Allen Weiner

Author John Grisham talks about the devaluation of books as well as “uncertainty over ebooks” in this insightful interview on NBC’s “The Today Show.”

Don’t get too excited, in this video, Grisham only acknowledges the fact that ereaders will make an impact on the number of authors who get published (as a result of lower retail prices). The world (or at least those of us who are fans of John Grisham), await the author giving the green flag to allowing his publisher to sell his works via digital channels. Grisham is among those authors who have eschewed the ebook route although many of his works are available on audiobooks. If I were to venture a guess, given the wide range of Grisham fans, he’s perhaps waiting for a device that is more accessible across the ebook digital divide. That said, he still could offer his books on a PC/MAC ereader (Amazon and B&N now have good ones).

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Macmillian, perhaps believing it will face some tight margins as ebooks sales become as competitive as print products have become of late, has rewritten its author contracts, with boilerplate language stating that authors will receive 20% royalty fees on net ebook sales. Many major publishers, including Random House and Simon and Schuster offer authors 25% of net receipts.

A net receipts formula is differerent than a more standard 15% royalty of list price of a print product. Most e-book retailers take a discount of approximately 50% of an e-book’s list price. If S&S, for example, collects $5.00 from the retailer on a $10 book, the author will get 25% of that, or $1.25. a reduction of twenty-five cents per sale from the previous arrangement.

Sound a tad confusing? Take my word, it’s only going to get more confusing.

Back in the day, the Sunday newspaper was the proverbial hearth around which families spent their morning pulling the paper apart, section by section and enjoying the Sunday newspaper magazine, comics or oversized travel and entertainment sections. As the latest Audit Bureau of Circulations report shows, newspaper circulation is down with Sunday—once a cash cow for publishers—taking a major beating. The iconic Sunday New York Times, the fuel of many a relaxing morning saw its Sunday circulation drop 2.6% for the six months ending September 2009. The weekday/Saturday New York Times was down a tad over 7%, but for the most part weekday newspapers are competing with cybernews providers. Sunday newspapers compete with…good question.

Actually Sunday newspapers compete with life in today’s world. Most major European newspapers have long given up on their Sunday editions (some because of distribution issues) as the day of rest has become the day of making up for lost time. The same is true here in the U.S. and newspapers have tried gimmicks (like product bundling) and promos (free subscription trials) to curb the steady decrease in Sunday circ, but my Sunday newspaper more resembles the local PennySaver than journalistic comfort food.

Beyond lifestyle changes, the Sunday newspaper has been doomed for a while. Never known for its news oomph (early deadlines, skeletal weekend staffs), the Sunday paper was once the home for big feature stories, special reports and a slick color magazine insert. With staff reductions, competition from other media (read: webzines) and rising costs, those showcase elements are all but disappeared. At this point, the only distinctive feature of a Sunday newspaper is its load of Free Standing Insert ads (which are themselves dwindling) and, if you live on the east coast, the lack of late sports scores.

The right move is to nuke the Sunday paper which will be a tough one to swallow but makes financial sense. Heck, I’d take all the Sunday content and bundle it into a TV show (web and on air) that reads like a local “60 Minutes” or CBS’ “Sunday Morning.” An act of heresy? Perhaps. But the times are a changin’, so it’s about time for newspapers to change with them.

Both Google and Microsoft (Bing) have announced plans to add Twitter results (and, in case of Microsoft, Facebook updates) to search results. This is an interesting achievement for sure, but one that leaves me in major so-what mode. There has been a lot of buzz around searching the real-time web, and both search giants have responded to that buzz with technically sound implementations. I offer this somewhat odd analogy: I am in my car driving on a major freeway and look to my in-car navigation dashboard for a way to circumvent an upcoming traffic jam. Aside from providing me such useful information as “escape routes” gleaned from official traffic sources, the GPS also tells me who’s honking their horns a few miles ahead as well as what traffic jams I would be likely to find in a freeway 100 miles away. In parallel, the real-time web offers information that is sometimes useful, sometimes interesting but often just silly sounds from strangers along the social superhighway. Unless search giants can parse the real-time web into comments that have authority as well as offer contextual relevance, these Tweets and Bleats are just noise.

