Was Apple the Sole Architect of the Agency Model?

Posted on May 14, 2013 by switch11

The Justice Department is painting Apple as the ringleader of the Agency Model. So says The New York Times.

Quick Reminder of the Agency Model.

  1. 5 of the Big 6 Publishers and Apple got together to introduce something called ‘The Agency Model’.
  2. It was seen by some as an attempt to exploit ereader owners and make them pay a ridiculous price for ebooks ($12.99 to $14.99).
  3. It was seen by others as an attempt to slow down the rise of eBooks and eReaders. Perhaps it was both.
  4. Update: From the articles today it seems it might have been Apple’s attempt to stall Amazon’s rise in eBooks.
  5. It led to a long stretch where we had really ridiculous prices for newly released ebooks.
  6. It led to a lot of pain for readers as they either didn’t buy the over-priced ebooks or waited until they were below $9.99. Those that did pay also suffered as they had to pay really high prices.
  7. It has also led to the current situation – Where lots of Publishers think it’s OK to introduce new releases at $12.99 and $13.99 and $16.99.

The Agency Model, in short, was the biggest threat to the rise of eBooks and eReaders. It’s only due to the fact that eBooks had already gathered too much momentum that it failed. Also helping it fail was the strong resistance by readers. Measures by readers such as the $9.99 boycott – which boycotted any books over $9.99 – played an important part.

Now, based on the picture The Justice Department is painting, it seems the architect of all of this malarchy may have been Steve Jobs and Apple.

Here’s an email from Steve Jobs to James Murdoch of News Corporation -

“Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.”

It’s pretty clear that, at least in this case, it’s Apple that’s trying to convince a Publishing Company into the Agency Model.

The Justice Department certainly thinks so -

According to the Justice Department, that e-mail is part of the evidence that Apple was the “ringmaster” in a price-fixing conspiracy in the market for e-books

It’s also quite clear that Apple wanted to block Amazon’s rise -

the government said that Apple and the publishers conspired to fix e-book prices as part of a scheme to force Amazon to raise its e-book price from a uniform $9.99 to the higher level noted by Mr. Jobs in the e-mail, which publishers wanted. That, the department said, resulted in higher prices to consumers and ill-gotten profits for Apple and its partners.

The Justice Department is really going after Apple. It’s settled with The Evil 5 Publishers and now Apple is the sole defendant -

Apple is the only defendant left in the lawsuit after five publishing companies — Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster — agreed last year and earlier this year to settle the charges.

This is really interesting. Wonder why Apple didn’t settle.

Power Corrupts? Apple strong-arming Publishers?

The Justice Department paints a really crazy picture – One where Apple is not only sweet-talking Publishers into joining the Agency Model Mafia, it’s also threatening and coercing them.

Here’s a gem -

In July 2010, Mr. Jobs, Apple’s former chief executive, told the chief executive of Random House, Markus Dohle, that the publisher would suffer a loss of support from Apple if it held out much longer, according to an account of the conversation provided by Mr. Dohle in the filing. Two months later, Apple threatened to block an e-book application by Random House from appearing in Apple’s App Store because it had not agreed to a deal with Apple, the filing said.

After Random House finally agreed to a contract on Jan. 18, 2011, Eddy Cue, the Apple executive in charge of its e-books deals, sent an e-mail to Mr. Jobs attributing the publisher’s capitulation, in part, to “the fact that I prevented an app from Random House from going live in the app store,” the filing reads.

Who would have thought that Steve Jobs set up the Agency Model. All this time we might have been accusing Publishers of being greedy – they might just have been Apple’s Puppets. If all this is true, and that’s an IF at this stage, then it pretty much means the Publishers got conned/threatened/cajoled/blackmailed into joining the Agency Model. That they were just Apple’s puppets to use against Amazon.

Also, remember when Publishers and Amazon were engaging in feuds and books were going missing. Well, Apple had its hands in that too.

the documents quote Mr. Dohle as saying that an Apple executive counseled him that the publishing company could threaten to withhold e-books from Amazon to force Amazon to accept the higher prices.

This is very different from what I had thought the situation was.

