E-Books Beyond Our Borders
A panel discussion with (in order of appearance)
Giovanni Mancini, director of product management, E Ink
Dave Anderson, vice president, vendor manage for Kobo
Marcus Woodburn, vice president, digital products, Ingram Content Group
Recorded September 24, 2013
Publishing Business Conference & Expo
For podcast release Monday, November 4, 2013
KENNEALLY: Today in New York, world leaders have gathered to discuss and debate the major issues of our time. In spite of language and cultural differences and even political divisions, the men and women assembled will seek common ground and strive to resolve the challenges that threaten to bring chaos.
I’m speaking, of course, about today’s Publishing Business Conference. Did you think I meant something else? Oh, that other meeting over on the East Side. Well, every industry has its trade fair, and I suppose that the United Nations General Assembly is diplomacy’s trade fair. But for the publishing business today, this one is ours.
Welcome to E-books Beyond our Borders. My name is Christopher Kenneally, and I’m with the nonprofit Copyright Clearance Center. Find us online at copyright.com. For those who are tweeting this session, our hashtag is #pbc13, and my handle is @beyondthebook.
Moving beyond borders is a longstanding ambition of the UN, but only recently, one that the publishing industry might reasonably dream about. Not very long ago, territories and markets were clearly delineated. Crossing from one to the other meant surmounting daunting obstacles.
Not so in 2013, and we will hear today from representatives of the largest international e-book market players. They will share with you the ins and outs of the global marketplace, from sorting out the devices to identifying where the biggest opportunities lie. Although the US market has developed first and arguably fastest, our panel will also share lessons from abroad that you may want to put to use here at home.
And finally, I want to leave hanging over us, like the International Space Station itself, the words of an astronaut, a Saudi national, as it happens. He says that on the first day or so, we all pointed to our countries, when they were in space. The third or fourth day, we were pointing to our continents. By the fifth day, we were aware of only one Earth.
Joining me to discuss all of this, that global perspective, moving from my right we have Giovanni Mancini, director of product management and head of e-marketing at E Ink. Welcome, Giovanni.
MANCINI: Thank you.
KENNEALLY: Since joining E Ink in 2010, Giovanni’s been instrumental in the launch of the Triton color product and the definition of the next generation of e-paper from E Ink. His 25 years of experience in the electronics industry include leading engineering and marketing teams in electronic design automation, communications, signal processing, and semiconductor products.
Then to his right is Dave Anderson, vice president, vendor manage for Kobo. Welcome, David.
ANDERSON: Thank you.
KENNEALLY: At Kobo, Dave is responsible for managing publisher relations, publisher analytics, and publisher communications globally, including in Canada, the US, Spain, France, Germany, and the list goes on, Australia, Brazil, and the UK among many others.
He is a career retailer with a passion for books. Prior to joining Kobo, Dave was at Accenture Management Consulting, where he worked in retail operation strategies, and before that, he spent seven years at Indigo Books and Music, Canada’s largest book retailer and the birthplace of Kobo.
And finally, our panelist on the very end is Marcus Woodburn, vice president, digital products at Ingram Content Group. Marcus, welcome. Marcus spent 12 years working as an archaeologist and photographer in the Middle East and South America before he began his career in the information world by microfilming historical documents for UMI ProQuest. He became product manager for K-12 and ProQuest, and after four years in the K-12 space, he moved into a role as director of publisher relations there, working primarily with journal and newspaper publishers.
Marcus moved to Ingram Digital in 2007, where he was responsible for working with academic and STM e-book publishers moving into the digital space. In 2010, he became VP, digital products for Ingram, particularly focused on Ingram’s CoreSource Digital Asset Management System and their e-book distribution systems business.
Marcus, I’ll start with you. Can you remind people what microfilm was?
WOODBURN: Just about. It makes me sound a little older than I actually am. It’s actually, archivally, funnily enough, it’s the longest-lasting medium. If you think CDs, MP3, everything like that, microfilm keeps on going. People still buy it.
