Open vs. Closed: Google Takes on Amazon and Apple in e-Books

As it stands now, the e-book industry is dominated by two closed and proprietary giants: Amazon and Apple. Both have e-book platforms — the Kindle and the iPad — which they design, manufacture and control, and both have been busy trying to convince book publishers to do business with them, with Amazon pushing for lower prices and Apple giving in to publishers’ demands for a more flexible approach. The landscape will change dramatically later this year, however, when Google is expected to launch a digital book-selling unit called Google Editions. The search company’s entry promises to turn the e-book business into yet another battle in the ongoing war of Open vs. Closed.

According to Google product manager Chris Palma, who described the search giant’s plans at a recent publishing industry event in New York, it will start selling digital books in late June or July. And unlike books bought from either Apple or Amazon, which are locked by digital rights management software and can only be read on the proprietary devices sold by those companies, Palma said that e-books bought from Google Editions will be accessible from a range of non-Google websites and will be readable on any device that has a web browser (including presumably a Google tablet, if one ever materializes). It doesn’t get much more open than that.

The Google staffer said that users will even be able to buy versions of the e-books they want directly from book retailers, which would allow them to keep a larger portion of the revenue from a sale. When it comes to pricing, however, the company apparently hasn’t decided whether to set prices itself or adopt the so-called “agency model,” which lets publishers set the price. The choice is an important one: Amazon has been pushing to get publishers to lower prices, hoping to spark demand for e-books that will help sell more Kindles (the same strategy Apple chose when it was using iTunes to sell iPods). But Apple has decided to play nice with publishers and use the “agency model,” which tends to keep e-books higher-priced.

Whatever pricing scheme it chooses, it seems clear that Google wants to come down on the side of being as open as possible — a choice likely designed, at least in part, to set the company’s service apart from the proprietary models of its main competitors. In a recent interview with Ken Auletta in the New Yorker, Google engineer Dan Clancy said that the company’s approach is designed to create “much more of an open ecosystem,” and that Google was “quite comfortable having a diverse range of physical retailers, whereas most of the other players would like to have a less competitive space, because they’d like to dominate.” But will an open approach pull in consumers who have grown used to the Kindle or the iPad and iBooks?

The one who stands to lose the most by Google’s entry into the e-book market is Amazon. The company has already lost a lot of the ground that it used to hold, thanks to Apple’s support of the “agency model” of pricing. Earlier this year, Amazon tried to force publishers to accept $9.99 e-book deals by threatening to remove their books from its online store — and in one case, it actually did so, with books published by Macmillan. Unfortunately for Amazon, however, Apple launched the iPad, and along with it came an agreement with publishers to allow them to set their own prices for books, based on their existing sales models for hardcover and paperback editions.

Google’s arrival on the scene is likely to give even more power to publishers, since they will gain even more leverage over Amazon (and to a lesser extent Apple). That will almost certainly make it harder for the company to try and bully publishers into accepting its pricing model. And if Google decides to go with the “agency model” as well, and allow publishers to set the price, that could leave Amazon without much of a leg to stand on. It’s not clear whether that will necessarily be good for readers, however — at the moment, Amazon is the only one pushing for lower prices, and the rise of the agency model threatens to give publishers more power than they had before, which could keep e-book prices high, at least in the short term.

Related content from GigaOM Pro (sub req’d): The Price of E-Book Progress

Post and thumbnail photos courtesy of Flickr user Stewart

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