Are we to Believe that Publishers were merely Sheep? Being used as Pawns by Apple to fight Amazon’s lead in eBooks?

That’s certainly the picture that The Justice Department is painting.

If this happens to be true, then my (non-legal) thought would be -

Couldn’t every single person who

  1. Had to pay more than $9.99 for a book.
  2. Had to wait for months for a book’s price to drop to $9.99.
  3. Had to skip a book because it was $9.99.

Couldn’t every single person in these three categories sue Apple for money lost and anguish caused?

Surely, if we waited 1 entire year to read a book by our favorite author because we weren’t willing to pay $13.99. Then we wouldn’t be very happy with Apple if Apple were the ringleader. Apple who hatched this entire plan? Apple who convinced Publishers and even threatened them into joining? Apple was the cause of our wait and discomfort?

Apple, inadvertently, tried to destroy the entire rise of eBooks and eReaders.

This bit from Reuters clearly shows Steve Jobs and Apple didn’t care about readers -

 the Justice Department said that Steve Jobs, Apple’s CEO at the time, “conceded the price-fixing conspiracy” when he told his biographer that Apple had “told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that’s what you want anyway.’”

‘Yes, the customer pays a little more’. Who cares about the readers?

Who cares if readers have to shell out more money. Who cares if some person has to wait an entire year to read a book they really, really would have loved to read when it was released.

Amazon might come out smelling of roses. Consider this part from The Washington Journal -

Apple said Amazon also considered the agency model and spoke in detail to publishers who at one point offered an exclusive arrangement that would cut out Apple.

Wonder what happened there. Did Amazon not take the exclusive arrangement because it wanted to do the right thing? Because it thought the Agency Model would kill eBooks?

Summary of What we Might or Might Not know about the Agency Model

So, it’s all a bit convoluted -

  1. Apple may or may not have started the idea of the Agency Model.
  2. Apple seems to have played go-between and facilitator between Publishers.
  3. Apple threatened at least one Publisher and perhaps that played a part in that Publisher joining the Agency Model.
  4. Steve Jobs’ solution involved ‘the customer paying more’. If true, it shows a striking lack of empathy for readers. Which would make sense given Steve Jobs though ‘people don’t read any more’.
  5. Amazon was offered something akin to the Agency Model and an ‘exclusive’ and either declined (for what reason?) or something else happened.

If the accusations made by The Justice Department are correct, then it paints a really bad picture of Apple as ‘Instigator of the Agency Model’, ‘Bully that threatened Publishers with dire consequences, including not approving Apps, if Publishers didn’t join’, ‘A company that doesn’t care about readers and customers, which suggested price increases for customers that went beyond reasonable prices for ebooks’.

It’s not a pretty picture. If The Agency Model really does turn out to be Apple’s brainchild, that would mean a lot of trouble for Apple. Beyond the obvious PR damage, it might open up Apple to a lot of lawsuits from a lot of people very upset about having to pay extra for ebooks. From people angry they had to skip/delay reading books they really wanted to read. It’s also not the right thing to do. Perhaps Apple’s moral antenna was not receiving the right signal. You’re just holding it wrong, Apple. It’s supposed to point to Heaven, not Hell.

Filed under: publishing | Tagged: , , , | 5 Comments »

Kindle, Amazon, new Kindle devices Versus iPad, Apple, iPhone

Posted on September 13, 2010 by switch11

The focus is on the Kindle 3 and its new, imaginary battle with the iPad. Yet, Kindle vs iPad is merely misdirection.

Today’s Kindle 3 advertisement is puzzling since a $139 dedicated reading device is about as different as possible from a $499 dedicated do-everything device.

Why would Amazon attack iPad and kick-off a pretend Kindle 3 vs iPad battle?

Well, perhaps Amazon is just setting the stage for the bloody War that will be in full swing by end 2010 or early 2011 – Apple Vs Amazon. The prize is billions of dollars a year in profits from digital movies, TV, music, games, and books. Apple and Amazon (and perhaps the company behind Xbox) are the companies best positioned to win.