KENNEALLY: As an archaeologist then, can we expect that a thousand years from now, people will uncover tombs full of microfilm?
WOODBURN: They say it’ll last 500.
KENNEALLY: At Copyright Clearance Center, we began in 1978 when the cutting-edge technology in copying was the Xerox machine, so we understand how things have moved along.
Marcus, then, what if I start with you and ask you, because Ingram has this world presence at the moment, and one that has allowed you a particular view on some of the problems and the pitfalls of distribution. I wonder if you could speak briefly about that, because in my introduction, I spoke to the whole notion that when we’re talking about beyond borders, eventually, that’s going to become a quaint concept if things go the way that everybody hopes.
WOODBURN: Yes, I think it’s an interesting problem, so just to give a little bit of background on what we do, we run a digital asset management and distribution system – it works for print books as well, so pushing digital print files around – on behalf of about 2,500 publishers. Scale-wise, I think we did about 42 million distributions last year. It’s fairly industrial strength. And we push out to about 190-plus countries, so it gives us some sense of what’s going on in the global marketplace, what some of those pitfalls are, and what some of the challenges are.
In particular, I’d say that being able to adapt to that market, adapt your own content to that market, descriptions, things like that. As I often say, if a books says, every American should read this book, nobody else in the world will. I’m sorry to insult my American colleagues here.
But things like metadata, clearly. Pricing, being able to put in different currencies. Those of you who might work with Apple, companies such as that, they insist on you providing those currencies. Being able to market adjust, so if you’re pushing to the Indian market, do you downprice by 35, 40 percent, that kind of thing?
KENNEALLY: Why would that be the case? Why would somebody choose to reconcile their price in a different country to the realities of that marketplace? Is it because the buying power is less? What the difference?
WOODBURN: Yes, the buying power is less, certainly. It’s just a general market adjustment that you’d find for almost any commodity, I’d say.
KENNEALLY: What people expect to pay.
WOODBURN: Yes, exactly right. And there, of course, you’ve got digital right management problems in terms of is the book only being sold into, say, India or Pakistan, or does it leak out to other markets? So a lot of things there.
The other challenge which I think has become more recent is retailers – and you’re probably better-placed to talk about this. The retailers increasingly want to minimize the number of relationships that they have. They’re happy to work with the big – however many it is these days, five, six. I’m losing count – and certainly a number of, say 40 or 50 different publishers, but after that, to a large extent, they’re really not that interested in carrying out direct relationships. They’re really looking more and more towards people that can bring them a large amount of content from a number of different publishers.
KENNEALLY: And so that’s where Ingram comes in.
WOODBURN: It is. Ingram and others, of course, but certainly that’s one of the refreshing things from my side of the world is that publishers are increasingly being referred to us by the likes of the Amazons, Apples, Kobos, and so on, so that they can get a normalized fee. It just makes it a little easier on their side.
KENNEALLY: Right. And Dave Anderson from Kobo, you were talking about celebrating Thanksgiving. But I think you’ve got that wrong. Thanksgiving’s in November, isn’t it?
ANDERSON: Well, yes, but it you want to come to Canada, we do it a little bit early just to get ahead.
KENNEALLY: I point that out only to reinforce Marcus’ point that a knowledge of the American marketplace would think that Thanksgiving is in November, but in Canada, it occurs in October, and I think that really crystallizes what the issue is here, an understanding of the world and its differences.
One of the things that Kobo has done is choose to – I don’t want to say disregard the US marketplace, but to kind of sprint around the world first and then sort of come back. Is that a good way to put it?
ANDERSON: That’s exactly how we’ve done it. What we saw a number of years ago was a highly competitive market where people were going to bludgeon each other to death, spending as much money as possible to get a customer base.
As a startup, we didn’t have the money to do that. We didn’t have the money the size of the competitors we could have faced going into the US solely, so we decided to go around the world. We had the vision that e-books was going to become a global market. There were fewer physical boundaries. I remember my days in physical books at Indigo and with trucks and stores and inventory. That didn’t have to exist anymore for content.
