In the world of eBookville, few decisions will stand out as more colossal blunders than two decisions, one made by Barnes & Noble, one by Sony, that may result in their giving the ebook market to Amazon on a silver platter.
Oh, I know — both B&N and Sony are still operating ebookstores. But at least one of them will not be standing in the not so distant future and when that happens, the reason(s) why will be traceable to “strategic” corporate decisions that even a sixth grade dropout would recognize as dumb strategy. It’s a good thing we don’t need to rely on either of these companies to lead our economic recovery!
“What are these decisions?” you ask: Barnes & Noble’s decision to adopt ePub and then add its own flavor of DRM and Sony’s decision to adopt ePub but not update its firmware to include the B&N flavor of DRM in its latest hardware release. Instead of recognizing that Amazon is a common enemy that is promoting its own proprietary file and DRM schemes that are incompatible with everyone else, Sony and B&N, with the acquiescence of Adobe who needs to share some of the blame for not insisting that B&N either not add its flavor of DRM or that Sony must upgrade to include the B&N flavor, have acted as if each alone can take on and conquer the Amazon juggernaut. Clearly no one at either company will win an award for brilliant strategist of the minute, let alone the year.
If anything, they should be uniting to knock Amazon down a notch or two. Instead they are dividing the field, making it easier for Amazon’s juggernaut to roll over them. You would think that B&N’s quarterly report would have caused a lightbulb to at least flicker in Leonard Riggio’s mind, but apparently not. And Sony has a perfect opportunity to both increase sales of what I think are superior ereading devices and tackle the problem by simply updating the firmware in the new models – even if it doesn’t offer the update to prior models, it needs to offer it in the new models.
I know that neither Sony nor B&N want their customers shopping elsewhere, but that is simply shortsighted. All they have to do is look at the pbook operations of both Amazon and B&N to recognize how foolish that position is. Both pbook operations have marketplaces where competitors can sell pbooks. Now why would that be if it wasn’t a good idea? How hard is it to transfer that thought process to the ebook market and recognize that Sony and B&N should be using the same flavor of ePub and DRM — especially as the bottom line now is that B&N customers can shop virtually everywhere other than Amazon and Apple, and Sony customers can shop virtually everywhere other than Amazon, Apple, and B&N. (Is it so hard to see something wrong with this scenario?) .
Neither customers nor businesses are loyal to anyone but themselves; this is the reality of today’s marketplace, especially in light of the easy access to competition provided by the Internet. Using incompatible DRM schemes doesn’t mean that the consumer will buy solely from your store. Sure some will, but not all, and those that will would do so regardless of whether they had easy access to other ebookstores. I’m not suggesting that Sony or B&N should give convenient wireless access to competitor stores, just that the books their devices will read should be more universal.
It is pretty clear that neither is on a sure path to overtake Amazon in the U.S. ebook market. B&N has lots of troubles and this is just one more trouble that it could have avoided with a bit of careful thinking. Sony is an electronics giant — not an ebook giant. Yes, there was a reason why it created its own ebookstore in the birthing days of ebooks, but now they should rethink the “strategy” of trying to tie Sony Reader customers to the Sony ebookstore. It will do Sony no good to have the best devices available but no buyers because people perceive that the Sony ebookstore isn’t as good as the B&N or Amazon ebookstore, regardless of how well it stacks up.
Sony’s real shot at stardom is to concentrate on the hardware and promote the universality of access its Readers provide. Encourage purchasing at the Sony ebookstore by making it easy through wireless access and applications for multiple devices, but boast of a customer’s ability to shop anywhere except at the two stores run by the Amazon and Apple, which want to limit consumer choice, not expand it. Sony and B&N need to become the white hat guys and make Amazon and Apple the black hats.
To my mind, having Sony and B&N work together to their strengths is a competitive combination that would stand a good chance against Amazon. Let Sony do the hardware and B&N run the bookstore. Forget the nook and forget the Sony ebookstore. OK, it ain’t gonna happen, so can we get the next best thing: B&N and Sony using the same flavors of ePub and DRM. At least then there would be some competitive pressure on Amazon and the possibility of more, especially as other device manufacturers — outside of Amazon and Apple — would follow suit. Sadly, I don’t think that’s going to happen.
So one day in the not too distant future we will see B&N raise a white flag, surrendering the market to Amazon, and the pundits will look back and sigh over how it could have been avoided if only two dumb decisions hadn’t been made and then stuck to as if the decisions were immutable gospel.
