Over the years, the Internet has grown into a large repository of data and information that can be accessed from anywhere through multiple devices. Today you no longer need to be seated at your personal computer to read your e-mail or book movie tickets. Instead you could be on the beach, at the playing field, at the airport or in another country.

It has been our vision that books, like all digital products should be accessible and available all the time. We have worked hard to build an infrastructure that ensures that we can provide this to our publishing customers, who in turn can ensure that their books reach their readers anywhere and at all times. We watch with confidence as the market takes shape and as this vision of books being on the cloud turns to reality in the months to come.

There are three main reasons why books on the cloud makes sense and I have outlined them below:

Consumer is King
Consumer expectation is to have services available all the time - from Webmail, to Google docs, to salesforce, to Evernote consumer expectation is that they will have their services accessible from anywhere and from any device. Companies that understand this and create this access entry point are guaranteed success. An example for me is a note taking service. I have used several note taking applications; I put notes on my mac, on my blackberry, my iPad too has a few note apps. And then, a few months back I discovered Evernote. This amazing web application, wins over every other note taking software as I can confidently use it knowing that I access all of my notes at anytime from any of my devices, no matter where I am.

Muti-device accessibility
with the speed at which technology is advancing, it is difficult to judge whether our lives are getting simpler or more complicated. Today, we use multiple, multipurpose devices, to stay connected. I have my laptop, my home desktop, my smartphone, my blackberry, my iPad and I work and live my daily life going between all these devices. For convenience sake I EXPECT my applications and software to work interchangeably between all these devices. While I might be an early adopter of technology, a few years down line, this just like e-mail being available everywhere will be a norm for most people.

Follow the Leader(s)
Amazon recently announced that they are launching the web based kindle. With this version, Amazon is now ensuring that their customer can access their eBooks from anywhere and on any device. I use a kindle and I expect to read my books on my iPad, my kindle or on my iPhone. As the market leader, Amazon is establishing a benchmark in the industry by providing this experience; a benchmark that all customers like me will expect to have when using books in the eWorld.

These norms will push publishers to deliver their content on the cloud, needing sophisticated technology to achieve the same. The good news is that there are companies like ours who can provide this infrastructure. This is just the beginning, once books are on the cloud; the opportunities for the publisher are innumerable. Publishers need to realize that this is the future and start implementing their cloud strategy immediately.

A lot has been said about eBook pricing in the past year. Publishers now are in a stronger position of control, shunning older pricing models for models that fit in with their business objectives.

The Retail model

In the recent past, the retail model, made popular by retail giant Amazon, has been facing a lot of criticism from publishers. Under this model the publishers sells books to online retailers, who then sell it to readers at a price that the retailer determines. Amazon was buying eBooks from publisher for about $13 and selling the same eBook, at a loss-leader pricing, for $ 9.99 for reading on its Kindle eReader device.

The strategy of taking a loss on each eBook was aimed to push sales of the Kindle mainly succeeded in establishing $ 9.99 as an acceptable and popular price for an eBook.

The problem publishers have faced with this model are two fold. Besides having limited control over pricing, publishers believe that a standard pricing of $9.99 devalues the book — negatively impacting sales of the hardcover paperback.

The Agency model

Many publishers such as Macmillan, unhappy with the Amazon eBook pricing model that resulted in devaluing the content of the book, began pushing for an ‘Agency model’ for the sale of eBooks.

Under this model, the publisher shall remain the sole seller, and an online vendor like Amazon would merely act as an “agent,” in exchange for a percentage of the commission. This ensured that the publisher had full control over prices, rather than having to accept the standard $ 9.99 price made popular by Amazon. Under this system, Amazon would probably earn extra dollars from publishers as compared to their current loss-leader pricing model.

The war against the $ 9.99 eBook price was started when Macmillan challenged Amazon head-on and refused to settle for the $ 9.99 price. Macmillan was soon followed by the Hachette Book Group and Harper Collins. Amazon initially retaliated by refusing to sell Macmillan books through their online store. But in a short span of time, Amazon accepted Macmillan’s terms and put their books back on the Amazon store — but not without insisting that Macmillan prices were still needlessly high for e-books.

Apple too has adopted the agency model for eBooks on its iPad, by signing up with publishers such as Harper Collins, Hachette Book Group, Macmillan, Simon & Schuster and Penguin.

