Allen Weiner
Research VP
7 years at Gartner
23 years IT industry
Allen Weiner is a research vice president for Gartner's Media IAS service. Mr. Weiner has more than 25 years of experience as an analyst, writer, editor, publisher and broadcaster. He has written about media trends in daily newspapers and magazines as well as serving as a chief analyst and… Read Full Bio
by Allen Weiner | January 24, 2012 | 2 Comments
Yahoo’s brand spankin’ new CEO Scott Thompson had his coming out party at what turned out to be a rather curious Q4 earnings call. The numbers are the numbers: up here, down there; news on the Microsoft Search Alliance and the usual “we’re going to try harder and do better” sort of rah-rah chatter.
What struck me was the length of time Thomspon spent on the call providing some direction on his take on what Yahoo must do to become competitive…or become competitive again. Much was said on a generalized basis, what stood out was his mandate that there were “no sacred cows,” meaning he is willing to shut down (pretty much) anything if it doesn’t benefit customers (and presumably shareholders). Curious minds no doubt run through a list of possible products and services on the chopping block: Livestand? Screen? Livestand came out fairly strong but now seems like another in the growing pack of social magazine platforms. Screen (which, for some reason still bears a Beta tag) is the hub for Yahoo’s original video content which runs the gamut from Morgan Spurlock’s serial drama “The Failure Club” to “Chow Ciao,” hosted by a former “Top Chef” contestant. The quality is inconsistent and while the viewing numbers are good (CFO Tim Morse says one in six Americans has watched a Yahoo original show) there’s no innovative path for monetization and Yahoo history with original content is somewhat unstable (remember Lloyd Braun?)
Thompson also spoke of balance several times. Primarily, he says, the balance for Yahoo is to be both a technology company and a media company. Not one or the other—both. This is a mantra that Carol Bartz struggled with in both painting a picture of what such an enterprise would look like but also what magical alchemy would result in this modern corporate blend. In the meantime, Apple (whose finances soon could qualify them for EU member status) is actually creating the blueprint for a media-technology company. Apple’s recent e-textbook event in New York unveiled an end to end ecosystem for creating, marketing, selling and consuming e-textbooks Sure sounds like a media-technology company to me.
Does Yahoo need to become Apple to become successful? Does Scott Thompson need to go on a Steve Jobs-like spiritual journey to an ashram to see the future? The answer to both questions is no. Yahoo lost its way when it decided it wanted to be like everyone else and lost sight of Jerry and David’s original vision of adding a layer of discovery on top of the unwieldy World Wide Web. It’s corny and off base to say Yahoo needs to return to its roots—that ship has sailed. What Yahoo needs is to distill its future vision into an elevator pitch that, like a perfect prism, can be viewed by different constituencies in a way that makes sense to them. Is Thompson the right guy for the job? We’ll be watching.
Category: Yahoo Tags: Apple, Scott Thompson, Yahoo
by Allen Weiner | September 28, 2011 | 5 Comments
While most observers obsess about the impact of Amazon’s new tablet and its impact on Apple’s iPad and other media tablets, the real story is much less about tablets and more about e-ink e-readers. With three new e-ink readers ($79, $99, $149), Amazon is looking to fire a double tap to the heads of Barnes and Noble, Kobo and Sony, its major competitors in that market. The newest Nook, a 7-inch beauty with e-ink’s Pearl technology has been coming on strong and is considered by consumers to be superior to Kindle 3 which is larger and has a physical keyboard. Amazon was not about to take such competition lightly.
Nor was Amazon about to let B&N take mindshare control in to so-called “reader tablet” market with its $249 Nook Color which features a version of Android as well as enhanced content from publishers and a variety of apps. At the same time, Amazon needed to face pending efforts in the color reader tablet space from Kobo and Sony—a lethargic but potentially dangerous competitor—in this arena.
Amazon’s frontal assault on its e-reader competitors is on price, undercutting the current market by about $40 for its new touch version and $60 for the new non-touch version. In addition, Amazon is offering a 3G model for $149 which is within $20 of its competitors’ WiFi only e-ink readers. As Gartner has predicted, the price point for e-ink readers would fall below $100 in time for the holiday shopping season. What remains to be seen is whether Amazon will be alone in that distinction or whether B&N, Kobo and Sony—whose new Pearl screen, WiFi device has yet to hit the market—will follow suit. The thinking is price cuts will be fairly dramatic market wide in Q4 along with perhaps some innovative campaigns which include product or service bundles.
