In the past two-and-a-half years since the company’s launch, Kobo has built e-reading and tablet devices and launched its business in over a dozen countries. Aside from Apple, which sometimes seems to be playing a whole different game in pushing e-books through its iPad platform, Kobo may be the best hope for publishers wanting to see the e-book retail market grow to accommodate a third, significant player.
In a press release in early June, Kobo boasted triple-digit growth numbers for e-book downloads and e-reader and tablet purchases and claimed nine million registered users in 190 countries. Kobo also recently introduced Writing Life, its self-publishing service competitor to Amazon’s Kindle Direct Publishing and Barnes & Noble’s PubIt!. And, perhaps most importantly, Kobo now has deep-pocketed backers in Rakuten, a dominant online retailer in Japan akin to Amazon in the U.S. that acquired Kobo at the end of 2011 for $315 million.
Leading the way for Kobo is executive vice president of content, sales and merchandising Michael Tamblyn. Tamblyn has been a vocal and effective spokesperson for Kobo, attracting large crowds for the many talks he gives at book industry conferences. In some ways, it’s a role he’s been preparing for his whole career, which he has spent primarily as a bookseller and online bookselling pioneer.
Tamblyn, 40, started his career in college where as a student in classical music he took a job at a local independent bookstore, The Bookshelf in Guelph, Ontario. Soon after graduating, he managed to convince the owner of the store to build an online bookselling destination. Bookshelf.ca was Canada’s first online bookstore and was eventually acquired by Indigo, Canada’s largest bookstore chain (and the company that initially launched Kobo), in 1998. Tamblyn went on to serve as vice president of online operations at Indigo for two years.
He spent the following years bouncing around online product and consulting jobs before landing at BookNet Canada as founding CEO. BookNet Canada is much like Bowker in the U.S., providing information, tracking and supply chain services. After six years at BookNet Canada, Tamblyn rejoined Indigo in July 2009 and assumed his current position at the start-up Kobo in December 2009.
Tamblyn has a bachelor’s degree in music from Wilfrid Laurier University in Waterloo, Ontario and an MBA from the University of Western Ontario’s Richard Ivey School of Business in London, Ontario.
We sat down with Tamblyn to talk about Kobo’s international expansion, sharing reader data, why romance, science-fiction and fantasy are leading the way with e-books and why publishers should experiment more.
Jeremy Greenfield: Kobo has begun a very aggressive international expansion but in the U.S., the company’s market share is considered to be low. First off, can you tell us what you estimate Kobo market share to be in the U.S.?
Michael Tamblyn: Market share is a very difficult thing for us to discern. There isn’t good data being gathered or tracked about this. The estimates are sketchy at best. In all of the markets where we’re currently active, where we have a strong retail partner and good distribution, we’re creating strong competition in that market. We’re right in there. We have become a serious choice for consumers who are looking for an e-reading platform that embodies the values that we hold and cherish.
For anyone who cares about openness, the intersection between reading and social, who cares about beautiful devices, they’ve been picking us up.
JG: Expanding internationally must be very difficult. Even very large companies like Amazon and Barnes & Noble are struggling to do it well.
MT: What I think that shows is just how difficult it is to do. Kobo was born international and knew from the very beginning that the only way to succeed in the e-book business was to be an international company. For reasons of raw economics, outside of the U.S., there probably isn’t another single national e-book market that’s big enough to sustain a player on its own in the space of international competition.
If you decide to base your entire business on selling e-books in the UK, there aren’t enough e-book purchasers there to sustain enough revenue to make the investment required to compete against other international players. When you look around the world, you see that pattern repeated. Local players try to spin up an e-book solution of their own and then realize it’s tens of millions or hundreds of millions of dollars of investment to compete against Amazon and Apple. Unless you’re international, unless your focus is global, to compete in this business is very difficult.
From the very beginning, we knew we’d be in multiple countries and in multiple languages and we executed on that from the very beginning.
