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.

Amazon proudly boasts that the Kindle was its leading product choice during the early shopping season. One has to wonder how forthcoming Amazon is in telling buyers they can only buy books from Amazon.com (that is without illegally jailbreaking book files) and that most books available for free from public libraries will not work on the device. And while Amazon has added PDF support to the Kindle via a firmware upgrade, it will not read Adobe ACS4-encrypted PDFs (which is what most libraries utilize). Those issues aside, the Kindle won’t be facing much competition for those looking to ride the early wave of standalone device e-reading.

Even with Kindle winning a one-horse e-reading retail race, it will be a hollow victory. For starters, a number of “enhanced” e-readers, such as the Alex, will be announced at the 2010 CES show in early January. These Android-powered enhanced readers divert from the pure standalone category by offering a second screen for viewing videos and even web content to provide developers a more fertile platform for value-added book applications. Also consider Google Edition and its cloud-based approach to manage all of a reader’s book content and provide access across all devices. If successful, Google flattens the device opportunity and could force the Amazons of the world to be “Google Edition” friendly. And then we must consider the moving target that is the launch of the alleged Apple Tablet. The rumor mill’s magic 8-ball now says second half of 2010 for an Apple Tablet launch. In the meantime, Creative, Dell, Microsoft and most of the Taiwanese PC manufacturers have an e-reader, enhanced e-reader, tablet or netbookish device on the drawing board.

The simple caveat emptor (let the buyer beware) seems like the watchword for those currently shopping for e-readers. What seems cool today could be a paperweight next holiday season. Publishers must not lose faith in the digital opportunity despite the market cacophony; pushing for open standards and creative value-added e-reading applications should be the publishing world’s  immediate course of action.

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

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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.

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.

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.