This is not a straightforward Amazon vs. the market event; the dynamics are complicated. Amazon’s new lower-priced e-readers could thwart B&N’s efforts in non-U.S. markets. B&N only offers Nooks domestically but has talked about global distribution; Amazon’s ability to sell internationally a popular device at a low cost could keep B&N from becoming a global player. Such a move would challenge Kobo which has set up a number of intentional distribution agreements as well as put a major dent in any plans Sony—a global player—would have in this market.
The $199 Kindle Fire initially would attempt to undercut B&N’s Color Nook in price and functionality. The Fire would not only be ideal for enhanced books (books with audio and video) but also offer streaming media services, something the Nook Color does not offer. And while a 7-inch tablet is not an ideal screen size for newspaper and magazine publishers, Amazon might offer some ways to render such content better than the Nook Color and become an initial volley in a longer-term newspaper/magazine strategy which fully blossoms when Amazon releases a 10-inch tablet. Amazon will not have to make a big effort to be more newspaper and magazine friendly than Apple has been regarding in-app purchases and sharing consumer data.
Amazon’s double tap has the impact of targeting its e-reader competition today and the media tablet market as a magazine and newspaper device in short order. Holiday shoppers will have a cornucopia of digital media devices to select from this year. Amazon’s hope is it sits under more trees at home and abroad than any of its competitors.
Category: Amazon Apple Tags: Amazon, Barnes and Noble, Kindle, Kindle Fire, Kobo, Sony
by Allen Weiner | September 6, 2011 | 1 Comment
Some 75 days after giving CEO Carol Bartz a vote of confidence, Yahoo’s board has announced a leadership reorganization under which Timothy Morse has been named interim Chief Executive Officer, replacing Carol Bartz, who has been removed by the board. The board has also announced a newly formed Executive Leadership Council tasked with supporting Morse in managing the Company’s day-to-day operations until a permanent chief executive is appointed.
Bartz’s dismissal is not a major shock to Yahoo watchers as her departure has been speculated for more than a year, but the timing of the action comes as a surprise. Yahoo has a major client event in mid-September and a change in leadership as the company enters a generally strong fourth quarter is curious. While not easily confirmed, reports add to the mystery around Bartz’s dismissal by saying it took place over the phone. Bartz had another 15 months left on her contract.
Neither the micro nor macro view of Yahoo’s performance since Bartz took over in January 2009 paint a pretty picture. The big picture shows that the Microsoft-Yahoo search alliance has not gone to either party’s satisfaction and that Yahoo has lost a number of key executives and was caught so short staffed is pointed to being undermanned as a reason for a disappointing Q2. Yahoo still calls itself a media-technology company but has a leader at the helm that had neither media nor web technology chops. At the micro level, Yahoo many of the company’s headline projects such as Connected TV and Livestand seem to be moving at a snail’s pace and its social media strategy is and has been a work in progress at best.
The conundrum for Yahoo in recent years has been its inability to develop an identity and sell that to employees, advertisers, partners and consumers. Yahoo has some great piece parts—messaging used by hundreds of millions of users worldwide; a sports brand that stands apart from other web properties and strong content plays in news and finance. Yahoo has yet to find a leader who has the vision to frame those pieces into cogent opportunity that would lead a transformation resulting in a 21st century media-technology power.
Morse is not likely to be more than a short-term solution. No successful media company in recent memory has been helmed by a finance guy. The company could look inward to EVP Ross Levinsohn former President of Fox Interactive or could begin the challenging search for a rare Steve Jobs-like leader who can spin the dials of the Yahoo Rubik’s Cube and revive this once-iconic brand.
Category: Yahoo Tags: Alibaba, Carol Bartz, Tim Morse, Yahoo
by Allen Weiner | August 1, 2011 | Comments Off
Hollywood has long exaggerated the persona of a newspaper editor. Lou Grant, the grumbly guy with rolled-up shirtsleeves (Lou was a TV news producer, wasn’t he?); Jason Robards as Ben Bradlee, the erudite, “You don’t have it,” sort of guy who demands perfection; even the editor in “Absence of Malice’ (portrayed by Josef Sommer) who is the passive-aggressive sort who coaxes his reporters to bend the truth or even mangle it for front page excitement. Truth be told, editors are nothing of the sort—they are detail oriented underpaid sorts who get little glory and are forced to work with a bunch of egomaniacs who love seeing their byline in print. For the most part, editors are part mentor part taskmasters who are the bridge between reporters and readers. And, by the looks of current trends, soon to be a vanishing breed.
