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Adobe rolled out a new update for their Digital Editions Epub app today, and I have good news, bad news, and okay news.

This is a relatively minor update to the month-old Epub app, and the good news is that it adds a full text search option as well as a new display window for search results.

The bad news is that we don’t know for sure whether Adobe is still spying on users, because (and here’s the okay news) they say that they are now encrypting the data uploaded to their servers. According to the changelog posted by Adobe, one of the new features is:

Enhanced security for transmitting rights management and licensing validation information. With this latest version of Digital Editions 4.0.1, the data is sent to Adobe in a secure transmission (using HTTPS).

I got the tip from Adobe a couple hours ago, after having run several tests I can confirm that the data uploaded to Adobe’s servers is no longer being sent in clear text.

I can’t speak as to the quality of the encryption or what data Adobe is collecting, but at least they have taken the basic step of making it difficult for everyone in the world to listen in when that data is sent to Adobe’s servers.

Update: I’ve heard from another tester who identified that Adobe was using SSL, and that it didn’t appear to be sending any data at all (for DRM-free ebooks). But if you activate a DRMed ebook Adobe does send a lot of encrypted information. Removing that DRMed ebook stopped the app from sending info.  Thanks, Michael!

Second Update: I have an independent confirmation that Adobe only uploads data after a DRMed ebook has been activated.

For those just tuning in, earlier this month I broke the news that Adobe’s newest ebook app was logging users' reading habits and scanning the storage of any attached ereader and uploading that data to Adobe’s servers in the clear.

After my initial report was confirmed by Ars Technica, the shit hit the fan. Following criticism from the EFF and from librarians, leading to a partial admission from Adobe that they had been collecting data "in accordance with their privacy policies" (which just goes to show that Techdirt is right; such policies are a joke).

You can find a timeline of events on my original post.

My report has sparked a debate in the ebook world over just what activities are acceptable. Some took the position that Adobe’s actions were similar to the conveniences that we take for granted with the major ebook platforms (and web services in general). That would be a good point if not for the fact that Adobe was not providing me with any service which would require collecting that data, much less uploading to their servers.

The best you can say for Adobe is that they might have been intending to provide a syncing service in the future, possibly as part of the iPad app which I have been told is in the works, or as part of the ebook platform which they license to other companies (Kobo, B&N, Pocketbook, and so on). That could be true, but again Adobe was not providing that service and thus did not need to collect the data, much less upload it.

This is less a case of a company screwing up in supporting users than it is one of a major tech company grabbing more user info than is required and then, when they are caught, trying to write it off with a "My bad" and a promise to add encryption.

That is entirely the wrong response. What they should have said was that they would stop the spying, not that they would make it more difficult for the world to listen in.

Unfortunately there’s not much that users stop Adobe. This company is too central to the ebook world and that means that we will have to do business with them at some point.

The best the average user can do is to use a firewall or other utility to block Adobe’s apps from accessing the web, or possibly use one of the older versions of Adobe DE (which to the best of my knowledge does not collect user data).

Or we could always flee into the welcome embrace of Amazon, but many in the ebook world would call that a fate worse than death. Plus, there is no guarantee that Amazon is not collecting similar data on users.

If anything, this ensuing story has reminded us that there are maony circumstances where privacy is more of a figleaf than a reality. The best we can really hope for is that the services we use won’t blab our person details to the world.

image by Soctech

In the midst of an ongoing contract dispute with Hachette here in the US, new rumors are circulating today that Amazon is pushing for similar changes to their contracts with UK book publishers.

Citing unnamed sources, The Bookseller reports:

In the UK a number of publishers spoken to as part of The Bookseller’s investigations into the Hachette dispute said Amazon was also now putting them under "heavy pressure". According to the sources, new demands include adjusting terms so that e-books and physical book terms have parity; the adjustment is said to be in the direction of "p", which traditionally attracts a higher percentage for the retailer compared with "e". Amazon is also understood to be targeting academic terms, which have historically been more favourable to the publisher. The retailer also wants to impose a ceiling on the digital list price of e-books in preparation for 2015 when the retailer will have to begin imposing the standard 20% rate of VAT on digital titles.

…

Another clause of particular note requires publishers to guarantee they have books in stock, allowing Amazon to do print-on-demand editions to customers – with extra terms benefits – should books be out of supply. The clause has echoes of a demand made in 2008 that small publishers use its POD service, with Amazon arguing at that time that it could “provide a better, more timely customer experience if the p.o.d. titles are printed inside our own fulfilment centres”. Publishers are worried that the clause would allow Amazon to effectively take over their stock-control.