So we raced around the world to try and get our name known to the best readers in the world, and that happened well in Europe, Australia.
KENNEALLY: Right. And one of the things that digital does is it levels the playing field. It offers and advantage to people that might have been challenged in the past because of the physical distribution aspect of it. So a player in Toronto now owned by a very large retailer in Japan, Rakuten, a player based in Toronto can make forays into world marketplaces, into Brazil, into Europe, into Asia, at a level that might not have been possible for you before.
ANDERSON: That’s right. And that happened one of two ways. One would be a very significant spend on brand to get the name known in places like Brazil.
What Kobo decided to do was to partner with physical booksellers. We knew that physical booksellers had a rich base of customers that wanted or could have the option to read digitally. So one option would be that everybody builds their own e-commerce and e-reading service with devices, or create a partnership.
So we talked to the likes of WHSmith in the UK and Finn AK in France and Cultura in Brazil and we set up a true partnership where Kobo wants to provide a service to readers and a retailer wants to give an option to its physical readers who wanted to go digital. In the US, the ABA is a great example of that.
KENNEALLY: And for those retailers, wherever they are, they are faced with the same juggernaut that retailers are in this country, so to hear that kind of partnership opportunity coming from Kobo must be welcome news.
ANDERSON: It certainly is. It’s the idea that in our opinion, the network of publishers, retailers – digital and physical together – with distributors, makes for a healthy ecosystem. To get rid of any links of those chains doesn’t make sense. So for us to enter into the Philippines, most recently, to do that with a partner helps Kobo, but it also helps the health of that publishing and retail network.
KENNEALLY: OK. Well, Giovanni Mancini, we have to talk about technology here. We can’t just talk about retailers and books and all. We have to talk about the devices themselves. That’s a place E Ink knows really well. I understand you’ve got a collection of how many different e-readers yourself?
MANCINI: I think at the last count, I probably had over 60 different e-readers collected from around the world, and that probably includes about 10 to 12 tablets on top of that.
KENNEALLY: If you’ve got 60 of them, you can’t blame people for being a bit bewildered by the panoply of devices that are out there.
MANCINI: Right. This is going to be a strange comment coming from the person that does the technology and the displays for e-readers around the world, but what we’re seeing in both North America and around the world is that the majority of the people – and there are exceptions to this – are not buying the devices because they want to own an e-reader or they want to own a tablet.
What they’re really buying into is they’re buying an experience. They want the experience of reading a book, they want the experience of basically losing themselves in the story. So, to the extent that a device enables that, that device becomes popular. If the device gets in the way of that, then that device becomes less of a popular adopted device around the world.
A good example of this is what happened with just the sale of books, is that when Amazon came along, people quickly found that what people wanted was the ability to read the story, not the ability to drive to the local store and the experience of shopping through bookshelves. What that really does both on the technology side and also on the distribution and sales side is it forces us to redefine the sense of value, or the value that we bring to the entire process.
On the product side, it’s what value does the display bring? What value does the power of consumption bring? What value does the weight of it bring? What is the sense and feel of the device compared to a book? And on the distribution side, what value do the different players in the chain provide to the process?
KENNEALLY: There’s a lot there to unpack, but I wonder – and we have to concede, of course, that E Ink has a dog in this particular fight. But you’ve made some observations in your travels around the world and the postures of people and the kinds of devices they’re using. Share that with us.
MANCINI: One of the habits that I have, whether I’m on an airplane or at an airport gate or a train station, given the amount of travel that I do, is that I always look at people reading and how they read. What I’ve noticed is that people that have dedicated e-readers – devices like the Kobo Aura, or the Kobo HD that Kobo distributes – is that the dedicated e-reader people tend to be in a posture very similar to when they’re reading a paper book. They tend to be comfortable. They’re seated back. They’re in a very comfortable position.
People that usually have some sort of tablet, especially the larger tablets, because of the weight and the glass nature of the devices, they tend to be more upright as if they’re reading on their PC. They’re not very much very into a comfortable position.
