I bumped into and met with at least a handful of other attendees I might not have crossed paths with otherwise. Highly recommended.


Why publishers should embrace the evolution of “fair use”

Scale-310471_1280When I meet with publishers I always ask them about the biggest problems they face in today’s market. One of the most popular answers is “discoverability.” Most publishers fret about getting lost in a sea of other books and promotional campaigns.

Life seemed much easier in the brick-and-mortar days. A publisher simply paid a retailer for premium placement, resulting in endcap promotions and books stacked in high-traffic areas of the store. Those options still exist, of course, but they’re less important now that one retailer dominates distribution and discovery.

That’s why I’m scratching my head about all the negative publisher and author reaction to the recent federal appeals court ruling on Google Books. If you’re not familiar with Google Books, it’s an extension of the search engine enabling discovery and sampling of digitized books. Many of those books are still protected by copyright, hence the delicate nature of the case.

If you’ve never explored Google Books you need to take a closer look before forming an opinion on the ruling. Here’s a quick search for “FDR” on Google Books. The first book link points to my favorite FDR biography, by Jean Edward Smith. Click that link and the first thing you’ll see is a frame with scanned pages from the book. Scroll down a bit and the following note is displayed:

This is a preview. The total pages displayed will be limited.

Every so often you’ll see more notes like this one:

Pages 2 to 9 are not shown in this preview.

In other words, what you’re seeing are merely snippets of the book. There’s no way you can read the entire work inside Google Books. What you can do, however, is search and discover more book content than you’ve ever been able to before.

For example, on page 10 of the FDR book I noticed the phrase “Richard Crowninshield of Boston”. Let’s say you’re a researcher working on a project about Mr. Crowninshield. A colleague said they read something about him in a book but they don’t recall which one. You need that source because you want to buy the book to understand the context and your research requires more than just a page or two where the reference was made.

I challenge you to find the book by searching that phrase on Amazon. I just did that and here are the search results. Smith’s book is nowhere to be found.

Now search the same phrase in Google Books and here’s what you get. One click takes me directly to that page and the left side of the screen tells me Smith’s book is what I need. Notice that Google also includes links to buy the book as well, in print or ebook format.

Publishers, wake up and realize that the largest search engine on the planet offers a powerful way for your content to be discovered and purchased. Rather than getting all litigious about this, why not embrace it and find a way to fully leverage it?

The simple truth is that as technology evolves, the notion of “fair use” is also evolving. I think this is a very good thing, and not just for Google. History is littered with marketplace incumbents who crashed and burned as they tried to protect yesterday’s model. Tomorrow’s publishing leaders will be the ones who take advantage of services like Google Books, not those trying to make it go away in a courtroom. 


How readers will become curators and resellers

Glasses-272401_1920It’s easy to think that today’s ebook is as good as it gets. Publishers are mostly satisfied with the current print-under-glass model and, unfortunately, flattening (or declining) ebook sales trends aren’t likely to drive investment in digital innovation.

What if readers could help drive some of that innovation in the future? Here’s why that’s a viable scenario…

When it comes to annotating ebooks today, consumers are typically stuck with some very basic options: highlights and comments. Those annotations are almost always limited to private view only. In fact, there was a startup a few years ago called Findings.com which tried to enable readers to share their highlights in Kindle books; they were quickly shut down by a rather large, powerful company in the northwest.

I think Findings was onto something and one day readers will not only be able to share and socialize highlights, but they’ll be able to add more content and value to the original ebook.

Consider the use-case of a student who’s mastered the art of note-taking and textbook highlighting. Back in my college days I loved it when I managed to buy a used textbook marked up by one of these students. It helped me hone in on the most important points in some pretty dull and dreary textbooks.

Now imagine that same use-case in a digital world where there are no barriers. Think of the textbook as one long web page the reader can manipulate and add to.  The original textbook content forms the foundation but the reader can add to it as they see fit.

So while Jane is studying chemistry she comes across a slick periodic table website that allows her to dive deeper into any given element. Today she merely bookmarks the site in her browser; tomorrow she drags the url into the textbook, perhaps configuring it as a pop-up element inside the ebook, thereby enriching the reading experience.