Those are quite different contract terms than what the latest leak has revealed about Amazon’s negotiations with Hachette over the weekend. According to one of the NYTimes’s unnamed sources Amazon is negotiating with Hachette over co-op fees, with the retailer teasing out each service they can provide and asking to be paid for it specifically.

it’s not known why Amazon is seeking different terms in the UK, but they are also rumored to be new most favored nation clauses.

Amazon is also reportedly seeking MFN clauses which include not just the option for Amazon to match prices with their competitors but which also gives Amazon the option to match whatever terms a publisher  might get for a new business arrangement, for example with a subscription service.

If that is true then it could be a sign that Amazon is already looking ahead to their next ebook effort, or at the very least they don’t want to be a step behind when someone else comes up with a new idea for the ebook market. And that is a telling clue of where Amazon thinks the book industry is going.

On a related note, what do you think the POD clause means?

I’m not sure if Amazon is that confident that their printing quality is that good, or if they just want to guarantee 100% availability for the books they carry.

The Bookseller

image by hnnbz

Smashwords announced on Monday that they had signed a new distribution agreement with txtr, the Berlin-based ebook company. Authors and publishers  who distribute their ebooks via Smashwords can now elect to also sell their titles via txtr and the ebookstores it operates.

Smashwords currently distributes 290,000 titles to over a dozen ebook retailers and service providers. Its distribution network includes ebook subscription companies Scribd and Oyster, ebook retailers like iBooks, Flipkart, and Kobo, and even one library ebook provider (Axis 360).

Txtr orignially launched in 2008 with the goal of launching an ereader, but today they are what is technically known as a whitelabel ebookstore operator. They developed a platform to run an ebookstore (including ebook apps), and then licensed that platform to other companies.

In addition to running their own ebookstores in nearly a score of  markets around the world, txtr also powers the ebookstore run by the UK-based retailer Foyles, and they have partnered with Duetsche Telecom in a couple markets in Eastern Europe. Txtr’s highest profile partner used to be Sony; before Sony announced the imminent closure of the Reader Store a few weeks ago txtr supplied Sony’s ebookstores in Germany and the UK, and probably other markets.

Txtr will sell Smashwords titles at the price set by the author or publisher (no discounting), or at the local currency equivalent, and authors will earn 60% of the list price (minus VAT and taxes). The first Smashwords titles will begin appearing for sale at txtr on Friday.

Smashwords

Amazon launched a new affiliate program for indie booksellers yesterday. They’re paying booksellers a small commission on hardware sales and a 10% commission on ebook sales, all the while pitching the program as a great idea. “Now your customers don’t have to choose between e-books and their favorite bookstore,” Amazon says in its pitch to booksellers.

Booksellers, on the other hand,  see things differently.

A number of indie bookstores across the US have spoken out about the program, and there have even been a few negative responses from the UK. (Even though this program is only available in the US, and not even the entire country).

The responses so far (as reported by Wired, PW, MobyLives, and even The Bookseller) have been uniformly negative (with a single neutral response). It’s not clear whether the coverage is biased, but I would tend to think it is not. All of the responses I have found so far match with what I was expecting to read.

Lissa Muscatine, co-owner of the Politics and Prose bookstore in DC, said: “We are not enticed in the least by the latest ‘offer’ from Amazon. It’s a dagger disguised as an olive branch – the latest effort by Amazon to gain traction with indie customers and loyalists.”

Her opinion was echoed by Suzanna Hermans, co-owner of Oblong Books & Music in Rhinebeck, N.Y., and president of the New England Independent Booksellers Association: “If Amazon thinks indie bookstores will become agents for the Kindle, they are sorely mistaken. There is no way I will promote Amazon products in my stores after the havoc they have wreaked on our industry as a whole. Sorry, Jeff. I’m not buying it.”

Several booksellers iterated the "Amazon is out to steal customers" theme. Michael Tucker, president and CEO of Books Inc., a 12-store indie chain based in San Francisco, described it as more or less a form of suicide. "In the long term, for anyone who gets into it, they would be losing their customers for what would end up a very small return."

Steve Bercu, co-owner of BookPeople in Austin, Texas, and current president of the ABA, agrees: "They’re attempting to acquire independent bookstores’ customers for two years of commission. This is simply in general not aligned with the interests of most independents."

