Prognostication correct! Free NOOKs

Robin Wauters reports today in Tech Crunch, "Barnes & Noble is now heavily discounting (and even giving away free) NOOK devices with digital subscriptions to a magazine or newspaper, the first time a bookseller has ever done this type of promotion if I’m not mistaken."

You're not mistaken, Robin. And neither was I when, (way back) in November 2009, I ventured that e-readers (as we then called them) would take off only when their business model changed. Eventually, said I, we'd get the reader for "free" when we paid for subscriptions. Just like a cable box.

Back then e-reader sales were sputtering in defiance of so many high hopes. One popular analysis held that the devices needed more features. Others thought slick interfaces and better form factors were the answer. "As soon as Apple properly address e-readers there will be no hesitation," wrote one foolhardy industry watcher on LinkedIn.

Months later came the iPad Spring that revolutionized the category and proved everybody right but me. But I hardly noticed, so thrilling were the times. The ungainly "e-reader" departed the lexicon and in flew the "tablet." Form factors, features and operating systems proliferated wildly. Intense competition kept prices flat while awesomeness climbed steeply. Indeed, some of the hungrier brands began selling devices at a loss in pursuit of market share. All the while, the only fixed variable in tablet sales was content.

Until now. Credit the intersecting challenge of monetizing digital publication, particularly of periodical journalism. All that stuff that used to be free on the Internet and that people weren't happy to pay for once the publishers erected paywalls. The marriage of paid subscriptions and free tablets (details here via Wired) works to close gaps in the perceived value of each.

In 2009, reported Forrester Research, roughly three million e-readers of all types were sold. Granted, there were only a few types. In 2011, reports Computer World, Apple sold 40 million iPads. No doubt sales will continue to rise. But increasingly the buyers will be publishers themselves. They will subsidize the cost of putting devices in people's hands as the enticement to get them to pay for digital content. 

Whither the e-book?

An interesting discussion started today on the LinkedIn Digital Publishing Network. From New Delhi, feelancer Devaki Khanna pings a Reuters article that digs into the slow market penetration of the e-book. Commenting from Ireland, Karl Capp, Managing Director at Rolonews Limited, attributes the slow sales to uncoolness and ungainliness, arguing, "As soon as Apple properly address e-readers there will be no hesitation."

Here's what I had to add:

Seems to me that the main delta to overcome here isn't technology, content, cost, sticky branding, or even interface. It's perceived value.

Today you have to pay upwards of a couple hundred bucks to get a basic e-book reader. The price tag by itself is a factor, but the main barrier occurs because people compare this to the cost of a printed book, or even a notebook computer.

Cognitive dissonance: A reader is not a book. Functionally it's so much more. But still. A tablet reader is not a notebook computer. Functionally it's a different animal (it's about display rather than activity). But still.

I think a fitting product analogy to e-readers is the cable modem, the little box needed to get Internet via cable. Initially, when marketed as a purchase extra in a subscription service model, the value was hard to grasp and it was a barrier to entry. But when it was absorbed by the Internet company (subscription provider) as a loss leader, the value delta closed. Today, Internet aficionados can still buy premium cable boxes. But most people get theirs on lease from the cable company and pay a little bit a month for the privilege and don't even notice. The cable companies reap multiples of the purchase price of the modem over time.

My guess is that e-book providers will adopt this model.