Format wars have been with us as long as mass distribution of content has been possible.  With all content in digital format, the time for open standards arrived, but old business models die hard. After the recent HD disk format war, you’d think ebook publishers would have been schooled in the folly of proprietary formats. Many of us thought that Amazon would surely open the Kindle format, but that has not happened. The result is several competing formats, all ties to proprietary readers. The newest entrant is a collective of traditional newsstand publishers who are pushing yet another closed format

Five of the nation’s largest publishers of newspapers and magazines are teaming up to challenge Amazon.com Inc.’s Kindle electronic-book reader with their own technology that would display in color and work on a variety of devices.

Time Inc., News Corp., Conde Nast, Hearst Corp., and Meredith Corp., whose magazines include Time, Cosmopolitan and Better Homes and Gardens, announced a joint venture on Tuesday to develop new ways of presenting publications digitally to rival Kindle’s gray “electronic ink” technique. (ABC)

No one will carry a collection of devices to access content. Distributors, publishers and even Amazon are shooting themselves in the foot by distributing in proprietary formats. Digital content needs to be easily accessible on ANY device to be a viable business for ANY player.

Time was when the Walmart steam roller cam to town, it flattened all but the mast capable competitors with the promise of low price and selection. As it turns out, often Walmart offers neither with small selection and higher prices  one local competition is crushed. If Walmart has a weakness, it’s in the online channel and that where Amazon continues to thrive. With Wallyworld making a firm commitment to dominate online, and Amazon continuing to grow, we’re likely to see a serious price war for some time to come. Since Amazon firmly believes in the long tail of a broad and deep selection, Walmart may even need to grow its product mix to stay the game.

In what is emerging as one of the main story lines of the 2009 post-recession shopping season, the two heavyweight retailers are waging an online price war that is spreading through product areas like books, movies, toys and electronics.

The tussle began last month as a relatively trivial but highly public back-and-forth over which company had the lowest prices on the most anticipated new books and DVDs this fall. By last week, it had spread to select video game consoles, mobile phones, even to the humble Easy-Bake Oven, a 45-year-old toy from Hasbro that usually heats up small cakes, not tensions between billion-dollar corporations.

Last Wednesday, Wal-Mart dropped the price of the oven to $17, from $28, as part of its “Black Friday” deals. Later the same day, Amazon cut its price, which had also been $28, to $18.

“It’s not about the prices of books and movies anymore. There is a bigger battle being fought,” said Fiona Dias, executive vice president at GSI Commerce, which manages the Web sites of large retailers. “The price-sniping by Wal-Mart is part of a greater strategic plan. They are just not going to cede their business to Amazon.” (New York Times)

Walmart has been aggressively taking market share from specialty retailers for years, most notably playing a major role in the demise of most computer and electronics superstores. The company has also repeatedly tried to make inroads online. Failed attempts to gain traction have included DVD rentals and music downloads. Then there’s the online store. Walmart management has clearly set its sites on Amazon. Past efforts to take any market share from the mega online retailer have been hit and miss - mostly miss. With a new effort to open its marketplace to outside sellers and offering heath and beauty products online, Walmart is becoming more similar to Amazon. I doubt this latest effort will impact Amazon, but it could grow the Walmart online presence. It’s wise move even if it’s a half vast effort.  Going forward it will be increasing difficult for any retailer to compete without a strong online presence.

Walmart.com has been taking steps to expand its business. In late August, it unveiled “Walmart Marketplace,” which allows select retailers like eBags and CSN Stores to sell merchandise on its website.

“We’ve been in business about nine years now and we’re very pleased with our progress, but we know there is still work we need to do,” Vazquez said.

