The big beneficiary of this ebook reading increase appears to be tablets, which have overtaken e-reader ownership for the first time in Pew’s surveys. While ownership of e-readers has grown to 19 percent from 10 percent a year ago, tablet ownership is now up to 25 percent, up from 10 percent a year ago. Overall, one-third (33 percent) of Americans now own an e-reading device, either e-reader or tablet, compared to 18 percent of Americans a year ago.

The Pew Survey, which polled 2,252 Americans in October and November, doesn’t break down exactly how much reading is actually taking place on tablets versus e-readers so it’s possible that e-readers are still more popular for actual reading of ebooks. But the report falls in line with other reports that suggest that the e-reader is set to decline in the face of more versatile tablets.

IHS Suppli said earlier this month that ebook readers peaked in 2011 and were expected to decline by 36 percent in 2012 to 14.9 million units, down from 23.2 million in 2011. IHS forecast that e-readers shipments will drop to 7.1 million by 2016. Meanwhile, tablets are expected to grow to 203 million shipments by 2013, up from 70 million last year.

The rise in ebook reading comes as traditional paper book reading declines. Pew found that 67 percent of Americans 16 and up read a printed book in the last year, compared to 72 percent a year ago. It’s not surprising that ebook reading is up. It’s just more convenient for many readers. And with tablets only accelerating in sales thanks to smaller units like the iPad Mini, there’s less need to rely on a dedicated reader.

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Down to You and The Wild Ones by Michelle Leighton (self-published, romance)

How they hit the list: Leighton, who goes by M. Leighton and has self-published fifteen books, says she’s not sure how Down to You and The Wild Ones hit the New York Times bestseller lists. She did a promotional event at book review blog A Tale of Many Reviews for two weeks following each book’s release.

Leighton just signed a deal with Penguin imprint Berkley for The Wild Ones. “They’ll be taking over the ebook soon and then we’ll be working together on the next two books out, once I get them written,” she said. “I’m so, so excited to be taking this journey with them.” Her agent is Kim Whalen at Trident.

New York Times bestseller list, week of 11/4/12

Here are the titles in the top 35 that appear on the e-book bestseller list, but not on the print bestseller list (click the link to expand the chart).

USA Today bestseller list, week of 10/25/12

USA Today includes all formats and genres in one list and notes which format of a book sold best. Here are the titles in the top 35 where e-books outsold print (click the link to expand the chart).

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• Forecast: the evolution of the e-book market
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• Tablet market to hit over 377 million units by 2016

With each new launch, someone inevitably declares the impending end of physical textbooks, as though those tech giants control the levers responsible for the successful adoption of new technology in schools. But while the tech industry plays a significant role in the transition to digital textbooks, making devices available and affordable is just the beginning. Rallied by leaders at the top, momentum is certainly moving in favor of digital textbooks – earlier this month, US Secretary of Education Arne Duncan declared that “over the next few years, textbooks should be obsolete” – but challenges for states and school districts still remain.

Schools, districts need more flexibility to purchase content

At their best, digital textbooks offer a learning experience that boosts engagement, adapts to student learning, tracks performance and ensures up-to-date content – all while potentially saving costs in the longterm. According to a report from the Digital Textbook Collaborative, which was convened by the FCC and the US Department of Education, the cost of implementing the shift to digital varies from $250 to $1,000 per student per year, but the cost savings from increased teacher attendance, reduced paper costs, online assessments and other factors are estimated to be $600 per student per year. However, some say estimates on cost savings assume tablet prices that are less than actual costs and, without funding support, the upfront costs are difficult for many school districts to manage.

Beyond the initial technology costs of getting to a one-to-one student-to-tablet ratio (from the historic student-to-computer ratio of 3.75 to 1), Geoff Fletcher, deputy executive director for the State Educational Technology Directors Association (SETDA), said the current procurement processes for textbook content aren’t aligned with the dynamics of the digital world. “The business model right now doesn’t take advantage of the enormous flexibility because all the money is locked into one approach,” he said.

As it stands now, in most states, Fletcher said, decision-making power regarding which textbooks should be adopted by schools is centrally held by the states. The textbook publishers, who have long dominated the education content industry, benefit from that model (my colleague Laura Hazard Owen provides a nice snapshot of that market here), but Fletcher said more states need to encourage the development of content marketplaces by giving schools and school districts the flexibility to select the content their students will use.

