Kindle Direct Publishing: Easier than iBooks?

by Holly Shoemaker

Earlier in the year I discussed how education by Apple will not reach those in need and how the Department of Justice (DOJ) looked into e-book price fixing. In addition to using e-books to try to transform the education industry, individual authors look to do the same with self-publishing. To that end, Amazon’s expanding Kindle line does not just provide competition with iPads, but an outlet for individuals to become their own publishers.

Amazon announced that 27 out of its top 100 Kindle books used Kindle Direct Publishing. Instead of dealing with publishers, Amazon says authors publish directly from its service, and authors have the ability to participate in the company’s 70 percent royalty program.
 
Better Choice than iBooks?

Both outlets give authors options not always available through traditional book publishers. Self-publishing via Amazon provides a less stringent way to get published when compared to Apple's iBooks. While Apple released the iBooks Author is January 2012 as a competitor to Kindle, it makes it more difficult for self- publishers. As it does with apps, Apple has final approval of what it makes available, and published books require an ISBN. With Kindle Direct Publishing, authors choose the royalty program and publish their content.

Will Microsoft Help Nook Overtake Kindle?

by Holly Shoemaker

Barnes & Noble (B & N) announced on Monday that it will partner with Microsoft in an attempt to make its Nook tablet more marketable.

Partnership Details at a Glance

Microsoft will invest $605 million over five years and gain a 17.6 percent share in B & N’s Nook market and its college bookstore. The newly-formed subsidiary is temporarily named NewCo. 

Benefits

The potential benefits tie into gaining market share:

• The move generates buzz for Windows 8, which launches in six months.  Microsoft also plans to discontinue its e-reader app in August 2012. NewCo will develop a Nook app for the touch-enabled Windows 8 operating system. While executives from neither side will confirm, it seems likely that future Nook tablets will run on a Windows-based platform, instead of the Android Market. In this sense, B & N is looking to Microsoft to establish itself to truly compete with Amazon just as Nokia has put its future in the hands of Microsoft for smartphones. In turn, Microsoft gets a chance to become part of the ever-growing e-book market. 
• The formation of NewCo shows that B & N and Microsoft understand the importance of gaining international market share. The needed cash that Microsoft has provided to B & N means the company has the ability to introduce the Nook bookstore on a larger scale.

Concluding Thoughts

The Nook has yet to truly rival Amazon’s Kindle Fire, and B & N could easily go the way of Borders. Partnering with Microsoft may become a risky move as Nokia is seeing in the smartphone market. It may come down to what platform future Nooks run on. If they run on a Windows-platform, they may see slower adoption just like the Window-based smartphones. 

Amazon's Q1 2012 Figures Show Kindle Going Strong

by Holly Shoemaker

Amazon announced its Q1 2012 figures on Thursday, April 26, 2012. The company’s earnings beat analysts’ expectations.

Numbers at a Glance

• Net Sales – They increased by 34 percent to $13.18 billion, compared to $9.86 billion in Q1 2011.
• Operating Income – Amazon reported a figure of $192 million, compared to $322 million in Q1 2011.
• Net income – This decreased by 35 percent to $130 million, compared to $201 million in Q1 2011.

While Amazon never discloses how many Kindle devices it sells based on type, the Kindle Fire is Amazon’s best-selling item. According to the company, nine out of 10 of its top sellers come from Kindle-related revenue, including devices, e-books and digital movies. The Kindle Fire is the company’s best-selling item.

Concluding Thoughts

Amazon has marketed its Kindle line well. While the company may not profit as much as Apple from selling a tablet, the company knows how to generate income from the accessories that come with owning a device.

A recently published survey from comScore reports that the Kindle Fire now accounts for about 54 percent of all Android tablet sales. As long as the company continues to invest in its Kindle brand, it will keep prospering in the ongoing tablet wars.

Is the Fix In? DOJ Sues Apple for e-Book Price Fixing

by Holly Shoemaker

I discussed in March how the U.S. Department of Justice (DOJ) started to investigate Apple for e-book price fixing. On Wednesday, April 11, 2012, the DOJ filed a lawsuit against Apple and five publishing companies for price fixing. The publishers include: Simon & Schuster, Hachette Book Group, Penguin Group, Macmillan and HarperCollins. HarperCollins, Simon & Schuster and Hachette have since settled.

Overview of DOJ’s Case

The case centers on the pricing strategy used with Apple’s 2010 iPad release. The DOJ claims that Apple conspired with the five publishers to increase e-book prices, which prevented price competition.

• Agency model – Apple and the publishers entered into an "agency model" agreement. This allowed the publishers to set e-book prices. In turn, Apple received 30 percent of the profits. Part of this component included a “most favored nation” clause, which stipulated that retailers, like Amazon, had to partake in agency deals for four months.
• Executive involvement – The DOJ said that high-level executives held secret meetings and discussed how to get Amazon to cooperate in offering books at what they deemed acceptable price levels.

Apple’s Response

Apple does not make public statements too often. It did in this case. Apple maintains it allowed publishers to set e-book prices just like developers set prices for apps. Therefore, the company claims it did not engage in price fixing.

Concluding Thoughts

Ultimately, Apple used contractual agreements to force parties into an agency model. However, the issue is a murky one as Amazon has engaged in tactics that some would call price fixing to promote its Kindle line.

Because the DOJ claims to have recordings and documents, it has a stronger case against Apple. Furthermore, some of the publishers were against the agency model from the start. Clearly the decision to promote and “force” others into an agency model was Apple’s e-book strategy to compete with Amazon. Ironically, it will have the opposite effect as Amazon now gains the prime position for setting pricing. In the end, the action taken by the DOJ will result in lower prices for consumers. It may also impact Apple's e-book textbook plan.

DOJ Looks into e-Book Price Fixing

by Holly Shoemaker

The Wall Street Journal has reported that the U.S. Justice Department (DOJ) may sue Apple and five U.S. publishers, Simon & Schuster, Hachette Book Group, Penguin Group, Macmillan and HarperCollins for anti-trust violations related to price fixing of e-books.

Overview of Issues

At the center of the complaint is how Apple charged for e-books when it launched the iPad in 2010. Apple employed the "agency model," where publishers set the price for an e-book and Apple received 30 percent of the profits. This is the same as Apple’s education strategy. Apple also said publishers could not let rivals sell the same book at a lower price. This is the point that I see difficult to enforce and one that does conjure up concerns.

Prior to this launch, publishers sold books to retailers for half of the typical cover price. This allowed sellers to discount books for less than the cover price. Book publishers did not respond well when Amazon sold new best sellers for $9.99 to boost sales of its Kindle devices. Amazon also forbid publishers to offer discounts to other retailers. Those who accuse Apple of price fixing have some legitimate reasons to conclude Amazon did the same. The issue is whether it is legal or not, and that answer is, "It depends."

Publishers have also said that retailers such as Barnes & Noble would not have the ability to compete with discounting, like Amazon does. However, Amazon agreed to raise prices.

Concluding Thoughts

E-books operate differently than regular books. There has to be some leeway to ensure all parties get their fair shares, this includes consumers. Apple and other companies have the right to come to contractual agreements. The issue is sorting out if those agreements did violate anti-trust laws. On the surface it appears price fixing occurred, but the issue is also one of capitalism and honoring agreements - if they are legal of course.

Reports have circulated that some of these major publishers are in talks to settle this case. No matter the outcome, consumers keep benefiting. Consumers have already spent money on tablets, smartphones or e-book readers. They will expect to receive e-books at a cheaper cost. This could mean that e-books will become even cheaper for consumers.