Joe Wikert's DisruptorFest

How Amazon Underground will affect content pricing and business models

As 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.

It’s time to radically improve the content sampling experience

The goal of the content sample is to acquire new customers, right? So why are publishers settling for sample content models that are outdated and largely ineffective?

Look at ebooks, for instance. Publishers mostly rely on retailers for discovery and distribution, just like how they sell the full ebook. To make matters worse, most of these samples are under lock and key inside each retailer’s walled garden. What if you want to send your friend the great sample you just read? Even though publishers should fully embrace and encourage readers to pass samples around it’s next to impossible in today’s model.

Newspapers and magazines aren’t much different. Yes, they tend to offer some number of free articles on their websites. They even offer email campaigns where the links to these articles automatically appear in your inbox every day or month. One of the benefits of the old newspaper and magazine format is the original container though. Even though containers are disappearing over time there’s still a benefit to having the material presented in a curated manner as envisioned by the editor. So why not make samples available in that format as well as the website version? Put it in an app and make it portable, so prospective customers simply download and go. And don’t forget to include the ads; after all, samples can also represent another revenue stream. 

Speaking of containers, why aren’t more publishers doing cross-container sampling? My local newspaper knows my reading habits. I use their mobile app to stay up-to-date with local news while I’m on the road. So why aren’t they using that information to offer me samples of books on those topics I tend to read most often? Book publishers would love this opportunity and I’m sure an affiliate deal could be cut with the newspapers so everyone enjoys a portion of the resulting revenue stream when I purchase an ebook through this sampling model. It’s also a way for the newspaper publisher to add some value and show me they’re really paying attention to my interests.

Next, how about making these cross-container samples bigger and therefore more valuable than the ones I can get elsewhere?  Again, it’s a way of adding value to existing subscriptions or prior purchases.

Lastly, once and for all, publishers, please start encouraging a frictionless sharing model with your samples. Make it super easy for me to email the sample to a friend. All my friends don’t use the same ebook platform I use. So if I’m enthusiastic about a new sample I just read, make it easy for me to share all the popular formats with my friends.  And please, please, please…remove DRM from samples. You want these assets to become a viral sensation, so it’s time to remove all the obstacles that prevent this from happening. 

How content containers can dramatically affect user experience

I’m a big believer in the notion that content containers are slowly going away in the digital world. Those things we think of in the physical world as books, newspapers and magazines are being redefined digitally. It’s a slow evolution but one that is definitely taking place.

In the years ahead we’ll see more blurred lines here. One format will bleed into others and the edges around them will become less rigid. We’ll also encounter new ways of discovering and consuming content. For example, maybe you won’t have to actually buy an “ebook” to obtain full access to its contents.

The lenses through which we read content are going to change dramatically in the future as well. Wikiwand is a good example of this. It’s described as “Wikipedia Reimagined” and “a beautiful new interface to the world’s knowledge.” In short, it’s a Chrome plug-in that completely changes your Wikipedia experience.

Over the years the Wikipedia has started to look rather dated, almost as quaint as the old print encyclopedias it replaced. Compare a typical Wikipedia page to a more dynamic page from The Guardian or ESPN, for example, and you’ll see what I mean. Both The Guardian and ESPN are rendering the same type of content they presented 10 years ago but with a much more modern user experience. It sounds superficial but sometimes that’s all it takes to make content more engaging. 

Wikiwand is simply rearranging the objects on a Wikipedia page and presenting them in a more attractive and logical manner. I’ve always wondered why the table of contents for a complex Wikipedia page is buried below the introduction. Take a look at the World War II Wikipedia page, for example. You won’t see the outline for that page till you scroll down a bit and once you scroll further it’s no longer on the screen.

Now look at the same page in Wikiwand. The outline for the page is conveniently placed in a panel on the left. And notice that it always remains on the screen no matter how far you scroll down the main page.

Search is another area where Wikiwand offers a superior experience to the original Wikipedia. If you type in a search phrase in Wikipedia you’ll see a dynamic list of potential matches. It’s a user experience that’s been around for quite a few years now.

Type the same search phrase in Wikiwand and that dynamic list of potential matches comes to life. You can hover over any of them and a small pop-up window is displayed featuring a quick summary of that particular page. All of this happens without leaving the original page where your search began.

I’m just scratching the Wikiwand surface. Install the plug-in, try it out and you too will quickly discover this is a much better Wikipedia content experience.

As I’ve said before, we’re stuck in a “print under glass” era where publishers are taking the easy way out by offering quick-and-dirty digital editions that look just like the print format. We spend all our time consuming dumb content on smart devices.

I realize the cost of creating a true “born digital” approach for most content is too expensive and doesn’t offer an attractive ROI. At the same time, I believe innovative approaches like Wikiwand, where the same content is presented in a new and more engaging manner, can inspire new thinking and help publishers take baby steps beyond the print under glass stage where the industry is currently stuck.

Are content curators becoming more important than content creators?

I’m sure most of you bristle at the thought of curators being more valuable than creators. After all, the former have no job without the latter. I agree, but it’s not as if the content creation population is declining. In fact, that number only increases every month, and that’s what’s driving up the value of curation.

Regardless of your preferences and interests there’s simply too much content to read. Whether it’s books, magazines, newspapers, blogs, websites, newsletters, etc., every year it becomes more difficult to keep up. Faced with this steady firehose stream of content, we can all use some help determining which elements are worth reading and which are a waste of time.

Separating the good from the bad is, of course, where curation comes into the mix. My favorite magazine, The Week, shows just how powerful and useful curation can be: Every week their editors sift through the latest news, presenting both sides of every story and saving readers countless hours with their summary coverage. Flipboard is another example of a platform that leverages curation. At first Flipboard curated the content and then they expanded their platform so now anyone can create a Flipboard magazine. Here’s mine, for example.

Despite its success, Flipboard illustrates the fact that curation still has a long way to go in its evolution. I say that because the signal-to-noise ratio of Flipboard and Flipboard magazines is getting worse. Every week I find fewer new, interesting Flipboard stories to read and reflip for others to discover.

So where will this valuable curation and consumption take place in the future? Today it’s spread across the web but I’d rather have it all united in one convenient stream.

The Evernote platform has the potential to move from simple note taking to becoming a more powerful content curation, sharing and consumption service. I’ve stopped using Instapaper because it’s so easy to clip, annotate and save web pages into Evernote. I’m also clipping magazine pages from my Next Issue subscription and pouring those into Evernote. In short, Evernote makes it easy and convenient to curate content from a variety of sources and splice them all together. 

Here’s the thorny question that will probably need to be answered soon: At some point, does a service like Evernote offer an option to buy access to the curation of others? In other words, can I charge you for access to my curated Evernote collections, including all that content I have no right to redistribute?

It’s yet another example of The Innovator’s Dilemma: Traditional publishers will aggressively fight to prevent it while forward-thinking ones find a way to participate in the revenue stream it represents. And this revenue stream, by the way, will be one where the curators are highly valued and, in some cases, become the key brand.