Maybe she also finds a few terrific videos online that explain some of the more complicated concepts in this chemistry course. Why not drag those into the book too?

At the end of the semester, Jane has managed to curate an entirely new product. The textbook is the foundation, but web elements and widgets curated by Jane help round it out. This has been useful for Jane, but what if she’s also able to sell her annotated edition to other students next semester? Maybe Jane’s edition sells for $5 more than the standard edition and Jane gets a cut of that price difference.

Are you getting hung up on all the IP and content rights issues this raises? It’s fair to point that out, but what if all these web elements are nothing more than pointers in Jane’s annotated edition? In other words, Jane isn’t actually embedding the videos and web pages in her ebook, she’s just inserting pointers to them. It’s the same as when the book suggests the reader “go to www.wherever.com”. In my model, the words are replaced with a link and the link might just open the widget as a pop-up or perhaps a new tab in the browser. In short, I’m convinced the legal issues can be completely avoided.

I’m also convinced this model will one day become a reality. Readers will become curators and resellers. Not every reader will be part of this movement, but enough of them will see the opportunity to leverage their passions and experience to make it a viable model. Publishers will also have an opportunity to promote the reader curators who create the most interesting, value-added annotated editions.


Here’s how search will evolve and become more powerful

Telescope-122960_1920You’re probably pretty happy with Google search today, right? It’s incredibly fast, extremely reliable and almost always delivers the desired results. What more could you ask for?

I think the problem with today’s search solutions is that we’ve limited them to what’s online. If the content has a web address and it’s been crawled by the major engines it’s properly analyzed and presented in search results.

But what about everything else? Once again, Evernote is a terrific example of what could be.

I’m a huge Evernote fan and I’ve configured it so that all my notes are exposed and retrievable in a Google search. Alongside the standard web, news, maps, images, etc., search results categories, Google also shows a frame with Evernote’s Web Clipper results. Simply put, a single Google search produces results from the web as well as my Evernote archive. Simple, yet powerful.

Why does it have to stop with the web and Evernote? Why can’t one search be configured to retrieve results from all my content streams?

Let’s start with the documents on my computer and in the cloud. They’re mostly Office applications, so a search needs to understand the structure of Word, Excel and Powerpoint documents. I’m not talking about simply searching file names; this search functionality needs to know whether the phrase is buried in the document itself.

Don’t forget about Outlook and all the other email applications. Search needs to sift through everything in my inbox, folders and attachments.

How about all the digital books, newspapers and magazines I read or scan every week? My search tool needs to capture, index and report back on all that activity as well. I sometimes rate articles and books I read, so the search algorithm needs to understand those rankings and include them in its algorithm, pushing higher-rated results towards the top.

Let’s also not forget about websites I’ve visited. This search tool should understand which sites I frequently visit and which pages I’ve spent more time on, reflecting the fact that I’m reading rather than scanning. This too is critical information for the search algorithm.

Next, it needs to understand my social graph and factor that into the search results. I’m much more active on Twitter than Facebook, for example, so what are the most recent relevant tweets that belong in my search results?

I realize this starts to clutter the results page. That’s why it all has to be configurable by the user. Clicking on/off checkboxes in a list should allow me to show or hide the various sources in search results. 

I’m able to search each of these sources individually today, of course, but there’s no uber-search tool allowing me to consolidate and search across all sources with one query.

Finally, and here’s where it gets even more interesting, I want the ability to curate and share my search results. Today you can do this by sharing the url from the results page; for example, here’s a Google search for my employer, Olive Software. That’s a start, but now I want to insert links to other sources, including all the ones noted above (e.g., documents, emails, ebooks, etc.).

Yes, there are countless sharing, opt-in, privacy and copyright issues to navigate before this vision becomes a reality. But imagine how powerful the results will be when these capabilities become standard features in every search engine.


Using technology to boost bookstores

Bookstore-945090_1280Technology and innovation probably aren’t the words that come to mind when you think about your local grocery store. Bar code scanners in the 1970’s were probably the last recent advancement in the grocery store industry. As you’ll see in this article, however, at least one grocery chain is leveraging a new form of technology to improve the shopping experience and I believe it offers guidance for a terrific lesson for bookstores.

