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Summary:

Apple’s decision to reject an e-book by Seth Godin because it contains hyperlinks to books in the Amazon store is just another example of how the oligopoly that controls the market for e-books is turning the landscape of reading into a walled garden.

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Just as a few massive chain stores eventually came to dominate the traditional printed book market in North America, the e-book marketplace is a kind of oligopoly involving a few major players — primarily Amazon, Apple and Barnes & Noble. And while bookstore owners of all kinds are free to decide which books they wish to put on their shelves, these new giants have far more control over whose e-books see the light of day because they also own the major e-reading platforms, and they are making decisions based not on what they think consumers want to read but on their own competitive interests. That is turning the e-book landscape into even more of a walled garden.

Author and digital-marketing maven Seth Godin highlighted this issue in a recent blog post, in which he described how his new book was turned down by Apple because it contained hyperlinks to books sold by Amazon (with whom Godin has a partnership). According to a letter that the author says he received from the company, the new title — Stop Stealing Dreams, a book about the transformation that Godin believes needs to happen in public education — was rejected by Apple due to what the letter described as “multiple links to [the] Amazon store.” Godin notes that the book had links to related works, including Too Big to Know from David Weinberger, co-author of The Cluetrain Manifesto.

Should e-bookstores only carry their parent company’s titles?

As Godin notes in his post, we don’t expect supermarkets to carry every brand of cereal or other products that we want to buy, because we assume that they have to make various business decisions about what they stock their shelves with. But the author argues that bookstores are different — or at least they should be:

We’re heading to a world where there are just a handful of influential bookstores (Amazon, Apple, Nook…) and one by one, the principles of open access are disappearing. Apple, apparently, won’t carry an ebook that contains a link to buy a hardcover book from Amazon.

It’s one thing when an independent bookstore owner decides not to carry a book for personal reasons, and even when a national chain decides not to stock books because of their subject matter (although those decisions also often get criticized by free-speech advocates, with good reason). But what makes the recent moves by Apple and Amazon and Barnes & Noble different is that they also own the major e-reading platforms, of which Amazon is the largest in terms of market share. So it’s not just the stores they control, but one of the fundamental methods of reading those books.

As Godin notes in his post, there are open standards for e-books such as ePub (and Google has made a well-intentioned but ultimately weak attempt at trying to open up the e-book market), but the majority of e-books are still read via the Kindle and the iPad and the Nook, and that gives the three major players a firm grip on what people consume — and they are using it. My colleague Laura Owen at paidContent pointed out in a recent post how Amazon blocked any books from distributor IPG because it was trying to negotiate a new contract with the company, a move similar to Amazon’s lockout of Macmillan’s titles during a negotiation over pricing in the days before Apple introduced the “agency model.”

Welcome to the platform-dependent bookstore of the future

For its part, Barnes & Noble has made what appears to be a retaliatory move against Amazon for the digital giant’s recent expansion of its power — which has involved signing authors to its own publishing imprint and launching features such as the Kindle Owners Lending Library. B&N has said that it will not carry any Amazon titles in its stores (although Amazon is trying hard to find a way around this restriction by doing deals with other distributors). At least B&N’s aggression can be understood somewhat, since the chain is said to be in fairly deep trouble financially.

As we’ve described before, Apple and Amazon come at the e-book market from different perspectives: Apple sees books as just another form of content that it can use to sell iPads and other devices, whereas Amazon sees devices like the Kindle and the Kindle Fire as ways it can lock people into its content ecosystem and sell them more books, movies and so on. But both are dependent on having users locked into their products, and so they make it as difficult as possible to move from one to the other.

Publishers are partly to blame for the walled-garden status of the market as well, since they handed Amazon and Apple the stick of digital-rights management, which the two companies are now using to beat them — and they won’t allow their books to be loaned to other users, or even in many cases to public libraries, and they certainly don’t make it easy to get access to them on different platforms. Welcome to the mutually incompatible, silo-based, platform-dependent and user-unfriendly future of books.

Post and thumbnail photos courtesy of Flickr users sly06 and Jeremy Mates.

  1. > Publishers are partly to blame for the walled-garden status of the market as well, since they handed Amazon and Apple the stick of digital-rights management, which the two companies are now using to beat them

    I place a bigger chunk of blame on the publishers. When Google was trying to launch the books initiative, these publishers cried “MOMMY!” and ran to Amazon-daddy and Apple-daddy, while fighting Google’s attempts tooth and nail. Now Amazon and Apple are showing them who’s daddy. If the publishers had any sense, they would have WORKED with Google have a viable alternative and a competitor who would have kept Amazon and Apple somewhat in check. They can still do this, but they are too stupid to understand Google Books.

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    1. Yes, I agree — if publishers had thought more about their actions, they might have decided differently, but now they are trapped in an environment that they helped to create.

