For book publishers, some of whom were waiting for signs of wide-scale acceptance of the universal e-publishing standard, ePub, the iPad came through…sort of. Although the device supports ePub, Apple is believed to be planning to implement its own DRM (Fairplay) to secure the ePub files, which could presumably then be distributed only through iTunes (that is, iBooks). If that is the case, Apple’s book efforts puts it in the same category as Amazon which utilizes a proprietary DRM that ties Kindle books Amazon.com. Hence any e-book purchased from Barnes & Noble, Sony or any of the countless e-book retailers will not work on the iPad. In addition, e-books from libraries, which are powered by Overdrive who uses Adobe’s DRM, also would not work on the iPad.

For both newspapers and magazines, the iPad remains a mystery. The demo of The New York Times, which was created in a compressed timeframe, is not much indication of what potential newspapers have on the iPad. Those are questions that can only be answered by developers who are busily downloading the new SDK and attempting to devise compelling paid or ad-supported content applications. The initial focus is on paid applications (and again, there is no evidence that consumers will pay for digital newspaper content) as there was no mention of advertising support from Apple, which many were expecting following Apple’s recent acquisition of Quattro, a mobile ad network. The same goes for magazine publishers who now have the color device they have asked for but will need to experiment with varied content applications and business models, while scrambling to source enough video to do justice to consumer expectations raised in demos.

The iPad launch will create ripples throughout the publishing industry: supply chain providers who digitize and format content as well as develop applications will thrive; standalone e-reader device manufacturers will have to re-price their devices now knowing that the WiFi-only 16G iPad can function as a high-end e-reader. Plastic Logic’s Que, the Alex and Entourage Edge may be forced to revisit their announced retail prices.

For video content such as TV and movies, a similar catch was apparent. While the iPad can clearly render beautiful hi-def full screen video, its lack of support for Flash was evident in the tiny blue cubes that appeared on web pages during the demos. This means that TV-friendly web distribution platforms like Hulu are unlikely to work on the iPad. (A Hulu app for the iPhone/Touch has been rumored for some time but has yet to materialize.) Here, too, Apple appears to have reserved the distribution of TV and movies for its device for iTunes, although YouTube remains a wildcard if it should release a sound model for content owners to monetize through rentals or sell-through. Also unexplored was the possible connection between the iPad and Apple TV, which have clearly enticing possibilities.

Then there’s the mysterious absence of any mention or demonstration of the device’s advertising potential, or Apple’s apparent newfound interest in participating in the business. With iTunes emerging as the sole channel for monetizing content of any kind on the iPad, advertising remains a critical source of revenue to publishers and video providers alike, and one on which Apple’s chief emerging rival, Google, is laser-focused with innovations like Google Goggles and QR barcodes readable by Android devices, and distributed to 100,000 businesses. Of course, these ideas require a camera, which the iPad lacks.

Still, Apple did not fail to push the envelope and generate enthusiasm for its latest creation. Now, with Apple setting the standard for content consumption devices, other manufacturers—most notably PC OEMs, will begin to launch their tablets and will look to Android and possibly Windows as device platform. In particular, Android will thrive with Google deploying its Google Editions and YouTube strategies to offer cloud-based delivery of all content to the universe of Android devices, with a well-proven advertising component.

And let’s not leave communications service providers out of the mix. Whether Apple’s choice of AT&T is one consumers find popular, it leaves Verizon and Sprint as ready partners for HP, Dell, and others whose tablets are in queue.

All that said, content companies of all kinds need to examine the iPad and the new version of the iPhone OS with a few things in mind. First, Steve Jobs is without peer in his ability to provide a vision of the future through the medium of the product he happens to be introducing at the time. In the case of the iPad, he described the magic of having the “…Internet in your hand.” True that, but for a lot of us, that came with the iPhone, the Touch and the AppStore. And as revolutionary as those products have proven themselves to be, the real magic has come from the integration of all those elements into a set of compelling content experiences.  Second, the iPad extends by one the form factors those kinds of experiences can be delivered through. Third, and this is really important, we’re still talking about the “Internet” as defined by Apple. The potential for game-changing killer apps to come for the iPad is not in question.  And the potential power of content experiences Apple can enable is not in question.  But the handle on that potential is being controlled by one entity.

In that regard, we remain puzzled at the continued estrangement between the iPhone OS-based product line – iPhone, Touch and now iPad – and Adobe Flash. Do the power-management issues cited by Apple as reasons for the iPhone’s persistent lack of Flash support? We think lack of Flash support still causes many, many media and content companies, and their developers, a great deal of strategic angst.