As Yahoo learned with Yahoo Answers, presenting algorithmic search results with those offered by real-life humans is a challenge. That same challenge exists in blending algo results with those from Twitter and Facebook. As more content sources begin to become part of a one-box search experience, presenting them to consumers in a navigationally simple UI, will take the search world 10 blue links to 100 blue links. Lastly, I can see the merits of digging meaningful nuggets out of Twitter but still don’t understand what Facebook updates provide as value-add to search results. When I type in the search query “health clubs” do I really want to know that someone on the other side of the globe is at his health club? As my teenaged daughter would say, that’s TMI.

Barnes and Noble ended weeks of speculation by announcing The Nook, its new ereader that should not only throw a scare into Amazon but also put somewhat of a damper on the ereading capabilities of planned tablets/devices from Apple and Microsoft. Barnes and Noble has addressed many shortcomings of existing devices with The Nook by supporting epub, a major open ebook standard, as well as allowing consumers to loan books to one another. The Nook also supports PDF allowing owners to sideload content such as personal documents. The devices, which will retail for $259, are available for pre-order and are expected to ship at the end of November. The Nook will be available online (at nook.com and barnesandnoble.com) as well as in the company’s more than 700 retail outlets. Barnes and Noble has partnered with AT&T for 3G service for The Nook which was a no-brainer given the retailer recently made a deal with the carrier to provide free WiFi in its retail outlets. The device will default to the Barnes and Noble online bookstore which features more than 1 million titles for purchases and well another 500,000 free titles. Paid subscriptions to magazines from such publishers as Conde Nast and newspapers, including The New York Times and Wall Street Journal will also be available for The Nook. Barnes and Noble is working with a number of enabling partners including Austin, Texas-based Libre Digital who will power many of B&N’s content offerings.

There’s more: the device will have two screens. A top screen, the reading pain, is an e Ink display and will not come with a web browser (E Ink based-browsers offer a notoriously poor web experience). The bottom TFT screen will be a color display and is powered by the Android O/S which, Barnes and Noble says, allows for optimum navigation and user experience in a small space on a mobile device. . The bottom window will be for shopping but also will support Android apps, however any apps that require web access will have to use WiFi support as 3G service is available only for book-related transactions (which keeps bandwidth costs down for B&N). Barnes and Noble will also facilitate synching of all content between The Nook, smartphone apps and Barnes and Noble’s desktop ereading software.

Anyway you slice Barnes and Noble’s announcement, The Nook is a game changer for the current market and one that will force Amazon’s hand even with Amazon’s recent release of an international Kindle. Regarding loaning ebooks you can lend Nook to Nook, as well as Nook to other Barnes & Noble eReader-enabled devices (such as iPhone, iPod touch, select Motorola and Blackberry smartphones, PC and Mac.) Just as with a physical book, the lender will not have access to the book during the two-week period (or earlier if the person you loaned it to returns it sooner). Banres and Noble plans on fully leveraging its retail presence by offering Nook owners special in-store content such as book previews. By encouraging Nook users to browse and shop with their devices in Barnes and Noble stores, these early adopters become product evangelists (not to mention demonstrators).

By supporting e.pub, the International Digital Publishing Forum’s open ereading format, consumers have a wider range of choices than with Amazon’s Kindle which supports Amazon’s proprietary DRM, .azw. with only the Kindle DX supporting PDF. Consumers also can borrow books from public libraries who offer digital lending programs as the vast majority of libraries support .epub and .pdf with their tittles.

Because of its rich set of features, retail merchandizing possibilities and open format support, The Nook not only impacts ereaders in the market (Kindle, Sony Reader) it takes some of the luster off of such pending ereaders as Plastic Logic’s Que and the new wireless iRex. The next move in the ereader space belongs to Amazon. That sound you heard was the air being let out of the Kindle’s tires. Amazon is now forced with the decision to be pragmatic and support the open .epub format or risk being locked out of the market.

According to reports from the Frankfurt Book Fair, Google has announced it intentions to enter the ebook business in 2010 with something called Google Editions, creating the sort buzz only Google can generate. The search giant will offer an ebook store to compete with Amazon.com, Barnesandnoble.com and others, yet somehow support purchases from those etailers via a browser-based ereader. The reader will work on any device that supports a web browser which includes all maters of desktops, laptop and notebook computers, Smartphones and a handful of dedicated ereading devices. However, the devil is in the details in the ebook business and there’s no mention of how Google will digitize books (hopefully not those dreadful scans) and secure them to offer via a browser-based reader.