The embattled Tribune Company is among those who have decided to centralize its editing and design functions. The Hartford Courant, a Tribune-owned paper, announced plans this month to outsource all copy editing and design to Tribune Co.’s Chicago Tribune, eliminating 19 newsroom positions — about half related to the outsourcing — according to Rich Graziano, the Courant’s CEO and publisher.
The move to consolidate editing and design is gaining traction as newspaper groups search for ways to offset plummeting ad revenues. Gannett and Media General are two major chains who have announced similar plans. Having a remote editor who is not sitting in the local newsroom interacting with staff face to face is not that much different to the revelation, in 2007, that the Pasadena Now website was hiring writers in Mumbai and Bangalore, India to cover local Pasadena politics by rewriting press releases and watching governmental meetings live on the internet. A professor of journalism at Cal-Berkeley summed it up best: “It just seems so fundamental to journalism to be there.”
No one can argue that newspapers must streamline to survive. Consider this: most newspapers use two content management systems (CMS), one for print and one for the web. Millions can be saved over time by using one system (as The Washington Post has learned). Also consider what a major newspaper chain has learned and experienced in savings by centralizing backend IT services for a group of its papers in the same region. The point is smart operational changes—even outsourcing such things as application development– can save money without stripping a local paper of its character.
Category: Newspapers Tags: Chicago Tribune, editors, Hartford Courant, newspaper editors, Newspapers, Washington Post
by Allen Weiner | July 27, 2011 | Comments Off
The New York Times had an interesting feature on a subtle change in the book publishing industry with one shortsighted goal in mind: increase print profits in a hurry. Breaking tradition from the customary one-year waiting period between release of a hardback book and the paperback version, the feature pointed to three examples of a new compressed hardcover-to-paperback release schedule. “Swamplandia,” “The Tiger’s Wife” and “Those Guys Have All the Fun” (the ESPN expose) will be released between five and seven months after they were out in hardcover.
Tying this trend to the buzz Amazon created earlier this year when it reported it sold more e-books than paperbacks seems to result in a total head scratcher. Two key points will shed some light on why publishers are thinking paperbacks.
Paperbacks get better distribution. As brick and mortar book stores die off, paperbacks benefit from the fact they are sold in pharmacies, supermarkets, airports and even some convenience stores. In retail book settings (what’s left of them), paperbacks are more easily showcased than hardbacks given their size and make for colorful eye-catching displays.
Of greater significance is royalties. While there is no general rule of thumb, authors receive far less of a royalty cut (average, according to industry sources at 6%) for paperback sales than in hardcover sales. On hardback, there is a sliding scale based on volume, generally starting out at 10%, going up from there. Percentage-wise, publishers make out far better on paperbacks. By releasing paperbacks while the hardcover buyer is still in play, they can sell higher volumes of the product from which they make a higher margin.
And then there are e-books. Royalties for e-books are a moving target and that target is moving away from the publisher. If J.K. Rowling is successful with her Pottermore effort—an effort in which she keeps 100% of her e-book revenue—publishers will be forced to up e-book royalties or lose their best and brightest authors. Factor in the growth of self-publishing and the rise of DIY distributors such as Smashwords who offer 85% royalties to authors and you can see publishers’ incentive to reduce the hardback-to-paperback window.
There is not an easy fix for publishers in protecting existing revenue streams, cultivating new ones and understanding the role e-books will play in their future. A plan, such as decreasing the window between hardback and paperback, won’t do much to strengthen relationships between publisher and author. Conversely, publishers should be working more closely with their stable of writers to create new promotional ideas (Google + hangouts, anyone?) and provide them the services to create new digital products. Such a move might not be a long-term answer but will provide a goodwill stopgap as the publishing market evolves.
