Amazon & the End of the Book

With the end of the Nook for Barnes & Noble and doom and gloom on expected losses and lowered guidance for fiscal 2012, the company’s stock fell 18 percent. The Nook was the poster child of Barnes & Noble’s in-store growth strategy.

Credit: Geek Sugar

It’s nemesis, Amazon, is doling out cash to authors who make their e-books available exclusively on Kindle for 90 days. Kindle Direct Publishing (or KDP, for those in the know) has put aside at least $6 million in 2012. Books can be “borrowed” for free and authors receive royalty payments based on the popularity of their titles. This may be one more step towards the end of the bookshelf as we know it.

While Amazon erodes the viability of the physical store, the Amazon storefront is fast becoming confusing to navigate, and it is a slippery slope for authors. If we let the age-old publishing process that allows a book to percolate (sometimes arduously) from manuscript to agent to editor to published work, to fade away, who will curate our content? Can the publisher and bookstore forge a new role in the value chain?

No more rejection letters
There is the age-old tale of the rejected writer: years of shipping manila envelopes to agents, years of returned manuscripts and polite decline letters from editors. J. K. Rowling’s agent submitted her wizard’s tale to twelve publishing houses and was rejected twelve times before she finally found a home. She is in good company as Stephen King and George Orwell were also rejected. One of Orwell’s critics wrote on the back of the Animal Farm manuscript, “It is impossible to sell animal stories in the USA.”
As the blog “Literary Rejections on Display” writes: “Remember this: Someone out there will always say no.” This is no longer the case.

Now there are aspirational tales such as Karen McQuestion who, after giving up on publishing her book, A Scattered Life, managed to self-published and sell over 35 thousand copies. There are stories of writers like Jim Kukral who went to the web to raise funds for his next book (remarkably $16,000 in a week). Kukral, author of This Book Will Make You Money says, “The walls are crumbling down, and aggressive and smart entrepreneurs are running through the gates to grab their share of self-publishing gold.”

But is this new business model sustainable? Is this the inevitable revolution of the masses against the traditional publishers? (Publishers, who many feel are removed from the new realities of digital publishing )

The answer is no.
According to R.R. Bowker, a publishing industry analyst, self-published titles in the U.S. nearly tripled to 133,036 in 2010 and will continue to grow. Like the flood of self-published Apps in the iTunes Store, there is a point where the author can no longer be found amidst the huge numbers of books being published. Finding a publisher becomes the easy part. Selling and driving profit becomes impossible.

Self-publishing your first novel and hoping that it reaches a mass audience is effectively the same as the delusionary garage app developer who decides to develop a game and post it to iTunes inspired by the success of Rovio’s Angry Birds. While Peter Vesterbacka, Rovio’s Chief Eagle, is touting his line of Red Bird sweat shirts, the developer’s app will be buried deep beneath the other one million assorted apps waiting for success.

The book is lost and the digital bookstore is becoming increasingly crowded with vanity press. With triple-digit growth in self-publishing it is difficult to know where to go to find an audience, and writers are flummoxed. With the surge of books self-published on the on Amazon’s storefront readers are flummoxed about where to go for quality content.

So how does the writer reach an audience? Amazon offers new reach and readers. But who is curating the explosive proliferation of content? What we collectively do not seem to understand is how the industry’s shifting roles are undermining the value chain for both the writer and the reader.

After years of battling the demons of book store conglomerates and then cloud commerce and eBook business models, the industry is teetering on reinvention.

We all know that what Amazon calls “pro-consumer” has been a major business disruptor for bookstores and now shoe, apparel and electronic stores. Could Amazon be simply using the book to build its m-commerce empire? Is the book industry a necessary sacrifice: mobile commerce road kill?

Book Countdown
Here are the modified Cliff’s Notes on how the book industry turned on its ear:

1. Bad-Boy Barnes & Noble: In the 90’s Barnes & Noble opened up superstore after superstore across America. They become the Wal-Mart of books, with the same vendor-facing attitude. Publishers were forced to grin and bear the harsh Barnes & Noble business terms: challenging discounts, sling-shot mechanize return policies, and more

2. Amazon Cloud: Ten years later, Amazon reinvented book browsing and shopping, and Barnes & Noble opened coffee shops and began selling household furniture. Smaller publishers and independent bookstores began to vanish.

