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Publishing News: Nook gets Microsoft, and soon NFC

Microsoft invests in B&N, Target evicts Amazon, and ebooks teeter on the brink of extinction (perhaps).

Here are a few stories from the publishing space that caught my eye this week.

Microsoft enters the battle of the publishing tech giants

NookLogo.pngAfter hinting in January that something might be in the works for the Nook, a deal between Microsoft and Barnes & Noble was announced this week. Reuters reports:

“Microsoft Corp will invest $300 million in Barnes & Noble Inc’s digital and college businesses … Microsoft will get a 17.6 percent stake in the new unit, while Barnes & Noble will own about 82.4 percent … The business, whose name has not yet been decided, will have an ongoing relationship with Barnes & Noble’s retail stores.”

Much discussion is flurrying about.

Felix Salmon has an interesting analysis at Wired, writing that “the news does mean that Barnes & Noble won’t need to constantly find enormous amounts of money to keep up in the arms race with Amazon. That’s largely Microsoft’s job, now.” He also points out that the real winners here are readers: “… we finally have a real three-way fight on our hands in the e-book space, between three giants of tech: Apple, Amazon, and Microsoft. And that can only be good for consumers.”

Publisher Thad McIlroy offers an initial analysis of the deal, likening the “marriage” to “two losers stumbling to the altar without bridesmaids or witnesses,” and a subsequent in-depth look at just what the $300 million exchange means to both sides:

“I know that Microsoft gained in part because the press release states that the two companies ‘settled their patent litigation.’ To merely settle patent litigation gives you no idea of who the winner is; the settlement can take myriad forms.

However, the sentence in the press release continues, ‘moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents.’ That means Barnes & Noble has agreed to pay Microsoft for some or all of its previously disputed patents via this new company (currently called ‘Newco’). And that means Microsoft managed to gain the upper hand in these negotiations.” [Link added.]

Microsoft analyst Mary Jo Foley over at ZDNet took a look at what the partnership could mean for future devices: a Windows-powered e-reader, perhaps? She reports that during a press/analyst call, “[Microsoft President Andy Lees] mentioned a few times that Microsoft is positioning Windows as key to the future of reading.”

O’Reilly GM and publisher Joe Wikert argues this isn’t about ebooks at all, suggesting that “Microsoft should instead use this as an opportunity to create an end-to-end consumer experience that rivals Apple’s and has the advertising income potential to make Google jealous.” He also wonders if Microsoft might influence B&N to deeply discount Nook prices with a two-year content purchase requirement, similar to what the company just did with the Xbox.

In any case, it looks like Wikert’s wish for an end-to-end UX might already be in the works. In an interview about the Microsoft deal at CNN Fortune, Barnes & Noble CEO William Lynch says plans are underway to improve offline-online integration to bring a richer experience to customers:

“We’re going to start embedding NFC chips into our Nooks. We can work with the publishers so they would ship a copy of each hardcover with an NFC chip embedded with all the editorial reviews they can get on BN.com. And if you had your Nook, you can walk up to any of our pictures, any our aisles, any of our bestseller lists, and just touch the book, and get information on that physical book on your Nook and have some frictionless purchase experience. That’s coming, and we could lead in that area.”

In response to whether NFC functionality will roll out this year, Lynch said, “Maybe …”

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Amazon loses shelf space

Target decided this week that it would cease carrying the Kindle and its accessories. The Verge reports that “the company is going to stop carrying the line of products due to a ‘conflict of interest'” and that “[c]ertain accessories will remain in stock, but shipments of Kindles themselves will cease as of May 13th.” Exactly why this decision was made remains a bit unclear, though speculations are being bandied about.

The LA Times quotes a Target spokeswoman with the official benign company line: “Target continually evaluates its product assortment to deliver the best quality and prices for our guests,” but then points to a New York Times story with a much more telling tidbit:

“‘What we aren’t willing to do is let online-only retailers use our brick-and-mortar stores as a showroom for their products and undercut our prices,’ Target executives wrote in a letter to vendors, asking them to think of new pricing and inventory strategies, according to a note that Deborah Weinswig, a Citi analyst, sent to clients.”

Laura Hazard Owen at GigaOm covers a couple possible reasons for Kindle eviction. Given the note quoted in the New York Times, the most likely seems to be that Amazon tried to negotiate new terms that Target just couldn’t accept, or vice versa. Owen notes a couple of other important points to consider: Target will continue carrying other brands of ereaders and accessories, including the Nook, and that Apple is set to begin a mini-store test program with Target.

Also notable: Thus far, I haven’t seen Amazon comment on the situation.

Is the end of ereaders and ebooks nigh?

The battle for King of the Ereaders may soon come to an end — not because one of tech giants wins the war, but because ebook formats lose out to the web and HTML5. So argues Jani Patokallio, publishing platform architect at Lonely Planet, in a blog post.

He says it all boils down to publishing rights and publishers opting “to circle wagons, stick their fingers in their ears and pretend digital is print.” He argues that “in the print publishing industry, publishing rights for different countries and languages are both standard practice and a big deal,” but these same agreements don’t make sense for digital publishing. They are, in fact, hindering the customers’ ability to purchase and read books:

“Customers today are expected to buy into a format that locks down their content into a silo, limits their purchasing choices based on where their credit card happens to have been registered, is designed to work best on devices that are rapidly becoming obsolete, and support only a tiny subset of the functionality available on any modern website. Nonetheless, publishers are seeing their e-book sales skyrocket and congratulating themselves on a job well done.”

Patokallio says that “[o]n the Web, the very idea that the right to read a website would vary from country to country seems patently absurd,” and that ebooks have an obvious replacement:

“The same medium that already killed off the encyclopedia, the telephone directory and the atlas: the Web. For your regular linear fiction novel, or even readable tomes of non-fiction, a no-frills PDF does the job just fine and Lonely Planet has been selling its travel guidebooks and phrasebooks a chapter at a time, no DRM or other silliness, as PDFs for years now. For more complicated, interactive, Web-like stuff, throw away the artificial shackles of ePub and embrace the full scope of HTML5, already supported by all major browsers and usable right now by several billion people.”

Patokallio’s post is a must-read, and there were a couple indications this week that he might be on to something. First, “[t]he Financial Times is preparing to kill off its iPad and iPhone app for good, signalling its final conversion from executable-app to web-app publishing.” Second, in a post at Wired regarding the Microsoft deal with B&N, Felix Salmon says: “… over the long term, we’re not going to be buying Kindles or Nooks to read books. Just as people stopped buying cameras because they’re now just part of their phones, eventually people will just read books on their mobile device, whether it’s running Windows or iOS or something else.”

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