Category: Amazon Tags: books, e-books, New York Times, paperbacks, publishers, royalties
by Allen Weiner | July 26, 2011 | 1 Comment
For a somewhat experienced market research analyst, it’s always a danger to build an opinion based on a small sample size. When that small sample size includes yourself and a few family members, now you are talking risky. That said, when Netflix announced a price change that separates its streaming and DVD-by-mail service, my visceral reaction (echoed by my family) is to hit the delete button. Netflix’s combo service paired two halves into a whole—a streaming service with somewhat second tier-content (second run movies, the first few seasons of popular TV shows and the occasional indie gem) and postage paid first-run DVDs on a LIFO (last in, first out, for you accounting fans) basis. Neither service is all that compelling on its own, but together for $7.99 or even $8.99 it seemed a good alternative when “nothing good was on TV.” And then there’s the ubiquity. We could find Netflix on our Roku box, Xbox 360, iPhone, iPad and even on our Google TV. Does the “everywhere you turn it’s there” sense of convenience outweigh its new service package? ‘Fraid not.
Was Netlfix’s change (met with discontent by investors and many subscribers) music to Amazon’s ears? If rumors of a pending Amazon tablet are true (and given the Asian manufacturing pipeline is not known for secrecy), then Netflix will face some major competitive challenges especially after a slowdown in subscribers in Q2 and an expected continuation of the same in Q3. With a device in place—especially one that may come in priced well below the iPad—Amazon will have content (among its recent deals is one with CBS), devices (Amazon Prime and VOD are both on Roku and other boxes) and a global audience/database of customers who are prime (pun intended) to buy more Amazon goodies. With profits from its other businesses (cloud, for example) Amazon could afford to sell its tablet at a loss to build marketshare for its tablet and content services.
Netflix is determined to retain its place as the number one Over the Top content service. There are some who believe Netflix’s decoupling of its streaming and DVD services was a doomsday plan to eventually shut down its DVD service which costs more to operate that its streaming business. Netlfix is determined to upgrade its content library signing deals with Miramax and Dreamworks. Netflix also has an enviable position in the key distribution endpoints—HDTVS. The service is bundled into internet-connected TV from Vizio, Samsung, Sony and others. That position may be somewhat precarious when competitors (or the manufacturers themselves) come up with similar streaming content services. Walmart (the leading retailer of TVs) is likely to be a power there with its Vudu service and its announcement of a new streaming service.
One area Netflix should target is original content. One of the hottest made-for-multiplatform content producers is Vuguru, producers of “Back on Topps” and “Prom Queen.” The company’s most recent show, “The Booth at the End” is available on Hulu and causing a stir among TV watchers. There’s plenty of new original content in the pipeline; Netlfix would be wise to focus a bit more on new shows looking for a home rather than somewhat stale material looking to squeeze a few more dollars out of a protracted viewing life cycle.
Category: Uncategorized Tags: Amazon, Apple, Booth at the End, Netflix, samsung, Sony, Vizio, Vuguru, Walmart
by Allen Weiner | May 5, 2011 | 2 Comments
Just when you thought it was safe to go into your big box retailers and buy an “e-reader” after parsing the maze of options, two new choices loom: a new tablet from Amazon and a new something from Barnes and Noble. Barnes and Noble’s new device is fact; Amazon’s is speculation built on the usual stream of social media rumors, half-truths and what passes for actual reporting.
First, Amazon: The Seattle-based company is likely to come out with some sort of tablet device which no doubt will be color, and support both support web browser and video. It will be touch screen because in Feb. 2010 Amazon bought Touchco, a company specializing in touch screen design. It will support Android, but like Barnes and Noble, it will have its own implementation of the OS for its devices and sell resulting apps in its marketplace. A new device for Amazon makes sense given its vast products and services in the publishing and entertainment sectors.
A new tablet device for Amazon mostly threatens Apple’s role in the publishing space. Amazon has more publisher relationships, a larger global publishing footprint, a self publishing unit, and exclusive deals with some high profile authors and book buying data from millions of shoppers. Amazon’s role in the newspaper and magazine industries are a bit more opaque; the company delivers text versions of both media but could be positioned to quickly upgrade those relationships.
A new media tablet from Amazon threatens Google’s position as an embryonic e-book force (does it force Google to go the device route?) and perhaps even Netflix. Amazon’s streaming movie services will greatly benefit from being baked into a branded device. And tuck this into your pocket: if Amazon’s new device has a built in camera, imagine the bar code/NFC shopping apps that could be part of the device’s core features. Here’s a scenario: you are in Wal-Mart, find a HDTV you want to buy; you snap a picture of the device or scan the barcode and Amazon will give you comparison price and allow you to buy it from them in One Click.
