Readmill Could be Amazon’s Next Acquisition Target

The mobileReadmill Could be Amazon's Next Acquisition Target Editorials reading app Readmill is back in the news again today with a new retail partner, and it's going to make them an even more tempting prize for Amazon.

Readmill has signed a deal with Penguin UK so that customers of the Penguin UK ebookstore can quickly and easily send their purchases to Readmill, and then read the ebooks in the Readmill apps for Android, iPad, and iPhone.

In the near future that ebookstore will be updated with new "Send to Readmill" buttons on the download page, removing yet another speed bump that has made it difficult for readers to concentrate all of their ebook purchases in one location.

Penguin UK is something like the 70th retailer to sign up with Readmill since it launched 2 years ago. Readmill's partners are a motley bunch of companies including ebookstores like eBookmall, publishers like Wizard Tower Press, and even self-pub services like Bibliocrunch. All of these sites sell or give away ebooks (including DRMed ebooks), and they have all elected to help their customers use Readmill.

As a result Readmill is becoming a focal point in a growing decentralized network of indies, and that is going to make Readmill a worthwhile acquisition for Amazon. (And the fact that Readmill's revenues are based on tracking their user's reading behavior and selling the data doesn't hurt either.)

Amazon has a policy of trying to buy any of their smaller competitors before they can grow into a serious threat. That's why Amazon owns Zappos, Diapers.com, and The Book Depository (3 niche retailers that were beating Amazon in their niches), and at some point Amazon is probably going to apply the policy to ebooks - if they haven't already done so.

Edit: I was just reminded on Twitter that Amazon has already bought ebook competitors - remember Stanza?

Now, if you're thinking that Amazon's only competitors are the big ebookstores then it's time to start thinking laterally.

For one thing Amazon would probably never be allowed to buy a major competing ebookstore (the SEC wouldn't allow it). And for another the major publishers are never going to let a single major ebookstore grow up and replace Amazon; they would be replacing one ruthless behemoth with another.

In short, the only competition Amazon could be interested in buying would be one or another indie startup.

This opinion was inspired by a comment left yesterday on a post about breaking Amazon's monopoly (such as it were). David Haywood Young argued that centralized systems (like Amazon) could be taken down by a network of indies:

There’s no obvious reason these centralized systems have to dominate internet sales at all. Set up an easy-to-use system for content owners to offer their wares from wherever they choose to host ‘em, and handle sales by at least one common protocol, and the only central system of use will be an index…which will really only be useful to most insofar as it is also a recommendation engine.

If we expand upon that idea, this indie network could include independent startups that each specialized in one or more task: production, distribution, payment processing, marketing, reading, or discovery. Rather than trying to do everything and failing to do any one task well (like Kobo, B&N, Google), each startup would try to be the best at just one task. Customers and creators would ideally be able to navigate the network seamlessly, with much of the work done automatically behind the scenes.

Now, this indie network doesn't really exist yet; it's more of a concept than any type of actual coordinated effort to grow the ebook market. But it could exist, and they way that Amazon is acquiring startups will work to either control it or at least control the most important parts.

Amazon is going to want to look for the startups that are becoming the major nodes in the indie network, and then try to buy them. Readmill could be on its way to becoming one of these nodes; they already have dozens and dozens of connections, so if Amazon bought them then Amazon would be in the middle of everything.

Do you know another company that was already on its way to becoming a major node?

Goodreads.

This book community had developed expertise in book discovery. They had invested in a discovery engine, and by encouraging users to assemble their own virtual bookshelves Goodreads had also managed to introduce an organic discovery component.

That's why Amazon bought Goodreads earlier this year, and for a similar reason I think Amazon is probably looking at Readmill.

Thoughts?

P.S. I would also add Smashwords to the list of potential nodes, but it isn't one yet. At this point Smashwords has only the most tenuous connections to ebook production services, and their ebookstore is too focused on their own website (it can't be embedded in author websites, for example). Right now Smashwords is a major node in a network with major ebookstores, and not an indie network. But Smashwords could also become a node in that indie network if they tried.