All of this sound interesting? Well, somehow this story lost something in this news as it crossed the continent and made its way stateside. Something like, what about the publishers’ lawsuit that has yet to be resolved? Perhaps this is nothing more than a straw man to encourage publishers to encourage the courts to come to terms with Google. Clearly, the Google Editions plan looks financially tempting to publishers:

With GE, Google would give publishers 63 percent of revenues and keep 37 percent for itself where it sold e-books directly to consumers. Google already partners with publishers to make physical books searchable and available for sale.

In cases where e-books were bought through other online retailers, publishers would get 45 percent and most of the remaining 55 percent would go to the retailer, with a small share for Google

A few things Google has overlooked in its attempt to send a bouquet of Forget-Me-Nots to book publishers: I am not sure about others, but I have never used the browser on my Kindle. My sense is, that if consumers excessively used their device browsers, Amazon and other wireless device companies would begin to charge for 3G access. Sure, Google says you can read the book offline once you have accessed it via your browser, but that’s a choice not a mandate. Putting all these issues aside, this all becomes moot if Apple releases an Apptab and sells books via the iTunes store. Not even Google, with all of its superpowers can compete with the iTunes/iPod/iPhone culture.

Lest we forget, the publishers I have spoken to in the past year loathe doing business with Google. Secretly, or maybe not so secretly, I think to a man they hope Apple comes in and kicks Google’s…eh..tail. Amazon’s too.

Patrick Barry, Vice President of Yahoo’s Connected TV Group, has left the company looking for new opportunities. I would hope that the company would replace Barry in short order to ensure the company maintains momentum in the TV 2.0 space. With the holiday season approaching, and consumer electronics manufacturers making decisions on their IP-based TV platforms, Yahoo can ill afford any delay in its plans, perceived or otherwise. To date, Barry has been the primary face of Yahoo’s Connected TV efforts.

After some thought, I realized that B&N already has an in-store relationship with AT&T with the carrier providing free WiFi in B&N’s retail outlets. It would thus make sense for AT&T to be the book retailer’s wireless provider partner for its rumored new device.

Putting aside my instincts to avoid writing about rumor (oops. I have said that before), an overwhelming number of published reports indicate that book retailer Barnes and Noble is about to launch an ereader, joining the parade of devices that includes the Kindle, Sony’s family of products and devices soon to launch (Irex), hyped to launch (Plastic Logic) and rumored to launch (The Apptab). Naturally, one would ask why. Why indeed given B&N’s recent announced deal with Irex in that it would be the default online bookstore for the new device.

Playing the speculation game, here are some thoughts:

*Barnes and Noble is launching a device because it wants to flex its bricks and mortar book retailing muscles by having a device it can sell in its more than 770 retail stores in the U.S. and Canada giving it first-mover advantage in that area. B&N circa 2009 is as much a lifestyle shop (complete with Starbucks coffee bar, comfy chairs, Muzak 2.0 and WiFi) as a bookstore, so it may be a suitable early-adopter environment to peddle a gizmo that most consumers have not even seen. No matter how powerful and global Amazon’s aspirations are, they remain solely an online merchant and an ebook reader just may be the sort of device that has to be seen to be sold.

*Barnes and Noble is trying to to gain additional traction for the .pdb book format is supports. That’s a bit of a long shot because no other devices other than the upcoming Irex support that format. It is possible, but not likely, that B&N will announce .epub support with its new device.

*Barnes and Noble, in offering a wireless device allegedly powered by Android will somehow bring Google to the ebook device wars just as a number of carriers (T-Mobile) and handset manufacturers (Motorola) have in the cell phone space. What would that mean? Certainly it could be a preemptive shot at Apple whose Apptab is not slated for release until Q1 2010 thus missing the 2009 holiday retail rush.

Also worth pondering is which carrier would join B&N to power its new device (which has received FCC approval)? I believe the smart money is on Verizon who would love to counter AT&T’s win with Amazon in being the carrier of choice for its new international Kindle.

This is one rumor that, if brought to fruition, will benefit consumers. The new B&N device will almost certainly be priced lower than any Kindle and perhaps even lower than Sony’s $199 ereader. B&N may be able to take a major hit on the device if it can use it to 1) provide uplift in sales in its retail stores 2) bundle a book club with the gadget 3) get some cost and channel support from a wireless carrier partner.

All of this speculation is interesting save for the .pdb support. If the new B&N device offers a format that is not supported by any other fixed device (I tried putting a B&N download on my format agnostic Astak EZReader and was foiled) then perhaps we’re right back where we started. A device Tower of Babel that is reminiscent of beta vs VHS.