This Much I Know

Apple is the world leader in digital music sales, and is making big inroads into digital video and TV.  The iPad completes the deal, bringing Apple’s magic to the world of eBook sales.

The iBookstore

Physical book sales are on the up, with the UK Adult Fiction market growing by 1.2% in 2009. In the same period, Children’s Fiction grew by 8.6%, and only Trade Non Fiction saw a decline in sales.  The economy may have been in decline, but the escapism of a book shows no sign of losing its grip on the UK’s imagination.

Following the success of the iPhone and the App Store, enterprising book publishers are now launching iPhone apps to tie in with their physical book releases. These apps are typically self-contained eBook readers, incorporating the full text of one specific book.

As with any app, Apple takes a hefty cut of the sale – nearly 39% in the UK once VAT is taken into account. And if a publisher wants to protect the book’s content from jailbreakers, they need to create their own DRM system for each app, increasing the complexity of publishing the book on the store.

With the launch of the iPad, and more importantly the iBookstore, Apple will remove the need for these book apps altogether.  Apple will provide a learn-once book reader, and will provide a new store optimised for discovering, exploring and trying out books. The store will provide book samplers, similar to the 30-second song previews in the iTunes Store.

The choice for publishers then becomes simple: develop, package and launch a custom reader app with its own DRM (and make 61%), or submit a book to Apple and get the reader and DRM for free (and still make 61%).  It’s a classic example of Apple’s “build it and they will come” policy for electronic media sales.

Apple already has the infrastructure and DRM system, and it already has the customers.  By making it easy for customers to buy books, Apple makes it easy for publishers to choose iBookstore.  I expect all major publishers to do so in 2010.

Beyond the book

The industry standard format for eBooks is called ePub, and Apple are using ePub on the iBookstore.  ePub is a useful standard, but it does not lend itself to interactivity.  Basing iBookstore on ePub makes it easy for publishers to unlock their archives and launch their latest releases, but it doesn’t enable them to think beyond the traditional book.

An iPad can do so much more than a physical book. Where content lends itself to an enhanced reading experience, or to something that isn’t a book at all, publishers shouldn’t feel obliged to emulate a book-reading experience just because the interface is familiar.

Apple’s “App of the Year” for 2009 was Jamie Oliver’s “20 Minute Meals” – an app that goes so far beyond the traditional recipe book as to be unrecognisable.  The app has been incredibly popular, with over 85% of users awarding it four or five stars on the App Store.  More importantly, the app has raised the bar for app developers to think beyond the book.  (We have a copy of Jamie’s Wired cover on the wall in our office; whenever a client says “we want something like the Jamie app”, we shake our fists and shout “Damn you, Oliver!”)

For certain types of content, it is no longer enough to release a simple eBook on the iBookstore.  Jamie’s app may have taken a team of 30 people several months to create, but it has shown users what to expect on a mobile device when publishers think creatively about their content.  It has also shown that apps can generate a substantial amount of publicity (and money) for authors when done well.

I expect eBooks to fall into two categories in 2010.  The majority will be standard eBooks sold through the iBookstore; but an important minority will be essential apps in their own right.

DRM

You can’t talk about online media sales without considering rights management, and books are no different.  In this respect, Apple has a major advantage over its competitors.

There are two DRM systems currently in use for ePub files:

• Kindle DRM (used by the Amazon Kindle)
• Adobe DRM (used by the Sony Portable Reader, the Barnes & Noble Nook, and several others)

Kindle devices use Amazon’s own bespoke DRM system, which is not licensed to other developers.  Adobe licenses its DRM software to device and software developers, but it has yet to appear on the iPhone. (This may be due to the $75,000 per-year licensing cost for including Adobe DRM in an iPhone app.)  Lexcycle’s Stanza app was supposed to be adding support for Adobe DRM, but since Lexcycle’s acquisition by Amazon, this has been quietly shelved.

Apple has yet to announce its approach to DRM for the iBookstore, but you can bet your life it won’t be based on either Kindle or Adobe DRM.  Apple’s own FairPlay DRM is one of the most trusted DRM systems going. ePub can be used with any DRM system, so Apple can easily add FairPlay on top of ePub for the iBookstore.