The smart shelf technology described in that article describes how Kroger plans to provide more information for shoppers with LED displays that display accurate prices and other product information. It’s not exactly rocket science but it’s a much-needed first step towards an improved and more efficient in-person shopping environment.

Imagine your local bookstore with this functionality. OK, accurate prices on the shelf edges on shelves aren’t exciting but take it a few steps further. What if the store knows who you are and what you tend to read? Once again, we find ourselves in an area that freaks out the privacy advocates, but keep in mind this would be a 100% opt-in model for consumers.

As you go through the store the shelves communicate with an app on your phone to surprise and delight, taking the shopping experience to a whole new level. You’re greeted with information about new releases that interest you and special deals offered exclusively to you and available only during your current visit. You prefer ebooks over print books? No problem. The app already knows that and offers similar information and focuses on ebook deals which are only available while you’re in the store.

This sounds a lot like what e-retailers are able to do with email blasts and “buy x, get y” campaigns, right? The missing piece online is serendipity.

When was the last time you went to an online bookstore to simply browse? If you’re like most consumers, impulse buys are far more likely to happen in a brick-and-mortar store than on a website. Yes, there are exceptions, but serendipity is more of an in-store experience than an online one.

It’s time for technology to boost serendipity in the brick-and-mortar environment. That mobile app needs to tell me about the book I just walked past and why it’s perfect for me. And the message needs to have a button for quick, one-tap sample downloads to my mobile device. Make it a more enticing sample than what I can find anywhere else though (e.g., longer, richer, etc.) And don’t forget to dangle the special discount in front of me to make buying an irresistible step.

In short, give me a reason to go the brick-and-mortar store. I’ve only visited two bookstores in all of 2015. I used to go every week but there are fewer reasons to go now. Ironically, just as technology contributed to the struggles brick-and-mortar stores currently face, technology could also be part of the solution to make them more relevant again. If bookstores offered this sort of in-store experience I’m quite certain I’d go out of my way to discover the new products and deals that await me. 


5 things we learned from the demise of Oyster Books

Oyster logoThe news from Oyster Books was disappointing but hardly surprising. They recently announced plans to “sunset” the service in the coming months, a fancy way of saying their all-you-can-read experiment is over. It’s unfortunate, as I believe there are both a market demand and a viable business model to be found for book subscriptions.

I’ve been an Oyster subscriber since early 2014 and have been quite pleased with the service. As both an Oyster customer and a member of the publishing industry community, I offer these five lessons from the Oyster experience:

  1. Unsustainable business models are, well, unsustainable – Oyster had to find a way to attract readers as well as publishers. To address the latter, they made the mistake of promising to pay publishers their portion of the full digital list price as soon as a subscriber read a certain percentage of the book. This percentage was set far too low, so publishers jumped at the opportunity and Oyster ended up losing money on subscribers who exceeded the threshold on two or more books in a month. Approximately 14 months ago I suggested Oyster (and competitor Scribd) were on borrowed time and that they had about 18 months to adjust or fade away. It appears at least one of them will disappear within that 18-month window.
  2. Adjusting business models is hard – Oyster tried to address the mounting financial pressure earlier this year when they announced plans to sell books as well as rent them. Even though Oyster was hardly a household brand name, the niche they carved out was clearly defined in the all-you-can-read space. It’s nice to think you can add buying to the rental model, especially when it creates one common bookshelf for the reader. The problem though is that one company already dominates the ebook selling business, so without a compelling advantage over existing models there was no reason for consumers to buy as well as rent from Oyster. 
  3. Content sampling remains broken – Everyone in the industry should applaud Oyster’s efforts to solve the content sampling problem. My wife and I share our Oyster subscription, btw. When I told her that Oyster is circling the drain her biggest disappointment is that she’ll no longer be able to explore so many new books and authors. Like many, she loved the fact that you could read part of an Oyster ebook, abandon it at any point and never feel guilty. The x% free sampling model that exists elsewhere, and sometimes barely gives you something to read beyond the frontmatter, is weak at best.
  4. Think depth, not breadth – Oyster wasn’t the first all-you-can-read ebook subscription and it won’t be the last. The ones that have thrived for years tend to focus on a particular genre or audience. They don’t try to lure customers in for the low, low price of $9.95 per month and they don’t pay publishers as though the book was sold. So in addition to working with a more viable business model, they tend to focus on a specific customer and offer enough depth to keep them engaged.
  5. All-you-can-read subscriptions devalue content – It’s true. When you’re only paying $9.95 per month to read as much as you want you start questioning the purchase price on $10 ebooks. If you’re a publisher and you already cringe when your ebooks are discounted to $9.95 or less you’ll feel even more uncomfortable participating in all-you-can-read platforms. Then again, re-read the previous point about depth and monthly pricing before you completely opt out of subscription services down the road.

