First things first, if you're interested in following publishing industry stuff in a regular way, you MUST read Maya Reynolds' blog. She's excellent at (a) staying on top of major developments and (b) explaining them in clear language, along with their implications. This post was inspired, in part, by her reportage.
So, as you may have heard, Amazon is the current market leader in the sales of ebook readers. It's Kindle has, according to some reports, 68% of the market share for ebook devices. Unfortunately, Amazon hasn't been a very benevolent monopolist in the book market in general. It's been dictatorial with authors who want to self-publish, requiring its own print-on-demand service. It even attempted, in January of this year, to coerce publisher Macmillan into accepting its terms by removing the buy buttons from that publisher's books when Macmillan wouldn't agree to let Amazon set the price of its ebooks at $9.99 (Macmillan wanted the ability to set its own pricing, a practice that is being called "agency pricing" in this particular industry, but in the rest of the world is just called, you know, the way things are usually done).
In short, Amazon has been a bit of a dick about exploiting the advantages it has in distribution. And when you're a dick, you tend to make people angry. Publishers, authors, readers...Amazon has angered all of these people with their pricing antics and "here and gone" Buy buttons, and authoritative demands.
But, at least up until this point, dick or not, Amazon had the advantage. Not only did it have the distribution channel for physical books, but it also had the most popular reader for e-books. If you wanted a book, Big Daddy Amazon was probably the way you would go, no matter how much you didn't like them.
Enter Apple.
Apple is excellent at making game changing moves in industries where content can be tied to hardware. Think about the iPod. Until the iPod, most people who wanted digital music were sharing it illegally, via Napster and other P2P services. Then the iPod and iTunes came along and most people now buy music from iTunes and play it on their iPods. In 2009, almost 74 percent of digital music devices are iPods. SEVENTY FOUR PERCENT. Of course, the record companies are now complaining about Apple's music pricing, but at the time iTunes launched, they were thrilled to get any money at all for music that people would have stolen otherwise.
And now, with the iPad, Apple might be doing it again. So let's take a look at how it's doing it.
1. Its ereader device will do more than the Kindle. The iPad has wifi and Internet access built in. It's in color. It has a full keyboard application. It has a gazillion applications (almost all of the applications available on the iPhone will work on the iPad), including games and useful stuff. And people already liked the ease of reading on their iPhones. That's not going to change with the iPad.
2. Its device will be better designed than the Kindle. I know people have a lot of critiques of Apple, but you have to give it up for them. They know how to design stuff that both works and is beautiful.
3. Apple has made friends of the publishers. Where Amazon told the publishers "our way or the highway," Apple said "help us help you." In other words, it agreed to agency pricing. As a result, ebooks make cost more on the Apple iPad than they do on the Kindle (almost certainly, in fact), but by letting the publishers pick the prices (and succeed or fail on them), Apple is guaranteeing that the publishers want to work with them. I'd lay money on "exclusive for Apple" content and features coming out of that cooperation.
4. Apple already seems like a friend to consumers. Apple's image is one of friendliness and cooperation. People (myself included) LOVE their Macs and their iPods and their iPhones. People will pay a premium to own the hardware, because it's so fun to use. And companies that do business with Apple get the benefit of that cache. Even behemoths like AT&T. Publishers, struggling to stay relevant in the changing world, will benefit from having Apple as a partner.
In other words, Apple has set up a strategy here by which it can be successful in the ebook market without a lot of risk to itself. It has evaluated Amazon's missteps and positioned itself to be the anti-Amazon in the same way that it's already the anti-Microsoft.
So here's the ultimate question: is it good for consumers?
In the short run, maybe. Ebooks on the iPad are going to cost a few dollars more than they do on the Kindle, that's true. That doesn't seem good for consumers, does it? Except that higher prices might be worth it if the content is worth it--if there are new features, or additional stuff, or if it's the right price for the author at the time. People have paid more for hardback and paperback books for years, so if the publishers can convince consumers that a digital book (with color illustrations, or additional content, or interactivity, or what-have-you) is worth $14.95, then every one wins. We get more "stuff" with our books, and the publishers make more money.
In the long run, definitely. Amazon has already made some troubling decisions in exercising its monopoly power. A competitor as vibrant as Apple in the ereader market means real competition, which ultimately results in lower prices and a better situation for consumers all around.* If digital content is going to be the wave of the future -- which it certainly seems like it is -- then it's better to have more players, not fewer.
~~~
* I'm sure people are going to point out that Apple is a monopolist in certain markets (like the iPod) already, and shouldn't my arguments against monopoly apply to Apple as well. Sure. Yes, they should. The problem is that no competitor has arisen that can hold a candle in terms of consumer appeal to the iPod. And the compatibility of iPods and iTunes with other non-Apple hardware has cemented its market position. In addition, however, it's important to note that Apple has also made a habit of trying to work with its partners rather that dictating to them. (Note, in that article, that the record companies aren't totally happy with the outcome of the negotiation, but that no one PULLED THE BUY BUTTONS OFF OF ITUNES TO GET THE COMPANIES TO AGREE, AMAZON.)