As for Barnes and Noble, in a meeting with investor analysts on May 4, “Barnes & Noble, Inc. … indicated it expects to make an announcement on May 24, 2011 regarding the launch of a new eReader device,” Barnes & Noble said in a filing with the Securities and Exchange Commission. With a recent upgrade to Android 2.2 on its Nook Color, what could be in store?
Here’s a SWAG with some degree of logic: Barnes and Noble might be the first to come out with a device using the Mirasol screen technology from Qualcomm. Qualcomm said earlier this year that it would have a device in the marketplace in 2011. A Mirasol device, which uses Interferometric Modulator (IMOD) element is a simple MEMS (micro-electro-mechanical system) device that is composed of two conductive plates. The net result is color which uses less power in a non-reflective display. In short, a color screen which supports browser and video with an e-paper like “easy on the eyes” experience. A Mirasol device could be positioned between the Nook Color and the Nook B&W (call it the E-Nook?) and offer the reading experience of the black and white with the ability to offer enhanced books and magazines. Pricing? Good question.
Amazon and Barnes and Noble’s new device plans raise the issue of the fate of its existing black and white line of e-readers. Two things make sense: one is that the price drops to around the $50 mark and is marketed to those whose only aim is to read trade fiction and the like (perhaps an older demographic). Second, is they are given away by book publishers to customers who sign up for book clubs that carry a monthly purchase commitment. (Bertelsmann, take note).
The e-reading space is one in which speculation has become a blood sport. Microsoft, Sony and other consumer electronics companies will be watching this space. If my speculation is on the money, see you at the race track.
Category: Amazon Apple Tags: Amazon, Apple, Barnes and Noble, books, e-books, e-readers, iPad, Microsoft, Mirasol, Qualcomm, Sony
by Allen Weiner | April 25, 2011 | 12 Comments
Barnes and Noble has made good on its promise of upgrading the firmware on its Nook Color, launched in October 2010, by announcing that Froyo, aka Android 2.2, will now be available to Nook Color owners. The upgrade for the $249 device can be done immediately through “sideloading” (download from web and install) or via a wireless push from B&N in one week. The net result transforms the Nook Color into a well…an enhanced Nook Color. Is it a tablet, did you ask? The answer—it depends. Hold that thought.
So, what new in the Froyo upgrade? There’s now an app marketplace with Android-based apps built for the Nook Color using a Nook SDK. Apps, which predominantly sell for $2.99 or less, run the gamut from games (Angry Birds) to Pandora internet radio. There is also email with seamless account setup for most popular POP-based email accounts (Yahoo, Hotmail, Gmail). The device now will support Flash which means it will play Flash video and audio. On the deficit side, it lacks Bluetooth, has tiny audio quality through small speakers in the back of the unit and while it plays Flash, a great deal of Web video is not optimized for mobile.. The experience can be hit and miss: on The New York Times site, video worked well; on Hulu, not so great.
The best things about the new and improved Nook Color are all reading related. After all, isn’t this “the reader’s tablet”? The Nook Color is a strong device for kids’ books with more than 350 kids’ digital picture books which take advantage of the new Froyo features such as video and embedded games. Nook Color V1.2 (as it’s called) does a nice job of handling the emerging category of enhanced books which incorporate video, audio and interactive social features. B&N says it has 225 (and counting) multimedia books including “Knitting for Dummies,” Raising a Child” and Elle: Workout Yoga starring Brooklyn Decker.
Nook Color V 1.2 might provide some help for the Nook Newsstand. I am among those who believe replica or enhanced versions of existing print pages not only don’t work on a tablet device, they look especially weak on a seven-inch screen. At launch, the upgraded device will have the Pulse “social magazine” app which hopefully will encourage newspaper and magazine publishers to build apps that look less like copes of their print products and more like Pulse and Flipboard.
Saving one of the better features for last, there’s a beta version of Nook Friends, a social application that shows great promise for sharing, recommending and buying books in one integrated site. The site also makes the “Lend Me” feature for sharing B&N titles much simpler. There are really good sites to share what you are reading and some where you can compare what you are reading to various parts of the social graph, but none that combines those two elements with the ability to buy a digital copy once you’ve discovered a new title.