Aside from the funding challenge, there’s the infrastructure hurdle of expanding broadband services to communities with inadequate Internet connectivity.  According to a 2010 FCC survey, 80 percent of schools say their broadband connections do not meet their needs and FCC reported this year that 19 million Americans still lack broadband access.

The good news is that the FCC and Department of Education are actively pushing change at the federal level and, over the past couple of years, 22 states have adopted policies encouraging digital textbooks, the SETDA reports. But as new digital content starts entering classrooms, the organization says local districts need to ensure that their policies accept the use of new devices and provide adequate professional learning to teachers.

User experience matters

Osman Rashid, CEO of digital textbook startup Kno, said that in addition to making devices and content available, providing a user experience that engages students is critical to the success of digital textbooks. While Apple’s iPad, which supports the use of interactive educational software, leads among new technology in schools, Amazon is trying to make a bigger push with the Kindle, attracting budget-conscious educators with a lower price. But except for the Kindle Fire, Amazon’s devices, which were built mostly around text, don’t offer students a markedly different or more engaging experience. They may lighten the load in students’ backpacks, which is a positive step but hardly the only benefit we should look to digital textbooks to provide.

To help ease the transition to digital, several schools have adopted “Bring Your Own Device” programs that save money by enabling students to use tablets owned by their families in class. But while many BYOD programs are producing encouraging results, schools need to be prepared for additional technological and instructional support. Not only do schools need to add bandwidth to support new devices (of varying ages and types), they need to prepare teachers to work with a range of devices. Most importantly, the programs need to build in safeguards to ensure that students whose parents can’t afford devices aren’t left behind. In the short term, schools can provide tablets to students who don’t have their own. But in the long term, the equity issue could rear its head as wealthier students bring in technology that outstrips their classmates’ in speed and performance, said McGraw-Hill SVP Vineet Madan.

“BYOD looks attractive,” he said. But “you won’t really appreciate the gap or performance difference until you’re two or three years into it.”

With many of these challenges, it’s up to the schools, districts and states, not industry players, to figure out solutions. But the SETDA’s Fletcher said that in addition to providing devices, there is another key role that companies like Apple and Amazon play.

“These are folks who want to show schools what can be, not just respond to the customer,” he said. “That kind of partnership is crucial in helping to make these kinds of changes in educational technology.”

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The company is preparing a mobile app that will allow users to get unlimited access to a library of books for one monthly price. The app will combine discovery with access and reading, so users will be able to get recommendations and immediately begin reading. The app was designed from the ground up to optimize the reading experience on mobile devices.

The app will feature a growing catalog of books, from national best sellers to classics, both fiction and non-fiction.  Oyster is looking at working directly with publishers, not with authors. The app is being tested right now with a small number of users.

In addition to Founders Fund, Oyster’s new funding comes from SV Angel, Chris Dixon, Founder Collective, Shari Redstone’s Advancit Capital, Sam Altman of Loopt.

The company was founded this past summer by Eric Stromberg, a former business development and product guy at Hunch; Andrew Brown, who worked at Google and Microsoft; and Willem Van Lancker, a former user experience designer for Google Maps. Stromberg told me the idea sprang from his fascination with the transformation of books and what they will ultimately look like in digital form. He said he wants to create a tool for helping people find and read a lot more books than they’re doing today.

“We want to create a product that fits into people’s lives and lets them find books and read all the books they wished they had read,” said Stromberg.

Stromberg said there’s no date for the launch of the app and no price yet. He said he wants to create a social environment that lets people recommend books to each other, similar to how Spotify users can share their tastes with others. And Oyster will also work in the background to learn from a user’s tastes and habits to suggest other books. Stromberg will be relying on his experience at Hunch, which provided personalization and recommendation services to companies.

For publishers, Stromberg said Oyster gives them another way to generate revenue and get their content in front of users. He said Amazon’s Kindle best seller list drives a lot of sales for publishers but it prevents other works from being discovered. Amazon’s lending library also plays in this market but it’s limited to Amazon Prime customers and only allows for one book to be borrowed a month.

There are still a lot of questions about Oyster and whether it can compete against Amazon and other competitors. A lot will come down to its book selection and how Oyster’s talks go with publishers. Stromberg said Oyster will try to focus on quality over quantity. With the success of access-related media providers like Spotify and Netflix, this might be a chance for publishers to test out a paid library model and also lessen their reliance on Amazon.