Amazon and Apple both want to control all digital downloads

Apple and Amazon have been putting things in place to take over selling digital downloads of books, music, movies, and games.

Consider what Amazon has lined up -

  1. Amazon has the following offerings already – Amazon.com, Kindle, Kindle Store, Digital Movie & TV downloads, MP3 Store, Game Downloads.
  2. It also has the following confirmed and rumored technology - TouchCo’s multi-touch screen technology, whatever eInk can come up with, possibly Qualcomm’s Mirasol display, Amie Street’s music technology.
  3. There are also rumors and patents that suggest Amazon has some of the following lined up - Kindle Phone, Kindle Gaming Device, Color Kindle, Kindle Electronic Pen, other new products from Lab 126.

There isn’t any type of digital download that Amazon isn’t interested in selling. In fact it’s already selling movies, books, TV shows, and games in digital format. The only device it has is the Kindle 3 but by end 2010 there may be new additions.  

Apple is even more invested in digital downloads -

  1. Apple has the following channels in place - Apple Store, iPhone, iPod Touch, iPad, Mac, iTunes Store.
  2. It also has a lot of technology and patents and new and upcoming products – an iPad 2 supposedly focused on reading, a new Apple TV, lots and lots of patents. 

Apple is already selling apps and movies and books and TV shows. It hasn’t gotten into digital game downloads (it seems to prefer selling $1 game apps) – However, that might change.

Apple vs Amazon is inevitable – The quest for digital download domination makes them natural enemies

Apple has the advantage of having over 125 million iOS devices out in customers’ hands. Amazon probably has only 5 million or so Kindles in customers’ hands.

Amazon has the advantage of everyone already associating Amazon.com with buying things. Tens of millions of people already buy books, movies, music CDs, and dozens of other categories of products from Amazon and if Amazon offers digital downloads customers will likely buy those too.

Both Amazon and Apple are trying to become the buying destination for all things digital. Sooner or later there is going to be war and 2010 is the year both of them decided to take the first step. For Apple it was iBooks and for Amazon is was today’s Kindle 3 vs iPad ad. These are the first obvious public moves – However, they’ve probably been thinking about this for a long, long time. Apple since 2000 when Steve Jobs started thinking about the iPad and Amazon since 2003/2004 when work on the Kindle was started.

Their recent actions are great indicators that both Apple and Amazon are positioning themselves for a war

Amazon just bought digital music site Amie Street which lets you stream or download music. This adds on to its existing mp3 store. It has started hiring lots of gaming executives and there are rumors of a Kindle Phone or a Kindle Gaming Device. It started working on an app store in January of this year and released two sample apps a few months ago. It just expanded to Best Buy which until now sold only iPad and Nook. It’s most recent step is today’s Kindle 3 vs iPad advertisement.

Apple’s acquisitions are mostly hardware companies and maps-related companies. However, it has made a number of moves that target the Kindle. It’s rumored to be building an iPad 2 focused on reading. It released iBooks and has taken pains to position iPad as a legitimate reading option for readers. It’s supposedly expanding iPad retail to Target which is the only retail chain currently selling Kindle 3.

Devices like Kindle, iPhone, iPad become critical

There are a few assumptions we can safely make -

  1. In the absence of owning a device customers are likelier to buy digital goods from the ‘buying destination’ i.e. Amazon.
  2. In the presence of a device customers are likelier to buy digital products using the default store on their device.
  3. Customers are likelier to buy from a company that has their credit card information and from which they already buy things (Ex: Amazon, Apple). 
  4. A company that has a direct channel to customers (via a device) not only is free of middle-men like search engines it can supplant them. Apple isn’t buying map companies for fun – it intends to teach Google a lesson.   
  5. Apple and Amazon are painfully aware of all of these points.

Both of them know that a customer who owns an iPhone or a Kindle is a captive customer – likely to make most of her/his purchases through the device (or from the company’s website). We already have indicators of this -

  1. iPods helped Apple take over digital music and even become the #1 music seller.
  2. Amazon has talked of Kindle owners buying 2.7 times the books they used to.  
  3. Kindle owners have turned ebooks into a threat with even Publishers admitting some books are selling more ebooks than hardcovers.
  4. iPhones and iPod Touches have helped Apple become a threat to gaming companies – Sony is now running ads targeting the iPhone.
  5. B&N has talked about sales to Nook owners going up 28%.  