This doesn’t stop Apple offering DRM-free books, of course – but it does mean that they have a proven DRM system with which to entice nervous publishers onto their platform.  With iTunes, it took a reliable DRM system to get music publishers on board, and it could be argued that the digital media revolution, spearheaded by iTunes and the iPod, would never have happened without Apple’s initial use of DRM.  Only some years later could they suggest dropping DRM, to the point where all music sold through iTunes is now DRM-free.  If DRM is what it takes to get the publishing industry on board, then Apple are perfectly placed to win over the majority of book publishers, just as they did for music.

Will users be put off by DRM protection on their books?  I don’t think so.  The iPod showed that most users don’t really care about DRM, as long as they can use their media on all of the computers and mobile devices in their household.  If the iBookstore’s DRM means their favourite books are available to buy and read, with no noticeable restrictions on how they read those books, then most users will be perfectly happy.  Apple got the number of devices spot on for iTunes; it will do the same for iBookstore.

iBooks for iPhone

What does this all mean for the iPhone and iPod Touch?  The iPad keynote didn’t mention iBooks for iPhone, but it seems certain that we’ll see some form of store and reader for the smaller form-factor devices too.

The leading bookstore apps on the iPhone are Stanza and Kindle (both owned by Amazon). There’s no way that Apple will allow Amazon to be the leading bookstore on the iPhone and iPod Touch once it has launched iBookstore for the iPad.  Apart from anything else, Apple would be missing a huge established user base, all of who have iTunes accounts.

Although the iPhone’s screen is too small for lengthy book reading, it is ideal for trying out new books during dead time when you’re on the move.  It is perfect for iBookstore book previews – read the first chapter of a book when on the Tube, and then buy the book on your iPad for reading at home.  (It also gives Apple a nice way to sell the benefits of the iPad to its existing users – “Imagine this reading experience on an even bigger screen!”)

I think that the iBookstore and iBooks apps will come pre-installed as part of an iPhone OS update once the iPad is launched.  If Apple are particularly savvy, books purchased in any iBookstore will sync wirelessly to all of your iPhone OS mobile devices using push syncing, meaning you’ll always have all of your books on all of your devices, without even needing to launch an app to sync.  (This is something Amazon’s apps will never be able to do.)

Unlike the Kindle app, the iBookstore won’t be restricted by Apple’s policy on in-app purchases.  Apps such as Kindle aren’t allowed to sell electronic content for in-app consumption without using Apple’s StoreKit (and doing so gives Apple a sizeable cut of every purchase, something Amazon would never sign up to).  Kindle’s only alternative is to bounce the user to a web page in Mobile Safari, get them to make a credit card purchase, and then sync their purchases when they next launch the Kindle app.  This process is clunky and unintuitive, especially when compared to the iBookstore, which will simply ask the user to enter their iTunes password.

Books may end up being cheaper in the Kindle app, but iTunes has shown that within a certain threshold, an easy purchase is more important than a cheap one.  I expect to see Apple wrestle control of iPhone book sales back from Amazon within days of launching the iPad and its corresponding iPhone system update.

(UPDATE: John Gruber of Daring Fireball points out that iBooks will be a downloadable app from the App Store, and not a bundled part of the OS. Whether this means Apple’s app will have to play by the same rules as any other developer’s app remains to be seen. And I should add that iBooks and iBookstore are two parts of the same app.)

Summary

iBookstore will become the place you buy all of your eBooks, simply because it is the easiest and most pleasurable way to do so.  Publishers will choose the iBookstore as their preferred iPhone / iPad store, benefitting themselves and their readers in the process. Books will come with DRM protection, but the majority of users won’t notice, because it doesn’t stop them reading their books. A few publishers will think beyond books, and will create truly innovative and useful apps from their content.

Adobe and Amazon won’t be able to compete, because Apple will control the entire playing field.  The iPhone and iPod Touch will provide an established user base to get people trying books on the move, and to sell the benefits of the iPad as the eBook reader of choice.  Before long, Apple will be the biggest eBook seller in the world.  And users will be happy about it.