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

24 Comments

  1. Baldur Bjarnason22 November, 2013

    In my mind Readmill’s potential suitors come in two groups:

    1. Those who should buy them but won’t even consider it.
    2. Those who are likely to buy them but really shouldn’t.

    Group 1:
    Google. Play Books suck. The apps suck. The experience sucks. Every Google-led ebook effort so far has either been misguided or misbegotten. They’d do well to buy Readmill and just put them in charge of ebooks.

    Sony. For similar reasons as Google.

    Group 2:
    Amazon, IMO. It’d be a purely defensive move as there is no evidence that they’d benefit from integrating Readmill services with Kindle devices or apps.

    Publishers. It’s conceivable that one of the big publishers might want to acquire Readmill to shore up their tech competencies. The platform would almost immediately lose support from all other publishers, though, but the acquirer probably wouldn’t care.

    Samsung. Because even though they might benefit a lot from Readmill’s competencies they’d also almost certainly shutter the iOS app.

    Anyway, I’m a huge fan of Readmill but I’ve never understood what their exit strategy is going to be.

    Reply
    1. fjtorres22 November, 2013

      “Sell out to Amazon/Google/Microsoft” is a standard silivalley exit strategy. The main variable is *when* to sell to get peak value.

      Reply
  2. Ray Kumar22 November, 2013

    I am puzzled why Ebay is not a player in the ebooks market.

    On the face of it, it appears to be a natural partner for publishers being:

    > unconflicted with its own competing publishing business
    > familiar ecommerce destination
    > PayPal payment processing
    > and also have a physical order fulfillment platform VendorNet for physical books

    And if only Ebay can also offer an open platform tablet/ ebook reader differentiated from the closed-garden variety of Apple & Amazon, that would also serve as an on-ramp to its ecommerce biz .

    Reply
    1. Nate Hoffelder22 November, 2013

      That’s a good question. Why didn’t they jump in during the ereader bubble? It would have made so much sense at the time for them to sell ebooks.

      And why haven’t they jumped in since? They have most of the online retail tech needed to sell ebooks; all they would need to develop are apps.

      Reply
      1. Ray Kumar22 November, 2013

        Perhaps with your blog cred, you may have a better chance of being heard with an open letter to Ebay on your blog.
        Or better still, prod Pierre Omidyar by dropping a line … [email protected] !!

        Reply
      2. Ben22 November, 2013

        You make it sound like a walk in the park to develop ebook apps. How many out there suck? We don’t need more crap.

        Reply
        1. fjtorres22 November, 2013

          Actually, getting an ebookstore going would be trivial for eBay:
          1- Decide to get in
          2- write a check to bluefire.
          🙂

          They would be a natural partner for Indies, more so than Kobo, because they could afford to do a 50-50 split with the bookstores, or even 40-60, cause they’d be working payment processing, pbooks, used books, and it would give them a leg up on Square.

          The problem is eBay/PayPal is aggressively puritanical.

          Reply
          1. Nate Hoffelder22 November, 2013

            The other problem with Paypal/Ebay is that they’re jerks to do business with. Think Amazon, only without the pretense that Amazon wants everyone to profit.

            Reply
        2. Nate Hoffelder22 November, 2013

          I agree that there is a good chance that the reading apps would be bad but that’s no reason for them not to jump in. It didn’t stop anyone else.

          And have you used Ebay? The website is often only semi-functional, so clearly putting out crap is not an issue.

          Reply
          1. Ray Kumar22 November, 2013

            “Have you used Ebay?”

            As it so happens, I did just did yesterday to buy some vacuum cleaner filters. Actually I went there through Google Shopper where it was the 3P merchant link which took me to Ebay. As an aside it was priced for less than by a 3P on Amazon.

            Anyway, only quibble about placing an order over on Ebay is the double login, first order on Ebay and then when you pay for it with Paypal.

            As 3P is Ebay’s bread and butter, they will face an existential challenge when Alibaba arrives stateside as it will most definitely drive down their 3P listing fees and they should hurry and diversify.

            Reply
  3. Nate Hoffelder22 November, 2013

    And while we’re on the topic of who should get into ebooks, why haven’t we heard anything from Yahoo? All the other tech giants are in ebooks (Amazon, Google, Microsoft); why not Yahoo?

