Is Netflix model the future of e-books?
Apple’s court loss over e-book prices may be irrelevant
Stories You Might Like
-
Sponsored: MarketWatch - Other Stock-index futures flip-flop after Bernanke
-
Sponsored: MarketWatch - Economy & Politics Bernanke stresses rates to stay low for long time
-
Sponsored: this site Youth and health, no longer synonymous
new
Want to see how this story relates to your
portfolio?
Just add items to create a portfolio now:
A federal judge has ruled that Apple /quotes/zigman/68270/quotes/nls/aapl AAPL -0.38% violated antitrust law in
conspiring with several book publishers to jack up e-book prices.
But the court ruling Wednesday, which delivered a harsh
criticism of Apple’s efforts to ”eliminate all retail price competition” in 2010
when it entered the e-book market, may soon be moot, experts say, as other
companies aim to make traditional prices irrelevant by offering e-book rental
services akin to Spotify and Netflix.
Apple guilty of driving up e-book prices
Apple colluded with five major publishers to bump up
e-book prices, court finds. Photo: Getty Images
While Apple decided to go to trial, five publishing
companies have already settled with the federal government and terminated
agreements made with Apple in 2010, in the weeks before the launch of the first
iPad. Those publishers include HarperCollins, Lagardère’s Hachette, CBS’s /quotes/zigman/393390/quotes/nls/cbs CBS -0.23% Simon & Schuster,
Pearson’s Penguin Group and the Macmillan unit of Georg von Holtzbrinck.
(HarperCollins is owned by News
Corp. /quotes/zigman/18008449/quotes/nls/nwsa NWSA -2.04% , as is The Wall Street
Journal and MarketWatch.) Since then, Amazon.com /quotes/zigman/63011/quotes/nls/amzn AMZN +0.27% has been steadily cutting the
prices of e-books.
While the settlement between the government and
publishers may lower prices in the short term, publishing experts say more
companies are finding ways to allow readers to swap e-books, read them for a
monthly subscription, or rent them from an e-library. Kindle owners who are also
Amazon Prime members can already choose from over 300,000 books to borrow for
free with no due dates, but they may only choose one book per month. Services
such as eBookFling.com and Lendle.me give Kindle and Barnes and Noble’s Nook
customers access to tens of thousands of other potential e-book lenders for a
14-day period.
Also see: Apple handed defeat in e-books ruling
So far, there is no book-streaming or rental service
with the scope and selection of Spotify for music, or Netflix for movies and
television. “I’m skeptical that the economics of e-book subscriptions will be
compelling enough for authors published by the big corporate houses to play
along,” says Simon Lipskar, the president of Writers House, a literary agency in
New York. “Subscriptions are fabulous models for the branded platform, fabulous
for the heavy-use consumer — and usually quite wretched for the creators of the
works.”
But others say consumers want the same flexibility they
have with music and movies. “We’re increasingly addicted to instant
gratification,” says Evan Carroll, digital media analyst and co-author of “Your
Digital Afterlife.” That, he says, is why people stream music with Spotify and
Pandora, and movies through Netflix and Hulu. “I anticipate that we will see
more e-book publishers take this approach in the near future,” he says. In fact,
it isn’t a question of if — but when, says Peter Hildick-Smith, president of
book market researcher Codex Group. “It’s the next logical step in the market’s
evolution,” he says.
There is a burgeoning market in e-book rentals. Safari Books Online — which has a website and apps on iOS
and Android — has partnered with over 100 publishers to provide access to
technology e-books on a subscription model; it has over 30,000 IT e-books.
“Think of it as Netflix streaming for professional developers,” says Safari’s
director of marketing Troy Petersen. Texas Southern University and California
State rent text e-books at discounts of up to 60% off the print price through CourseSmart.com, a digital service that began in 2007 and
partners with 100 universities and colleges.
Others are following a subscription model. Startup Oyster
Books is planning an iPhone app that allows customers to read as much as
they want for a monthly fee. But experts say its success will depend on the
quality and quantity of titles and, of course, the price. (The company didn't
respond to requests for comment.) In its first round of financing last October,
Peter Thiel — an early Facebook
investor — invested $3 million through his Founder’s Fund. “Oyster’s challenge
will be to prove that they can make the model profitable for Oyster,” says Mark
Coker, founder of e-book distributor Smashwords.com. Harlequin, which
publishes romantic fiction, also has a subscription model. Customers get two
free e-books in the subscription of their choice, and every month after they
receive a set number of books automatically delivered to their “My Bookshelf”
folder on Harlequin.com.
Bloomberg
It will be an uphill battle to get mainstream publishers
and authors onboard, experts say. A successful e-book rental or subscription
service will need to convince publishers that the service augments — rather than
replaces — traditional e-book retailer sales, Coker says. It may make more sense
to rent books, however, considering people tend to read them just once: “A song
is a three- to four-minute customer experience, which is often repeated with the
same song multiple times,” he says. “A book is a multihour experience, but is
seldom read a second or third time.”
If e-book rentals take off, they may only make financial
sense for avid readers. “Paying $9.95 a month for the premium Spotify is
probably more than I used to spend on purchasing songs or albums,” says Neil
Schlager, founder of Schlager Group, a publisher of materials for students and
teachers, “but I’m happy to do it because the service has value to me.” To be
fair, e-books prices are still low compared with print copies, Coker says.
Amazon charges $9.99 for new and best-selling e-books. “Any e-book subscription
or rental service needs to meet or beat what retailers are already doing,” he
says.
No comments:
Post a Comment