Rocket Bomber - article - retail - publishing - E-Books and Readers: Price War - Betamax - Snake Oil - Razor Blades - and Apple Pie

Yeah, yeah, I know: most of the time I’m too clever for my own good.

Let me explain 4 of the 5 components of the article title before we get to specifics:

• A Price War is “a term used in the economic sector to indicate a state of intense competitive rivalry accompanied by a multi-lateral series of price reduction”
• Betamax is a video format “generally considered obsolete, though it is still used in specialist applications by a small minority of people.”
• Snake Oil – “applied metaphorically to any product with exaggerated marketing but questionable or unverifiable quality or benefit.”
• and the Razor Blade reference is actually to the Razor and Blades business model, “the concept of either giving away a salable item for nothing or charging an extremely low price to generate a continual market for another, generally disposable, item”

And I’ll make all this work, I promise.

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Last point first:

Razor Blades.

Seth Godin [wiki, official site] is a big-idea-guy; he posts boggling (in the good sense of the verb ‘to boggle’) ideas almost daily to his blog. A couple of weeks ago (7 June) he posted an article titled Paperback Kindle directed at Amazon but of note for any potential market player. He posited 4 new business models for an ebook reader:

• no frills, rock bottom price (Seth calls it at $49) – get people to buy into your ecosystem with a heavily discounted chunk of hardware, knowing they’ll be buying e-books from you for years. This is Amazon’s current business model, except they wanted to charge you $259 $189 for it.
• Again, the razor and blades model, cited as such by Seth but pitched slightly differently: Buy, say, 8 e-books and get the reader for free. —actually, both the ‘paperback’ and ‘razor’ are fine examples of the freebie model, just different ways to sell it to customers. Alternately:
• A subscription service, with subsidized hardware, just like a cell phone. Tie your customers into a contract but make it sound like a Book of the Month Club — sure, the e-reader is free, but you just opened yourself up to ‘push’ marketing, where the book each month (a fine book, I’m sure, but…) is not the selection of editorial staff but rather the winner of an auction, whomever was willing to pay most for access to your eyeballs.
• …and lastly, something fairly Seth-specific that may be important to business, social networks, and New Media types [like, say, bloggers] but doesn’t quite jive with traditional publishers.

My extensive linking to and gloss upon the words of Godin is only meant to highlight one point: the money is not in the e-book appliances, but in the continuing and ongoing sales of e-books. $10 a pop for a file? iTunes was only charging 99¢…

Snake Oil

I’m not going to debate the $9.99 price point — except to note here that it’s about $5 too low for a brand new book about to be released in hardcover, considering the non-print production costs that get discounted or ignored by most ‘experts’ who look at publishing as a dinosaur and e-books as the only answer.

— And e-books themselves are not the ‘snake oil’ that I feel salesmen are trying to foist on an ignorant public. Books are books, e- or otherwise, and they are the most important thing to me, in both my life and career (I’m a bookseller) and everything that I am and aspire to be was either found in or is founded upon books. I love the damn things.

That said: I recently looked into the ePub format and lo and behold: e-books are digital files.

Yeah, I wasn’t really shocked either.

Here’s the thing: ePub formatted e-books use XML, XHTML, a subset of CSS and honestly, No One needs a new chunk of hardware to read these things. Adobe could add ePub functionality to it’s PDF Reader tomorrow, and a creative coder could have extensions for Chrome or Firefox up by the end of the week.

ePub e-books are merely formatted text, a damn sight less complicated than, say, PHP scripted web-pages served up, dynamically, from a MySQL database. —that is to say, e-books are less complicated by many degrees from My Blog, This Very Web Page You Are Reading Right Now on Whatever Phone, Netbook, Tablet, Laptop, or Desktop Computer Screen. Rocket Bomber — indeed, any blog — is magnitudes more complex than an e-book. [so far, no one has complained about blog browser compatibility]

E-Books are [barely] formatted text, and the web has been reliably serving text since 1993. E-Books are easy.

So, the Snake Oil: Amazon (and it’s copy-cats) are trying to convince us we need a new appliance to read text. “Brand new thing, this, the book, never mind the Gutenberg behind the curtain or that sticky-cable thing — if you want to read books, well, step right up! I’ve got what you need [*slap*] right here!“

—

There’s nothing wrong with a book, or plain .txt files, or HTML, or browsable web pages.

So, um, why pray tell do I need another screen to read your ‘e-books’ when it would have been just as easy to read them without proprietary controls and locked-in business relationships? Hm?

Amazon (and its copy-cats) want you to buy their e-book appliance because then [presumably] it ties you in to their system and you end up buying just their flavour of e-books for life. This is the double-damnation of the Kindle — as yes, in fact, if you buy an e-book from Amazon you’re doomed to Amazon-sanctioned readers for life — but other vendors are just as culpable — as everyone selling ebooks may pay lip service to open standards and “you buy it, you own it” rhetoric but the truth is: I, you, and everyone else are just one hard-drive-crash away from having to re-buy everything: music, books, computer games & applications included.

Right now, in the realm of e-books and e-book appliances, there is both a format war ongoing and a price war on the horizon.

Both make little sense. (You might have already guessed why I think so, but I’ll cover the other points first before my conclusions)

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Betamax

At one point in time, Betamax and VHS were competing formats. [both are obsolete now; one more object lesson in the e-book technology discussion]

Betamax is more notable in the modern day-and-age for the lengths Sony was willing to go to support the new technology [see: Sony Corp. of America v. Universal City Studios, Inc.] and that’s a debt we all owe Sony and for which I myself will be eternally grateful, as the SCOTUS ruling on the Betamax case re-affirmed & established a whole new class of fair use and the internet you all so enjoy today may or may not be dependent on it, but your TiVos and Netflix most certainly are.

