Why The B&N Store Isn’t Competition for Amazon

July 22nd, 2009 · 24 Comments
by Kassia Krozser

Hot on the heels of the Amazon/1984 news came word that Barnes & Noble is entering the ebook retail space. Oh sure, they were already there with their purchase of Fictionwise, but now they’ve planted a giant flag in the sand. They have proclaimed we are here, we are serious, we are formidable.

Sort of.

While everyone applauds the competition, the truth of the matter is that B&N have just added to the confusion. Several times over the past few days, I’ve read comments from publishing experts, all of whom note that it is very important to keep Amazon from winning the digital book game. Alrighty then, I say, what are you doing about it?

‘Cause thinking the Barnes & Noble store is an “in your face, Amazon” move isn’t reassuring me.

The Barnes & Noble ebook store is being touted as device agnostic. This is simply wrong. They are only selling books in their proprietary eReader format (likewise, when the world was aflutter about B&N matching Amazon’s ebook prices, few noted this was only happening in that same eReader format). I can read books purchased from B&N on my iPhone, Blackberry, or laptop/desktop. I cannot read books on my existing Kindle or Sony Readers. Or any other reader I might happen to own (note to booksellers trying to get in this game: the breadth of readers used by real people is astonishing; try to meet them halfway, okay?).

Unless “device agnostic” now means “devices, but not the ones you happen to own”, it’s not really device agnostic. It’s really just a variation of the Kindle ecosystem. It’s not competition for Amazon or the Kindle in any meaningful way. Jane Litte notes, and I agree, that the Barnes & Noble store won’t entice customers from Amazon. It’s possible that the iPhone app will convince regular B&N customers to try ebooks on their phones, but, like Jane, I seriously doubt existing iPhone ebook readers will be converted in great numbers.

For what it’s worth, I have six reading-related apps on my iPhone right now. No seven. I use two regularly. There is nothing particularly special about the B&N app to convince me to switch from the Stanza and Kindle apps, and I think that’s an important consideration. Offering a similar experience and similar pricing without actually adding something new and exciting to the mix doesn’t make for a game-changer.

(If the goal is open up the marketplace to other devices, that would have been the best possible way for B&N to introduce this store.)

In the near future, B&N will be offering the (large-size) device from PlasticLogic — I like this device, but see it working more for the business user than for the casual reader (it’s not purse-sized); they are also (apparently) developing their own reading device. Will that device be wide open and accept all types of files in an easy-to-manage sort of way? Or will the B&N reader, like so many others, only work with limited formats with a special emphasis on the eReader format.

eReader is a proprietary format. Rumor has it that, in the future, B&N will be selling in the EPUB format. In theory, this opens the door to owners of other devices. If and when EPUB is offered on Kindle, it will be wrapped in Amazon’s DRM. It would be a pleasant surprise if Barnes & Noble chose not to wrap their EPUB files in their own DRM, but ain’t nobody holding their breath for that one.

What is happening — to the surprise of very few — is an ever-increasing Landscape of Confusion. This doesn’t, actually, help publishers achieve their apparent goal of creating a competitive marketplace. Now if the goal were chaos, we have a winner! All these devices, all these formats, all these stores…and readers are reeling because they simply don’t know what formats work with what device (or, heck, operating system).

I’m not sure publishers can do anything about this. But the more confusing the marketplace becomes for ebook readers, the more comforting Amazon seems. It’s a seamless shopping experience. It has the most variety (c’mon Barnes & Noble, playing silly games with public domain works to bump up your numbers?). It’s wireless.

Okay, maybe there are things publishers can do. Set up a fund to help the ABA get its ebook marketplace up and running in a smart way. Sell ebooks directly to consumers in formats that are, ahem, truly device agnostic. I don’t know, maybe beg big retailers like Barnes & Noble to make it easy on readers.

The music industry really wanted, swore they wanted, competition. So they set out to create a marketplace to achieve this goal, aided and abetted by various and sundry services and devices. It was a disaster. In the meantime, music consumers were frustrated beyond belief with the industry’s refusal to listen to what they were saying. It wasn’t hard for Apple to dominate the music space with the right device and purchasing experience.