3. The eBook: In 2007, we saw the first Kindle, the harbinger of a new power game and more importantly a new relationship with the mobile consumer. The Kindle became the new storefront further threatening the first market disruptor, Barnes & Noble. In order to promote its Kindle device, Amazon sold electronic books below wholesale prices. A tactical loss. Owning the commerce platform was the ultimate reward for Amazon.

4. Macmillan’s Counter Attack: This revenue model is understandably sub-optimal for the publisher. Led by New York-based Macmillan, the industry challenged Amazon’s hostile business model. Amazon pulled Macmillan content from its site. Macmillan held ground. Amazon caved. Round one.

5. Vanity Press: In the traditional publishing relationship, the writer should expect approximately a 7.5% royalty for paperback books and for digital, 25% of net receipts (which is the 70% that publisher receives from the retailer.) Amazon offers “publish direct” capability for writers on a 70/30 royalty share across the Kindle, Amazon Cloud, and the free Kindle apps. Direct is an attractive option.

The creative → agent →publisher → distributor relationship become dis-intermediated. Touted thriller-writer John Locke joined the Kindle Million Club (authors who have sold over a million books). And then there is the tenacious Amanda Hocking, who became a successful self-published author after receiving multiple rejections from traditional houses. (However, the Million Club is an elite club, and I would hazard a guess that there are many other would-be writers that will never go beyond vanity press.)

6. Slippery Slope: Book stores (Barnes & Noble) and publishers (the Perseus Books Group) launch self-publishing eBook services (PubIt! and Argo Navis respectively) with similar flattering revenue shares. With all stakeholders playing all the roles, the value chain is breaking up.

7. The Kindle Fire: Combining commerce with the immersive Kindle experience is the final frontier. Layering in Cha-Ching into the armchair reader is a natural and powerful evolution of the bookstore. Amazon is so confident that they are selling the unit at a loss ($199 for $210 unit cost)

8. Kindle Owners’ Lending Library: Amazon Prime members who own a Kindle can “borrow” one title per month, from this expanding library for free. Presently, there are a limited number of books available; Amazon has not received publisher consent to include titles from many publishers. In some cases, Amazon is simply paying the wholesale price for the book each time somebody borrows it.

This is Napster, the original peer-to-peer music file sharing service, but legal and underwritten by Amazon. The Authors Guild naturally has harshly criticized this business model.

Is this an eight-bullet epitaph for the book publisher? John Biggs blogs nostalgically, “While I will miss the creak of the Village Bookshop’s old church floor, the calm of Crescent City books, and the crankiness of the Provincetown Bookshop, the time has come to move on.”

Move On? The question is where to.

What is the beleaguered publisher’s new role? (Guaranteed the solution is not for the publisher to go digital by offering multimedia extras such as video and audio commentary with their eBooks.) The publisher can:

1. Taste Management: The publishing industry can retain its credibility as the purveyors of content. The publisher is providing rich content and is in the best position to build a long-term relationship with the customer, selling targeted stuff to this person, not once but many times.

2. Drive Subscription: Learn from mobile commerce. The mobile content aggregator never sold one ringtone (too much work for the publisher and for the buyer). The mobile content aggregator sold a subscription. The mobile consumer paid for music curation. (And a pretty penny at that.)

Perhaps we need to reconsider the idea of buying a book. Perhaps we should be buying a content subscription to chapters instead of books. Or see the book as a modern Dickensian novel serialized in mobile monthly installments.

3. Sell non-traditional: Fight Amazon in the cloud, not the store. Publishers need to find ways to sell digital content into competitive storefronts. The publisher needs to work closely with the remaining terrestrial booksellers to help them sell into their digital storefronts.

Publishers need to be aware that the 2010s are eerily reminiscent of the music industry in 2000’s. Books have changed. Reading and commerce behavior has changed. Publishers need to reaffirm their value proposition and find a way of reintroducing their mission critical role into the digital mall.

My Experience with the Kindle Fire and Nook Tablet

I’d like to start this topic off by making a point. The way most reviewers review technology products is helpful for those to whom technology is well understood and non-threatening. However, I would argue, that the way most reviewers review and compare products is not helpful for the way the average non-techie consumer processes information to make an informed buying decision. In all reality, the group that I am speaking of, the non-tech elite, most likely don’t read any of the reviews from tech sites anyway. Instead they talk to trusted friends and family and more importantly they go into stores and feel the products out for themselves.