The iPad is not the iPod for publishing. Music was a ready and waiting asset that needed little “post-production” work to be suited for a portable device, and, when the iPod arrived, the industry had already been badly disrupted. Hence the iTunes store was quickly filled with both quantity and quality. But other forms of content are not so enthusiastic to commit to a closed channel platform that controls both device and distribution, and the next 60 days will be crucial as Apple hopes to load its electronic storefront with a selection of content that will encourage consumers beyond the “fanboy” crowd to be iPad lovers.

(This post was co-authored by Mike McGuire and Andrew Frank)

If this report is true, then I suspect Yahoo’s newspaper consortium will lose much of its momentum if not outright come to an end; there are more than 600 newspapers in the consortium and HotJobs is one of the key services Yahoo provides its partners. Based on Microsoft/Bing’s desire to work with newspapers (well, at least News Corp.) and Google’s recent efforts to attract newspaper publishers (Living Stories, search blocking), two companies are eager to take over what Yahoo started.

The James Patterson e-reader will be available from Sony Centres, Waterstone’s and sony.co.uk from 30th November 2009.

Oh, did I forget to mention that the new Kindle “global edition” will be powered by AT&T. That large groan you heard was from Sprint, Amazon’s current wireless partner who powers the mysterious “Whispersync” for current Kindle owners. AT&T  has a network of global partners who come together to provide AT&T customers (somewhat costly) global cell phone reach. The difference here is that Amazon foots the bill for the bandwidth (at least they do upfront) used to download books. In the case of downloading newspapers (which are larger files sent daily), the cost is transparently passed on to consumers who pay about $10 per month for each newspaper subscription.

Looking at this announcement through Amazon’s eyes, this announcement has (at least) three missions here:

Ward off the growing list of competitors (iRex, Sony, Plastic Logic) who have announced or plan to announce new ereaders that come complete with wireless partners and who have their sights set on international distribution.

1. By gaining a dominant position in ereader sales, establish its proprietary ereader document format, .azw as the standard for the ebook market as it battles against .epub, the open global ebook standard.
2. Take some of the steam out of the hype out of Apple’s non-announcement of a tablet device. The latest “public rumors” indicate that a device will be in the market at the end of Q1, 2010. Having the Kindle, which is priced about half of the rumored Apple tablet price, into global channels before the first Apple tablet hits the market would be a strategic advantage to Amazon. Publishers may be pragmatic and lend greater support via more titles to a lower priced globally distributed device than a rumor no matter how cool.

But, things are not that easy. Even a lower cost, globally supported Kindle does not deliver a viable newspaper or magazine experience. Also, powerful global carriers such as BT, Vodafone, Telecom Italia, Orange, Telia, etc.. will not be satisfied with revenue sharing deals with AT&T in supporting its network for Kindle downloads; shortly, we will see major carriers outside the U.S. forge relationships with ereader manufacturers for local or inter-regional support (pan European, for example) as well as retail channel support.

Amazon’s announcement indicates the company is well aware of the market dynamics that threaten its dominance. Will Amazon have the tactical prowess to remain a market leader supporting a proprietary ebook format and offering a device that is a non-starter for newspapers and magazines? At this point, the answer is no, but Amazon often forces us to expect the unexpected, so stay tuned.

Also notable for the device is that it will be priced at $399, far lower than many of IREX’s previous offerings, and will be available at both Costco and Best Buy in time for the holiday shopping season. Best Buy says it will train its associates on the fine points of e-readers, but Costco is generally a self-service shopping experience, so it will be somewhat of a merchandizing challenge to sell the IREX to a Kindle-conscious consumer.

Barnes & Noble (www,bn.com) is the lead online bookstore partner which is good news up to a point. While Barnes & Noble will have a sizeable selection priced competitively (competitively to Amazon, that is), B&N offers titles in the .pdb (Palm Database) format deployed by Fictionwise, a nine-year-old online e-book, e-tailer B&N recently purchased. The .pdb format is one used by many mobile devices and PC-based readers, but goes somewhat against the trend of adopting .epub as the universal e-book format. Nothing will keep publishers on the sidelines longer than a format/DRM fray. The IREX DR800SG, out of the box supports many formats including .epub. The decision to partner with B&N is a pragmatic one from a business standpoint given B&N’s name and reach. With multiformat support, however, it does not box consumers into a one channel e-book purchasing choice (ala Amazon). Consumers (like me) can even easily download books from their public libraries for free using OverDrive’s Adobe Digital Editions supporting technology and read them on the IREX devices. Choice, not to mention value-priced devices, is what will drive the ebook space.