Every company sooner or later comes to the conclusion that owning the device is absolutely critical. Even Google is trying to find ways of doing it by releasing Nexus One - it’s supposedly also working on a Google Tablet.

It’s the new Kindle devices that will fight the War against iPhone and iPad

There are a ton of indicators that the Kindle family is probably going to get a member in 2010 (or early 2011) focused on something other than reading -

  1. Amazon is hiring quite a few gaming executives. 
  2. The Kindle App Store seems far more suited to a phone or a gaming device than a Kindle. 
  3. The patent for gesture recognition is reminiscent of Kinect and doesn’t seem like anything an eReader would use.
  4. The gesture recognition patent also includes images of a device that looks a lot like a smartphone or handheld gaming console.
  5. Amazon’s acquisition of a company that has multi-touch technology (TouchCo) which would be far more useful on a multi-purpose device than on an eReader.
  6. Lab 126 hiring a lot of people from Palm and Handspring early on.
  7. The continued insistence of Amazon that Lab 126 will build other products plus various rumors that Lab 126 is doing more than just Kindle.

Amazon has seen customers buy 2.7 times the numer of books they used to from Amazon once they became Kindle owners. There was probably also an increase in non-ebook purchases from Amazon. Any smart company would wonder what other devices it could make to tap into this loyalty/affinity factor.

Before the Kindle Amazon wasn’t a hardware company but now it most certainly is one. It also needs to be one.

Amazon needs new devices to preserve CD and DVD sales

Kindle provides Amazon a hedge against a decline in physical book sales. It needs Kindle Phone and Kindle Gaming Device and Kindle TV to hedge against a decline in sales of physical DVDs and boxed games and music CDs.  

Amazon has to be worried about the decline of physical media - While its Electronics sales grew by 69% its Media Sales (books, CDs, DVDs, etc.) grew just 18% (last quarter’s earnings report, year over year).

Kindle has transformed Amazon from a company that sold a lot of physical books but was in danger of getting left behind if ebooks took over to a company that might dominate all of Publishing if ebooks take over and the current status quo (Kindle and Kindle Store both being #1) remains.

If Amazon can create a Kindle Gaming Device and a Kindle Phone and a Kindle Pad and win one or more out of games, music, and movies it’s suddenly put itself right back into a position of dominance – one that’s even better than its earlier position as the top online retailer of physical media.

The Kindle Ad is more about Apple vs Amazon than iPad vs Kindle

Amazon seems to have decided to send Apple a message – We can play the advertising game too and we aren’t shy of attacking your shiny products.

A lot of people don’t understand that Apple is far more vulnerable to attacks than a normal company. You run a million PC vs Mac ads but most people are still going to buy PCs – they just don’t care that much about social proof and popularity and coolness. However, If Amazon can run enough ‘Loser Guy with Apple Product’ ads they’ll end up taking a lot of the shine off of Apple’s shiny devices.

Apple is very vulnerable to the very strategy that helped it find success – selling coolness in product form and associating rival products with non-cool qualities. The Kindle Ad shows that people are finally becoming aware of it.

The perfect next ad would be an iPad owner talking about how the iPad taps into his creative genius and identifies him as part of the intelligentsia while a bunch of monkeys use iPads in the background while eating bananas and prancing about. Then pan out to show its hundreds and hundreds of monkeys all wearing the same black suits and all using iPads. End with a slogan - Stop monkeying around if you want to read - Get a Kindle 3.

Filed under: kindle | Tagged: , | 5 Comments »

What exactly is Penguin trying to do in the Kindle Store?

Posted on May 31, 2010 by switch11

Penguin are celebrating being let back into the Kindle Store by behaving like a petulant 4-year-old.