That being said, those consumers who are interested in either the Amazon Kindle Fire or the Barnes & Noble Nook Tablet are not first and foremost shopping for a tablet (to them a tablet is an iPad). They are in fact shopping for an e-reader, that happens to have a few more bells and whistles but first and foremost a good e-reader. Clayton Christensen said it best in the Innovators Dilemma “consumers hire products to get jobs done.” Consumers interested in either the Kindle Fire or Nook Tablet are interested in hiring either of those devices to get the job done of reading electronic books, magazines, and periodicals. Therefore as point number one both devices should first be judged or “reviewed” on the basis of how good of an e-reader they are. Having the ability to play a few games, browse the web, access movies and videos, etc are all secondary features to wanting the best e-reading experience.

Related: Why Kindle Fire Reviews are All Over the Place

Instead of reviewing these two devices in the traditional sense, I wanted to focus on my experience and observations using them both side by side. To do that I decided to focus my thoughts on comparing the two devices based on the most common use cases I see the average, non-techie, non-early adopter, mass market consumers interest in these two devices to be.

Reading E-Books

Both are capable e-readers. Neither are the best pure e-readers on the market but as far as e-readers “plus” go they are both capable. I will, however, say that the Nook Tablet is the better e-reader of the two. Reading a standard book is a check box for both devices. However the differentiator as a reader for the Nook Tablet is the experience reading and interacting with many of their interactive books and magazines.

What Barnes & Noble has been doing by making magazines more interactive, with extra features and bonus multimedia content, or social sharing of reading material is the best example of what the future interactive reading experience should be with this type of content.

One of my favorite reading experience features are “enhanced” books. These are books that more and more publishers are releasing that include extra content like exclusive videos, audio, as well as other interactive content related to the chapter.

Many of the magazines on the Nook Tablet also features enhanced experiences. People magazine for example, one of the more popular magazines in the United States, has loads of bonus and interactive content built into their Nook magazine reading experience. Besides People Magazine, since I don’t read it, the one I found quite compelling was Sports Illustrated. SI includes many new interactive features not found anywhere but the Nook platform. Again many of these same interactive or enhanced magazines exist for the Nook Color but they are much snappier, crisper, and generally better on the Nook Tablet.

These enhanced magazines, books, and more are one of the reasons the Nook Color was hailed by nearly all the “tech reviewers” as the best color e-reader out there, hands down. The Nook Tablet has brought all those same features into the Nook Tablet with a better screen and more snappy experience with the content.

One final point. I was able to accomplish something that is near impossible with the iPad and the Kindle Fire on the Nook Tablet, and that was read outside in the sunlight. Despite the bright and vivid display of the Nook Color you can also easily read and use it in sunlight. It is the ONLY tablet on the market today where this is possible.

As a Media Player

If you are an Amazon Prime subscriber at $79 dollars a year then you have access to about 10,000 streaming movies and TV shows accessible on the Fire. Interestingly, the catalog offered for streaming to Prime subscribers is nearly identical to the streaming offered through Netflix’s on demand streaming service. Therefore if you are a Prime subscriber and not a Netflix subscriber than the Kindle Fire would make more sense. However if you are a Netflix subscriber the streaming catalog options are nearly the same, therefore accessible on both devices. Therefore what Prime video streaming gives you on the Fire you get on the Nook Tablet with Netflix.

A point on the Netflix experience, the Nook Tablet includes a secure silicon layer that is required for movie studios to allow movies to be played in higher resolution. Therefore in a side to side comparison of Netflix video the Nook Tablet looks better.

Truthfully I do not use Amazon’s services for music and videos so it is hard for me to qualify the value in the Fire’s access to their music and movie stores. What this brings out though is an interesting observation due to the fact that I am a heavy iTunes user and deeply entrenched into Apple’s ecosystem. In that regard the Nook Tablet actually fits better into Apple’s ecosystem than the Fire does. It is easier for me to move existing non-DRM music, movies and more to the Nook Tablet due to its larger storage capacity and easy of sync with my MacBook Air. Interestingly enough, the Kindle Fire didn’t even come with a PC sync cable, perhaps for obvious reasons.