JG: Kobo was recently acquired by a large Japanese e-tailer. Microsoft recently entered into a joint venture with Barnes & Noble. Google just launched a new tablet and seems to be ready to join the e-book battle anew. And Amazon is the big kahuna. Why will Kobo compete and win the e-book war?
MT: You look at that list of companies and what becomes clear is you just can’t be good at one thing. You can’t just have a good device. You can’t just have a good bookstore. You can’t just be in many international markets. You have to be able to integrate a great international experience, a great multilingual experience, a great device, a great catalog of books, a great customer experience, a great reading experience or customers don’t get excited about you and it’s hard to grow.
Because of the resources Rakuten has given us, we are able to meet those expectations.
When you hear about a company struggling, it’s because expertise isn’t necessarily transferable: to be good at one thing doesn’t necessarily mean that you’re good at the others. That’s why we’ve been able to stay in this game and grow as rapidly as we have.
JG: There was a big article recently in the Wall Street Journal about data that e-booksellers gather through their readers. Kobo has long been known in the industry as the e-bookseller that has been most forthcoming with data. Why do you share so much data?
MT: There are couple of reasons for it. We fundamentally believe that for Kobo to do well, publishers have to be doing well and authors have to be doing well. We are part of a content ecosystem. Authors and publishers right now have massive decisions that they have to make. And most retailers treat this whole process like a black box: e-books go in, revenue comes out and the publisher and the author have no real insight into how those sales are being made. The more insight we can give to a publisher and to an author about how this market is developing, how this consumer is different from a print consumer, the more likely they are to make good decisions, the better it’s likely to be for us.
JG: Do you share more data with publishers than you share during your talks at industry conferences?
MT: Oh yeah. This has been another fundamental policy for us. On a very regular basis we’re sitting down with publishers and breaking down data on how their particular business with us is doing, how are they benchmarking relative to others and especially in this world of agency, how are their price points performing, what are the time cycles around their books, what’s the seasonality around their books, how have marketing campaigns we’ve executed together performed. You can never give enough. There’s always the next question and the next data point. As a part of that ongoing dialogue, we are always getting better at answering the publishers’ question of how we’re selling together.
It has its limits. We don’t get into aspects of specific consumer behavior. We are obsessively protective of privacy. But where we think there’s an opportunity to preserve reader privacy but at the same time provide reader insights into how our customers are performing in the e-books space, we’re interested in that. To be fair, that’s no different from what traditional booksellers have been doing for years and years. Historically, people have moved from being publishers to retailers and back. A lot of that has gone away in e-books except to the extent that we’re able to recreate it.
JG: Can you give insight into the kinds of data you share?
MT: It’s a mix of informal chats and hard data. Most of what we’re doing is packaging up reports and bringing them to publishers and often sitting down together and dissecting the data that comes from that. The interesting question for us going forward is how do we make that a broader, more scalable process. We have tens of thousands of publishers and we have them all around the world. What works well when you’re visiting 10 big publishers in New York, doesn’t work as well for 20,000 publishers around the world in 60 languages. So we’re looking at scalable solutions.
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JG: Like a publisher dashboard of sorts?
MT: It’s much more incremental than that. Expanding the range of reports that we give, making them easier to produce and more replicable and then looking at the different ways that publishers want to be communicated with and how do we get our insights to that larger group: newsletters, PDF reports and portals are all in the mix but I’m not going to commit to a timeline right now because it’s a very iterative process. We do a bit and see if publishers like it and then do a bit more.
We’re starting at the top with our big publishers but also starting at the bottom with Writing Life, giving a ton of visibility to self-published authors on sales and looking at how books sell around the world. Are there territories you should be looking at? Should you be setting prices differently around the world? In our mind, a self-published author is a publisher – it may be a publisher of one book but they make all the decisions a publisher has to make.
JG: You’ve been in the book industry your whole career, much of it in bookselling. Is that always what you wanted to do? Why?
MT: I started as an independent bookseller in a college town in Canada.
