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ReaderLink, Txtr, & Why the Bleep Would Anyone Think That Was a Big Deal

January 8th, 2013 by · 10 Comments · ebookstore news, opinion

The hot digital publishing story yesterday was news of a deal between the ebook services developer txtr and a retail book distributor ReaderLink. The latter is now the North American agent for the former, and apparently that detail has a lot of people excited.

I was planning to skip this story due to the fact this partnership will have about as much effect on the ebook market as a fart in a hurricane, but I was inspired to cover this story by the absolutely nonsensical coverage this morning over on Digital Book World. Here’s the title of that article:

  • Another Contender to Knockout Heavyweight Amazon?

Yeah, if you don’t know that the answer to that question is NO then I’m not sure what to say other than to offer to help you find your little red ball.

Clearly DBW is engaging in clickbait, but for once I will take the question seriously. I can think of 4 reasons this deal does not matter on the larger scale:

  • cost
  • buying decisions
  • customer service
  • marketshare

Let’s start with cost.  According to the press release:

Mass, club, grocery, and drug retailers account for a large portion of the physical books sold in the United States but they have yet to enter the rapidly-expanding digital book space.

One detail that is left out of the press release is that those books on the store shelves don’t cost the stores much, if anything. The publishing industry currently sells paper books on  what are very good terms, including the option of returning unsold titles.

The same cannot be said about ebooks. No matter how low txtr’s fees, running an ebookstore will not be as cheap as carrying paper books.

As for buying decisions, I’d bet the reasons mass retail sells the most books are gifts and impulse purchases (see a title you like so you buy it). I doubt that dedicated reader intentionally shops for books at a supermarket; they go to a bookstore or Amazon. That leaves only certain types of customers buying books in a drug store for certain reasons.

Can someone explain how those types of sales of paper books could be duplicated in selling ebooks?  I don’t see it. An impulse purchase requires that you see the item before you buy it.  And if you’re going to give an ebook as a gift then wouldn’t most people just give a gift card instead?

Customer service and tech support are another couple issues which I think could render this deal moot on larger scale. Sure, your local grocery store might get into ebooks but how competent do you think they will be at providing good customer service and tech support?

B&N and Kobo are terrible at CS and TS, and they are a heavyweight retailer and the sub of a heavyweight retailer. If they can’t get it right then what are the chances that the little guys will get it right?

And that brings me to market share. The problem with speculating about how indies can take down Amazon is that we already have indies in the US market and they don’t amount to much.

Ingram has been distributing to indie ebookstores for some years now via the Lightning Source service. According to one publisher I know, Ingram accounts for a negligible share of the US ebook market. To be more exact, he doesn’t get many sales through that channel, and I’d bet the same situation will apply to txtr’s partners.

Don’t get me wrong, this could open up some interesting possibilities for niche ebookstores. In individual cases we could see a decent quality ebookstore serving a particular community well. But even if that happens a lot, it still won’t mean much on the larger scale of the US ebook market.

Last week one reader introduced me to the economic theory titled “Gorillas, Chimps, and Monkeys”. It has to do with market share, and as you probably guessed Amazon is the gorilla of the ebook market.

Txtr’s deal could end up creating a whole bunch of new monkeys. Do you really think that they could take down the gorilla? I don’t.

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10 Comments so far ↓

  • carmen webster buxton

    At least DBW put a question mark at the end of the headline. And they close with a somewhat skeptical sentence.

  • fjtorres

    Not even monkeys… ants.

  • fjtorres

    Hmm, it strikes me that txtr is shaping up to be the Author Solutions of the ebookstore business. They don’t need to make money off the sale of ebooks because they can make ample money off the businesses *trying* (and failing) to make money selling ebooks.
    With the US market so strongle dominated by the walled gardens there really isn’t much beyond crumbs left over for indies.

    A recent (annecdotal) report in Publishing Weekly cites ebook sales breakdown for a single publishing house (unnamed) at 64% Amazon (unchanged for years and years), 15% Apple (growing slightly), 20% Nook (declining slightly). That leaves 1% for Kobo and indies.

    You have to wonder what sales pitch they intend to make to get businesses to cut them checks. “B&N is imploding!” or “You can beat Amazon!”??

    • Nate Hoffelder

      I think you’re looking at the case of the individual stores from the wrong angle. They’re not out to beat Amazon, just to make some money. That 1% of the market could conceivably be enough for any number of indie ebookstores. We have them now, don’t we?

      • fjtorres

        Do we?
        The Google effort produced nothing and that was almost zero cost to the bookstores.
        The Kobo deal mostly *pays* the bookstores.
        The txtr (and Bluefire) operations *charge* for building and hosting the ebookstores instead of paying. So, yeah; the store may *think* they’ll get a few million in sales but I doubt they get it. The bulk of that 1% is going to go to Kobo and its own walled garden.
        And maybe Sony.

        There isn’t much room for generic ebookstores in the US, not with the walled platforms running the show.
        Fictionwise was the biggest of the true indies and its gone.
        How much do the likes of Diesel and BoB really add up to in the US? I suspect they live off international sales more than anything.

        The other indies are really publisher outlets more than anything; Baen, O’Reilly, Smashwords, etc.

        Anybody who *thinks* there is meaningful mone in generic ebookstores is basically trying to get in on a popped bubble. The dust has already settled and we’re moving to a (near) zero-sum phase. (Might be temporary, might not.) In times of slow market growth, the best way to grow is by cannibalizing the weaker players.

        If Kobo is really down in the 1% range, they’ve already been cannibalized (Rakuten thought they were buying a “high-single digits” share. If B&N is down from 26% *they’re* being cannibalized. By Apple, most likely. And Amazon shows no sign of yielding much share. So you have an “irresistible” force and and “immovable” mountain. And txtr clients trying to get between the two? When even Google doesn’t register on the scale?

        Author Solutions is Vanity Publishing. Txtr seems to be peddling “vanity retailing”.
        “Look at us! We’re modern, up-to-date! We even sell ebooks! We’re relevant!”

        No, you’re delusional, most likely.
        (shrug.)

        Think about it: Walgreen’s ebooks? Piggly-Wiggly? Macy’s?

        • Nate Hoffelder

          Copia went in a similar direction (selling the platform instead of selling the eboks), and in fact they could be having more success in the western hemisphere than txtr. Copia’s success could explain why txtr felt they needed a US partner.

          • fjtorres

            Could be, but doesn’t Txtr already have a US partner? 3M?
            Maybe the deal runs the other way?
            Readerlink bringing Txtr in?
            Lots of weird scrambling these days.

          • Nate Hoffelder

            No, txtr has a US owner. 3M bought a chunk of txtr back in 2011.

  • Mike Cane

    I have absolutely no idea what the news was that triggered this post. And you know what? I’m HAPPY NOT KNOWING! Next!

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