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Introduction
Many early players have fared well with a handful of eBook channels that mirrored traditional
print-based pricing and royalty models by default, but publishers realize this model is not
durable. Publishers Weekly magazine reported that 72 percent of publishers surveyed on
digitization’s impact said the development of new business models, multi-media products and
effective marketing strategies is the biggest challenge facing publishers today. Decision-makers
in the publishing industry have concluded they need to carefully navigate this potentially
lucrative, yet also tumultuous, landscape.
Publishers must establish a sustainable eBook operating model that provides the flexibility to
maximize profits from the existing model, while positioning them for future developments that
may require multiple strategies. They have arrived at a crossroads, with the majority of
publishers considering three viable paths:
It is important to note that while Forrester is forecasting explosive growth, they also estimate that
eBooks currently account for only 1.5 percent of total readership. The proportionate percentage
of fiction titles, for which current eReader functionality is optimized, is likely much higher.
Amazon’s “first mover” status, and seamless Whispernet1 integration of its 330,000+ available
books onto its groundbreaking Kindle device, has established it as the preeminent eBook player.
Amazon does not release Kindle sales information, but Jeff Bezos, Amazon's CEO and founder,
told The New York Times in October 2009 that in instances where Amazon offers both a Kindle
and paper version of a book, 48 percent of total sales result from the digital version. In May
2009, this number was 35 percent. A recent Amazon earning report2 stated that the Kindle is
Amazon’s top selling item across all product categories, and is the “most wished for” and “most
gifted” item.
The Kindle is today’s leading device (although it is unknown to what extent) and its name has
become a synonym for “eReader.” Competition is becoming more fierce, however, and the 1984
incident3 has underscored Amazon’s perceived lack of flexibility. Some Kindle users fear they
are essentially users of a charging library.
Sony is moving full speed ahead and has recently unveiled Edition devices that are EPUB-
compatible. Some of these devices are attractively priced, wireless and feature-rich, and have
already upped the ante. Sony has also formed what appears to be a long-term alliance with
Google. One million free public domain titles will be directly available to Sony Readers, with
millions more likely to follow the eventual Google Book Settlement. Expanding beyond its
platform, Sony Daily Edition purchasers will have wireless access to local libraries’ eBooks, as
well as other platforms’ EPUB-formatted eBooks (provided the appropriate DRM rules are in
place). By targeting new monetization streams from all EPUB content, Sony may be positioning
its Readers, and future versions, to access and integrate non-eBook content (perhaps including
Sony’s proprietary gaming content).
As expected, Barnes & Noble announced its Nook device, featuring a touch-screen LCD panel
and in-store browsing and sharing capabilities that are hoped to augment, rather than replace, the
bricks and mortar bookstore experience. Through its Editions offering, Google will open much
of its scanned book warehouse, soon to become the biggest digital content repository, to all
browser-enabled devices. Betting against the knowledge and resources of both Apple and
Microsoft has proven unwise in the past. It is believed that both companies are developing multi-
media tablets; meanwhile the iPhone, through applications such as Stanza and iKindle, as well as
direct browsing, has become a leading eBook reading device.
Early television programming copied heavily from the content and format heard on the radio,
leading many to view the expensive new medium skeptically. After years of experimentation,
however, the large companies investing in the promising new technology found the right types of
television content that grabbed people in a different, more visceral way than radio. The race to
develop and offer interactive eContent, as well as to create a new and improved reading and
learning experience, is already under way in the eBook market. Jeff Bezos, the founder and
president of Amazon.com, expressing confidence gained from decades of technological
achievements, recently turned Sarnoff’s quote around by stating that the “Kindle is an example
of working backward.” The medium is ready and is now merely awaiting appropriate content.
Education
American educators are increasingly looking to eBooks and eReaders as a more interactive,
environmentally friendly and less expensive option than print materials. Both California and
Texas have already launched aggressive eLearning initiatives and publishers of educational
materials are starting to seize this opportunity for growth. McGraw-Hill inked a deal with
Amazon recently, making all of the publisher's higher education material available on Amazon's
Kindle. McGraw-Hill is also loaning students Kindle devices with the necessary texts already
loaded. Cengage Learning, Wiley, and Pearson have forged similar deals with universities.
Students who subscribe to CourseSmart will now be able to download their texts and digital
notes to Apple's iPod Touch or iPhone to create customized study guides or cramming aids.
Flat World Knowledge, an open source, Web-based digital textbook publisher, states that 40,000
students on 400 college campuses will use its texts this fall, a significant increase from the 1,000
students who used them last spring. The K-12 Foundation is a non-profit organization with a
mission to reduce the cost of textbook materials for the K-12 market, both in the U.S. and
worldwide. Using an open-content, Web-based collaborative model termed the "FlexBook," K-
12 intends to pioneer the generation and distribution of high-quality educational content that will
serve as core text, as well as provide an adaptive environment for learning.
While some features, such as annotations, margin notes, “dog-earing” and highlighting are
eReader-enabled, the sharp, graphical nature of most textbooks is currently lost, and students
find it difficult and frustrating to jump ahead or back to sections or pages (or records) on
eReaders. The Kindle DX device is geared towards textbooks and newspapers and Sony has
unveiled a landscape and touch-enabled device that will facilitate the textbook experience, but
there is still progress to be made. eInk color is at least a year away and will certainly improve the
experience.
4 It is reported that Pixel Qi’s 3Qi product will eventually offer users exciting hybrid eInk and LCD displays.