It’s funny, but when I went to university, I went to become a composer and did a degree in classical music. Because it turns out that composition is a really bad way to make a living, I worked in an independent bookstore. Because I did work in multimedia and worked on the very beginnings of the internet, I managed to talk the owner of the store into taking it online. As a result, we were Canada’s first online bookstore.
Every part of my career has been at the intersection of books and technology and that is the thing that I love. How do we use both the passion people have for reading and the great things that technology can do to put the next great book in someone’s hand. I got to be present at the time the book industry was remade through online retail and then, working at BookNet Canada, I was present while the supply chain of the business was remade and the metadata side of the business was remade. From the research that we were doing at BookNet, I could see there was this e-book thing on the horizon and that made the decision to jump to what was a fledgling startup inside of Indigo easy. There’s nothing more addictive than turning industries upside down and making them anew.
JG: You’re in some ways a book industry insider acting as a catalyst for change in the industry.
MT: When industries are stable and things are ticking along steadily, industries tend to be dominated by insiders; you have to grow up in it and pay your dues. During times of upheaval is when outsiders get in, when start-ups get in, when innovators get their shot. You see it all through the ranks of senior executivess in publishing. You see it in companies like Kobo jumping up to challenge giants like Barnes & Noble and Amazon.
That’s a really exciting place to be. And it means that there are these windows in time when even very large and entrenched organizations are willing to consider new things and are willing to place bigger bets than they would have otherwise. We’ll come out the other side with a stronger, smarter, more resilient book industry and that’s always a good thing.
JG: What advice would you give someone who wants to enter into a career in bookselling?
MT: There are so many more ways into it now, on one hand. But in some ways fewer places to do it.
You either have to deeply embrace the physicality of the book and build the small, beautiful independent bookstore or you come somewhere like here.
Now, bookselling means a lot of different things. We have people here who are booksellers born and bred who are picking and highlighting different titles and deciding which ones we should put our muscle behind in a particular market. But there are also people who write recommendation algorithms or who do data mining – that’s bookselling, too.
So, whether you’re someone who has taken three degrees in English literature or two degrees in engineering, if you love books, there’s a place for you in this industry.
JG: Discoverability is a big buzz word right now. What can publishers do through the Kobo platform to help their books get discovered and to sell more books?
MT: There’s a lot of talk right now about the lessons that traditional publishing can learn from self-publishing.
There’s an extreme you can take that to that I don’t think makes sense. But there are some things that self-published authors do really well that would be interesting for traditional publishers to emulate. Self-published authors spend a lot of time thinking about how people find books: You’ll see subtitles optimized for searchability and what category do I put this book in to get on a best-seller list; thinking very strategically about descriptive text; watching the performance of each book with a near religious obsession; and caring about the performance of each book.
Self-publishers look at each title with a laser-like focus. That’s easy when you have five books. It’s hard when you have 10,000. The publishers who figure that out, who treat each book as an individual platform with an individual audience behind it will see big gains.
MT: Publishers should experiment more. We just launched the Kobo author notes program. Author notes allows authors to interact with readers inside the book, to penetrate that last barrier in publishing, which is between the author and the reader. You can see some publishers say, “I don’t’ think my author would go for that,” but some publishers light up because they say, “now we can get out authors engaged with our reading base,” because they know getting authors involved with their reading base is the whole game now.
We know publishers we can go back to and we can go to them and say, “why don’t we try this” and they will and some publishers will say, “no, we can’t, we don’t have time, too difficult.” The difference in attitudes will be a huge differentiator for publishers going forward because authors are going to look to that.
Authors have made this dramatic leap forward in terms of their expectations. They know the level of control they have with self-publishing platforms and they’ve had experience with traditional publishers. It’s not just what can you do for me now, it’s what can you do for me that’s better. That’s an upheaval in the industry. It’s quite ground-breaking for publishers to start to think like that. I think it’s fantastic. It’s going to change publishing and the relationship between publishers and authors for the better.