So what you typically see, and my different studies have shown this, is that for longer-form reading, if people have a choice, they will gravitate to a smaller, lighter dedicated e-reader device versus a larger, heavier tablet.
KENNEALLY: In fact, that’s a good transition back to Dave Anderson at Kobo. And since we were talking about tweeting, we should tell people if you are tweeting this session it is hashtag pbc13. My handle, Chris Kenneally, is @beyondthebook. Dave Anderson is @dxanderson, and Giovanni would be @eink.
So Dave Anderson, this notion of the immersive experience is one that Kobo has recently made some announcements about, so I’ll give you a chance to tell us about those. It’s been termed the reading life and reading mode, I think.
ANDERSON: Yes. We’ve just made some announcements on product development, but also on experience developments. I agree with Giovanni that you’re never going to win a customer’s heart by the device itself, so what we wanted to make sure is that the reader had an experience so they could engage with Kobo.
So we did just announce a new e-reader, a dedicated E Ink device that we do know there is a customer who wants that immersive experience. We find that out around the world. We talked to our most dedicated readers and we asked them what they wanted, and they keep coming back with a dedicated e-reader is what they’re looking for.
The new announcements of the Aura, which is lighter, but also three new tablets. We know that the world is going to a place where people want many things in one spot, so we have two seven-inch devices and a 10-inch device. But also the idea that there’s a reading life, being able to go beyond the book, and it’s sort of funny that that is the name of your blog. It’s also the name of what we’re doing to help people get immersed into a book so as you’re reading a book, you see a term, you see something about the Louvre in France, you can click on this and it will take you off into an article about the Louvre or tours about Paris.
So the idea that you can go deeper into a book than the book might let you, or you can just simply read page-to-page as you have before. Being able to engage more with the book and the story and what the author might have wanted.
KENNEALLY: And there’s a partnership there with Google Play as well.
ANDERSON: Yes, our tablets are all fully Google-certified, so you get full access to the Google Play store. But the announcement we did make was a partnership with the people at Pocket, so that’s the idea that you find something you want to read but you don’t have the time for it now. So that’s fully integrated now with our e-readers. Usually, you’re expecting to see Pocket integrated with a tablet or a smart phone. We now have full integration with Pocket on our e-reading devices.
KENNEALLY: So, it matters then about the debate of tablets versus e-readers. Who around the world wants or prefers an e-reader? Is it something that goes above the borders, or in certain countries more of an e-reader population and other countries, more of a tablet?
ANDERSON: I think it’s directly related to the evolution and adoption of e-reading in that market, so in more developed areas – North America, Europe, Australia – there’s a balance. People are looking for that e-reading device, and the ones who are looking for it are the passionate reader, where reading is central to their life. They have social capital with reading, they talk about reading, their friends look to them as readers. Those people are looking for an e-reader.
But then when we look at areas where we’ve just entered – Brazil we just launched in November – e-readers there have incredible growth because it’s a new technology. It’s something new. Kobo has not been there, has not been in Brazil, so we’ve launched our line of e-readers, and that’s doing incredibly well.
KENNEALLY: Right. And I suppose we should remind people that despite the emphasis in the conversation here about tablets and e-readers, many people around the world still read their e-books on laptops.
ANDERSON: That’s right. I’m always a bit surprised. As a reader, I’m more of an e-reader on a dedicated device, but people read on laptops. We’re finding some really great success in Japan with apps, so the adoption of e-reading in Japan is growing in tablets and e-readers, but incredibly well on apps, also.
KENNEALLY: The apps are for a store or for a publisher or for a book title or all of those?
ANDERSON: It’s the Kobo app, so it’s either on your Kobo device, but also on your iPhone or your Android-enabled device. So choosing the Kobo experience can happen anywhere.
KENNEALLY: Right. And Marcus Woodburn, the kinds of titles that Ingram is distributing around the world, they range from trade books to textbooks to STM books. Talk about the differences there, or are there any differences in the way that people are reading or the way that their consuming their content depending up on the particular publishing niche?