    Reply
  4. David Haywood Young22 November, 2013

    Hey Nate-

    This is sort of funny–I saw your response to my comment on the other post late last night, and responded a few minutes ago. But it turns out you didn’t need my response; you’d already written it yourself!

    -D

    Reply
    1. Nate Hoffelder22 November, 2013

      It was an interesting idea. Thanks for suggesting it.

      Reply
      1. David Haywood Young22 November, 2013

        Sure. I’ve been saying it every now and again for a few months now. {8′>

        But, y’know…assuming there’s validity to that outlook, it means Amazon’s core business model relies (or will rely) on improving what people lately want to call discovery and I’ve been calling a recommendation engine. The content-hosting and actual sales are important, sure–somebody needs to do them–but they’re essentially plumbing. Which can be outsourced to lots of people.

        Which makes B&N and other companies look a little bit silly. They seem to have concentrated on duplicating easy-to-duplicate infrastructure but may have forgotten along the way what their business is about: introducing readers to books, and making it easy for readers to return to authors they enjoy.

        I think it was David Gaughran who pointed out that the major non-Amazon ebookstores mostly “recommend” what publishers pay them to recommend, though I’m not sure where I read it and it may have been someone else. Regardless: if that’s true as well…man. How embarrassing for the companies involved.

        Sort of a cargo cult effect, I guess. Fun to watch, but I do wish we were all a little smarter. ‘Specially me!

        -D

        Reply
        1. David Haywood Young22 November, 2013

          I should add this: if that’s still all true and/or nearly true, doesn’t that mean that if B&N changed their focus to recommendations, and decided they didn’t care who hosted the content they sold, that they could fairly quickly undersell Amazon? And please a lot of publishers? And take credit for changing the world?

          This doesn’t even take a lot of tech. Authors/publishers could put stuff on their own websites, and feed B&N their data. B&N could take a small transaction fee. You know what? This could start as a WordPress plugin. Not so expensive to build. Getting decent legal agreements drafted is probably harder than the tech bits.

          Of course Amazon could do this too. But it directly undermines their 35-70%+ cut that they so enjoy, and as the market leader they don’t have a lot of immediate incentive to kill their own cash cow.

          So…seriously, this could start next week, if B&N (or another major player) would just give up on laying pipe. There are all sorts of fun ways to “improve” this from a technical standpoint, but so what?

          I should get back to work.

          -D

          Reply
          1. David Haywood Young22 November, 2013

            What if a publisher offered an open data feed? And essentially allowed anyone to become an affiliate?

            Pay a commission on each sale, and voila! New businesses could spring up, based on selling books. There are already lots of payment processors, and we’ll be forever getting more of them. Who needs Amazon? Who needs B&N?

            Then somebody could be innovative and come up with a good way to apply ideas centering around “pay per click” and allow even more people to play some part or other of the book-selling game.

            Somebody’s gonna start this ball rolling pretty soon. It’s just too easy to do, and all it takes is an outsider’s viewpoint to make it obvious.

            Reply
          2. Ray Kumar22 November, 2013

            David-
            Actually a response to your “What if a publisher offered an open data feed?”, but seems like all the reply links for this thread are used up!

            Anyway, didn’t the publishers recently band together to set up a collaborative review, discovery and distribution platform, Bookish.com ? Even though its CEO protested rather too loudly that it is “not trying to steal sales from Amazon and other retailers”, I think it is exactly that and is a clear effort to “disintermediate” book retailers, especially for ebooks.

            The logistics for eBook distribution is much easier than for the physical version. Why bother with agency model, wholesale model etc. when all that is needed is a platform to host the content, manage DRM, process payment and advertise/promote etc. In time they might seek to reset their relationship with platforms like Amazon, B&N, Google etc. as merely advertising and referral affiliates. And another logical next step would be to offer a subsidized generic eInk reader supporting something like a Webkit open browser and break themselves and their readers out of the Apple, Kindle and Nook walled gardens.

            I think Amazon having egged on DoJ in the anti-trust action to further its own quest to dominate the ebook space as it has done with the physical version might wish it left well enough alone. The “Agency” racket might in the fullness time appear a sweet deal compared to what they may end up being – merely an advertising and referral affiliate for the publishers and authors.