The last thing I will say on this subject is that much of the Amazon media player experience is based on a streaming model. For that reason Amazon’s media services are good but only work when on a wi-fi network. Because the Nook Tablet has more local storage and allows me to easily move music, movies, and more to the device I can use it to consume media even when not connected to the Internet.

Running Apps and Browsing the Web

Realistically 90 percent of the apps in the Android App store are no good anyway which is why I don’t make a big deal of a lack of apps in the case of the Fire or Nook Tablet. What matters more importantly is that the right apps, or quality apps are there. Keeping in mind if a plethora of apps is your reason for buying a device there are other options. Again emphasizing my assumption that for those truly looking into the Fire or Nook Tablet a plethora of apps is a moot point. More importantly do they have the right apps?

In that regard they both have the most important app for the 7″ form factor, the web browser. Because of that both access Facebook, Twitter, and many popular services delivered through the web. In fact with the 7″ and above form factor many of the most popular apps are better in the browser. It should also be noted that the Kindle Fire does not actually have the Facebook App, what it has access to is the HTML version of the Mobile Facebook site, which look nearly identical to the Facebook app on smart phones.

Both have e-mail apps but I don’t believe e-mail is going to be in the top several jobs these devices are hired for so I didn’t set my email up on either of them. I have a smartphone and a PC for that job.

The Ecosystem

Ed Baig in USA Today said it best:

The fight between the companies largely comes down to which ecosystem you want to buy into, because books you purchase from one provider are not compatible with the other.

Which ecosystem is the right question. In my opinion, as I stated above if you are in Apple’s ecosystem, using iTunes to manage media, the Nook Tablet will fit better in that ecosystem. If you are already heavy into Amazon’s ecosystem, meaning you are a Prime member, use Unbox, and a number of other Amazon’s services then obviously the Kindle Fire is a better bet.

Barnes & Noble doesn’t have a way to get first release movies and DVD’s yet on the Nook Color where Amazon does. If renting, buying or streaming first run movies is important to you the Kindle Fire has a solution today where Barnes & Noble will most likely have one in the future.

One other point about the ecosystem I would like to point out. Barnes & Noble has created a more family and kid friendly experience with the Nook Tablet. When looking for content–like apps–for example I can actually filter my choices to look for apps that are good for kids. I can even easily pick different kids age groups and search for apps for kids within that age range. That was a very cool experience, especially since I have my kids use all my technology quite a bit. I like the family friendly approach integrated into the Nook Tablet.

Again it all comes down to which ecosystem you have bought into or want to buy into.

The Price

Many in the media have knocked the Nook Tablet for its $249 price point. It appears those people believe that cheaper is always better. I wholeheartedly disagree. I believe consumers perceive value in a number of different ways and the price tag is one of many points to consider. Because of that, if a consumer was genuinely shopping and compared the visual experience of both devices as a reader, video player, and web browser they would conclude the Nook Tablet is a better experience and thus worth the extra $50.

The faster processor, more memory, vivid screen and more make for a more pleasant experience when using the Nook Tablet over the Kindle Fire.


I’ll be completely honest, if I had to choose to spend my own money on the Kindle Fire or the Nook Tablet, I would choose the Nook Tablet. Based solely on using it as a reader for books, magazines, periodicals and more. The Netflix experience and my ability to move my own personal music and videos on it and the responsiveness and speed of the device present a much more elegant experience.

The big question you may be asking is now that I have used both side by side what would I recommend to friend and family to buy for this holiday season. My honest answer is this: If you are an “Amazonite” meaning you buy all your e-books from Amazon and also use their unbox services for music and video then the Kindle Fire makes the most sense. On that point however, if you are sold out to Amazon and want something that does more than be an e-reader, I strongly recommend waiting for version two of the Kindle Fire expected in the first half of next year. The Kindle Fire is “good enough” at all the things expected however it is not the best at any single experience in the e-reader “plus” category.

If you simply want the best e-reader plus for this holiday season then I recommend the Nook Tablet as it retains many of the great features of the Nook Color but is snappier and with a better display. If the $50 price tag is too hard to swallow, and again you want the best e-reader with some extra features then I strongly recommend considering the Nook Color at $199.