It’s a bit hazy to gauge the impact of the Nook Color V1.2 in the e-book marketplace/e-reader landscape. While it might seem logical for Amazon or Kobo to build an app for the new Nook Color app marketplace (as they have for other marketplaces), none is in the offing, says B&N and neither Amazon nor Kobo has requested a developer’s kit . The same goes for digital magazine marketplaces such as Zinio. Will B&N keep them out of their marketplace? Better yet, can B&N keep them out of their marketplace?
So, bottom line, is the Nook Color a tablet? Well, it always was a tablet—a reader’s tablet—which is a device whose form factor and functions facilitate an enjoyable reading experience across books, newspapers and magazines. Now, it strengthens its position in that space and offers enough gaming, entertainment and productivity apps to keep consumers not so much from buying an iPad, but more from buying whatever Amazon or Sony might come up with for readers “who want more.”
The Nook Color with its new Froyo upgrade is not an iPad—not even close. But those who are looking for a great cross-media reading device with some nice new multimedia bells and whistles, it remains a go-to device.
Category: Uncategorized Tags: Amazon, Android, Apple, Barnes and Noble, e-books, e-readers, Froyo, iPad, Nook
by Allen Weiner | February 2, 2011 | 3 Comments
Among the landscape of publications attempting to become pioneers in the era of tablet journalism comes the launch of The Daily, a much ballyhooed iPad daily newspaper offered up by News Corp, owner of such media properties as New York Post, The Wall Street Journal, and Fox Broadcasting. After a two week trial period, sponsored by Verizon, the tablet newspaper will cost 99 cents per day, $39.99 per year. The Daily will be available only on the iPad for now with future devices on board at some unspecified time.
The launch event, held at New York’s Guggenheim Museum, resembled the annual TV critics junket in which network executives trumpet their new season’s fare knowing how difficult it is to make a lasting judgment of any product or service after one viewing. Same goes for The Daily with its $30 million startup budget; a periodical of any sort is only as good as it is on day 100 whether it’s in print, online or on a tablet. Cool tabloid-like photos, interactive NFL linebackers and sexy video built for launch become far more challenging in the daily grind when every news day offers new challenges.
Issue one looks sexy and not-quite-bleeding edge techie. Headlines straight out of tabloid 101: A photo of Natalie Portman with the headline, “Oh, Baby!” Integrated Twitter feeds into breaking news stories and sports features (what is Twitter saying about Mike Tomlin). Magazine quality photos A section on top travel apps (with links to the iTunes store). Interactive Sudoko. . No ads. Lots of video.
The Daily is a manifestation of what can be called the Flipboard revolution. Flipboard, launched in 2010 and listed as an app of the year for iPad, offers a blend of visually striking and relevant content with a significant social overlay. The Daily’s take is to take to create an alchemy that blends Flipboard’s social sensibility, a tablet’s inherent attributes (video, geolocation) and a helping of well crafted of news and information.
There are more questions than answers, so we’ll need to come back and revisit The Daily after the initial buzz dies down.
1. Via ITunes, Apple is offering daily copies and subscriptions to The Daily, but Eddie Cue offered no details on the technology behind the offering and failed to answer questions related to the current in-app versus out of app subscription controversy.
2. Those on stage were naturally evasive about what “voice” The Daily will have. The answer of “that’s up to the editors” was clearly in deference to Murdoch’s presence on stage.
3. Given the imminent release of tablets with advanced version of Android, how quickly will The Daily be on other devices?
4. Little was said about ad platforms, ad rates, or early advertiser beyond those up on day one (Land Rover, etc..)
5. Does the name The Daily infer that the newspaper won’t be continually updated save for breaking news?
Well, that’s just a few of the outstanding issues.
At the end of the day, the fate of The Daily rests on the shoulders of this crazy quilt of an editorial staff which has been assembled. Staffers include print journalists, bloggers, social media experts and broadcast journalists. How long it takes to get these folks to think and deliver in a unified fashion will go a long way to dictate this product’s future.
Pilot season for Fllipboard newspapers has just begun. The New York Times, AOL and others will soon be out with similar products. Is being first an advantage?
