Kindle, ebooks and agency pricing

Is agency pricing the future for ebooks?

This is not the post I was originally going to publish today,  I was actually going to post a blog post comparing the cost of ebooks on Amazon and WHSmiths – to see what the price difference was between ebooks for the Kindle and the Sony Reader (it worked out, over 29 random books to be just under 30p more expensive for the Sony Reader btw).  But you know what?  I’m bored of posts filled with numbers, so I thought I’d fill one full of text instead!  This was mainly prompted by the following story on The Bookseller:

WH Smith has began selling Penguin and Hachette e-books at agency prices, with the retailer’s digital offer falling into line with Amazon.co.uk and Apple.

The retailer had been at an impasse with Hachette since it switched to agency pricing in September. Until now, Hachette titles were removed from sale from WH Smith’s website, as well as Waterstone’s and Tesco’s digital offer. Penguin implemented agency pricing, along with HarperCollins, on 1st November, leading to their books also becoming unavailable at online retailers, with the exception of Amazon and Apple.

The agency pricing model seems set to be the standard pricing strategy for the delivery of ebooks in the future.  Under the ‘agency model’ system, publishers set the retail price for books which booksellers are then obliged to sell at.  The ramifications of this are obvious.  If publishers set the price for books, then there is no room for suppliers to offer a variable pricing strategy and one format will not be able to steal a march on any other (naming no names *ahem*).

Of course, this is not exactly good news for the consumer either.  It will prevent ebooks from being more realistically priced in comparison to their print counterparts.  That is hardly going to persuade huge swathes of people to ditch print and take up ebooks.  Handily for consumers, Amazon have made it very clear that they are completely opposed to the agency pricing model:

“We believe [the publishers] will raise prices on e-books for consumers almost across the board. For a number of reasons, we think this is a damaging approach for readers, authors, booksellers and publishers alike.

“In the UK, we will continue to fight against higher prices for e-books, and have been urging publishers considering agency not to needlessly impose price increases on consumers.”

Although, obviously, Amazon aren’t exactly in this solely to protect the consumer, oh no.  There’s the question of a monopoly to consider.  As author Charlie Stross explains:

“…..to customers, Amazon would like to be a monopoly (i.e. the only store in town). To suppliers, Amazon would like to be a monopsony (i.e. the only customer in town). Their goal is to profit via arbitrage, and if they can achieve those twin goals they will own everyubody’s nuts — the authors, the customers, everyone. They are, in fact, exactly the kind of middle-man operation that the internet tends to squish, gooily.”

Interestingly, he also adds:

“Just before Apple announced the iPad and the agency deal for ebooks, Amazon pre-empted by announcing an option for publishing ebooks in which they would graciously reduce their cut from 70% to 30%, “same as Apple”. From a distance this looks competitive, but the devil is in the small print; to get the 30% rate, you have to agree that Amazon is a publisher, license your rights to Amazon to publish through the Kindle platform, guarantee that you will not allow other ebook editions to sell for less than the Kindle price, and let Amazon set that price, with a ceiling of $9.99. In other words, Amazon choose how much to pay you, while using your books to undercut any possible rivals (including the paper editions you still sell). It shouldn’t surprise anyone that the major publishers don’t think very highly of this offer …”

I think this gets to the heart of the problem and is one of the reasons why I am unlikely to be converted to Kindle any time soon.  Essentially, they want to stitch up the market so that they are the sole provider of ebooks.  This would be fine in principle if they employed a format that worked across all products.  They don’t.  Instead of supporting an open format like ePUB (which doesn’t, incidentally, mandate DRM – vendors add that), they utilise only their own format which is incompatible with others (unless you push it through some conversion).  The agency model is bad news for them (as it is for the consumer of course) because it becomes a level playing field and they no longer have the advantage over Apple, Sony etc.  This means that there is starting to emerge a straight choice between AMZ and ePub.  With the latter having the added advantage of being the format that library ebooks are delivered in.

Amazon have two choices, either adopt ePub as a standard format for the Kindle, or try to fight off the inevitable leveler.  It’s interesting that, in recent weeks, they have been employing some aggressive marketing (particularly attacking Apple’s iPad – Apple being the driver behind agency pricing) – with ads all over the newspapers, billboards and regular TV spots.  Maybe they are trying to get people to buy Kindles before agency pricing is applied across the board.  Once it is widespread, it is hard to see what advantages there are to having a Kindle at all.  Interestingly, agency pricing could be a good thing for libraries….just a thought.

Of course I could add that this the agency model is regressive and flawed, but that’s another post for another time.  In the meantime, for that argument, check this post out on FutureBook.  I’ll be interested to hear people’s thoughts on what agency pricing means for ebooks, Amazon, ePub and, of course, us consumers.  Good for some and not for others?  Bad across the board? What do you think?

Will the iPad Kill the Kindle?

So finally, after months of speculation, Apple’s iPad has finally been unveiled. Although there is much to discuss about Apple’s latest device, the aspect that is most interesting to me is its use as an ereader. What was particularly intriguing about this development was the announcement that the iPad would support the ePub format. This could have massive implications for the ebook market, and is potentially disastrous for one market player in particular.

The iPad - Apple's Kindle Killer?

