What the Failure of REDgroup Means for Ebooks in Australia

Anyone who follows book news cannot have failed to hear about the collapse of REDgroup’s Borders and Angus & Robertson bookchains last week. But what does this mean for ebooks? Depending on who you listen to ebooks are one of the causes of REDgroup’s slide into administration. But is this true? Are ebooks destroying the common dead tree bookseller? And did video kill the radio star? Read on to find out more.

For those who don’t know, Kobo is a Canadian ebook platform that partnered with Borders in the United States, and Borders/A&R in Australia. As I said back at Christmas, it may not have been the brightest move on Kobo’s part to tie themselves so closely to Borders, but they did. And that means that even though Kobo is not REDgroup, they will suffer some of the consequences of the collapse, including the withdrawal of books by some publishers from their joint library.

Although I’ve complained about the Kobo ereader and their flaky platform before, they were the only real competitor to Amazon’s Kindle ecosystem and Apple’s iBookstore. They were unique in Australia because their partnership with Borders brought them mainstream, nationwide legitimacy and a physical retail presence – something neither Apple nor Amazon can compete with. From all reports this partnership has been relatively successful – it was one of the few areas of their business that REDgroup wasn’t entirely bungling. This is part of the reason why ebooks cannot be blamed for the collapse: like it or not ebooks are still only about 1% of the industry here in Australia – and REDgroup had already carved themselves a healthy chunk of that 1%. While that number is growing very fast, ebooks are not putting booksellers out of business just yet.

No, what destroyed REDgroup was incompetence and greed. While various pundits have tried to blame parallel importation, the GST, and even the internet as a whole – the fact of the matter is that REDgroup are the only Australian bookseller currently under administration. And while plenty of booksellers are struggling, they haven’t had fraught relationships with suppliers for the last twelve months, and they haven’t been jacking the prices of their books up over RRP. And they haven’t been selling barbecues instead of books.

Regardless of the outcome of REDgroup’s period under administration, the Borders brand has been seriously tarnished by this collapse, and that’s only going to get worse with issues like the recent decision not to honour customer book vouchers. You can safely predict that Kobo’s ascendancy in Australia will be slowed for a while to come.

So where does that leave ebook buyers and readers? Or rather – where does it leave readers who don’t want to submit to the Amazon or Apple gulag platforms? Well, with the recent news that Google are looking to partner with groups of retailers rather than individual booksellers, things on the indie front appear to look a bit bleak. But it’s not all doom and gloom. The annual post-Christmas survey in Bookseller+Publisher demonstrated that while the dead tree book industry is trembling under the threat of a shrinking market – ebook readers and ebook sales are healthy and growing. Not only that, but 40% of booksellers not already selling ebooks are planning to do so in the next year. This is great news for readers – with the freeze of Borders/Kobo, there is a lot of room for new growth. And new growth in books can only be a good thing.

As a culture, we’re currently undergoing one of the largest paradigm shifts in cultural consumption ever. It is now more than any other time that we cannot afford to have dead weight like REDgroup dragging the rest of us down. So I say the king is dead – long live the king.

The Tower of eBabel

The problem with new technology is that it costs a lot of money. Technology companies frequently spend years and years without making a profit, shaping their business model, trying to ‘monetise’ their creation. Amazon, for example, was launched in 1997, but didn’t become profitable until 2002. Facebook only became profitable last year, and Twitter still doesn’t make money, despite all the people that use it. Nonetheless, when these technologies take off they often make a lot of money.

Most big technology companies have become massive by creating platforms that have ended up being the de facto standard. A platform, in the technology sense of the word (rather than a raised piece of floor), is the system used to manage certain kinds of content. Facebook, for example, is a social media platform. The iTunes Music Store is a platform for music. Amazon’s Kindle is a platform for digital books. The most useful outcome for consumers is that a single platform ends up delivering a single type of content. In the days of physical media platforms – CDs, DVDs, audio cassettes – there was a certain amount of disconnect between the company that owned the rights to the platform and the people who sold the content.