            Reply
            1. Nate Hoffelder22 November, 2013

              @Ray Kumar

              Bookish is not really anything new. It is a marketing channel that the publishers use to promote their books. not anything collaborative. Nor is there any distribution aspect.

          3. David Haywood Young22 November, 2013

            I’m not sure it matters to ebook distributors/creators/retailers whether they make their own readers. Many existing readers are crippled, format-wise, but it’s fairly easy to distribute an ebook in multiple formats. Not a challenge for anyone. Also, the current meme seems to be that people are moving away from dedicated readers to multi-function devices anyway.

            But…what if a publisher just told Amazon “here’s how we’re giving you our data now–do you still want it?” and gave them an online feed containing info about books they had to sell? What if they then opened up that feed to anyone/everyone else, and let go of trying to manage the whole process from cradle to grave? And focused on…you know…managing their relationships with distributors. In case they happened to have any experience in that particular area.

            They’d be providing an actual service to the authors they e-published. Sure, some indies would go duplicate the tech for themselves, but there could be all sorts of bundling and subscription options indies would have a hard time matching (at first–in the long run, we’ll all be indies IMO). And the indies would have to establish their own relationships with distributors…oh wait, that’d be where Smashwords (et al) might fit in.

            Let me put it another way. Suppose the publisher allowed Amazon to sell its books, the same way it works now, but the publisher also either sold books directly via its own site or through other (indie?) distributors if the publisher chose to specialize further and/or not alienate existing distributors? Meaning that what the publisher set up would essentially be a combination of an affiliate program (sell our books on your specialized or otherwise cool site!) and pay-per-click (send qualified visitors our way, and if a sufficiently high percentage of them buy from us that we’re sure you’re not spamming us, you get paid for each one who comes to our site).

            What if all publishers started doing this, or even a few of them? Or even one large publisher? Once it gets rolling, there’d be all sorts of potential for specialized (even “local”!) booksellers to create and curate their own virtual shelves, without having to try to actively sell “everything.”

            This could be fun for the publisher. Like: here’s my price for this book, but it’s in this category too so you can actually sell subscriptions to the category (or to your own self-generated category based on search criteria, or even a curated category of books that qualify for inclusion–and that curated subscription might be your very own private toy to sell) or…frankly I don’t know what would be possible, especially if indie distributors and sellers can start creating new combo-products across publishers. ‘Cause that would naturally happen, and we’d find out what business models worked downstream of the publishers themselves by watching to see who made money.

            What sort of recourse would Amazon have? None, is my guess, as long as the publishers aren’t contractually obligated to deal with them exclusively.

            Amazon’s best long-term defense against this? Contractually exclusive content. They’re all over that. I don’t think it’s a coincidence. I think they’re very smart people over there.

            Reply
          4. David Haywood Young22 November, 2013

            I think the above is what professional ebook publishing will look like in the fairly near future, though of course I don’t know what path we’ll take to get there. This is a kind of answer to the question of what value a publisher can offer a writer–not much right now, unfortunately, but “managing an actual 21st century online business” is not a skill set every writer will want to master. Of course, then there’s Smashwords…

            Further, I think there will be lots of people who become involved at some level without making lots of money for it. I think that’s fine. Not everything we do needs to be what we do for a living. Book lovers in general will become players in the game, and those with a following will probably be able to get paid for wielding what influence they have.

            It just sounds like fun to me.

            Reply
  5. eric hellman23 November, 2013

    Wouldn’t Overdrive be a more attractive acquisition target for Amazon?

    Reply
    1. Nate Hoffelder23 November, 2013

      Amazon already has what they need from OverDrive.

      And OD is on the list as well:
      http://the-digital-reader.com/2013/07/18/speculation-who-amazon-might-buy-next/#.UpDhMRBKaGk

      Reply
  6. […] thinking this through from a non-techie perspective last Friday because Nate Hoffelder wrote a post that he said was partly inspired by a comment I’d left on another of his posts…which I […]

    Reply
  7. […] Amazon’s next ebook acquisition is back in the press again today with the news that they’ve formed partnerships with 4 new reading apps. […]

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