Walmart.com ranked as the 13th-largest U.S. online seller in 2008, with an estimated $1.74 billion in sales, according to trade publication Internet Retailer. Amazon.com ranked as the No. 1 online seller, with $19.17 billion in sales. (Yahoo)

That is, Amazon will reach the point in global sales where there total $$ from general merchandise surpasses their book/media sales. Pretty good for a company that is still generally known for their media presence –

Fifteen years after Jeffrey P. Bezos founded the company as an online bookstore, Amazon is set to cross a significant threshold. Sometime later this year, if current trends continue, worldwide sales of media products - the books, movies, and music that Amazon started with - will be surpassed by sales of other merchandise on the site. (That already occurred this year in its North American business.)

In other words, in an increasingly digital age, Amazon is quickly becoming the world’s general store. Alongside the books and CDs and DVDs are diapers, Legos, and power drills, not to mention replacement car clutches and more arcane items like the Jackalope Buck taxidermy mount ($69.97).

“Amazon has gone from ‘that bookstore’ in people’s mind to a general online retailer, and that is a great place to be,’’ said Scot Wingo, chief executive of ChannelAdvisor, an eBay-backed company that helps stores like Wal-Mart and J.C. Penney sell online. Wingo envisions e-commerce growing to 15 percent of overall retail in the next decade from around 7 percent.

This says something about retail in general. Even though Amazon might appear to have a total cost disadvantage over a typical retail store. That is probably not the case. For one, Amazon’s in-store loss numbers are nonexistent as they don’t have any, vs the B&M retailer whose losses are in the 1-3% range. So if Amazon can be more efficient in warehouse mgt they have the chance to beat the B&M retailer on a net profit basis.

The market seem to agree. Amazon is rated at 60 times earnings.

Linky.

A great many public libraries have been quietly extending their collections with downloadable ebooks and audio books “on loan”. You check them out with a download and when your time is up, they simply quit working. On the surface it looks like Sony’s pulled a real coup by partnering with the libraries first to help push its line of ebook readers.

That effort also continued today, with Sony saying that it’s teaming up with libraries to offer still more free books to its users.

For example, the New York Public Library (NYPL) will begin offering over 40,000 titles for free to those with Sony e-readers.

“Free is important,” said Paul LeClerc, the NYPL’s president and CEO, adding that “free” is part of the library’s mission.

In addition, library systems will enable Reader Digital Book owners to check out books from their local library without leaving their home, according to Sony’s Haber. Adobe Digital Rights Management technology (define) will ensure that the books expire on the e-reader after 21 days, he added.

Sony said it would be working with OverDrive, a firm that specializes in distributing e-books, to add free local library titles to the eBook Store by Sony — the company’s online book store. Users can locate their local libraries’ collections by entering their ZIP code into the new Library Finder application, also unveiled today, before downloading e-books using a valid library card. (Internet News)

I have little doubt this will help Sony, I see sel a few more readers, but there is  no reason why libraries would not also welcome a similar arrangement with Amazon, and their reader software works with anything that uses Windows.  While the cost of ebooks is a major obstacle to critical mass with publishers hesitant to price to far below print, the market for $3oo reader devices is limited. Critical mass for ebooks comes when best sellers go for a couple of bucks and a decent tablet / reader is $100. While the obstacles may remain in place for a while, the reality for publishers is that mass distribution of literature on dead trees  on life support.

ikonoclasm alerts us to the news that Murdoch is angry and threatening to remove all News Corp. material from the kindle unless Amazon is willing to hand over subscriber names and info to News Corp., despite having just negotiated a larger share of revenue. Of course, the subscribers themselves might actually like the fact that Amazon isn’t handing out their user info. (Techdirt)

Imagine this email coming from Amazon.

“Dear Kindle owner.

When we promised to not share your personal information with anyone, we didn’t know that the big bad Murdoch would take away his very valuable content if we refuse to share your information with him. Therefore we have provided all of your information to him in order to keep providing his unique content”

My prediction: Murdoch will pull content from his dailies. Amazon won’t bend. If Murdoch makes good on his threat, there will be plenty of alternative news sources to fill the vacuum.

Dear Rupert: You’re pointing your gun at your own foot.