WOODBURN: Certainly there are wide differences. It’s interesting. You think about the device side, what people are working with in terms of reflowables. We see a lot of plain fiction –
KENNEALLY: I’m sorry. E-flowable.
WOODBURN: Reflowables.
KENNEALLY: Reflowables.
WOODBURN: Beg your pardon. Reflowable content, something that when you’re watching a DVD and it says, formatted to fit your screen, same kind of idea.
KENNEALLY: So device-agnostic.
WOODBURN: Exactly right. So we see a lot of content being picked up. South Africa’s become a big market. Somewhere like Holland, as well. If you go to university in Holland, all the instruction’s in English. Big market for a lot of people there.
So you’ve got some interesting areas where people are reading different types of content. I would say professional and STM content in particular overseas is very big. People are looking to U.K., American publishers, for a lot of that instructional content, in particular, things like standards as well. They’re looking to learn about those, bring that knowledge back to themselves.
Some of the more interesting things I think that will start to develop as we move forward is the breaking down the book. The individual chapter sales, things like that, going into certain markets, especially where the ability to download is not necessarily all that good. If you look at certain markets, which have up until this point it’s 5,000 miles to your nearest bookstore kind of a thing, now you’ve got that Barnes and Noble or whatever it might be, in your pocket, essentially.
So the availability is there, but not always a great connection to download, to be connected all of the time, that kind of thing. So it makes a big difference.
But we do find, essentially, that all types of content sell pretty much anywhere, and to a certain extent, it’s a matter of just getting that content out there. If that’s easy to do and doesn’t cost the publisher anything more, then put it out there and somebody will eventually find it.
KENNEALLY: Giovanni Mancini, I want to follow up on that because you were talking at the beginning about the immersive reading experience, and we associate that with the long form. Marcus has just raised the idea of chunks of material in smaller bits and the process that I suppose is rather like what happened in the music industry, where the digital experience vaporized the compact disc and freed all of those tracks to be what they wanted to be.
In the Chinese marketplace, there’s a great demand for e-reading, but I believe in that kind of form, in the smaller form. Tell us about that.
MANCINI: One of the strange experiences we had is one of our customers in China, Onvon, was marketing their e-readers, and they were not selling a significant number of e-readers in the Chinese market. Yet, there was something of about a $6 billion market in e-books in China and people were trying to figure out what was going on.
It turns out that it’s exactly as Marcus was saying. People were not buying a full book or a full novel. They were buying it incrementally. Based on the technology they had, which was basically phone-based or smart phone-based, they were buying small snippets of the book and chapters, and as they went along, they made a decision as to whether they wanted to invest further in the book in terms of buying the next chapter or not.
As you go in to different markets, this experience in terms of what is reading, starts becoming a factor in terms of how people shop, how people buy, not only the device but also the material that they buy.
KENNEALLY: So Marcus Woodburn, is that something that publishers are taking into account? Are they packaging their material with you to be available in those kind of shorter forms?
MANCINI: Starting to. Some of the challenges that you face are things – in the journals world, for instance, which has been well-developed as an e-market for a long time, especially to institutions, has a lot more abstracting and indexing of the individual articles. I think a lot of publishers face, what’s this chapter about? There’s a title from the table of contents, not much more, essentially.
So there are some challenges there. Pricing, of course, is also a challenge. How do you price your chapter versus the whole book so that you’re protecting the revenue there?
But increasingly, we do see people starting to do that, and I think there’s becoming also more interest in the idea of the custom book, being able to actually adapt that book toward the user, the reader, in different countries, for instance. Being able to also protect that book by almost customizing it to an institution if you’re in an education world, something along those lines, either in a print or a digital world. If you do a POD book, you can actually wrap it with a cover that’s for the university, that sort of thing. It helps to protect revenue, but also starts to pick up more buyers, I would say.