Anyway. In this article, Betamax (no matter it’s virtues) is cited as a cautionary tale: it was a proprietary format which never garnered enough users to persist after it’s corporate sponsor abandoned it.

I’ll let you Kindle owners puzzle that last bit out.

—

Are there cases where the ‘proprietary’ format won out over the market and became the standard? Why yes, I think there may be — but only after patents expired and ‘proprietary’ became open domain.

It’s a long process and between Sonny Bono and the speed at which technology advances in the present day, there is a large disconnect — not just between ‘rights’ and ‘the public domain’ but a cognitive disconnect where ‘rights’ are now assumed to continue into perpetuity. There is no innovation, no standing on the shoulders of giants — only a klatch of greedy gollums hoarding their ‘Precious’ forever, no matter how it might damage us, or them.

The open [I’m tempted to put that in quotes but the format is Open even if it falls short of full implementation of that ideal] ePub format helps… but only if the motives of market players follows up on the promise of Open Formats —

That is to say: Books are open formats; just open a book. All this e-book nonsense hasn’t proven itself — and one can argue e- is better (and in many ways, it is) but unless and until we figure out this rights-and-perpetuity-thing I quite honestly hate e-books.

My fear is that once the opportunity to make money on an e-book expires, so does the e-book. No permanent record, no addition to the corpus of human knowledge, no appeal and no recourse: Once the economic viability of a book is gone, there is no [apparent] need [to a business-type] to support the e-book and make sure it persists.

I shudder. Business models suck and they’ll suck us all down with them.

Open Source was the best idea of the last century, as important as the Scientific Method was in the 18th and 19th centuries — and if we can be sure Open Source interfaces with what used to be the Public Domain, I for one will be a lot more confident about our future as a species and our ability to solve all our current and any future problems.

This may make me some sort of hybrid Scientist/Socialist/Communist/Pirate, where I feel ideas must be shared. If so, I welcome that label. And I will stoutly defend my new niche against those who would use the same arguments to obtain popular entertainment iterations for free. Dude: free exchange of ideas is one thing, making sure the wealth of human knowledge is available to future generations — that’s great; admirable, even — but my intellectual argument does not guarantee you access to the latest chapters of Naruto or the most recent episode of the Bleach anime.

That’s merely entertainment.

I’m arguing books. Ideas. Social models and actionable suggestions for transforming our society.

Confuse the two at your peril. At best, you are uninformed and intentionally ignorant; at worst you are part of the problem and only provide fodder to those who seek to clamp down on ideas and innovation because there is no profit in it, and to whom the very idea of a ‘free’ society is just another legal fiction that can be ‘fixed’ if enough lobbying dollars are funnelled into respective legislative bodies world-wide.

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If necessary I’ll expand on that argument but I’m already off-topic.

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Price War

The first news article I saw [cnet] was time-stamped 6AM: from B&N $149, Wi-Fi-Only Addition to NOOK Family… NOOK 3G Available at $199

So: Nook as we knew it now $60 cheaper, new model [not yet in stores, but announced] for $110 cheaper than the previous established ‘standard’ e-reader price.

New Chapter.

Didn’t take long: by the time I sat down to lunch, Amazon had their PR up: AMAZON KINDLE NOW ONLY $189 [emphasis Amazon’s]

Yeah, now we really are seeing a competitive e-reader market, and given the realities of the Razor and Blades model: prices will go lower. The point of this mess is not to sell e-reader appliances, but to gain market share.

The retailer with the largest base gets to dictate terms to not only the customers, but to the publishers.

[And I haven’t even mentioned Apple yet. This is going to get real messy before Christmas.]

Speaking of Apple, Joe Wikert posts a dissenting view, on why bookstores (meaning B&N and Borders) should abandon e-reader gadgets right now, in favour of the iPad, as posted here

key quote:

“Seriously, have you seen the ‘Nook specialist’ at the front of B&N stores?  This poor employee has the unfortunate job of pulling you over to the Nook display with the hopes of wowing you with the device’s many features.  It feels like the teenager serving orange chicken samples on toothpicks in the mall food court, only more awkward.  Imagine the buzz the store would generate if that employee was showing demos of the iPad, featuring the store’s app and books.  I guarantee you it would drive a lot more interest than the Nook display (or the almost completely abandoned new media section at my local Borders store, where they try to sell Sony Readers).”

My current employment as a B&N manager restricts me from commenting further [though you might infer something from the fact that I posted that quote to begin with].

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Apple Pie

There’s no law that says you can’t take advantage of your customers.
There’s no law that says you can’t traffic on ignorance.
There’s no law that says you have to be altruistic.
There’s no law that says you have to care about, or even serve the needs of, your established customer base.

In fact, there is an established, centuries-old tradition of deceiving your customers, hobbling potential competition, perpetuating unfair systems that happen to be unfair in your favour, lying, cheating, stealing, and generally being a total dick

in fact, being a total dick [in a business sense, and perhaps elsewise] is as American as Apple Pie.

So I can scold Amazon for it’s dick-moves, but my own employer is just as guilty and I’d like to point out one last time:

e-books are just files — many different ways to open files; & you didn’t need to buy a $500 $259 $199 $149 $49 new device at any price to read text. The web is free, and a hell of a lot more complex that these new “e-books”.

I’m conflicted, and confused. I really want to rant and rave against ebooks [and have, over multiple posts] but I’m also trying to understand where my reader base is going – & is this e-book-thing a format they’re adopting, or just a distraction and annoyance?