JG: It’s been a trendy thing to do to guess when e-book revenues will surpass p-book revenues in the adult trade market. When do you think that will happen?
MT: At a certain point, I think it’s less about when digital supplants print and more about where do we believe the tipping point exists, where we start to see real systemic, structural changes happen because of that shift. We know that things like chain bookselling can sustain a certain amount of transfer from print to digital and the question then becomes how much of that shift happens before those companies have to dramatically remake themselves.
I look at some of the great innovations that our former parent Indigo is doing right now. They figured out early on that they can’t dedicate as many square feet to books as before – that they have to become a cultural department store.
So what I’m more interested in is when we will cross that tipping point where the industry has to radically remake itself.
JG: Are print books going away?
MT: No, I don’t think they’ll ever go away. I don’t think they’ll go away any more than vinyl LPs have gone away. But more than that, there’s some kinds of content and there are some reading experiences that just fit so beautifully with the printed page that I don’t think we’re ever going to see those go away.
One other thing that the transition to digital has done is force publishers to really examine their relationship to the physical product that they’re putting out. The reason that so much has transitioned to digital – romance and science-fiction and fantasy – is that those books had almost no relation to the product. There was very little care to how those books looked in the world. The move to digital was no big deal because all people were worried about was the word.
There are some books where the physical experience is a huge part of the value. There are some publishers who will think, “you know what? I’m going to focus on the beautiful book. Even if 50% move over to digital, I’m going to keep the larger share of what’s printed on paper.”
JG: Because Digital Book World lives almost as much on Twitter as on the Web, we thought it would be fun to take a question from our Twitter following. This question comes from Maaja Wentz (@MaajaWentz): “I want to know what Kobo is doing to help indie publishers reach the Canadian kids market and also libraries.”
MT: To the extent that we are a b-to-c site, we’re connecting directly with consumers rather than institutions, our relationship to libraries are thin at best. That’s just because that has not been our focus. There are lots of Kobo e-readers in libraries and there are lots of library users who download borrowed library material onto Kobo devices, but that’s different than being a sales channel into the library market.
Our focus is going to be on how do we connect that publishers to the consumer market. How do we get that book into the consumers’ hands.
As far as children’s books sales and the ability to reach children’s book consumers, there are a couple of things. We started out with Kobo Vox which was the first color device to really go after children’s content for the Canadian market. We just expanded our fixed layout, color support to our iOS apps as well so that kids color content can also be consumed on those devices. We’re going to keep rolling out that support among our family of apps and devices. We know that market is there. We know there is a segment of parents that would love to be able to carry a big selection of children’s books that they can put in front of their kids. We will focus on getting more of that content from publishers, sometimes going to publishers and saying, “hey, you’ve got to get these books digitized.” We also will focus on discoverability: How will parents discover the books they want to buy for their kids?
JG: What are you reading and on what platform?
MT: I read almost entirely on my iPhone, which is heretical here because we have these fantastic devices. The thing that’s driven me there is that it’s the device that’s always with me. I always have it in my pocket, I always have it in my hand. For me, it’s fighting for these tiny snatches of time when I can find time to read books.
Whether that’s in a line getting onto an airplane or in the 15 minutes when I’m grabbing something to eat, that’s when reading happens.
When I’m looking at things like flights or vacations or anything when I’ve gotten my act together, Kobo touch. It’s a fantastic, fantastic device, especially when you’re going to read three or four hours at a time.
There are a couple of books that I’ve got going on right now. One is Tim Powers’s, Hide Me Among the Grave [HarperCollins], a Victorian vampire novel. I’m also reading book Hedy’s Folly by Richard Rhodes [Random House]. It’s a non-fiction work about the 1940s Hollywood star Hedy Lamar and how she and the avant garde composer George Antheil got together to invent [a frequency-hopping code machine that they patented in 1942. Editor’s note: I redacted this part of the conversation because Tamblyn went into a lengthy explanation of Lamar’s invention and the book. While very interesting, it was not really part of the core of this interview and so was removed for space considerations.]
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