It’s great that Barnes & Noble is offering its customers an ebook option. But to pretend they’re creating serious competition to the Kindle ecosystem is madness. Let’s talk when they have a device and experience that makes the buying and reading of ebooks the best experience technologically possible.

File Under: The Business of Publishing

24 responses so far ↓

  • Aaron Pressman // Jul 22, 2009 at 2:47 pm

    While I agree that there’s less than meets the eye to the B&N ebook effort so far (vaporware reader, phony-baloney ebook count, phony-baloney ebook prices), it is good for competition.

    You’re right that there’s no competition created for existing Sony eReader or Amazon Kindle owners. But there’s lots of competition for those reading on an iPhone or other mobile device and there soon will be (probably) competition for people considering the purchase of a dedicated ereader device for the first time (assuming Plastic Logic arrives soon). That’s still a big part of the ebook market in these early days. And because ebooks are priced the same for iPhone or Sony or Kindle, competition for some customers benefits all customers.

    As to what publishers should do, I’m surprised you didn’t mention the obvious answer — they should follow what music publishers did and dump DRM lockdowns. That’s exactly what music publishers did to break the stranglehold of Apple’s iPod/iTunes proprietary ecosystem. The result was bad for consumers — prices rose significantly for the most popular music — but good for publishers.

  • Kassia Krozser // Jul 22, 2009 at 3:16 pm

    I skipped over the DRM issue because, well, I try to limit that rant to once a week. In all fairness, though, it’s not just the publisher who are balking. They are responding to author concerns. We’ve spent a good decade or so creating a fear of piracy and authors are understandably afraid. It’s going to take a lot of education before things change.

    I’m not holding my breath on the Plastic Logic reader. It’s a nice device, but it’s large. The advantage Kindle and Sony have are they are small enough to carry in a bag. Plastic Logic — unless there’s a machine I haven’t seen — isn’t in that league.

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  • Rich Adin // Jul 23, 2009 at 6:03 am

    As a long-time B&N customer & member I was dismayed by B&N’s announcement and wrote B&N to tell it so. I own a Sony 505 and had hoped to be able to buy ebooks from B&N. Serious readers who buy more than 5-10 books a year do not read their books on their cellphones. They derive pleasure from the reading experience and spend hours a day reading.

    In the past 12 months I have purchased more than 100 hardcover books and nearly 300 ebooks. Haven’t read them all, but the pile of books to be read continues to grow. I probably will buy an equivalent amount of books in the next 12 months, but none of the ebooks will be from B&N (except for the few multiformat books I buy at Fictionwise) because of B&N’s nonagnostic policy.

    As for Plastic Logic, I am looking forward to the device IF my New York Times and The Economist can be delivered to it and it can replicate the experience I get reading the print version. But I couldn’t conceive of making that my default reading device — it’s simply too large. Besides, PL constantly touts that it is designed for the business person, which is a way of adding to the price. It is unlikely (although I have no information to support this guess) to be price competitive with a Sony 505-type device. If people are balking at buying Kindles and Sonys because of the price, how much will they balk at the Plastic Logic/

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  • Steve Weber // Jul 23, 2009 at 6:56 am

    B&N’s ace in the hole is its brick-and-mortar stores, where they can demonstrate and hand-sell the Plastic Logic readers. After all, who wants to plunk down $300 to $500 for a Kindle, sight unseen, if they can test-drive an e-book reader at their local bookstore?

    Another thing that can help B&N compete here is its decision to award 6-percent commissions on affiliate referrals resulting in e-book sales. Amazon is paying nothing to its Associates on referrals resulting in Kindle edition sales. When your typical Amazon Web affiliate realizes they aren’t getting paid for Kindle e-book sales, a lot of them will probably add B&N’s affiliate program to their site.