The ultimate loser, of course, will be the consumer, because when there is one company left standing, prices tend to go from competitive and low to uncompetitive and high. Shall we set a date to gather in New Orleans for B&N’s funeral procession?
Via Rich Adin’s An American Editor Blog.
Kobo is also in market with a credible bookstore, international coverage and partners, and a program to expand ePub beyond its own devices supporting PCs, iPad and Android class devices. You can even connect a Sony ereader directly to its store tool for purchase and library management of Kobo books shared cross-platform.
As Alexander says, Kobo is looking like the winner among the non-Amazon vendors. They supply their own flavor of DRM, but provide downloads in the official licensed Adobe DRM as well. I’m waiting to see if the Kobo app allows side loading of Adobe DRM books to my Android phone (none of the other eReader apps for Android are compliant with Adobe DRM).
I’ll read books on my phone, but I doubt I’ll buy a reader until restrictive, unique DRM goes away. I don’t want my library tied to Amazon’s fortunes, or B&N’s, or anyone else. I want to be able to read my ebooks on any device I own, now and in the future.
Great article! It does seem that the only corporation with enough sense to stop the Amazon juggernaut is Apple, which itself has monopolist pretensions. And in the end, any strong competitor may save both Amazon and Apple from a federal anti-trust intervention they don’t seem clever enough to avoid on their own (particularly Amazon).
Personally, I feel that the real solution lies in something like the use of wholesale middleman between publishers and bookstores. It wouldn’t actually be wholesale, since it would sell directly to the public, but it’d be a one-stop digital bookstore that any publisher or independent author could join. For users, it’d look a lot like Amazon–one place they could go to find almost any book. From the perspective of authors and publishers, it’d be a co-op, taking a slice of a sales price to cover expenses, and letting authors/publishers control how a book is treated. It’d also let others set up speciality storefronts on particular types of books.
That’d create an entity that’d be big enough that those who sell ebook readers would be forced to make their gadgets work with it. Otherwise, as you note, B&N books won’t be available on Sony devices and ebooks sold through Sony won’t be readable on the Nook. Both have just small slices of the market, so neither has an incentive to support what they regard as their competition. The end result of that is that both will lose to Amazon and perhaps Apple.
Look, B & N is financially shaky and could be gone by the end of 2012. (Borders is certainly gone by then.) Sony has NO interest/experience in selling books- and their bookstore shows it,. It is terrible (and customer service is worse).
Kobo could be a challenger, but they are really Canada based, which isn’t a big enough market to stop AMazon. And the Apple iBookstore has 10% of the books that Amazon has.
I know you hate Amazon, we’ve been through that before. But the simple truth is-
1) they have the best overall device (my opinion);
2) the have the best bookstore by far- not only by amount of books, but reviews, etc.;
3) The have the best customer service as even you admit.
So they do all of that extremely well, along with the lowest prices (which the other stores can match with Agency pricing). Where do the feds come in? Not happening.
Rich- get over it!
Richard, B&N is not at all financially shaky. They’re a solid operation that would be very profitable except that they’re pouring a lot of money into moving the company into the Internet age. Those investments in the future are causing them to show small losses in the present.
B&N can well afford those small losses. Those losses were exactly as predicted in the company’s guidance to investors; B&N is right on target with its modernization plan.
But another problem is the pricing of books. Sony is by far the most expensive of the big 3 (Amazon, Nook, Sony) as this recent survey by Inkmesh.com shows:
http://bit.ly/aDH5kD
Dude, mini-disk. UMD. Memory Stick. Blu-Ray. Sony has shown time and again that they have no interest in sharing formats with everyone else.
Sony wants a world where you Sony your Sony to the Sony to Sony some more Sony that you can Sony on your Sony Sony.
@Richard Askenase — Richard, just so we are clear, I have not said that the feds would enter the picture. What I have said — and still say — is that if Amazon has no serious competition, those low prices you are always pointing out are likely to disappear as shareholders pressure Bezos to increase the quarterly dividends. That is the way it almost universally goes when a company is in a monopoly position. And often what follows is the customer service.
A good example is cable TV. In my area, as I expect is true in most areas of the country, there is no competition for cable TV — and there wasn’t for years until Verizon came along with FiOS. Until then, Time Warner could be relied on for pitiful customer service and disdain for its customers. The day FiOS came available to me, I dropped Time Warner — and TW didn’t even care. They didn’t even try to persuade me to stay. Now their tune has changed.
Why you think Amazon would follow in the footsteps of every other monopolist is beyond me, but you might be right. The problem is, when we find out whether you are right or I am right will be too late should you be wrong and I be right. I’d rather keep competition alive.