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  2. I’m not sure how different the situation you describe is from the situation 30 years ago. Back then, the “readers” were physical books, so the publishers controlled the fundamental method of reading content in the past, too; they owned the reading platforms, and Random House wouldn’t publish something to be read on Simon & Schuster’s “reader.” Also, publishers made decisions based on their own competitive interests, i.e. if they didn’t think a book would sell, they wouldn’t publish it. That was a walled garden 30 years ago.

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    1. That’s true, Rich — but to pursue the analogy, those publishers didn’t control the bookstores you shopped in to find those books, the way that Apple and Amazon control ebook stores and platforms.

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  3. Everytime I hit “Buy Now” on the kindle store, I have to console myself by thinking at least the author will get paid, but then I think, all this does is let Amazon think it is OK to sell books (OK, a licence to view one copy of the book) with DRM that ties it only to their reader, which can’t read epubs. So that means I have to have a device that can run multiple reading apps, pushing up the price of the reader. And then the publishers with regional rights – go to get a book – not available in your region – yet Amazon will happily sell me a paper copy and charge me shipping. I know it mush be the publishers because A book I was after was actually available in Amazon, and B&N, but not here in NZ. SO I got it from Demonid.com instead. THE DRM DOES NOT STOP PIRACY. Letting my buy the book to read on whatever reader I want will reduce piracy.

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  4. “these new giants have far more control over whose e-books see the light of day because they also own the major e-reading platforms, and they are making decisions based not on what they think consumers want to read but on their own competitive interests. That is turning the e-book landscape into even more of a walled garden.”

    Yes, that’s one way to look at it. You can say the exact same thing about the Publishers. They pull books from a specific platform…all in the name of competitive interests as opposed to what consumers want to read.

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    1. That’s true, Rusty — but as I mentioned above, publishers don’t also control the bookstores most people shop in for their books.

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  5. This is exactly what forced the music labels to remove DRM. Apple controlled the devices so completely that in turn it controlled how music was sold online through the iTunes store.

    Now Amazon, Apple and B&N control the reading devices and in turn how books are sold. I’d love to see a situation where publishers are forced to get rid of DRM because the “Big 3″ control distribution. It’s less likely to happen this time around, because with 3 players, the publishers have some level of say in pricing while with music, Apple effectively controlled the pricing.

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    1. I believe DRM meet its demise because of AMZN not APPL. Remember, itunes started as Apple-only platform. Music industry would rather throw lawyers at the changes wrought by digitization than think about how to adapt to change.

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    2. Apple fought DRM in music and won. They make enormous amounts of money from hardware and run iTunes at breakeven. They would be happy if music were free, since that would sell the most hardware, but they try to keep the price just high enough to keep the supply healthy.

      Logically they should take the same approach to ebooks, but it’s harder because individual books can be so expensive. They do support ePub, and most of my iBooks are DRM free ePubs.

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  6. I understand your larger point Mathew, but Gruber asks some pertinent questions too – see http://daringfireball.net/linked/2012/02/29/godin-ibooks. It seems kind of sloppy of Godin to generate one copy of his book that has Amazon links and then expect competitors to be fine with that. I wonder though… lazy editing or savvy attempt to capitalize on the “Look, Apple’s being mean to me” angle?

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    1. I admit Gruber has a point — but why shouldn’t we expect Barnes & Noble to sell books that have coupons in them for Borders? The bottom line is that I want an ebook store to sell me ebooks, regardless of who publishes them, and none of the companies with a platform is apparently willing to do that.

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      1. I think that’s naive. tell me, did you ever see a physical store selling books that promoted a competitor? Why on earth would they do that? Why shouldn’t a store expect any cross promotion to point to the product sold by that store? When have you EVER seen this?

        I noticed you ignored the point that Godin could simply edit the links.

        Finally, you seem kind of hostile to entities doing what they can to monetize their product. On newspapers you mock things like paywalls. Here, you expect on distribution channel to sell products promoting a competitor. Tell me… have you ever had P&L responsibilities?

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      2. I’m not hostile to them monetizing their product, I’m just thinking like a consumer, and what I want is a broad selection from multiple sources, but that’s antithetical to the platform-and-content model that Apple and Amazon are both focused on. As for a stores selling products that promote a competitor, there is no real-world analogue to hyperlinks so it’s difficult to find an example. Why should Apple tell me what to link to?

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      3. “I’m not hostile to them monetizing their product, I’m just thinking like a consumer, and what I want is a broad selection from multiple sources,…”

        OK, fair enough. But that’s really an issue with DRM, not with Apple’s rejection of a book that contained affiliate links the author has with a competitor’s bookstore. As a consumer none of us is privy to the back room dealings with bookstores in the physical world. If all Godin had to do to get the book accepted was insert a regular bibliography or link to copies of the same books in the iBookstore then not doing so seems like he is cutting off his nose to spite his face. Or he tried to slip one by Apple to make a few extra bucks and is now using the controversy he created to get some free publicity for his book. I’d be willing to bet in the end he will strip the offending links and resubmit and make even more money because of all the attention. No sane person would he give up the thousands of dollars he stands to make in the iBookstore for the pennies he’d get from his Amazon affiliate links.

