Welcome to The CITE -- a blog on Course materials, Innovation, and Technology in Education, created by Mark Nelson and now part of the Publications Department of the National Association of College Stores. CITE is a pun with multiple meanings - referring to cite as in citation, something people reference; site as in location, website, or place people go to; and sight as in foresight or looking ahead to what is coming. Comments, discussion, feedback and ideas are welcome.

Tuesday, May 11, 2010

The New Yorker on Amazon, Apple, and Google’s quest for market share

The New Yorker recently featured an interesting article by Ken Auletta, that takes a look at much of the e-book news from recent months. We have discussed a number of the topics in various blog postings but it is interesting to read an article with a summary of all the happenings. The article covers: the release of the iPad and the iBookstore; e-book pricing and the agency model; the challenges for bookstores; publisher concerns; and Amazon, Apple, and Google’s plans. There some good points and interesting quotes throughout the article. Here are a few interesting passages.

Auletta points out that it is all about market share:
There are now an estimated three million Kindles in use, and Amazon lists more than four hundred and fifty thousand e-books. If the same book is available in paper and paperless form, Amazon says, forty per cent of its customers order the electronic version. Russ Grandinetti, the Amazon vice-president, says the Kindle has boosted book sales over all. “On average,” he says, Kindle users “buy 3.1 times as many books as they did twelve months ago.”

But publishers also recognize the similarity between Amazon’s strategy and that of iTunes. One publisher said, “Get market share, and when you get far ahead it is hard to catch up. Bezos’s game, like Jobs’s before him, is to get the device and get eighty-to-ninety-per-cent distribution on the device, and you own the game.”

In regards to the challenges ahead for bookstores, Auletta notes:
“The analogy of the music business goes only so far. What iTunes did was to replace the CD as the basic unit of commerce; rather than being forced to buy an entire album to get the song you really wanted, you could buy just the single track. But no one, with the possible exception of students, will want to buy a single chapter of most books. Publishers’ real concern is that the low price of digital books will destroy bookstores, which are their primary customers. Burdened with rent and electricity and other costs, bricks-and-mortar stores are unlikely to offer prices that can compete with those of online venders. Roxanne Coady, who owns R. J. Julia Booksellers, an independent bookstore in Madison, Connecticut, said, “Bookselling is an eight-inch pie that keeps getting more forks coming into it. For us, the first fork was the chains. The second fork was people reading less. The third fork was Amazon. Now it’s digital downloads.”

An Apple adviser and Jonathan Burnham, the senior vice-president and publisher of HarperCollins, commented on what consumers want from bookstores:
The Apple adviser said, “The Internet makes everything available and cheaper. I compare bookstores to video stores ten years ago. Now I use Netflix or I download movies.” Book buyers understandably want both the convenience of the Web site and the intimacy of the store. But this obliges publishers to essentially run two businesses at once: a traditional publisher that sells bound books to stores and an electronic business that sells e-books online. “I think consumers, like publishers, are living in parallel universes,” Burnham says. “Consumers are educated to have a multiplicity of choices. They still like to go to a bookstore, while they also want everything available online.”

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