I have been fairly sceptical about the Kindle for some time. On a number of occasions I have questioned the wisdom of Amazon’s decision to pursue its own format rather than embrace ePub which has quickly become the industry standard format. Whilst they have had fairly limited competition in the ebook market, they have been able to getaway with backing their own proprietary format. However, now Apple have entered the fray, Amazon’s Kindle could be in real trouble. By supporting the ePub format, Apple have left Amazon nowhere to turn. Surely no-one will seriously consider a Kindle when it doesn’t support a format that has pretty much become standard? Although speculation is a dangerous game, it seems hard to see much of a future for the Kindle unless it adopts the ePub standard as soon as possible. If it does not, it is dead. And even if it does, it could be too late. The Kindle has not been able to get a foothold in Europe due to various technological issues (Amazon’s Whispernet cannot be used in Europe). Should the iPad launch over here before the Kindle gets a proper Europe-wide release (which is pretty much a nailed on certainty), the Kindle won’t have a chance.

However, Amazon may have one thing in its locker. The one drawback with the iPad, in terms of ebooks anyway, is that users could suffer from eyestrain as it is has a backlit screen. Reading from a screen using e-ink is far more comfortable than reading from a backlit screen as it puts no strain on your eyes whatsoever, and comes close to the experience of reading a ‘real’ book. That said, more and more people seem to comfortable reading text from their iPhone/Touch. I have even heard people suggest that they will ditch their ereader in favour of reading from their iPhone. So maybe it isn’t that much of an advantage after all!

As well as sounding the death knell for the Kindle, the iPad could have a very positive impact on the ebook market as a whole. With Apple’s current strength, is it unlikely to see the cost of ebooks come down and for this new format to finally take-off? Could it be that 2010 will see real growth for ebooks? It’ll be interesting to see how things develop in the light of Apple’s foray into the ebook market.

Update

Looks like my initial excitement may not have been well founded.  Just discovered this on an Adobe blog:

It looks like Apple is continuing to impose restrictions on their devices that limit both content publishers and consumers. Unlike many other ebook readers using the ePub file format, consumers will not be able to access ePub content with Apple’s DRM technology on devices made by other manufacturers.  And without Flash support, iPad users will not be able to access the full range of web content, including over 70% of games and 75% of video on the web.

I do hope this isn’t the case.  If the iPad was to adopt an ePub standard compatible with other readers then, as I said above, we could really see the ebook market take-off.  Maybe this will change before launch, if it does not it’s not the step forward I hoped it would be.

The iPhone 3G

The iPhone 3g

The iPhone 3G

As followers of my Twitterings will know, I have finally given in and bought myself the new iPhone 3G.  I had been thinking of purchasing a smartphone for a little while now, although it was the Blackberry Storm that I was giving more serious consideration (mainly because it was on the same network that I was already on).  However, after reading a lot of negative reviews of the Storm (especially when it was compared to the iPhone), I decided that probably wasn’t worth the outlay.  It was only after having a play around on a neighbour’s iPhone and seeing what it could do, that I gave it serious consideration (that and the new price plans that were on offer).  With a baby on the way, I knew it was now or never (when will I be able to afford things like this again!?), so I took the plunge and signed up for the contract (something I never thought I would do!).  I have to say, I have not regretted it one bit.  It really is an amazing piece of equipment and has quickly become my favourite gadget (beating even my beloved e-book reader).

Of course the first thing that strikes you with the iPhone is the interface.  The touch screen is really quite amazing, as is the accelerometer (the mechanism that detects the orientation of the phone and adjust the display accordingly). However, the 3G model has a number of new features.  Firstly, and most obviously, it has the addition of 3G technology which enables faster data speeds.   It also had the addition of assisted GPS, enabling the phone to pinpoint your exact location.  This can be used in conjunction with a number of applications.  For example, with ‘Location Services’ switched on in the Settings menu, you can access Google maps and at the press of a button the phone will highlight your location.  Using the search bar above the map, you can search for anything you fancy.  Enter the word ‘cafe’ and it will search for all the cafes in the area, highlight them with a red pin and provide a link to contact information (including phone number, address and website).  Not only does it locate your search terms, it can also give you directions to your chosen destination, giving you distances and times by foot, car or bus (including the time of the next bus!).  Should you be on the move when you have requested directions, it will act as a sat-nav and follow your progress in real-time (and pretty accurate it is too).  A pretty nifty little tool.

There are a whole host of other functions on the phone, including the ability to play films (I recently purchased Tropic Thunder which came with a digital copy, and was promptly transferred), view photos, watch YouTube clips and sync the phone’s calender with Outlook.  There are also a host of other functions that are available from the App Store, a fantastic innovation that allows developers to create software that utilise the iPhone’s unique control system.  I have already downloaded a number of applications (some free, some at a small fee), including:

  • Facebook- Obviously links the phone to your Facebook account
  • Twitterfon – Probably the best of the Twitter based applications available
  • Last.fm- Links to your last.fm account and enables you to stream music from your last.fm playlists
  • Flixster – Works with the location function to locate local cinemas, display listing, watch trailers and, depending on the cinema, book tickets
  • Feeds- Links to Google Reader account to display RSS feeds
  • Google Earth- Google’a amazing application for the iPhone.

Of these, only Feeds required a small payment (£1.75), the rest were totally free.

So far, I have been totally blown away by what the iPhone has to offer.  A number of the applications are truly superb and it has been a very worthwhile purchase.  The only real drawback so far has been the battery life.  For the first week I was charging fairly regularly (almost daily in fact).  But I have a feeling this was more down to the fact that I was using it a lot to get used to what it could do, rather than the fact that it runs out absurdly quickly.  I have since discovered a number of ways to minimise battery wastage, and I have certainly noticed an increase in battery life between charges (there are a whole load of tips here).  So all in all, the phone is pretty impressive and I certainly haven’t regretted giving in and signing a contract.  It will be interesting to see what other new applications will be developed in the near future.  For now, the iPhone has merely scratched the surface of what is possible.  Who knows what may emerge when they dig a little deeper.