So, as you may have heard, Amazon is the current market leader in the sales of ebook readers. It's Kindle has, according to some reports, 68% of the market share for ebook devices. Unfortunately, Amazon hasn't been a very benevolent monopolist in the book market in general. It's been dictatorial with authors who want to self-publish, requiring its own print-on-demand service. It even attempted, in January of this year, to coerce publisher Macmillan into accepting its terms by removing the buy buttons from that publisher's books when Macmillan wouldn't agree to let Amazon set the price of its ebooks at $9.99 (Macmillan wanted the ability to set its own pricing, a practice that is being called "agency pricing" in this particular industry, but in the rest of the world is just called, you know, the way things are usually done).
In short, Amazon has been a bit of a dick about exploiting the advantages it has in distribution. And when you're a dick, you tend to make people angry. Publishers, authors, readers...Amazon has angered all of these people with their pricing antics and "here and gone" Buy buttons, and authoritative demands.
But, at least up until this point, dick or not, Amazon had the advantage. Not only did it have the distribution channel for physical books, but it also had the most popular reader for e-books. If you wanted a book, Big Daddy Amazon was probably the way you would go, no matter how much you didn't like them.
Enter Apple.
Apple is excellent at making game changing moves in industries where content can be tied to hardware. Think about the iPod. Until the iPod, most people who wanted digital music were sharing it illegally, via Napster and other P2P services. Then the iPod and iTunes came along and most people now buy music from iTunes and play it on their iPods. In 2009, almost 74 percent of digital music devices are iPods. SEVENTY FOUR PERCENT. Of course, the record companies are now complaining about Apple's music pricing, but at the time iTunes launched, they were thrilled to get any money at all for music that people would have stolen otherwise.
And now, with the iPad, Apple might be doing it again. So let's take a look at how it's doing it.
1. Its ereader device will do more than the Kindle. The iPad has wifi and Internet access built in. It's in color. It has a full keyboard application. It has a gazillion applications (almost all of the applications available on the iPhone will work on the iPad), including games and useful stuff. And people already liked the ease of reading on their iPhones. That's not going to change with the iPad.
2. Its device will be better designed than the Kindle. I know people have a lot of critiques of Apple, but you have to give it up for them. They know how to design stuff that both works and is beautiful.
3. Apple has made friends of the publishers. Where Amazon told the publishers "our way or the highway," Apple said "help us help you." In other words, it agreed to agency pricing. As a result, ebooks make cost more on the Apple iPad than they do on the Kindle (almost certainly, in fact), but by letting the publishers pick the prices (and succeed or fail on them), Apple is guaranteeing that the publishers want to work with them. I'd lay money on "exclusive for Apple" content and features coming out of that cooperation.
4. Apple already seems like a friend to consumers. Apple's image is one of friendliness and cooperation. People (myself included) LOVE their Macs and their iPods and their iPhones. People will pay a premium to own the hardware, because it's so fun to use. And companies that do business with Apple get the benefit of that cache. Even behemoths like AT&T. Publishers, struggling to stay relevant in the changing world, will benefit from having Apple as a partner.
In other words, Apple has set up a strategy here by which it can be successful in the ebook market without a lot of risk to itself. It has evaluated Amazon's missteps and positioned itself to be the anti-Amazon in the same way that it's already the anti-Microsoft.
So here's the ultimate question: is it good for consumers?
In the short run, maybe. Ebooks on the iPad are going to cost a few dollars more than they do on the Kindle, that's true. That doesn't seem good for consumers, does it? Except that higher prices might be worth it if the content is worth it--if there are new features, or additional stuff, or if it's the right price for the author at the time. People have paid more for hardback and paperback books for years, so if the publishers can convince consumers that a digital book (with color illustrations, or additional content, or interactivity, or what-have-you) is worth $14.95, then every one wins. We get more "stuff" with our books, and the publishers make more money.
In the long run, definitely. Amazon has already made some troubling decisions in exercising its monopoly power. A competitor as vibrant as Apple in the ereader market means real competition, which ultimately results in lower prices and a better situation for consumers all around.* If digital content is going to be the wave of the future -- which it certainly seems like it is -- then it's better to have more players, not fewer.
~~~
* I'm sure people are going to point out that Apple is a monopolist in certain markets (like the iPod) already, and shouldn't my arguments against monopoly apply to Apple as well. Sure. Yes, they should. The problem is that no competitor has arisen that can hold a candle in terms of consumer appeal to the iPod. And the compatibility of iPods and iTunes with other non-Apple hardware has cemented its market position. In addition, however, it's important to note that Apple has also made a habit of trying to work with its partners rather that dictating to them. (Note, in that article, that the record companies aren't totally happy with the outcome of the negotiation, but that no one PULLED THE BUY BUTTONS OFF OF ITUNES TO GET THE COMPANIES TO AGREE, AMAZON.)
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