The Subscription model

The problem that publishers faced with both the above models, be it the wholesaler-retailer model or the agency model (selling through agents), was lack of access to buyer statistics and behavior. In the future, publishers are largely going to shift from B2B to B2C business models i.e. selling directly to readers / end-users or institutions.

Under a B2C business model, the publisher enjoys certain advantages. Publishers have control over prices, get to know the readers directly and can gain insights into the usage of their content.  They can also sell several supplementary / ancillary assets at incremental prices directly through their website. This type of content monetizing is possible by adopting newer models such as marketplace Apps or subscriptions.

Many publishers are now choosing to supplement their retailers by distributing books and eBooks via their own branded eBookstores that have e-commerce systems built into them.

A buyer looking to purchase a particular book can visit the publishers’ eBookstore and buy the book directly from them. This is useful particularly when readers wish to gain access to several books in the store. Along with selling the titles individually, publishers can offer a monthly or yearly subscription to all the books in the store. Publishers can also go one step ahead and offer eBooks, eBook supplements or content chunks to customers on ‘rent’. i.e. enable micro-payments to provide access for a short periods of time. For example, a reader no longer has to buy an entire book just to access say Chapter-7 of the book. He can instead loan out the content for just as long as s/he needs it.

In the future, it is likely that more and more publishers will create and manage their very own eBookstores to supplement sales through their retailers, intermediaries and other online distributors. The advantage of reaching out directly to the end user, not only allows publishers greater control over prices, but also helps them understand their reader buying and consumption habits better.

Other Noteworthy Business models

Harper Studio

One model worth taking note of is the game changing business model by Harper Studio that pays the author 50% of the profit sharing as compared with the traditional 7-15% royalty that an author gets.

The model aims at seizing the doors of opportunity that technology has opened. Harper is looking at packing and supplementing their products with multimedia tools such as DVDs and / or embedded videos or narrative blurbs.

Odyssey editions

A group of well known and well respected authors, have formed Odyssey editions to sell their titles as Kindle ebook editions. Most of the books are priced under Amazon’s target eBook price of $9.99 and mostly undercut the price of the paperback edition. The model which offers self ePublishing authors 70% of sales, is facing flak from traditional publishers who have, under newer contracts been claiming exlusive eBook rights, offering authors only around 25% for ebook sales.

With the agent taking on the role of the publisher, Publishers such as Random house are disputing Odyssey’s rights to sell the ebooks.

References:

http://blog.macmillanspeaks.com/macmillan-ceo-john-sargent-on-the-agency-model-availability-and-price/
http://www.digitaltrends.com/gadgets/three-publishers-now-reject-amazons-9-99-ebooks/
http://www.fastcompany.com/magazine/135/fast-talk-the-experimenter.html
http://industry.bnet.com/media/10006134/harpercollins-inkpop-another-step-in-the-digital-publishing-revolution/
http://www.i-programmer.info/the-stone-tapes/1098-publishers-bypassed-by-kindle-ebooks.html

Like many of us in the publishing industry, I have been closely monitoring the recent wave of e-book coverage in the consumer media. We have seen powerful headlines such as “B&N Launches Kindle Killer” (Wall Street Journal) and “Is Amazon Taking Over the Book Business” (Time Magazine) and questions abound: Are we nearing Malcolm Gladwell’s proverbial tipping point? Will e-books sales capture a substantial share of the overall market in the next few years? Are Jeff Bezos and Steve Riggio going to rumble? Possibly.

Amazon and Barnes & Noble certainly continue to move the needle by developing new technologies, engaging new partners and driving consumer awareness. But I would like to offer a slightly less “sexy” story angle. Perhaps this isn’t a race for inter-stellar domination between two massive companies. Perhaps the story is not about one viewer or one “e-book megacenter” as the NY Times so eloquently described it. Perhaps this isn’t even about Amazon or B&N or Google, Apple, Sony or whoever comes next.

In my opinion, this is not an “either/or” proposition. This is about how publishers can learn from each other; how we all benefit from technological advancements; and, what we can discover from the new business models that are currently being tested.

Beyond the technology, the alliances and the giant marketing budgets of Amazon and B&N, the key to success for publishers of all sizes is building platforms that connect them with their end-users in meaningful ways. Publishers need to harness that data and produce strong, lasting consumer relationships. The publishers who best understand their consumers and grasp what they really want will lead the way.

The future is bright for the Davids and the Goliaths.