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In documents filed late Friday, Bob Kohn asked U.S. District Judge Denise Cote to stay her ruling on the grounds that consumers will be irreparably harmed by new e-book prices if the settlement goes forward.

Cote approved the settlement last week as a means to fix what she concluded to be blatant price-fixing by Apple and the publishers. The arrangement calls for Simon & Schuster, Hachette and HarperCollins to truncate their contracts with Apple by this Friday and to notify other ebook retailers that they are no longer bound by contracts that set a minimum price for ebooks.

What this means in practice is that, within weeks, mega-retailer Amazon will be able to resume selling ebooks at bargain basement prices, including below cost.

Kohn, Apple and two other publishers had urged Cote to hold off approving the Justice Department settlement until the price-fixing issues could be addressed at a trial next summer. In a surprise move last week, however, Cote threw aside planned court hearings and said the settlement could go into effect.

Kohn, a prominent entertainment industry lawyer, now says that the process should be halted until it goes before the Second Circuit Court of Appeals. If Cote doesn’t grant a stay, he says, “consumer welfare” will be harmed immediately as the new ebook prices will take effect and shift pricing power to Amazon. He also points out that, if the Second Circuit ultimately sides with the Justice Department, ebook buyers will not be hurt; they can simply collect more money under a proposed compensation scheme that proposes to pay them between 25 cents and $1.32 per overpriced ebook.

In an interesting tactical shift, Kohn appears to acknowledge that the publishers did in fact collude to fix prices but that the price-fixing was not illegal. Until recently, publishers have denied that they conspired.

This suggests that the publishers who did not settle are now putting all their hopes on a Supreme Court decision that held that price collusion is not illegal in the case of market failure. The argument is based that on the idea that Amazon, with a 90 percent ebook market share, was a monopsony (a single buyer with all the power) and that publishers had to take a one-time step to fix that.

Kohn first made the argument in a remarkable comic-strip he submitted to the court last week:

Judge Cote will rule on Kohn’s request for a stay in the next few days. According to Peter Toren, a veteran federal court litigator, Cote will almost certainly turn down the request. Toren added that this will pave the way for the settlement opponents to make an urgent request for a stay to the Second Circuit.

If the Second Circuit also rejects the stay, it’s effectively game over. This is so because it would take the Second Circuit many months to address the settlement itself — and, by that point, the new ebook prices will have gone into effect and changed the market.

Here is Kohn’s stay request with some relevant parts underlined:

Kohn Request for Stay

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Background

Recall that publishers and Apple have been in a throw down with the government over the price of ebooks. Government lawsuits say that the publishers’ switch to a commission-style pricing system (like the one used in iTunes) amounted to price-fixing. Three of the five publishers threw in the towel while Apple and two hold-out publishers are fighting in court.

The feds’ lawsuit demands that publishers change their pricing model so that Amazon and others can set the price they want (even it the price is below cost). The lawsuit by the states is instead about money; the states want to collect refunds on behalf of ebook buyers.

Three publishers agreed to pay up several months ago, but it was only on Thursday that the dollar figures finally came out. Meanwhile, Apple and the others are refusing to play ball.

• See also: Everything you need to know about the e-book lawsuit

What the deal means for you: a tiny Kindle or iTunes credit and a long wait

If you bought an e-book from one of the five big publishers between April 1, 2010 and May 23, 2012, you will get a 25-cent refund for each old title you bought and $1.32 if the title was a recent New York Times bestseller. The refund will come in the form of a credit to your Amazon, Barnes & Noble or iTunes account; you’ll get a check if you bought from Sony or Google. The retailers have your email address so it will not be hard to notify you.

This is a micro-windfall that you probably weren’t expecting, so it’s all to the good. The only catch is that it will be a long time coming. U.S. District Judge Denise Cote has to stamp the deal — and there’s a good chance she won’t while the case is ongoing against Apple and two hold-out publishers. Realistically, we’re talking years before that $1.32 credit hits your iTunes account. If the two hold-out publishers and Apple finally decide to settle, you may get another small credit.

What it means for publishers: ebook sales and an escape from the class action lawyers

The three publishers who struck a deal are looking smarter by the minute. The settlement not only gets them out of legal purgatory, it will lead to most of the money they pay coming right back to them. What do you think the average person is going to do with a $1.32 Barnes & Noble credit? That’s right. They will buy an ebook that likely costs $5 or $10. This is almost a net win for the publishers.