KENNEALLY: Although I have to say, as somebody from Copyright Clearance Center, I start hearing that and I think, oh, lots of rights questions and challenges involved.
MANCINI: Yes and no. People are getting better at that kind of thing in terms of the way – most of the larger challenges tend to be the royalties, but as long as you can do the royalty off the actual amount sold as opposed to having to try and divide the book by chapters or number of words, you’re not too badly off.
KENNEALLY: Right. Well, Dave Anderson –
F: (inaudible) talking about royalties.
MANCINI: Certain publishers have arrangements whereby they say the author is owed 25 percent of the revenue. Now, if the revenue is off a chapter versus a whole book versus an image or something like that, it’s much easier to calculate than it is to say their revenue – suddenly, I’m selling a tenth of the book, so how much do I owe that person on other arrangements, older types of arrangements, I would say.
KENNEALLY: We’ll have questions from the floor at the end of the session, so if you would hold that, please. Thank you very much indeed.
Well, Dave Anderson, so we’re hearing about chunking up content and sort of a chapter potentially competing with a larger book, but there’s other competition going on, and you recognize this as well. There’s this notion of share of mind, so making the book experience as attractive as it can be helps the retailer to compete against all the other options that consumers have today.
ANDERSON: That’s right. When we think about how do you make the e-reading experience better, it’s not necessarily to say e-reading versus physical reading. We’re truly interested in more books being read by more people, and if that allows for a choice of a person who wants to read digitally, then that’s a good thing.
There’s a lot of competition on a tablet or just out there that you’ll be faced with, whether it’s Angry Birds or Netflix or the list goes on, so the goal is to create an experience where people think to come back to their book, think to come back to the store, think to have a conversation about a book, and once they have the conversation with that trusted source, coming back and making sure they buy.
The idea of chunking up a book, as a tactic, I think that makes sense for the right kind of book and the right kind of reader. If that’s something that they’ve been looking for, then that’s a great idea.
KENNEALLY: You’re probably not going to do that with Harry Potter, even if J.K. Rowling would let you.
ANDERSON: And that’s what’s interesting. We look at a lot of statistics on not only the conversion of searching versus buying, but buying versus opening, and for some books, 50, 60, 70 percent of the people who buy the book don’t open it. And then of the people who open it, some books, 30, 40, and 50 percent of the people don’t finish it. So the idea that you could sell a fiction book in pieces would scare me for the wrong book. Done in the right place and the right time, it makes a lot of sense, but it might allow for someone to walk away.
KENNEALLY: Indeed. And those kind of usage statistics, those patterns probably aren’t new. I would imagine that people bought books in stores and put them on a shelf or by the bedside table and they just collected dust in the past, so this isn’t new, necessarily.
ANDERSON: That’s right, it’s not. It’s fascinating because, again, as my history in physical books, I always wondered. One of my favorite books, Infinite Jest, it took me four times to actually finish it. I’m proud that I did finish it, but I put it down a lot. There must be those books out there that get bought and not opened, opened and not read, so I’ve gone to look through a lot of my favorites, and it’s very interesting statistics.
KENNEALLY: I’ll confess, Moby-Dick is in that category for me. I got about as far as call me Ishmael.
With the experience you’ve had a Kobo, David, it’s really about getting as much content available as possible within the device, and this means working with publishers as closely as you can and working with different kinds of publishers.
ANDERSON: That’s right. One of the things we want to make sure we do is to have a content experience that is something that the reader goes into the store and is amazed with what they can find. So yes, that means the large publishers, but it also means global content and it means local content. We’ve chosen to have a team on the ground in all of the countries we’re in working with local publishers to make sure their front list, their backlist is digitized so the person who does choose to read digitally can go on and find their favorite book.
KENNEALLY: And to use that phrase beyond the book again, this is beyond books itself as well. Now, Kobo is offering people access to news publications, magazines and so forth.