IREX, a spin-off of Phillips, has the vision and technology chops to be a major player in the e-reader space. IREX could be the first to come out with an affordable color device and may be the device the successfully works with newspaper companies (through some major partners) to offer a reading experience that does more than render PDFS of news pages.

At the same time, that hope is somewhat pinned to a company who has yet to publicly show its cards in the e-publishing space: Apple. Apple is rumored to be launching a tablet in 2010 that will functionally act as an e-reader but there are no details about launch time, 3G partners, publishing partners, and so on. Nonetheless, 65 percent of those surveyed say that Apple will produce and e-reader that will impact the publishing market. Amazon was second with 62% and the Plastic Logic hype machine landed 13% of those surveyed putting them in fourth place behind Sony with 25%.

And now for the news that indicates that while the e-distribution opportunity is strong, its successful implementation is (optimistically) more than a year away: More than half of publishers surveyed see a business model that includes a mix of advertising and subscription. Such a statement shows that there will be lots of experimentation in the next year with patience required from publishers to gather the answers needed to make decisions that resonate with consumers. At this point in their evolution, publishers know time is not on their side and the need for revenue has long since expired. Patience may be a luxury publishers cannot afford. Also in play are retail prices for e-reading devices and the role service providers (AT&T, etc..) will play in supporting the channel from a distribution as well as underwriting perspective. Could AT&T defray some of the device cost for folks who bought an e-reader armed with two years of 3G service (as they are doing with netbooks)?

Net net: as the e-reading market goes through a major shakeout related to devices, formats, hardware, software and business models, the timing couldn’t be more perfect. The future, at least for consumers, should hold a 2010 holiday season where e-readers (priced at about $199) are the must-have gift. Until then, early adopters can knock themselves out.

Given that a vast majority of the book world (publishers, enablers) supports the .epub standard and has rallied behind Adobe’s ACS4 as the DRM for .epub, Sony, the “other” early entrant in the Ebook reader space, has announced a move away from its proprietary standard for both its device family as well as online bookstores. Folks who have older Sony’s PRS-500 e-reader will also provided an update path for the new format. Sony’s move has some interesting implications: for starters, it puts more heat on Amazon who sits practically alone in offering a device and Ebook store that supports only its .azw secure format. For Sony, it shows it is leveraging its bets by separating its product lines into device and Ebookstore columns. While the two work harmoniously in that the newly announced devices will no doubt be geared to work seamlessly with the Sony Ebookstore, the Ebookstore will allow anyone with a device that supports .epub to go there to buy their digital books. In essence, Sony will compete with two separate (with some overlap) sets of companies: for devices, it will battle Amazon, Astak, Irex, Cooler and (when it launches) Plastic Logic. In the Ebook storefront space, it will compete with Amazon, Barnesandnoble.com, Borders, individual publishers and literally thousands (2,498 according to LibreDigital) of digital content providers. The picture gets really murky once you factor in partnerships and white label provision, but let’s leave that for another day.

But wait, there’s more. Plastic Logic, whose device aimed at “mobile business professionals,” and is targeted for a Q1 2010 release, has inked two impressive and interesting partnerships. As the device will include 3G/WiFi connectivity for remote Ebook buying as well as offering the capability to update newspaper and magazine content, Plastic Logic recently announced a partnership with AT&T. That positions Plastic Logic quite well against Amazon, especially after announcing a relationship with Olive Software, a digital warehouse/digital enabler primarily servicing in the newspaper and magazine space. Whether or not the deal is exclusive or will expand to include either Ingram or LibreDigital who have more experience working with book publishers remains to be seen. Nonetheless, we see the need for three key components to building a successful consumer-facing Ebook content consumption experience (say that fast three times): a device that supports multiple formats, especially e.pub; a relationship with a wireless service provider to facilitate 3G/WiFi capabilities and a enabler to power the flow of content directly to the device or to Ebook retailers who then sell content to multiple devices.

If all of this sounds complicated, it is, but will likely get more complicated before the entire Ebook marketplace simplifies for publishers and consumers. Whatever happens, hold on to your Kindles—they may wind up being valuable artifacts/icons of a major misstep from a previously powerful media titan.