Kobo, commissions, Kindle, and the retailer's ecosystem
I had completely failed to understand Kobo's deal with WHSmith until Kobo made its presentation to the Booksellers Association AGM last week.I had not grasped WHS's return from the deal. It sold a few devices, but at what appeared to be the substantial cost of handing over the buyers to another retailer. Yes, you could buy books for your Kobo from WHS; but you were unlikely to do this, because it was the Kobo store that appeared as the default setting on your device and on your computer desktop.
The point is, though, that WHS continues to get commissions from these sales. Kobo registers each person who buys a device in WHS as a WHS customer, and that person remains a WHS customer, generating revenue for WHS even when Kobo is the primary seller.
"Revenue" may seem a grand word for a commission rate that is likely to be - the terms are not public, of course - less than 10%. But what do booksellers make on their own sales? Their margins are a good deal below this third-party commission rate.
The figures explain why James Daunt emphasised the term "profitable" when discussing Waterstones' deal with Amazon Kindle. Commentators assumed, when news of the deal broke, that Waterstones would earn commission only on sales of Kindle ebooks transacted within its stores. But it is possible - though, given Amazon's secretiveness, we may never know - that the deal resembles the Kobo one.
It may not, even so, be perfect; but what would be perfect? The assumption is that Waterstones, if it had the resources, would develop its own ebook reader, linked to its own e-bookshop. This solution may be what a retailer would want, but it is not what I as a reader want.
I cannot read Kindle ebooks on my Kobo reader. I can read EPUB ebooks from bookshops other than Kobo, but only after a certain amount of faffing around. I can read Kindle books on my tablet, through the Kindle app*, but I have to use different apps to read my EPUB ebooks. The Kobo app does not work properly on my tablet, so I have to do further faffing around to transfer my Kobo-bought books to the Aldiko reader. In the light of these experiences, I do not conclude that an e-reader tied to a retailer's ecosystem is a consumer-friendly offering.
What I want is an independent reading device. I want to read all my ebooks on it through a single application. If I buy an ebook from a store I haven't been to before, I don't want to have to spend half a day Googling in order to figure out how to get the book to my machine and read it.
So far, readers have been very happy with their Kindles, because Amazon offers by far the best shopping experience. But I think that, as the market matures, more and more readers will come to feel as I do.
This is an argument for the abandonment of DRM. Whether there is a better argument for its retention, I lack the foresight to judge.
* Oh, no I can't: I've just discovered that the Kindle for Android app is incompatible with my tablet.
Kobo, Anobii, Hive woo independents