Penguin have gone crazy with Kindle eBook Pricing

Here are a few examples -

  1. Ayn Rand’s Centennial Editions of Atlas Shrugged and Fountainhead are at $27.99.
  2. Sue Grafton’s promotional 4-pack increased from $7.99 to $27.99.
  3. Nora Roberts’ Brides Quartet’s new release (Savor the Moment) is for $9.99. However, her backlist titles (Vision in White, Bed of Roses) are for $12.99.
  4. A Murderous Procession (Mistress of the Art of Death) is $17.99. Ariana Franklin’s books available in paperback are an outrageous $12.99.
  5. Ken Follet’s World Without End is at $17.99. 
  6. Caught is $14.99 while the hardcover is $11.99.
  7. A Thousand Splendid Suns is $12.99 - pricier than the paperback.

The last 6 examples are all from annoyed kindle owners at the Kindle forum. There are two threads complaining about high prices and a third recommending a Penguin boycott – All on the first page.

It’s a rather random and haphazard way of treating customers - Why would Penguin make customers wait 55 days and then hit them with $17.99 and $27.99 prices. Prices that are much higher than even the ’50% higher than $9.99′ Agency Model prices?

Then you start piecing together the signs and you have to wonder.

Is Penguin Apple’s 5th Column?

Thanks to Rob Enderle for the idea about Tech Companies using the 5th Column. Basically, it’s a company using spies and double agent employees and double agent partners to sabotage a rival.

Well, here are a few Penguin-Apple connections -

  1. Penguin has the most books in the iBookstore. More than any other Publisher. 
  2. Penguin was one of only 3 big Publishers available in iBookstore UK on the iPad’s international launch day. 
  3. Reports at The Bookseller talk about ‘publishing sources’ claiming that iPad already had 14% ebook market share and that the share jumped to triple with the 3G iPad. Given that Penguin hadn’t signed an Agency Model deal with Amazon by then it’s likely to have been Penguin. 
  4. Penguin held out for an entire 55 days – whereas the other Agency Model Publishers all agreed to deals quickly.
  5. Now that the deal is signed Penguin is the only Publisher that’s actively pricing books at prices much higher than the $14.99 and $12.99 prices that the Agency Model Publishers were supposed to stick to.

It’s almost as if Penguin was doing everything it could to hurt Amazon before an agreement was reached and it’s continuing to do so – even after a supposed agreement.

Penguin may not have a secret deal with Apple but it’s certainly behaving as if it does.

It’s beginning to have an effect on readers, or is it?

The 55 day long stand-off got a lot of Kindle owners upset. There weren’t any (to the best of my knowledge) that quit using the Kindle though several threatened to. Amazon made the right move by letting Penguin in and leaving it to customers to make the choice to pay Penguin’s inflated prices or not. However, everyone expected $12.99 and a little bit of $14.99.

Penguin has literally shocked readers with their prices and gone far beyond even the outrageous Agency Model prices. 

Now, again, we have users threatening to leave the Kindle due to Penguin’s pricing shenanigans -

B. Diduro says -

I just noticed that alot of the Penguin Books have increased alot, The four Sue Grafton books were $7.99, now $27.99, thats crazy. I just ordered my kindle and Im not sure if Im keeping it due to the outrageous prices of the e-books.

Here’s the thing though. That user has no history and the first thing he does is attack the Kindle for Penguin’s mistake. How do we know it’s a real person and not some astro-turfing attempt by Penguin or another anti-Amazon company?

Here’s a response from a Kindle owner that pretty much sums up my feelings -

“I just ordered my kindle and Im not sure if Im keeping it due to the outrageous prices of the e-books.”

Do you also take your new car back because you found one gas station that had gas at $0.50 a gallon more than the rest of the stations?

Why would you consider rejecting the Kindle because one book is outrageously priced. I think I am averaging well under a buck for my books and I have 1813 entries in my calibre library. Many people just skip books that are over $10, my clipping point is $6.

While assigning blame to Penguin as opposed to Amazon is appropriate there’s no denying that Penguin’s terrible pricing does affect Kindle owners – especially if some of their favorite authors are on Penguin.