Digital media has changed this. Nowadays, the iPod and the iTunes Music Store are synonymous with buying music digitally. Amazon would like to make the Kindle synonymous with ebooks. Apple would probably like to do the same with their iBooks software on the iPad (and as of this week, the iPhone and iPod Touch too). People in the industry call this eBabel – as each new company enters the fray, they bring with them a different format with a unique type of DRM. This situation is absolutely horrible for consumers. People are locked into a single platform with their purchases because digital media cannot be transferred between competing platforms. I’m not going to try and stretch this into an awkward physical media metaphor – there is no equivalent. It’s just bad – frustrating, confusing and annoying for readers.

It’s easy to argue that a single format will win out in the end – it’s what has tended to happen with physical media (we have Bluray instead of HD-DVD, and had VHS instead of Betamax), but with digital media the result of a single format ‘winning out’ is dramatically different. The only settled digital format so far (digital video is still up in the air, as is the format for ebooks) is Apple’s iTunes platform. This model has succeeded by Apple being in complete control of the platform and the content delivery. In order to use the iTunes Music Store and the iTunes platform, you need to use an iPod. In order to use an iPod, you need to use the iTunes Music Store.

In the future, it’s easy to foresee a company like Apple or Amazon being the only place you can buy ebooks from. They control the hardware and the software – the platform and the content. Is this what we want for ebooks? I think the answer is an emphatic no (though by all means, please disagree in the comments!). Unfortunately there is no clear solution to this problem. Getting rid of DRM would be a nice start, but publishers are very unlikely to stop using it – even though it demonstrably benefits technology companies far more than it does content providers. I’d love to hear what you guys think – sound off in the comments if you have an idea or even just an opinon. How do you want to get your books in the future?

Review: iBooks on the iPad

Click on any of the pictures for a closer look

So, I’ve had my iPad for a couple of weeks now, and it’s high time to review Apple’s answer to the ebook question. I’m not going to review the entire iPad – unlike the Kindle, the it’s not a dedicated reading device, and there are plenty of other options for reading books, newspapers, magazines and blogs on it.

The iBooks app does not come pre-loaded on the iPad when you buy it, a choice by Apple that has more to do with their relationships with international publishers than it does with their determination to turn the iPad into a reading device. Unlike Amazon, Apple do not want its users to associate the iBooks app with no books on its bookstore.

Having said that, we don’t yet have much of an idea how much content will be available on the Australian version of the iBookstore (can I point out right now that I’m already getting sick of typing lowercase ‘I’s in front of every bloody proper noun in the Apple vocabulary?). When it launches in Australia on 7 June, the iBooks app will be available from the App Store, but we don’t yet have any idea what the range will be like. The US iBookstore, for what it’s worth, seems well stocked enough (by all reports, somewhere in the vicinity of 20,000 titles). It’s a drop in the bucket compared to the 400,000 available on the Amazon Kindle store, at the moment, but that’s likely as much to do with how long it has been available as anything else.

So what’s it like reading on this thing? Absolutely fine. Unlike the Kindle, the iPad uses an LCD screen, a source of much consternation for ebook nerds. I’ve heard comments that the backlit screen makes it ‘useless’ as an ereader. But this has not been my experience at all. For those of us who already spend a proportion of our days reading backlit screens on computers, the iPad is no worse and arguably a lot better than this. You can easily set the brightness levels to suit the ambient light, and the advantages of the backlit screen are obvious – it can show colour, embedded video and the refresh rate (how quickly each page turns and illustrations are shown) is light years ahead of the Kindle. You can also almost instantaneously flip the orientation of the book between a double-page spread and a single larger page by just turning the device as it suits. There are disadvantages as well, of course. The screen is not a patch on the Kindle for reading in direct light – you can forget bringing it to the beach with you (though I’ve never been inclined to bring my Kindle to the beach anyway). The ten-hour battery life is also nowhere near the Kindle’s ten days – though this is mitigated by the fact that the iPad can and would be used for more than just reading books.