It’s unclear when Oyster will disappear but I’m glad they at least warned us and didn’t abruptly shut down one morning. As I race to finish a couple of lengthy books I started a few weeks ago I’m hoping Oyster might grant a final wish to subscribers: Let us keep the books we’ve almost completed. Publishers have already been made whole on these so I’d like to think they would support the concept as well.


Why ad blockers will help content evolve

Man-791049_1280Ad blocking is one of the more controversial features of Apple’s new iOS release. Apple prefers to call it “content blocking”, but it’s mostly intended to block all those pesky website ads that nag us every day.

Publishers are, of course, totally freaked out at the prospect of their content being consumed without monetizing the accompanying ads. And although ad blockers have been around for quite awhile, they’ve become a front-page story because Apple now makes it so easy to eliminate ads in their Safari browser.

To assess the impact of ad blockers in web browsers I think it’s worth studying the evolution of a similar medium: Television. TV started with totally free, over-the-air broadcasts. Advertisers subsidized those shows and everyone was happy.

Then cable arrived and an interesting thing happened: Most of us were willing to actually pay for all those free channels. Why? Two reasons: Better reception and more channels, although not the hundreds of channels available today. I remember our family’s first cable connection back in the early 1970’s. We went from three fuzzy stations to approximately 12 crisp, clear ones. That wasn’t a huge increase but it was important enough for my parents to sign up for a monthly payment.

Today we have cable, satellite, etc., with ad-subsidized channels, pay channels and that wonderful technology known as the DVR; each of these have their own business models. But with website content the business models still appear to be stuck in the early cable TV era.

On the web we have access to both free, ad-subsidized content as well as content behind paywalls. As ad blockers become more mainstream it forces publishers to make a strategic choice with their free content. Some will continue what they’ve always done: offering free content and now accepting the fact that more reading is taking place without the benefit of ad impression income. Others will push more of their content behind a paywall, reducing consumption but enjoying a false sense of contentment knowing that they aren’t being gamed by the ad-blocking crowd.

Others will embrace something in between. Their content will still be free and ad-subsidized, but in order to access it readers will have to agree to view the accompanying ads. Call it the “ad blocker blocker”. Technology will be developed to display the content only if the ads are also displayed. In fact, you could argue certain mobile apps and video pre-roll ads without skip/fast-forward buttons are examples of how this is happening today; perhaps we’ll see more publishers push their free content off the web and into mobile apps where ad blocking isn’t quite as easy. Yes, solutions will be developed to override this model as well, taking the cat-and-mouse game to a whole new level. But for the free ride to continue, mechanisms like this will have to emerge to ensure content creators and publishers have the revenue stream to keep producing.

It’s an evolution and only the strong and efficient will survive. But it’s also an important step leading to what I believe will be a future with deeper content engagement. After all, if readers find your ads so irritating, doesn’t that say something about your website experience? The ad-blocking movement should be a wakeup call for publishers everywhere, forcing them to do something radical: make the advertising experience more engaging and less annoying for readers.


Rethinking your mobile strategy

Iphone-410324_1280Scan today’s news and you’ll undoubtedly see plenty of stories about how the majority of content is being consumed on mobile devices. In fact, you’ll probably use your own mobile device when you do that scan.

Like many of you, I read all my books on a tablet and most of my short-form content on my iPad Mini or my Android phone. Even though I spend several hours in front of a computer every day, the majority of that time is spent using productivity tools like PowerPoint, Excel and Outlook. I’ll read the occasional web page on my Mac but my phone and tablet are my go-to devices for business and casual reading.