What we have is a concerted, well orchestrated attack on Amazon and the Kindle Store

The 5th Column Attack – How Apple are indirectly attacking Amazon

Apple are waging a silent war and using what they know best -

  1. Attacking Amazon’s strength of low prices - Apple used the Agency Model Publishers to kill the Kindle Store’s pricing advantage. Now they are using Penguin to try to create the perception that Kindle Store prices are bad.
  2. Attacking the eReader niche and the dedicated reading device – The Press are happy to alternate between painting eReaders as Tablets and claiming that LCD Tablets are better for reading than eInk based eReaders. They’re basically attempting to confuse people about the niche and the role of the device and its value.
  3. Posts and Comments – It’s mostly published authors and publisher employees. However, you have to wonder about some of the ridiculous comments on the Amazon forums.

It’s all designed to seem like a user uprising and the death of eReaders - Except it makes no sense because the pain is caused by Agency Model Publishers and there are no devices as good for reading as eReaders.

It’s a war of perception and subterfuge that’s being used to augment actual strengths i.e. a good device and a better fit with people who want a device that does more than read.   

There are definitely more aspects to the covert attacks and it’s worth thinking through and analyzing. Would it make sense to map advertising budgets to the nature of articles a magazine writes about a company?

How much of the eReader confusion is due to covert Apple Marketing? How long before we start seeing Ads that directly attack eReaders or is this indirect approach more effective?

How could Amazon counter this?

Basically, Amazon have to make a very strong effort to avoid fighting a Perception War. Apple can do spin and marketing better than anyone else. The best path for Amazon might be to embrace reality as much as possible while still fight the Perception War to an extent.

  1. Get the Kindle into people’s hands. Selling Kindles through Target is a great first step. They do need to expand to more retailers.
  2. Promote the 30 day return period more.
  3. Focus on strengths – reading in sunlight, advantages of eInk, better battery life, free Internet and free 3G downloads.
  4. Find new strengths – If the Kindle App Store has apps that help with reading and provide reading related features then it might be a real strength. 
  5. Attack the iPad - That ‘iPad causes loss of sleeping’ story got a lot of coverage so that would be a good story to promote. The price, the headaches and irritation LCDs cause for LCD-incompatible humans, the distractions, and the poser/cult-member reputation that’s beginning to get associated with some over zealous Apple product owners.

It’s tough though – While looking at individual blogs you’ll see enough ambivalent opinions about Apple and lots of critical opinions. However, the main stream Press worship at the shrine of Steve Jobs. They literally write untruths (that even in sunlight they prefer reading on the iPad over the Kindle) and at some point the only way to fight that is to get an actual Kindle into users’ hands and let them see the difference for themselves. Even the King of Spin can’t beat the cold, hard facts.

Filed under: kindle | Tagged: , | 14 Comments »

Apple eReader/Netbook with Verizon Subsidy

Posted on July 22, 2009 by switch11

A day after we get confirmation that Plastic Logic’s eReader will be on AT&T, there are strong rumors that Apple will release a subsidized netbook/ereader on Verizon’s network (The Street broke the news).

Update: Big News - USA Today’s Bestselling Books List will include Kindle Book Sales Information beginning July 23rd.

The snippet -

An initial version of the long-anticipated Apple tablet will be subsidized by Verizon, but Apple and Verizon “won’t be as tightly integrated” as Apple’s iPhone exclusivity deal with AT&T, says one source familiar with the companies, who asked not to be named.

We also have UBS Securities analyst Maynard Um adding more fuel to the fire -

Maynard Um suggested in a note on Tuesday that Apple (Nasdaq: AAPL) and Verizon could introduce a non-cellphone device this year.

Two big things -

  1. Verizon will subsidize the price. That means the $800 Apple Netbook/eReader is suddenly $400 or less. 
  2. Verizon is not AT&T – Addition by Subtraction.

AT&T is tormenting iPhone owners, to the point that Plastic Logic choosing AT&T becomes a plus for the Kindle (yes, it’s that bad). 