  • Chris Thompson // Jul 23, 2009 at 7:49 am

    Today most publishers are executing the strategy of “Keep the Ship from Sinking” by tactically focusing on several main initiatives including:

    1.) Cutting staff and general overhead to match declining revenue streams

    2.) Retain existing advertising revenue

    3.) Execute an unclear web strategy to gain new readership and maybe new revenue streams

    4.) Streamline distribution

    The unfortunate realities of these tactics are they come from a defensive mentality. An instinctive flight reaction from, fight or flight. I suggest the alternate choice of fight, with a shift to, “How do we eat the lunch of our competition.”

    Currently, there are two warring groups; internet based news organizations and traditional print organizations. Historically, print has won almost all battles, as there was no one to fight. Now there is a bully on the block; the venture backed internet company (insert evil hissing here). Both groups have strengths and weaknesses.

    The internet has a weakness. Most people prefer to read on paper than from some device. Surprisingly, many who control internet media do not yet see the value of traditional print. They believe everyone will read from a screen. The internet group does provide people with good, reliable, actionable information on any topic in any language. And they’ve created a very useful advertising platform which has taken a big bite out of what is traditionally print’s domain.

    Print distribution takes entirely too long for a periodical to reach the consumer. The internet gods know this, use this to their advantage, and relish in the reality of it. If print is to thrive, it reinvent how the content is delivered. It must stay fresh. The good thing is, print is still looked at as reliable. It is the filtered information which can be trusted. It is also the only medium which is truly mobile.

    I predict a convergence of technologies in which printed media will become more personalized. I expect the publishers ability to update and deliver printed periodicals will improve dramatically in the coming months. It would also stand to reason that a method for targeted advertising be developed and deployed as part of a solution.

    So, the 100 billion dollar question is,
    1.) Who does these things and wins the war by getting real time, updateable information into the retail stores in a bound and professional print format?

    -Christian Thompson
    Oasis Media Corporation

  • T. Moore // Jul 23, 2009 at 11:16 am

    We’re not trying be competition to Amazon, but the retailer has problems to solve. We offer our ebooks in a variety of formats without Kindle because our books do not sell well in the Kindle format. Also, their revelation that the ebooks they sell for their device are just leased, and not owned by the buyer, leaves us scratching our heads. We sell to the readers for them to own. The end result is that we can do quite well without dipping into the Amazon trough. Why is Amazon considered the best place to buy, anyway? Judging by the number of suits brought against them, they have a long way to go to make their customers happy. And with their acquisition of Zappos they are *this* close to antitrust prosecution.

  • Eoin Purcell // Jul 23, 2009 at 2:21 pm

    Kassia,

    I think you are right in the sense of this not being an incredible offering. I’m not as convinced about the competition side of the issue however.
    I wonder if the weakness of the offering will matter for a certain kind of customer? The kind who trusts B&N more and has been considering ebooks and sees this as a safe way, a new kind of ebook customer even?
    Eoin

  • meghanstrain // Jul 23, 2009 at 3:30 pm

    I completely agree!

    As a Sony Reader owner myself, I would love to be able to choose where I buy my ebooks instead of being forced to use the Sony store (Which only works on PCs… Grrrr!)

    I can understand some of the DRM points being made, but I think that all of these companies are losing out on potential profitability by not eliminating the proprietary formats and allowing more open competition.

    Plus its annoying as hell! Yeesh.

  • Michael J // Jul 24, 2009 at 10:29 am

    Two thoughts:

    The game is about textbooks, not retail. B&N has to protect the threat to the resale textbook business. They have a huge advantage in college bookstores. Reselling print textbooks is a significant profit center.

    I think Christian Thompson has it spot on:
    the 100 billion dollar question is,
    1.) wins the war by getting real time, updateable information into the retail stores in a bound and professional print format?

    I blog at the printing industry. In fact all the tech is now in place. Lighting Source has been doing POD for years and works for most publishers. There are a number of other outfits set up to deliver exactly the experience that Christian describes. In fact in the reports I read about B&N they fulfill a significant number of titles with an on demand basis. Amazon also bought a print on demand functionality a couple of years ago.