For anyone used to reading ebooks, the iBooks app has most of the standard ereader features. You can look up words in the dictionary (I really like the implementation of the dictionary – it pops up in a small window overlaying the text so you can quickly check without having to leave the page), you can also search the book and bookmark it. For some reason iBooks does not have any annotation capability, though this may be something addressed in a future update.

One thing that really bugs me about iBooks, however, is the way you load books. If you buy books exclusively from the iBookstore, you can do it from anywhere and start reading instantly. However, if you want to load up your own DRM-free, out-of-copyright books you might have downloaded from somewhere like Gutenberg.org, then the only way to add books to the app is to plug it into iTunes, add it to the library and sync the iPad. For a device that sells itself as internet connected and as a netbook replacement, this feels like a massive (and unnecessary) step backwards.

Ultimately, the iBooks app is a very strong contender in the realm of ebook readers. However, the comparative feature set of this single app is not going to be what sets it apart. That’s because the iPad is not just iBooks. For readers who are hooked on the e-ink experience, I’d say that there’s no huge advantage to buying an iPad. Stick with your Kindle, your Eco Reader or your Sony. For people who are curious about e-reading, but can’t decide whether to an ereader is a waste of money – then an iPad is for you. It’s more expensive, but it does far more than an ordinary ereader. It is also much more likely to be future proof – whether it’s Amazon, Apple or Google books you’re after, it’s very likely that they will all be able to be read on an iPad long into the future.

The agency model: hot or not?

The Agency Model: A lot more boring than     this picture.

I’ve implied in the past that ebooks are likely to change the way we buy, sell, read and perhaps even write books in the future. One of the ways things are already changing is the way that publishers supply ebooks to booksellers. This is what’s called the ‘agency model’. The agency model has the potential to fundamentally change the way that publishers interact with people who read books, so it’s worth knowing the basics.

To understand it, though, you first have to get an idea of how dead tree books are sold now. In the current dead tree publishing model, the company sells a certain amount of books to a bookshop and ships them out in dead tree boxes. The bookseller tries to sell as many as possible. Whatever is left can be returned to the publisher. There is a recommended retail price (RRP), but the bookshop decides how much to sell the book for – and they’ve demonstrated a lot of flexibility in doing so. In Australia for example, the big discount stores (K-Mart, Target and Big W etc.) will sell books for a fraction of the recommended retail price. Borders, on the other hand, has been known to increase the price. In other words, books are sold pretty much like any other product.

The agency model is something that has come out of selling ebooks – specifically when Apple came on the scene with the iBookstore and the iPad. Basically what it means is that instead of the bookshop selling digital products directly to you, the bookshop becomes an ‘agent’ (hence ‘agency’ model) of the publisher. The publisher sets the price of the ebook and then give the bookshop a license to sell ebooks on their behalf.

I’ve covered the reason for this change in a previous blog, but the consequences so far have been steady prices for readers (Amazon have increased the prices of ebooks by a few dollars, but other ebook stores will eventually drop their prices). It also means that no single bookshop (I’m looking at you, Amazon) can artificially prop up a price point that no other store can match. This is essentially what K-Mart, Target and Big W do in Australia with dead tree books. You can get very cheap books in these stores, but not a big range. Smaller bookshops around Australia have closed as a result, and the sales for midlist authors (authors who don’t always sell in the big discount chains) aren’t as good as they used to be.

So, the questions is – is the agency model hot or not? As with all of these kinds of questions the answer is that it’s complicated. Do you prefer a good range or a good price? The prevailing wisdom is that the cheaper books become, the fewer risks publishers will be able to take on new and interesting authors. Having said that, ebook stores do not have the physical limitations of their dead tree cousins – the range of books they can supply is almost infinite. What do you think? Sound off in the comments.