As far as Amazon having the best selection, well I find its selection no better than B&n’s or Sony’s — for me. Every book I have wanted or want, all 3 stores sell. Perhaps that will change in the future, but I don’t judge a bookstore by raw numbers — which are meaningless — but by whether it has what I want when I want it. So far, neither B&N nor Sony has failed my test for me. It does me no good if Amazon has a quadrillion books and Sony only 1,000 if i want to buy a book from Amazon but it doesn’t have it and Sony does. People need to get over looking at raw numbers as if they have any meaning or are the gospel.
I agree that generally Amazon has the lowest price and if my only interest were in buying for the absolute lowest price, I would probably buy some things from Amazon. But that isn’t what motivates me. You should be thanking me for not buying from Amazon — my purchases help keep Amazon’s competitors in business, which means that Amazon has to continue offering the lowest price to keep its reputation and current business model alive. 🙂
As for the Kindle being the best device, that is truly subjective. I personally prefer the Sony and think it is the standard against which all other devices should be measured and will be found wanting.
@DensityDuck — Sadly you are right about Sony. And sadly, Amazon and Apple seem to be walking that same bridal path. But having said that, my experience with everything I have ever owned that was made by Sony is that it is top quality. My Sony 505 is soon to be 3 years old and works as well today as the day I received it and appears to be ready to work equally well for my wife for the next several years when I pass it on to her. My neighbor can’t say that about his Kindles, which have been replaced/repaired several times already or my other neighbor who has had his iMac laptop repaired twice in the past year by Apple for failed components. (I’ll grant that their experience — or even mine — may be atypical, but isn’t the experience we personally have what motivates to buy or avoid specific brands?)
It’s a good thing Sony builds quality hardware generally, because their customer service is terrible.
B&N is also late to sell books outside US & Canada. They refuse my American Express because it was not issued on US (B&N service told me they must deal with “international copyright laws, tariffs, VAT taxes, currency conversions, etc”, so they won’t sell to me).
Amazon is selling ebooks to me. I still intend to buy a Nook (I really like the B&N device), but I’ll buy the ebooks from Amazon, extract the DRM and convert then to epubs to read then on the Nook. Brazilian stores are prone to adopt epub with standard DRM, readable on Nooks but not on Kindles (sorry, Amazon, I would love to buy a Kindle, but I need to read epubs!) 🙂
B&N is useful ONLY for US customers. You can’t buy an ebook there unless you have a US addressed credit card. The rest of the world doesn’t care about B&N.
The ePub mixture of books is well established and is used by almost everyone except Amazon. This is not like HD vs Blu-Ray. There are too many players involved and the publishers are not interested in seeing one format win over another.
I am not very sure, why everyone says that the Sony Book store sucks? Personally I like it much better than the Kindle store (at least online). Books are sorted into the categories and you have easy to find bestseller lists, new arrivals, etc. It’s much better done for “just” browsing than the Kindle store.
Jm2c
The only thing that’s facilitating any kind of Ebook competition now is how trivially easy it is to remove the DRM of Adobe Epubs with ineptepub or Amazon’s DRM with unswindle.
I own a Kindle, and I’ve bought every one of the books on it – Some from Amazon’s web store, some from Book Depository, and some from other ebook sellers. The first thing I did with each is to remove the DRM and add them to my Calibre library. The idea that if I buy a Kobo/Sony reader in the future I’d have to throw away half my library seems totally bonkers to me – Thank goodness there are still talented independent minded codeslingers out there who make sure this hasn’t happened (yet).
The thing that we have to be careful about is not formats, but contracts. If I can sell my ebook in any format I like, then hardware is meaningless. If Amazon requires me to sign a contract saying that I can NEVER sell my ebook ANYWHERE ELSE, then that’s a problem.
Not so much “hardware lock-in” as “contract lock-in”.
I get what your saying about the tower of babel. And I realize that it’s disappointing that the new Sony’s haven’t adopted B and N DRM. But I don’t really think it’s hurting them, or any other epub-er, in reality as much as in people’s imaginations.
Check out the growth of epub, as evidenced by google trends:
http://www.google.com/trends?q=epub&ctab=0&geo=all&date=all&sort=0
The whole point of a standard format is that there’s no one single Kindle killer. Just a whole bunch of smaller companies all doing pretty well.
I agree with MarkChan & Daniel. Both B&N and Sony won’t sell to me at all because I live in Australia. They’re the black hats in this equation.
Amazon might not be a white hat, but at least they’ll sell books to me!