    If it’s not yet fast enough that’s just logistics that is being solved. If it isn’t common place, that might mean the business deals haven’t been made or the publisher’s don’t have it on their radar.

  • Stan Scott // Jul 24, 2009 at 10:42 am

    Love your site, but I think you’re wrong about this.

    First, anyone can convert and publish text in eReader format. It’s “proprietary” in the same sense that the PDF format is proprietary to Adobe. Both formats can be converted to easily, and can be read on PCs, Macs, iPhones, Blackberrys, etc. For people who chose to buy proprietary book readers, yes, they’re limited. But they chose that limitation, by buying a Kindle, Sony, or whatever.

    Second, none of you seem to realize how much damage Amazon did to the Kindle market. They made it clear that you do NOT own a Kindle book, and they reserve the right to reach into YOUR reader and take a purchased book away from you. This is huge. B&N is doing the right thing by continuing to sell books, now available in ebook format.

    Third, you need to distinguish between a particular format and DRM protection. Rightly or wrongly, publishers and many authors insist on having this. Instead of locking you into one format, as the Kindle does, ebooks from B&N are unlocked using the credit card number used to pay for it. A one-time thing, simple and unobtrusive. I’d prefer not to have DRM at all, but this is a good compromise.

    Fourth, the price is right. Whatever the publishing industry might want, the high prices charged by some sellers are unfair. I’ll gladly pay $10 for a new book, and more for “special” books. Kudos.
    I’ve already bought an ebook from B&N, and I intend to buy a good many more. I applaud the company for taking this step.

  • Kirk // Jul 24, 2009 at 11:28 am

    Stan – While it’s true that PDF was created by Adobe, it is now an open standard.

    While the tools for creating eReader files may be available to anyone, the format certainly is not open. I can’t read eReader books on my Sony Reader for example.

    With regard to eReader DRM somehow being better than Kindle DRM, frankly, I don’t understand your argument. They’re exactly the same as far as I’m concerned in that both are designed to lock consumers into a proprietary reading system.

  • Kassia Krozser // Jul 24, 2009 at 4:48 pm

    Stan — you inadvertently reminded me of the authentication thing. The first time I encountered it was via my iPhone. I’d bought a book from the eReader store, but was out of the house when I wanted to read the book. I didn’t have the necessary credit card number memorized — I use different cards for different types of purchases. This seems simple and unobtrusive, but when you don’t have the necessary information with you, it’s not so simple. Given the fact that I’ve already made the purchase and logged into my account, why do I need to further authenticate when I open the book?

    I am all for competition. We need lots of it, but I’m not crazy about proprietary formats or systems that make reading hard.

    I’m curious about what you mean by people who “choose” proprietary book readers. All readers, to the best of my knowledge, have some degree of limitation, most by limiting the formats they support. But I’m not sure most consumers get that the ereader they purchase is limited. We hear evidence all the time about people who don’t understand why they can’t buy books for their Sony Reader at Amazon. It’s likely we’ll hear the same question about B&N until they become compatible with that device. These limitations aren’t as obvious to the average reader as we, the people who talk about this stuff every day, think.

  • Kerensa Brougham // Jul 26, 2009 at 8:18 pm

    I think there are good arguments on both sides, so this is just a quick response to Rick Adin’s comments about “serious” readers not reading on cell phones. Having just finished reading a book on my cell phone, and immediately starting another one, I’m not sure where that perception is coming from. Personally, I prefer reading on my cell phone. It’s a multifunction device, that is always with me (I don’t have to remember to grab a separate reader *or* a physical book on my way out the door), and fits not only in my purse, but in the small front pocket of said purse. And, I read a lot. I don’t purchase anywhere near that quantity of books each year, but it’s a decent amount. Just sayin’…!

  • Chris Hoopes // Jul 27, 2009 at 5:46 am

    Amazon has a small ace up their sleeve, even if they don’t know it.

    There are really three main ebook formats out there: eReader (Palm), ePub, and MobiPocket. Most ereading devices support one of these formats or another. The Kindle format is just a modified MobiPocket format. Even the Kindle itself has a hidden MobiPocket PID.