Just as important, the settlement lets publishers short-circuit the class action lawyers who are coming at them with a separate lawsuit. Those lawyers, who say they would get more money if they were in charge, are now frozen out because there is no money left to collect on behalf of consumers.

The two hold-out publishers, Macmillan and Penguin, now face a hard choice. They have to decide if their fight to keep commission pricing is worth years of legal bills and uncertainty (keep in mind, they could lose the case and face an even stiffer penalty). Given this choice, it’s possible that the publishers, even if they believe they did nothing wrong, will find it easier to just accept the states’ deal and move on.

What it means for Apple: fighting on

Unlike the publishers, Apple has more lawyers than the state of Connecticut. It can (and will) fight this thing forever. At the same time, Apple has a stronger defense than the publishers — it wasn’t in the room or on the phone when many parts of the alleged conspiracy took place.

Apple, which says it did nothing wrong, may also be concerned with protecting the commission model of its iTunes store (if the government wins on ebooks, will it come after apps or music pricing next?).

Finally, if the two other publishers fold and join the settlement, the government may quietly close the case against Apple rather than risk losing an expensive and high-profile court fight.

What it means for the government: election year headlines

The settlement is a trophy for Connecticut Attorney General George Jepsen and his counterparts around the country. They can tell voters, shortly before November elections, that they have won refunds for home state consumers.

This is a big fudge, of course. According to Beth Farmer, an antitrust professor at UPenn, the court is unlikely to approve the deal while the dispute with Apple, Macmillan and Penguin is ongoing. ”The notice and claims process is going to be complicated and it wouldn’t be efficient for the states to do that multiple times,” said Farmer by email last month.

Andre Barlow, a former Justice Department lawyer and antitrust expert, is also skeptical. “It’s not a clean way of doing this but it probably makes sense for the states to do it this way … At least they’ll have a big headline.”

(Image by Pagina via Shutterstock)

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The news comes from court filings that offer fresh details about a sweeping settlement between state governments and three publishers over an alleged conspiracy with Apple to fix the price of e-books.

As my colleague, Laura Owen, reported last night, Simon & Schuster, Hachette and HarperCollins will pay a total of $69 million to consumers. Here are some fresh details based on today’s filings:

• Consumers will receive $1.32 for each New York Times bestseller they bought between April 1, 2010 and May 21, 2012

• They will receive 32 cents if a book was not on the NYT bestseller list at the time but was in its first year of publication, and 25 cents if it was an older backlist book

• Most consumers will receive the reimbursement in the form of a credit to their Amazon, Barnes & Noble, Kobo or Apple account unless they state they prefer a check

• Those who bought ebooks through Google and Sony will get a check

• Any money left over will go to literacy related charities

If a court approves the deal, the publishers will put aside money into a dedicated consumer account within 30 days and retailers will begin notifying customers by email. The notification process will also include Google and Facebook ads.

The publishers will also put aside $7.6 million to compensate the states’ for investigation and attorneys’ costs and an additional $750,000 each to pay for the notification process.

Consumers in five territories and every state except Minnesota, whose attorney general has opted out of the deal, are eligible to receive money. (We’ve reached out to Minnesota for comment and will update when we hear back).

Even though only three of the five accused publishers are part of the deal, publishers who bought an ebook from any one of the five will be compensated. The office of Connecticut’s attorney general said by email that this is because any conspirator is responsible for the actions of a co-conspirator.

The states are continuing a related lawsuit against Apple and the two hold-out publishers, Penguin and Macmillan. If they prevail, according to the memo below, more money could be forthcoming to consumers.

Here’s the memo with key parts underlined:

Memo in Support of Plaintiff States’ Motion for Preliminary Approval of Settlements Copy

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In the Footsteps of Little Crow by Curt Brown (Minneapolis Star-Tribune)

It’s the oldest story in Minnesota, Curt Brown says: The U.S.-Dakota War of 1862. The U.S. Government hanged 38 Dakota Warriors and it remains the largest mass execution in United States history. For years it was “swept under the rug,” Brown says. But 2012 marks the war’s 150th anniversary, and the Minneapolis Star-Tribune assigned Brown to write a long series about the conflict.

Brown received a four-month break from his regular reporting duties and traveled through the United States and Canada to meet with Dakota descendants. He read historical documents and diaries and consulted unofficial weather records and newspaper accounts to tell the story of the war through the eyes of Dakota chief Little Crow, the leader of the rebellion.

