Andersen on Andersen: "Free" Doesn't Go Far Enough

I bought Chris Andersen's book "Free" and read it cover to cover. This is notable, I think, both for the buying and the reading. First the buying: I bought it hardcover, at my local bookstore, for $26.95 plus tax (I'm sure my friends at Hyperion are pleased). It was available cheaper on Amazon, but I couldn't wait for it; it was available for Kindle ($9.99, previously free); Sony eBookstore ($11.99, or you can get a "bundle" with The Long Tail, for the same price, and I don't see why you wouldn't); it wasn't yet available for the Cool-er Reader on coolerbooks.com.

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Sony + Google: 1 Million eBooks And Counting

The eBook arms race continues.

Today Sony announced that its public domain offerings from Google in its eBook store has reached 1 million volumes. That's a lot of eBooks. For context, the Library of Congress has 32 million books and is the world's largest library; Harvard's collection is 5th largest at 15 million books. (Thanks, Wikipedia.) So we're merrily trucking along at digitizing the world's collection of books.

(By the way, if you've ever wondered how Google goes about digitizing books, check out this cool graphic from their patent.)

This news follows Barnes & Noble's announcement last week that they, too, have a partnership with Google, and will be offering their content in their eBookstore via apps on smartphones and PCs (and eventually the much anticipated Plastic Logic eReader).

Here's what I think the implications are:

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Plastic Logic + AT&T: Cellular Network Is Table Stakes To Compete With Kindle

At 8am this morning Plastic Logic announced that it will be partnering with AT&T to provide wireless 3G connectivity on its eReader device, expected out in Q1 2010. This announcement follows the news of Barnes & Noble's partnership with the device-maker.

No doubt, having big brands like B&N and AT&T on its partnership roster helps Plastic Logic establish credibility in a market where it is an unknown, competing against mammoths like Amazon and Sony. And the announcements help inspire confidence that the device will actually get to market--an assumption that can't be taken for granted given the pre-launch financial failure of other eReader competitors like Polymer Vision.

We think cellular connectivity--not just wifi, which isn't available everywhere--is table-stakes for Plastic Logic (and Barnes & Noble) to have any hope of competing with Amazon. Consumers value the seamless connectivity of the Kindle's Whispernet service, which lets them download a book in 60 seconds using Sprint's network. Especially since Plastic Logic will be focused on newspapers (USA Today and The Financial Times are also partners), having the device be able to connect and refresh content anytime, anywhere, will be crucial for its success.

What we still don't know: the financial terms of the deal. Will it be a wholesale model with a per-user monthly fee, like Sprint's arrangement with Amazon? Or will consumers be charged directly for a monthly data plan, like AT&T does for Apple iPhones? Will AT&T get a cut of every transaction, or just a per-user fee?

What we do know is that the big remaining competitor in the US mobile market, Verizon/Vodafone, won't be able to sit this one out. Our prediction: We'll see them partner up with Sony, First Paper, or both, before the end of the year.

Polymer Vision: An eReader Manufacturer Bankrupt, No Surprise

A little birdie told me several weeks ago that Polymer Vision, maker of the "rollable" pocket-size Readius, would be filing for bankruptcy, and lo and behold, they did, as reported on July 15 by the Hampshire Chronicle, the local paper of Millbrook, England, where the company was based. The story has since been picked up by Engadget, and here's our two cents.

First, a bit of background: Royal Philips Electronics was one of the early investors in E Ink, which makes the displays for nearly all eReaders on the market today. Deciding that eReaders were not a core business focus, in 2005 Philips spun off iRex Technologies, a company that has since seen modest success with its B2B sales model for eReaders, and spun off Polymer Vision in 2006. Polymer Vision was planning to manufacture its own displays, and use an ODM in Asia for the device manufacturing, with the goal of dominating a new market for pocket-sized eReaders.

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Our Take On Chris Anderson: Why Free Doesn't Go Far Enough

A reporter asked me yesterday whether I thought Chris Anderson was right, or whether I thought he was too glib. I don't think an either/or question.

What I've come to realize while researching and writing reports like our paid content forecast is that yes, free can be a business model--but only for much, much smaller businesses than most media companies as they exist today, with their Manhattan skyscrapers or sprawling Hollywood studios, thousands of employees, unions, factories, warehouses, and debt obligations.

So Anderson is right, but not right enough to be much comfort to the media companies on which we depend.

Here's why. In the digital world:

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WSJ: Publishers Delay eBook Releases; Our Advice To Publishers

Jeffrey Trachtenberg and Geoffrey Fowler's article in the Wall Street Journal today really got me thinking. Trachtenberg and Fowler report that some publishers are withholding the release of eBooks until the hardcover printing has run its course--which we see as the latest manifestation of publishers' shock and denial of the digital revolution and the catastrophic change it will wreak on their industry.

In the article, the reporters quote a literary agent comparing eBooks to DVDs, arguing that the film industry would never release a DVD at the same time as a theater release, so why should publishers cannibalize hardcover sales by releasing eBooks simultaneously? Well, here's why we think publishers are wrong:

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$299 Kindle 2: Amazon Hears Footsteps, Drops Price

Amazon dropped the price of the Kindle 2 today from $359 to $299. Are we surprised? No. It's predictable that prices decrease for consumer electronics as manufacturing volume scales up (just ask those poor saps who paid $499 for a 4GB iPhone in 2007). But there's also some pricing pressure specific to the eReader category that Amazon is responding to. In particular:

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