Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.
The current eBook market has been in place over five years. Amazon basically created it with the introduction of Kindle in Fall 2007. Others have followed but Amazon continues to hold over 65% of the US market. B&N Nook; Apple iBooks; Kobo; Sony and Google are all usually mentioned as competition.
But over the past year, numerous start-ups have entered the market. Some use the traditional eBook sales model; others propose subscription-based sales; micro-selling pieces of the books; guaranteed sales and various other options. None of these start-ups has gained even a small trace of market-share, but it is early. It will take time.
There are numerous factors that go into the success of an eBook retailer. The retailer must have a unique feature and a killer user experience. Many focus on the community building aspect and/or coming up with options to carve a slice out of Amazon. But, throughout of all this, three major issues must be addressed:
1. Content – Publishers control the content. An eBook retailer that wants to succeed must have the cooperation of publishers. The start-up must have enough content to make it attractive for the consumer. If the company is going after the general reader, it needs a couple of the Big 6 to agree because they own the high-profile authors. But, a start-up can also succeed by focusing on a vertical and getting content for just that area. The reason Amazon has pushed so heavily into self-publishing authors and their own publishing is to control the content.
2. Capital – Although less expensive than starting a physical book chain, there are still substantial costs involved with starting an eBook retailer. The first 24-months will probably be revenue-negative. There are a lot of costs setting up the site, getting the app ready and approved, marketing and day-day operations. One of the new things digital has created in publishing and bookselling is there is a lot more VC investment than ever before. Digital has brought in a lot of people who never were interested in books. It has created a lot of new opportunities.
3. Customers – Even if a start-up builds a great app and reading experience. Even if they have a complete list of titles and offer great deals. It isn’t a “if you build it, they will come” reality. A retailer must go out and capture the customer. They need to either go after new readers or take them from the existing platforms. This part may be the most difficult. Amazon is a great user experience; Apple has millions of dedicated loyalists and B&N has the reputation as the nation’s bookseller. To extract readers from these companies takes patience and a unique platform to convince people to switch. As important as acquisition of consumers, “retention” of those that visit is imperative.
There are definitely other factors to a successful start-up, but these three are key.
It is a time of great opportunity in the digital book arena. The competition is tough and the current players have deep pockets. Amazon, Apple, B&N (backed by Microsoft), Kobo (Rakuten), Google and Sony are all billion-dollar corporations. But there is room for smart start-ups to shave a bit of this huge market, gain an audience, be profitable and grow into a significant player.
Will be interesting to see what develops in 2013 and beyond.