The pundits say that publishers and content distributors need to think about smaller screens and shorter pieces of content. They’ll go on to tell you that responsive design is a must and it’s critical to granulize content so it can be read in smaller slices of time.

The oft-used scenario is someone standing in line at the grocery store. They’re bored and looking for something to do. Their phone is always with them, so how can you take advantage of that opportunity and cater to their need?

I think we’re missing a huge opportunity by simply saying existing content needs to be restructured and apps need to optimize every square inch of screen. Publishers should be thinking more about companion content for mobile, not just reformatting what they’ve already produced.

Here’s an example: I finally got around to reading David McCullough’s wonderful book about Harry Truman. Each night I read a few more pages before I go to bed. There’s no way I’d ever consider opening that ebook on my phone and trying to read it in line at the grocery store. In order to really engage I need at least 20-30 minutes of book reading time, not two or three minutes in a checkout line.

So although I’ll never read Truman at the store, I’d be thrilled to spend that time in an app that provides tidbits about Truman. Let’s take that a step further and suggest the app should offer more than random facts or stories about him; rather, it should use information about what I’ve read so far and it tailor today’s suggestions accordingly.

This app will know that I’m currently reading about the 1948 presidential election, so it gives me links and summaries of all the activities from that fall. The app also knows what today’s date is, so it’s able to provide noteworthy info from “this date in history” (e.g., September 14) as it relates to Truman’s life.

In short, the companion mobile app leads me to deeper engagement with the book I’m reading each night. Having access to something like this would only make me more excited to read the next installment of the book.

Don’t overlook the marketing opportunity this represents. Give the app away for free and promote other related titles inside it. That means tossing in samples of other related books. You might want to include other types of advertising in it as well. I don’t care how you monetize it; just make sure it truly serves as a valuable companion to the book I’m reading.

The UI for this could follow the same metaphor the Google mobile app uses. Simply tap the cards you want to want to open and swipe to discard the ones you’re not interested in. The app learns what you like and adjusts future recommendation cards accordingly (e.g., maybe you prefer more YouTube videos and less long-form articles).

Although a mobile strategy certainly needs to consider the screen size and a consumer’s on-the-go reading habits, sometimes the content’s original format shouldn’t be altered. Instead, think about the deeper engagement opportunities a companion mobile product could offer.


Direct-to-consumer (D2C) starts with building community, not owning the sale

Directory-881420_640More and more book publishers seem to be focused on building a better direct relationship with consumers. Some of these direct-to-consumer (D2C) efforts are well thought-out while others are nothing more than publishers following the crowd.

How else do you explain so many publisher sites that are simply catalog pages with the option to by print or ebooks direct? What’s the compelling reason for someone to come to the site? Even if they find the site why would a consumer consider buying direct rather than from their favorite retailer?

It reminds me of the old days when everything was driven by seasonal (print) catalogs. The accounts insisted on having enough lead-time to promote titles, so the summer titles were presented the previous fall or winter. The print catalogs were then left behind with the buyer as evidence of the sales call presentation.

Most of today’s publisher websites are nothing more than the digital version of those seasonal catalogs. And since there’s no compelling reason for consumers to discover and explore them, many of these websites are ghost towns.  Publishers create them and then wonder why nobody visits or buys.

Here’s something most D2C-focused publishers overlook: It’s virtually impossible to change a consumer’s buying habits. The larger my Kindle ebook library, the less likely I am to buy my next ebook from a retailer not named Amazon, and that includes an aversion to buying direct from the publisher. It’s that wonderful retailer walled garden phenomenon; and those walls are something publishers helped create by insisting on locking their books inside DRM.

So if that spiffy website is unlikely to generate direct sales why does it exist? If your answer is “to increase discovery”, do yourself a favor and study the results of a Google search for your top titles, series and authors. If your pages aren’t among the top search result links you’re kidding yourself with the “discovery” justification. The top results are the ones getting all the clicks.

Rather than trying to change consumer buying habits and owning the sale, publishers should instead focus their D2C efforts on building community. Publishers own the relationship with authors, so as a publisher, what are you doing to build community around your authors? What are the top three reasons are you giving consumers to come to your website?