ANDERSON: That’s right. We just announced our magazine offering that is launching this month, and that’s the same concept. We work with all the majors in the United States and Canada, but also across Europe, and as we enter new markets, we will continue to have a magazine experience that will have the big titles, but also making sure that the locals, they’ll go in and they’ll look for the one thing that they’re interested in for their part of the world, and if they don’t find that, then that’s not a credible bookstore. We want to make sure we have that credibility as well as the global reach.
KENNEALLY: Right. And, Giovanni Mancini, we had some of a debate, tablets versus e-readers, but there’s a kind of a middle ground, or at least an answer to that question, tablet or e-reader. The answer can now be both. This is fascinating to me. Talk about that and what direction that might be leading us to.
MANCINI: Actually – was it two weeks ago? – at the EFA conference, two of our customers announced a product which basically is if you have a Samsung Galaxy S4 smart phone, it comes with a cover. One of our customers integrated an E Ink display into the cover so you have an integrated smart phone and e-reader experience directly on your smart phone. A company called Yota out of Russia did that with a product called the YotaPhone. They announced at CES earlier this year, and Alcatel also now has a similar thing with their smart phone.
And we’re working with a number of other customers that are doing the same thing, where essentially, amongst other things, they’re integrating the e-reading experience that you have on a dedicated e-reader into a product that you have, whether it be a smart phone, whether it be a tablet, or whether it be kind of the mixture of the two commonly referred to as fablets.
KENNEALLY: So you get them coming and going, almost.
MANCINI: Exactly.
KENNEALLY: That’s interesting. What about the challenge to get people to get into a device in the first place? For a lot of the world I would imagine, particularly the developing world, they get a phone as cheap as they can and that’s how they communicate. Talk about that, sort of moving people toward the more complicated devices. How quickly is all of that going to happen? Because it will enable e-reading, although I would imagine some of them are doing e-reading even on those very rudimentary phones.
MANCINI: They are. Dave brought up the Kobo apps. Apps is basically bringing the people down to e-reading and using that, but what we’re also seeing in the market in terms of the products our customers are designing is essentially the market almost bifurcating into kind of the devices that people want to buy because they want the e-reading experience, and then there is a lower-price market which people believe that they should not be paying for an e-reader so they want the e-reader to essentially be a free device, or the equivalent of free so that it just becomes kind of a platform for them to buy e-books.
So you’re starting to see kind of the higher-end devices that have a lot of features and more of the lower-end devices that are just kind of very simple e-readers, and sometimes those are just apps on whether it be a smart phone or a tablet.
KENNEALLY: Right. And rather like that U.N. General Assembly, there are a lot of debates. We’ve talked about tablets versus e-readers, physical versus digital. Tell us a bit about your experience with the Android versus IOS debate. In this country, if not the actual pocket share, but the noise share, all the media attention, is how many phones did Apple sell last weekend. How does that look to the rest of the world?
MANCINI: It’s interesting because – I’m an engineer by training, and when Apple first came out with the Mac and I got a Mac, it’s like, what kind of computer is this? What do I do to program it? I quickly found out that Apple’s products are not necessarily designed for engineers. They’re actually designed for the real public out there.
That was said about e-readers as well. A blogger was commenting about the fact that when the iPad came out, that e-readers would soon be replaced with iPad. One of the people responded and said, you just don’t get it. E-readers are not made for people like you. They’re actually made for people like me.
The idea is, the reason why IOS is so popular, whether it be here or around the world, is that it’s basically designed from the consumer in as opposed to the engineer out. When you look at products like Android, you look at products like Windows, you can tell where they came from, where they originated from versus when you look at an IOS product, you can tell what consumer they were targeting when they designed that and how they kind of came back in terms of how to engineer the product.
KENNEALLY: Fascinating insight, there. And Marcus Woodburn, I think that notion of thinking about the consumer, you have to kind of think like the buyer rather than the creator or the distributor of it. This applies to promotion and merchandising as much as anything else, and you have some experience with that at Ingram.