You heard that right. What’s the use of passing a law if the main source of that proposed income will just withdraw from the field? Eh? –

Earlier this month, Governor Linda Lingle vetoed the unconstitutional tax collection scheme passed by the Hawaii legislature in HB 1405. Because the effective date of that bill preceded both her veto and the legislature’s veto override session, we had little choice but to end our advertising relationships with all Hawaii-based participants in the Amazon Associates Program. Now that the override session is over, and the legislature did not override Governor Lingle’s veto of HB 1405, we would like to invite all Hawaii Associates whose accounts were closed due to the pending legislation to re-enroll in the Associates Program.

To do so, please click here. When asked to sign in, please use the same account username and password that were previously associated with your Associates account. To make your return to the Program as seamless as possible, when you re-enroll, your account information (login, store-ID, etc.) will be the same as it was prior to termination. For further information about re-enrollment, please click here for FAQs.

— From the Amazon presser.

So Hawaii affiliates can now resign-up their accounts and get cooking again.

Linky.
HT: Instapundit

Initial post: Jul 23, 2009 12:16 PM PDT
Jeffrey P. Bezos says:
This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our “solution” to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we’ve received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission.

With deep apology to our customers,

Jeff Bezos
Founder & CEO
Amazon.com

With this Amazon issues an apology. Readers how would you rate it? Good, Fair, not worth the electrons?

Here’s my take. Amazon should have ate it. The cost I mean. They should have worked out whatever deal they could with the publisher for the customers to be able to keep the books. Another words Amazon should NOT have inconvenienced the customers and ate the costs. Absurd? Well what if it had been a physical book? You think Amazon would have gone through the pain and shipping costs for something that would not have been successful? Of course not. The fact they had the delete key was the only reason they went that route. Oh and every version of Kindle made in the future should have the remote delete feature removed. Period.

So the apology was NOT ENOUGH!

Linky.

I’ve been told that getting customers to pay by subscription for Microsoft’s wares has been a dream of  Steve Ballmer’s since the time he was the company’s lone salesman. It’s a strange turn of events that he’s  getting his wish from a technology he has fought so hard to undermine: utility computing in the cloud.

Microsoft’s Azure of cloud platform doesn’t seem to be positioned well to win many new converts, but it could be enough to keep cloud bound true believers in the temple of Windows. That may be just enough to help Microsoft keeps its strangle hold on the corporate IT world a little longer.

Microsoft will offer Windows Azure under a pay-as-you-go pricing model where customers will pay only for the services they consume. Microsoft plans to charge 12 cents per hour for computing, 15 cents per gigabyte stored, and one cent per 10,000 storage transactions.

The Azure platform includes a Web-based relational database in Microsoft SQL Azure together with connectivity and interoperability with .NET services. Microsoft said it will charge $9.99 for the basic Web edition of its SQL Azure database, which includes up to a one-gigabyte relational database; and $99.99 for the business edition with up to a 10GB database. By contrast, .NET services will be 15 cents per 100,000 message operations, including service-bus messages and access-control tokens, the company said.

And when it comes to network bandwidth, Microsoft said it will charge between 10 and 15 cents per gigabyte for Windows Azure, SQL Azure and .NET services. The software giant also rolled out an enterprise-class guarantee backed by a service-level agreement that covers service uptime, connectivity and data availability for all three services. (Yahoo)

Update. Now Hawaii is in play as well. Looks like there is a whole series of States wanting to play this game. Does Amazon have the guts to keep cutting? I hope they do. –

Amazon (NSDQ: AMZN) has informed its marketing affiliates in Hawaii and Rhode Island that their business relationship with the online firm has been ended. Amazon has been dropping its affiliates in states that approve the collection of sales taxes for online transactions.

It is a massive game of chicken. The only people getting hurt are the citizens affiliates in these States. Thanks Legislators. You are screwing your own citizens and not gathering any taxes.

Linky.