Analysis: Ebook Format Wars, Round 2

[This article was originally published in the March 2012 issue of News on Bookselling, the magazine of the Australian Booksellers Association.]

This year will mark the fifth anniversary of Amazon’s launch of the Kindle, the

event that triggered the spectacular rise of the ebook. Amazon has remained the biggest beneficiary of this growth, with its global market share estimated at 60 per cent or more. But changes are afoot that threaten its dominance and could shake up the whole market that has evolved around the ebook.

The catalyst is the release of new ebook formats that offer richer formatting and take advantage of new hardware. Late last year, the industry group behind the five year old EPUB standard released its successor, EPUB3, which will appear in ebook readers and apps during 2012. Shortly afterwards, Amazon announced Kindle Format 8 (KF8), successor to the venerable mobi format at the heart of the Kindle phenomenon. KF8, like EPUB3, is based on the new web standards of HTML5 and CSS3.

Both EPUB3 and KF8 open the door to highly illustrated and complex works, with EPUB3 having the edge through its support of video and a programming language called Javascript to add sophisticated interactive features. KF8 might add these later but they’re absent from the initial release, probably due to hardware limitations — Amazon is keen for some of its older, but under-powered, black and white Kindles to remain compatible. So far, only its new colour e-reader, the Kindle Fire, supports KF8.

These new formats might set the stage for Round Two of the battle between Amazon and the rest of the industry which has largely coalesced around the EPUB standard. But just weeks into the new year, things changed again when Apple fired a shot across the bow with iBooks 2. Apple’s iBooks app and its iBookstore support EPUB but iBooks 2 adds a new twist — a version of EPUB3 that is similar to, but incompatible with, the industry standard.

Apple cleverly made its initial target textbooks rather than trade ebooks although its technology can span both markets. Its strategy goes well beyond introducing its own format. The launch of iBooks 2 went hand-in-hand with a user-friendly authoring tool called Author which lets anyone, including teachers, authors and small publishers, produce these rich ebooks. The catch? If you want to sell an ebook made with Author, you have to sell it through Apple’s iBookstore.

Apple played another trump card to boost adoption of iBooks 2, launching the free iTunes U app. For several years, Apple has nurtured a section of its iTunes store called iTunes University which now features thousands of free video and audio courses from universities around the world. iTunes U opens this to schools (US only initially), integrates iBooks textbooks, and expands functionality with learning management system (LMS) features that manage courses and track students’ progress. All of this, combined with Apple’s deep roots in educational sales, is likely to make Apple and its hugely popular iPad a must-buy for education and a major market for digital textbooks. This popularity will likely spill over to the trade book market.

So, even before the first EPUB3 ebook goes on sale, we have three (incompatible) variations of the industry standard. For those of us who’ve followed technology markets over decades, and witnessed the tactics of dominant companies like Microsoft, this is deja vu. Microsoft, whose dominance is waning as mobile devices replace the PC as the centre of computing, is famous for its ‘embrace and extend’ approach to standards. It adopts a standard then adds incompatible ‘enhancements’, a strategy that carries through to the internet today with the so-called browser wars that mean websites look different in different web browsers. Expect ebooks to follow suit.

All of this manoeuvring will affect the book industry profoundly, including the emerging ebook ecosystem. The traditional dominant players — publishers and booksellers — will have little influence over its outcome and it’s a time when technology leadership might change, including Amazon’s dominance of the first major wave of ebooks.

Will traditional publishers still have a role? Probably. Unlike simple narrative works, the complexity and cost of producing high-end multimedia ebooks will demand the financial and human resources of big publishers. It’s unlikely the future digital Jamie Oliver cookbook blockbuster will be self-published — but will Oliver appoint Penguin, or a new player like BBC, perhaps through its Lonely Planet acquisition or US media giant NBC, both of which now have ebook operations with access to cash and multimedia expertise?

A fragmented ebook market might also upset existing ebook distribution channels. Ebooksellers like Kobo, Barnes and Noble, Google, and the many booksellers who use their technology, rely on the EPUB standard to access a large range of ebooks. This access will be threatened by demands from Amazon, Apple and some emerging players that sales go through their platforms. As ebooks become more complex to produce, publishers could start to limit the number of editions they support, making it harder for minority platforms to compete for top titles.

There are still plenty of pieces in this puzzle to emerge from both incumbent and new players — including the book’s print cousins, magazines and newspapers. But one thing is almost certain — the shift to rich media ebooks means positions that emerged in the past few years could change again. And yes, EPUB3 — the industry’s attempt to control the book’s digital evolution — and even Amazon if it missteps, could be casualties.