Details and Thoughts on a Verizon subsidized Apple eReader/Netbook

  1. Contrary to what The Street’s Scott Mortiz thinks, the market is more than ready for an Apple Netbook.  
  2. Netbooks are surging – they are actually selling more than the iPhone (though they get little love).
  3. The rise in netbooks and Apple not having any product in that market is really hurting Mac’s share of the PC market.
  4. It’s helping Windows as 95%+ of netbooks use XP. Must be pretty upsetting for Steve Jobs.
  5. The integration between Apple eReader Netbook and Verizon will not be as tight as AT&T and the iPhone.
  6. There’s rumored to be a data plan subscription (though no voice plan).
  7. Netbooks are already being subsidized (by AT&T for example) to $100 – $199 price levels.
  8. There are rumors there might be a keyboard.

Can’t remember the last time since the launch of the Kindle that the ebook landscape changed so much in 2 days.

Filed under: apple ibook reader, news | Tagged: , | Leave a Comment »

A Threat to Kindle for iPhone?

Posted on June 8, 2009 by switch11

One of the announcements from the Apple conference today (June 8th, 2009) is that ScrollMotion’s Iceberg iPhone App will add an in-app bookstore and support in-app purchases.  

The updates in iPhone OS 3.0 for the Iceberg App are quite impressive -

  1. In-App Purchasing.
  2. In-App Email, including emailing notes and book snippets (which could be huge).
  3. Ability to go to a particular page. Iceberg supports pages.
  4. Copy/Paste.
  5. Book Shelf. Its basically a visual list of your titles and, as you might guess, its book covers on a bookshelf.

For this post, let’s focus on the BookStore.

Iceberg In-App Purchases and BookStore

Iceberg In-App Purchases and BookStore

Iceberg iPhone BookStore – InApp Purchases

Firstly, the Kindle for iPhone is unlikely to add in-app purchasing as that would mean 30% of revenue to Apple. Given that Amazon is already losing money on books it sells, handing over 30% of revenue to Apple would be suicidal.

That means the Iceberg’s support for In-App purchases will be a competitive advantage for a long time.

Kindle for iPhone Vs Iceberg – Content.

This is key. Currently, Iceberg only offers 500 or so bestsellers. The big news, and the reason its getting so much attention, is their claim that they’ll soon bring -

  1. More than a million books. Content partners include Random House, Pearson, HarperCollins, Hachette, Simon and Schuster, Houghton Mifflin Harcourt, Perseus, Candlewick Press, and Wiley. 
  2. 50 Major magazines, including ones from The Slate Group, Time Inc, Conde Nast, Hearst Publications, Harvard Business Review. 
  3. 170 daily newspapers (and presumably additional content) via a distribution deal with Libre Digital.
  4. Film, television and education related content.

That’s a lot of content and makes it unlikely that by million books they mean 990,000 public domain titles. To spice things up further they specifically say they will include textbooks by Houton Mifflin, Harcourt and McGraw Hill (the last of which has so far shyed away from supporting the Kindle DX). 

What’s the Threat Level?

Overall, its not much of a threat to Kindles. However, the Kindle for iPhone App is definitely under threat.

  1. The Kindle for iPhone App has had a huge advantage in amount of available content. 
  2. It also has the advantage of Amazon branding.
  3. If Iceberg isn’t just pulling a publicity stunt and have a sizable number of new books and current textbooks available, they suddenly have enough content to take on the Kindle app.
  4. Add in features like in-app email, support for pages, and the fact that in-app purchases are more convenient than jumping to Safari to buy Kindle Books, and you have a viable competitor.

Which brings us to branding and marketing - 

  1. Given that Apple get 30% of the purchases, it wouldn’t be much of a stretch to imagine that Iceberg gets featured on the App Store home page and added to the Editor’s App Picks.
  2. The fact that they were shown off at the Conference is just a taste of things to come. Apple is definitely going to put its weight behind the Iceberg app.

The first battle in the Apple Vs Amazon Wars is actually this Kindle Vs Iceberg confrontation. It’ll be interesting to see how it pans out.

Filed under: apple ibook reader, news | Tagged: , , | 4 Comments »

Follow

Get every new post delivered to your Inbox.

Join 5,602 other followers