Category: Apple Tags: Flipboard, Murdoch, News Corp, The Daily
by Allen Weiner | December 6, 2010 | 3 Comments
Google’s entry into the digital publishing space with the launch of its eBookstore, partner program and device neutral distribution scheme is a big deal. On first look, there is the significant impact on rivals in the distribution space (Barnes & Noble, Kobo, Apple and Amazon) as they face new competition. However, as the first “media in the cloud” provider that has retained full control of the media value chain, the stage is now set for a high-powered battle – one that will separate the true contenders from pretenders.
The eBook story is simple: Google will offer a device agnostic scheme that allows consumers to buy and download content from either Google’s eBokstore (more than three million titles with “hundreds of thousands” for sale) or from one of the search giant’s partners (Powell’s, Albris, etc…). Their digital content on the Google online store will be powered by Google’s eBook infrastructure.
Google will deploy whatever model a publishers selects: agency model with fixed pricing or wholesale retail with suggested pricing and fixed margins. Keep in mind, Google will be competing with its partners, but it also contends its partners can add quite a bit of their own brand and value alongside the bookstore. As both an arms dealer and arms retailer, Google puts itself in the rare position to get a piece of every transaction that flows through its pipes.
Google has licensed Adobe’s ACS4 DRM,which means the content can be read on e-ink based black and white devices aside from Amazon’s Kindle which uses its own proprietary DRM. Google will have an eBook application for the iPad, Android devices (but of course) and presumably ever other flavor of device platform on the horizon that supports a web browser. Consumers can access their books (and presumably later, newspapers and magazines) from any device simply by entering their Google account and download the appropriate app or, in the case of a e-ink reader, side load the content using Adobe Digital Editions.
A few issues to note: books purchased prior to the launch of Google’s eBookstore cannot be transferred to the cloud. So, a book purchased from Barnes and Noble for the Nook cannot be deposited in the Google cloud due to DRM issues which tie content to devices. Books purchased from Google will be paid for using Google Checkout which, while having millions of users has not been a popular payment service when compared to the payment experiences of Paypal or iTunes.
While Google’s pending case over unauthorized use of copyrighted material has an impact on its eBook launch (settlement would add millions of new titles to the content tank), the negative PR Google has suffered from its prolonged battle with publishers will require some marketing and goodwill spin to prove themselves a friend rather than foe.
The big picture: The eBookstore launch and parallel efforts with Google TV must be viewed as companion efforts to establish a cloud-based media storefront. Add in the purchase of Widevine (multiplatform DRM and content optimization platform) and you see the formation of two content services with the ability to share customer behavioral information, advertising targeting and a device agnostic distribution engine. A book purchased by a consumer on the wine regions of France could likely result in the delivery of a TV clip, pushed to a user via Google TV, on a related topic complete with targeted advertising. User behavior data collected and collated across Google’s content services and Google’s search engine creates a scary scenario of cross-media dominance.
The fruition of Google’s media cloud plans likely will lead to positioning of competitors in this rarified space: Apple, Amazon and perhaps Microsoft. A few of the major CE companies who have devices across the content consumption landscape—Sony and Samsung to name a few—will want a piece of the media cloud either through ownership or partnership. It can be profitable to sell a consumer a TV set or e-reader, but far more profitable to have that device owner come back and use your storefront as a content hub.
Certainly a pressing question is how Google’s entry into the eBook distribution space impacts Amazon. Google and the Seattle-based giant etailer have similar positions in that they own large pieces of the e-book value chain. Amazon is in the device business as well, but its proprietary stance seems close to being a major liability. This leads Amazon with some pragmatic choices: move to the ePub/Adobe DRM standard or get out of the device business. With assets that go beyond books (movies, music, shopping) it’s much more reasonable to expect Amazon to remain in the device space, adopt open standards and even come out with a tablet device that has cross-media capabilities and some sort of location-based shopping capabilities.
Possibly, Google’s eBook service will not emerge out of the gate like a bolt of lightning. The market of content supply and consumer demand is unstable, fraught with battles between proprietary stakeholders. Google can patiently sit back and wait for consumers to demand open, portable standards and raise its hand as the device-neutral, consumer-friendly answer. Sounds like a good position in this ever-changing space.
Category: Amazon Apple Cloud Google Tags: Amazon, Android, Apple, ebooks, Google, Google ebooks, iBookstore