    If Amazon was feeling the pressure from B&N, or a bookseller working with one or more of the three main formats, they could either reveal the PID on the Kindle, or start to offer their library in standard MobiPocket format. With one small tweak, Amazon could support a large number of ereading devices and reach a larger consumer market. I just don’t see them doing anything like this until there is some sort of dent made in their Kindle or ebook sales.

    I think the device that will win the consumer marketplace will be the one that supports multiple formats (eReader, ePub, and PDF at least), and the ebook portal that can supply the largest library of ebooks in these multiple formats at a competitive price.

  • mario // Jul 28, 2009 at 3:16 am

    one note on why so far the b&n app beats the kindle app : you can actually download and use outside of the U.S. (something you can’t do with the kindle app because there is no amazon store here and the app is only available in the itunes country stores that do, i believe). but i totally agree with you on the drm issues, etc.

    cheers

  • Peter Jurmu // Jul 28, 2009 at 8:46 am

    The Plastic Logic eReader may not fit in a purse, but neither does the Kindle DX with its 9.7″ screen. (Not a problem for me–laptop bags and backpacks are my measuring standards.) I don’t think sidearm eReaders like the Kindle are in PL’s sights: Michael J’s observation that textbook sales may play a large part in the dominance of one retailer has not escaped Amazon (hence the textbook-replacement tests schools like Princeton intend to run with the DX this fall). Nicholson Baker, in his New Yorker article about the manifold Kindles, argues the “real flurry over the new DX…has to do with the fate of newspapers,” and a level of distribution to which the DX does not rise. But let’s assume that one of Amazon’s goals for the DX is effective and attractive presentation of newspapers and textbooks, and, with that retailer’s resources, they’ll release a device that pleases most people some of the time. One can’t argue (well) that the Kindle 2 does (well) what the DX or PL eReader mean to do; however, their uses may compliment and even offset one another (at least the Kindle and DX may). Will the Kindle 3-4 attempt to mash-up the slighter Kindle 2 and step-in-the-right-direction (in terms of display quality) DX? Anyway, PL doesn’t have to worry about that. Large as the reader may be, PL only needs to support this one device (for now). If that fact doesn’t make the PL reader a better buy in the long run, PL will have seriously erred.

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  • Lili // Sep 8, 2009 at 9:36 pm

    While I do not own a Kindle, I do own an ereader. I got one for Christmas. After doing a lot of research, I came to the conclusion that the Ebookwise eReader was the best for what I wanted it for, which is simply…reading. I didn’t want a device with a keyboard that has to be connected to an internet or an account with a credit card, no keyboard, music player or anything else extra, I just wanted something I could carry with me to read on. And the price wasn’t bad, either. At the time, it was around $150 (now I think it’s $135) including a memory card that enables it to hold up to 150-200 books depending on size. I can load my own books onto it, after I convert them to a word doc and upload them to their server. An easy enough process once you know how. They can’t take them from me, and I don’t have to pay to send them to my device via email. I also don’t run the risk of overcharging myself on a credit card.

    I buy books from Fictionwise, ebookwise and where ever else I can get them in PDF format, then convert them myself. I like it. I’m happy with my eReader. Wouldn’t trade it for a Kindle or Sony even if they paid me.

  • wave panel // May 12, 2010 at 1:44 am

    I think Christian Thompson has it spot on:
    the 100 billion dollar question is,
    1.) wins the war by getting real time, updateable information into the retail stores in a bound and professional print format?

  • led bulb ligh // May 12, 2010 at 1:45 am

    I think there are good arguments on both sides, so this is just a quick response to Rick Adin’s comments about “serious” readers not reading on cell phones. Having just finished reading a book on my cell phone, and immediately starting another one, I’m not sure where that perception is coming from. Personally, I prefer reading on my cell phone. It’s a multifunction device, that is always with me (I don’t have to remember to grab a separate reader *or* a physical book on my way out the door), and fits not only in my purse, but in the small front pocket of said purse. And, I read a lot.