WOODBURN: Certainly in terms of making sure that people are aware of the content, that kind of thing, merchandizing in the right way. We’re talking on the Kobo side putting people on the ground. It’s funny the number of book promotions that we get for Christmas books to Australia, which they don’t realize that Santa’s on a surf board in Australia because it’s the middle of summer at that point. So it’s certainly some of that regionalization, merchandizing in that kind of a way.
I think increasingly allowing different retailers to know what the bestsellers are so that they can make sure that they’re featuring books properly, but also publishers themselves really taking advantage of digital merchandizing. We’re talking about breaking books apart. You’re right, breaking a fiction book apart doesn’t really work unless potentially it’s the first chapter so you can try it before you read it or buy it. There are certainly things like that, being able to push the content out, regionalize it a lot more.
Merchandizing in general just tends to be something of a challenge, I would say. To a certain extent, Amazon is interested in your money to merchandize things. Apple is interested in the prettiness of your content to merchandize things. So there are a lot of variations in the Wild West out there and for different markets, as well.
KENNEALLY: And Dave Anderson, one of the challenges in the e-book world is that in a number of countries – France and Germany, for example – there are price controls around the sale of digital content. Explain that very briefly for our audience who might find that a bit of a challenge to think about in our world of Amazon where the price keeps going down. And then, what kind of impact does that have for Kobo as far as getting people to be attracted to the digital experience?
ANDERSON: What I think it does is it, for those countries – Germany, France, specifically – it puts total control of the pricing in the hands of the publisher, so that content in that market in that medium will go for sale for what the publisher is looking for. So as a retailer, it actually just simplifies the whole thing. It just puts everybody on an even pricing scale so where the assumption is if people were shopping based on price, which they aren’t always shopping based on price, it levels the playing field.
I think one of the most important elements of retailing e-books, as Marcus just said, is the discoverabilty. What is that book that month? How do you draw a backlist, a front list? How do you merchandize series? How do you specifically talk to one consumer who likes young adults, even though they’re 47 years old? How do you get the books in the hands of the readers who want them?
Price is one variable. It is maybe a frustrating variable when discounting gets too extreme, but pricing tends to be one of the variables, but the idea that consumers are looking for a book that they want to enjoy doesn’t necessarily come attached to price.
KENNEALLY: And that might be sort of welcome news to people who think that digital is just cheaper. It doesn’t necessarily have to be cheaper, and that’s not the point. It’s about, again, this experience, which is a theme running through this whole discussion.
ANDERSON: That’s right. I get nicely frustrated when people think digital should just be free, because it’s an experience, whether it’s a digital movie or a digital book. I am willing to pay for something that I enjoy, whether that’s a book, then a book has an author and it has an editor, and it has a whole host of cost behind it, but it’s the willingness to pay of the consumer. If it’s something that they truly love and say it’s a limited supply, they would be willing to pay more. If it’s something that they find they can find anywhere else, then the price can come down.
KENNEALLY: And Marcus Woodburn, I see you vigorously nodding your head in agreement there. That’s your experience as well?
WOODBURN: To give a sort of a case study, we have one very interesting publisher, a fiction publisher based in the U.K. I went to them and said, I think your books should be a little higher priced. I was thinking they’d push them up just a little bit. They decided that for their first six months of the release of a title, they would price it at exactly the same as the hardback, so around $28 a copy for the fiction book. They saw no unit decline whatsoever. Tripled their revenue, saw no decline.
I think one of the most interesting things that that illustrates is that readers have decided how they want to read. They know what they’re interested in, whether it’s an author that they’re interested in, a particular topic. If the content is good, they will pay for it on whatever medium it is.
And Amazon charging much lower prices does nobody a particularly good service, apart from Amazon, perhaps.
KENNEALLY: Right. Well, thank you Dave Anderson, vice president, vendor management, Kobo. Also thank you Marcus Woodburn, vice president, digital products at Ingram Content Group, and finally, Giovanni Mancini, thank you, director of product management and head of marketing at E Ink.
And remember, as Groucho Marx said, outside of a dog, a book is a man’s best friend. Inside of a dog, it’s too dark to read.
Thank you very much.