The result was a six-part narrative series, complete with infographics, photos and video. The first part of the series ran in the Star Tribune and on its website on August 12, with another part each day for the next five days. The paper also packaged all six parts together into a $2.99 ebook that went on sale August 12, for readers who couldn’t wait to read the whole thing.

Apparently, a lot of people couldn’t wait: The book is #13 on the New York Times nonfiction ebook bestseller list this week. It’s featured in the Apple iBookstore, where it is #8 on the history bestseller list.

I asked the project’s editor, Kate Parry, why she thinks it has been so successful. “We worked very hard to put the Dakota and white settler versions of history on equal footing,” she says. “Because it is set in the same era as the Civil War, we may be picking up readers who read whatever they can find about that era. But the bottom line is that Curt wrote the series magnificently, with a lot of intrigue and tension woven through the story line. We’re hearing from readers on every platform that it was a great read and they couldn’t wait to get to the next chapter or installment. That’s just what we were hoping for when we structured it as a narrative.”

“The response has been overwhelming,” Brown says. “[The Star Tribune] was in bankruptcy a couple years ago. I got calls and emails from people saying, ‘This restores my faith in newspapers.’ People are impressed that a newspaper can let a reporter have four months to do something special and tell them about their history.”

In the Footsteps of Little Crow is $2.99 on … Amazon Kindle | Apple | Barnes & Noble Nook

New York Times bestseller list, week of 9/2/12

Here are the titles in the top 35 that appear on the e-book bestseller list, but not on the print bestseller list (click the link to expand the chart).

USA Today bestseller list, week of 8/23/12

USA Today includes all formats and genres in one list and notes which format of a book sold best. Here are the titles in the top 35 where e-books outsold print (click the link to expand the chart).

Photo courtesy of Star Tribune / David Joles

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The Boy in the Suitcase by Lene Kaaberbol and Agnete Friis (Soho Press)

What it’s about: Danish nurse Nina Borg discovers a three-year-old boy in a suitcase, naked and drugged and alive. As she treks across Denmark to find out where he came from and how to get him back, her life is in danger. It’s #25 on the New York Times ebook bestseller list this week.

How it hit the list: Soho Press, a NYC-based independent publisher that focuses on literary fiction and international crime, is selling the ebook edition of The Boy in the Suitcase for $1.99 this August. Soho Press first published the English-language edition in fall 2011. The paperback edition comes out in September, and the next book in the Nina Borg series, Invisible Murder, will be published in October.

When Soho Press put The Boy in the Suitcase ebook on sale — in concert with an advertising campaign across crime blogs –”presales of the digital edition of Invisible Murder jumped way up,” says Paul Oliver, Soho’s director of marketing and publicity. “The promotional tools in this case are working in a very consistent way. Ebook readers are going on to purchase the follow-up.”

The book is included in Amazon’s August “100 Kindle Books for $3.99 or Less” promotion.

The Boy in the Suitcase on … Amazon Kindle | Apple | Barnes & Noble Nook | Google  | Kobo | Sony

New York Times bestseller list, week of 8/26/12

Here are the titles in the top 35 that appear on the e-book bestseller list, but not on the print bestseller list (click the link to expand the chart).

USA Today bestseller list, week of 8/16/12

USA Today includes all formats and genres in one list and notes which format of a book sold best. Here are the titles in the top 35 where e-books outsold print (click the link to expand the chart).

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I’ve seen Facebook sharing of digital content from an e-reader in the past, but as an Evernote user, this feature intrigues me:

“For the first time, Reader is combining features from Evernote to allow users to save their favorite web content to enjoy any time. Evernote’s Web Clipper allows saving content with a click, and pages saved with Evernote Clearly are optimized for Reader’s crisp E-Ink display. Favorite passages can also be annotated on Reader and saved back to Evernote for viewing later on any smartphone, tablet or PC.”

Adding Evernote support is a smart move by Sony and I anticipate others — namely, Amazon and Barnes & Noble — to follow with expanded sharing or web clipping options. Moving content to the cloud for later consumption on nearly any device is just one of the benefits brought by Evernote and it makes sense: Why read a long web page on a device that’s not optimized for the activity when you can clip it and read later on a better display? Likewise, the reverse option is appealing: I often use Evernote Clearly to clip the text of web pages and could use the new Sony Reader to view them later.

With the PRS-T2, Sony is also throwing in a free voucher for an e-book copy of Harry Potter and the Sorcerer’s Stone through a partnership with Pottermore, making the Potter pot, that much sweeter for its new Reader.

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