Michael Serbinis didn’t want to be a victim of the digital revolution.
Serbinis, the CIO of Indigo Books & Music (TSX: IDG), has watched warily as the music industry has been turned inside-out by downloads, and especially Apple’s potent combination of iPod and iTunes. “When will the meteor hit Planet Bookseller?” wondered Serbinis. Then in November 2007, Amazon.com Inc. (Nasdaq: AMZN) launched its Kindle electronic book reader — a tablet-like device about the size of a trade paperback with a display that simulates reading ink on paper, and allows for the wireless downloads of digital books. “We kept talking about eReaders, saying the ‘market is still small,’” says Serbinis. “But that’s what the music industry said.”
Soon after, Serbinis got serious about positioning Indigo in the nascent market of digital bookselling. His answer: Shortcovers, an online retailer that tries to bring the act of reading into the era of social networking and smart phones. Launched Feb. 26 in Canada and, most importantly, the U.S., Shortcovers has a website with links to purchasing books (through Indigo.ca in Canada and Barnes & Noble in the U.S.). It also offers free mobile applications for the iPhone, certain BlackBerry models, and eventually other smart phones. Currently, Shortcovers has a catalogue of about 50,000 titles, aiming for 200,000 within six months, compared to Amazon.com’s more than 240,000.
By not hitching its digital book strategy to a particular device, like the Kindle or Sony’s similar Reader, Indigo hopes it will reach a wider, younger audience that want to read books — and articles from newspapers and magazines, which it plans to begin offering in the coming months — but in new ways. “It’s early days in this market,” Serbinis admits. “But consumers are reading differently. They’re reading on screens more, and in shorter sessions. They want to be able to say, ‘I want that,’ and click. If they can’t, it’s a missed opportunity.”
Peter Hildick-Smith, who runs the New York–based readership market research firm Codex Group, estimates that digital books accounted for about 3% of book sales from mid-December to mid-January in the U.S., driven partly by the Kindle, and could grow to 5% in 2009.
Serbinis believes it’s essential to get digital books on the same screens that other media occupy — namely smart phones. In-Stat, a technology market-research firm based in Scottsdale, Ariz., estimates that by 2013, about 20% of the 1.6 billion mobile handsets shipped globally will be smart phones. Analysts estimate Amazon.com and Sony have sold as many as a million of their digital book readers in the U.S., the only market where the Kindle is available. “Not everyone is going to be reading on a $400 Etch A Sketch,” says Serbinis. “That’s just not going to happen.”
It seems that Amazon.com agrees. Just days after Shortcovers went live, Amazon launched its own Kindle iPhone application — again, only in the U.S. And several other free-to-download eBook readers are already popular on Apple’s iTunes App Store.
Shortcovers is trying to differentiate itself by offering individual chapters for sale, as well as free excerpts, in an attempt to replicate how people sample in a bookstore before making a purchase. Shortcovers is also playing up a social networking angle, allowing customers to e-mail friends, write comments or post messages to Facebook, Twitter and a long list of other services about what they’re reading. As well, it offers writers, amateur or otherwise, the ability to upload and self-publish their work — something even established authors did on Shortcovers’ first day in operation to promote their next book.
The long-term success of Shortcovers may rely on publishers, and the pricing models they choose for their digital wares. In the first days after launching, some digital books cost more on Shortcovers than paperbacks, which Serbinis acknowledges consumers will not accept. “Consumers won’t buy a $30 book on a device,” he says. He hopes the publishers are learning the right lessons from digital music downloads: the device isn’t as important as the shopping and purchasing experience.