Btw, authors are just one component. Many publishers have popular series or dominate a specific genre. What are you doing to build community around that brand or genre?

It’s OK to still offer direct buy buttons on each title’s catalog page but your D2C buy buttons should be offered alongside buy buttons for all the popular retailer sites.  That includes buy buttons for print as well. Let the consumer decide where they want to buy and don’t force them to hunt for your product on a retailer’s site.

If publishers don’t spend the time building this community with consumers, who will? The retailers aren’t going to do it. Their focus is way too broad.

So although most publishers missed out on the opportunity to go direct in the digital era, there’s still plenty of time to establish a strong consumer relationship by using your site to build and foster community. Just be sure to keep your priorities straight and focus on community first and owning the sale second.


How Amazon Underground will affect content pricing and business models

Screen Shot 2015-08-31 at 9.29.05 AMAs interesting as the all-you-can read models from Next Issue, Oyster Books and Scribd are, I believe Amazon just introduced a new model that’s likely to be much more disruptive in the long run. I’m talking about Amazon Underground, where paid apps go to be free.

If you haven’t heard about Underground it’s a collection of paid Android apps that are now available free if you download them directly from Amazon. The initial collection is mostly games but it will undoubtedly grow over time. It’s also important to note that the catalog includes paid apps as well as those with in-app purchases (e.g., additional levels for a game); those in-app options also become free in the Underground world.

App developers get paid for engagement in the Underground model. So if their app gets downloaded but never used they earn nothing. On the other hand, if their app is wildly successful and used extensively, Underground represents a whole new developer revenue stream.

Any app developer will tell you there’s an enormous difference between the number of downloads of a 99-cent app and that same app as a freebie. Amazon gets that and may have cracked the code in leveraging free while also driving revenue.

It all has to do with advertising revenue. You may not see much (any?) advertising in some of these apps today. For example, I haven’t seen a single ad in a casino game and Office app tool I downloaded. That will undoubtedly change in the future. After all, in order to keep investors happy, Amazon’s losses today always need to point to profits and other benefits in the future.

What are those benefits?

First of all, it’s an interesting way to co-opt the Google Play store. Remember, you can only get these Underground apps direct from Amazon, not Google. I’ve got to believe Amazon’s own app store isn’t exactly thriving, so this is a great way to give it a gentle boost.

Second, all those Underground apps you download ultimately pull you deeper and deeper into the Amazon walled garden. This too might not be apparent today but it will become crystal clear when those ads start popping up. And don’t forget that you’re opting into a model where all your app usage is closely tracked. After all, that’s how Amazon determines how much to pay developers. If you’re a privacy freak, Underground is not for you.

Why should publishers care about Amazon Underground? It sounds like an interesting model for game developers but not all that applicable for books, newspapers and magazines, right?

Wrong.

I’ve been talking about advertising in books for quite awhile now and I think Underground represents a viable, incremental business model for this vision. It’s obviously not the best option for some content but I’m convinced enough publishers and authors will embrace it, so much so, in fact, that naysayers will even have to consider it.

Let’s be clear about this though: I’m not suggesting an ad-based model will generate the same amount of per-unit revenue as the paid edition. That’s simply not going to happen. If a publisher is earning $5 per copy sold of an ebook today they might only earn ten or twenty cents (at best) from each download of the Underground version.

So why would any publisher ever agree to this?

It’s all about extending reach. Sure, nobody wants to trade a $5 sale for one netting ten cents. But what about all those readers who aren’t going to buy the book, newspaper or magazine to begin with? You’re netting zero from them today and possibly ten cents from each of them in the future. All that, with no cost of goods, btw.

Here’s another interesting use-case: Underground becomes a better sampling solution. Once the service is loaded with a bunch of ebooks, readers will be able to download the entire catalog without paying a penny. Amazon won’t be on the hook for any payment till pages are read. Consumers who like what they see but get frustrated with all the ads will always have the option to go back and actually pay for the original, ad-free edition. The rest of us will simply deal with the ads and enjoy the free ride.

That sounds like a win-win model for quite a few books, newspapers and magazines.