        And who is to say that DRM won’t eventually be pushed aside by more and more readers gutting savvy about the books they buy? Just 5 years after the inception of the iTunes store, market forces rid digital music of DRM. There is no reason to think that the system as it exist now will be the system we will all have to live under for the next hundred years.

        “Why should Apple tell me what to link to?”

        Tell you? They told the Godin which is sort of none of our business or concern as consumers. As consumers why should we care whether Godin get his affiliate fees from Amazon or not? That’s all just inside baseball. And wouldn’t the more “open” way to do it be for Godin to simply to list the books in his bibliography and let us choose where to buy them?

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      4. Mathew,

        You’re thinking like a consumer? Pardon me, but no. No consumer will care in the least about Godin’s links one way or the other. This is a spat that only people like you and I will care about. The reason I questioned you on your attitude is that what Apple did is perfectly reasonable from the point of view of someone who is responsible for running a business.

        No physical bookstore would be fine with a book that contained coupons to a competitor for the author’s other works. I’m guessing Best Buy wouldn’t want to sell Samsung TVs that had coupons for other Samsung products at, say, Amazon. The only reason the web is getting all bent about this is that it’s Apple.

        Again, this is PR by Godin. He could easily have updated the links (Apple has an affiliate program too, as does B&N if I’m not mistaken). And do you honestly think this would have gotten a fraction of the attention if Seth had been rejected by Barnes & Noble? Of course it wouldn’t have. This is nothing more than PR for him and linkbait for the news sites. “OMG Apple is a walled garden! They’re CLOSED!!!!”

        What solves the oligopoly issue isn’t something as mundane as allowing cross-linking to other stores. It’s the abandonment of DRM and the use of published ebook formats (or, of course, the wide distribution of programs that read proprietary formats ala the Kindle).

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    2. Well its got the whole blogosphere talking about his book doesn’t it? I can’t believe Godin is that naive about such things. Seems about as casual a mishap as MIA giving the bird at the Superbowl. Cause a minor controversy that will blow over in a few days and get lots of free publicity as a result.

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  7. I think a better analogy would be a brick and mortar book store choosing not to stock a book because the appendix contains a list of other titles by the author with the address of a major competitor store selling them – and that store have exclusivity.

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  8. Secular Investor Wednesday, February 29, 2012

    He doth protest too much!

    Godin wants his cake an eat it. He’s happy to get paid by Apple who sell his book, but he also wants to place links to in his book to Apple’s competitors, where he can presumably earn a fee for every hit.

    Asking Apple, Amazon or Nook to allow links from the books they publish to their competitors is like expecting supermarkets to sell products with vouchers to buy similar products from they competitors down the road.

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    1. Grocery stores/supermarkets do this Every Day.

      They sell newspapers, which advertise competitors and contain coupons for same. THEIR response, at least in my market, is to accept competitor coupons and prices as tho they were their own ads.

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      1. Rather than invalidate his basic point, all you did was show the list muted applicability of his analogy. Coupons for generic products are not a good analogy for links to books exclusive available from one publisher after all.

        Indeed, after reading the article and several of these comments it seems to me unfair to compare what Apple did with Godin’s book with what the other publishers are doing so partitioned not the industry.

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  9. He could sell his book as a PDF file. That would allow him to include any links he wants.

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    1. Steve Sabol Friday, March 2, 2012

      Exactly… But then he’d have to have the infrastructure to do that. So, he wants Apple (or Amazon or B&N) to sell his book, handle all the overhead of the sale process, and then is shocked SHOCKED I TELL YOU when that retailer has a problem with him driving business to a competitor.

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    2. More to the point, he could sell as an ePub, which would make it appear identically in iBooks to what one would get via the iBooks/iTunes bookstore.

      On the more general point, the ball is in the publisher’s court — they just need to get rid of DRM to make all eBooks universal.

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  10. Godin is being more than a bit disingenuous. “Too Big to Know” is also available in the iBookstore. So if linking directly to a store was so much better than a standard bibliography reference he did that option. Of course he won’t make money off that link like he will off the Amazon one but its not Apple’s responsibility to promote an author’s third party deals. if he wanted to put coupons for Amazon in his hardcover books I’m sure Barnes & Noble might have a little chat with him as well.

    I have faith that this will all work itself out in the end … just like digital music DRM. At the beginning people are just excited by the new concept. Then as eBooks become greater and greater share of the market consumers become more savvy their limitations and they begin to speak up. Eventually, eBooks publishers will be forced to standardize or remove DRM by either market forces or judicial forces and all of this will be an unpleasant memory. These are just growing pains.

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