I must say that my favorite response was the one from Left Bank Books.

Author and owner Kris Kleindienst has a skill for sarcasm that exceeds my own: "Left Bank Books announces its new program whereby Amazon.com buys its books from us at a fifty percent markup over list price. They will also be charged shipping. We believe this will allow Amazon to be a part of the bricks and mortar experience that they can’t do without. Prior to this program Amazon was forced to make do with warehouses in tax free environments that did not leave their customers with that satisfied,  ’I supported my local economy’ feeling they increasingly want. Now with the innovative Left Bank Books program they are easily able to stay relevant in a world that demands more integrity from its retail experience."

And finally, the generally negative response is coming from more than just US booksellers. While this program is still limited to the US, booksellers in the UK have already weighed in with their opinion.

 Tim Walker, owner of Walkers bookshops, said: "One would have to ask the question ‘Why would Amazon want to take that step? Where is the motivation?’ Because at the end of the day, they haven’t really ever given a stuff about everyone else in the book trade . . . My worry would be that by selling Kindle devices, we would be converting customers to using Amazon for their physical book sales as well as e-books. I would be very reluctant to jump in."

Sheila O’Reilly, owner of Dulwich Books in London, said: "I think I would search my heart and find that morally I just couldn’t stock the Kindle. I know Amazon employ lots of people in this country but they also have head offices in Luxembourg and Ireland for tax avoidance reasons and I couldn’t ignore that. If it was more of a level playing field between Amazon and independents then maybe I would think about it, but it isn’t."

To be honest, none of this comes as a surprise. The general tenor of the responses matches with what the very first bookseller said when news about this program broke in June.

Though I do find it strange that a few of these booksellers participate in the ABA partnership with Kobo; I don’t see how only Amazon is going to steal away customers.

Sources:

• Amazon’s New Kindle Offer Rejected by Indie Bookstores (Wired)
• Booksellers Say “No” to Amazon Source (PW)
• "We are not Amazon franchises": booksellers respond to Amazon Source (MobyLives)
• UK indies: 'We won’t stock Kindle' (The Bookseller)

Barnes & Noble has just released their year-end report for FY 2013, and there is bad news and worse news.

The tl;dr version of today’s news is that B&N lost money and market share this past year, and in response they decided to make a minor change to their current operations in the hopes that it will fix everything.

Here’s the bad news:

Fourth quarter consolidated revenues decreased 7.4% to $1.3 billion as compared to the prior year. The consolidated fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $122.0 million, as compared to a loss of $9.7 million in the prior year. The consolidated fourth quarter net loss was $118.6 million, as compared to the prior year net loss of $56.9 million. Fourth quarter net losses were $2.11 per share as compared to a net loss of $1.06 per share a year ago.

For fiscal 2013, consolidated revenues decreased 4.1% to $6.8 billion as compared to the prior year. Fiscal 2013 consolidated EBITDA was $10.3 million, as compared to $176.7 million a year ago. Fiscal 2013 consolidated net losses were $154.8 million, or $2.97 per share, as compared to $65.6 million, or $1.35 per share in the prior year.

Here’s more bad news:

The NOOK segment, which consists of the company’s digital business (including devices, digital content and accessories), had revenues of $108 million for the quarter and $776 million for the full year, decreasing 34.0% for the quarter and 16.8% for the year, as compared to the year ago periods. Device sales declined during the fourth quarter due to lower selling volume. Digital content sales increased 16.2% for the full year, however, they decreased 8.9% for the fourth quarter due in part to the device sales shortfall as well as the comparison to the The Hunger Games and Fifty Shades of Grey trilogies a year ago.

I wouldn’t get to excited about the fact that digital content sales increased by 16%. That is a far smaller growth than reported by Amazon, and that 16% is even smaller than the AAP’s estimation for the increase in the US ebook market (44%). Also, a good chunk of that increase probably came from video sales.

In other words Nook’s share of the ebook market shrank in 2012.

And here’s the worse news. Barnes & Noble didn’t announce any radical plans today.

They haven’t sold off Nook Media yet, nor are they getting out of the hardware business – not completely. They’re going to continue to design their own ereaders, but they are no longer going to make tablets:

Thus, the widely popular lines of Simple Touch™ and Glowlight™ products will continue to be developed in house, and the company’s tablet line will be co-branded with yet to be announced third party manufacturers of consumer electronics products.

Funny thing is, June has come and almost gone and there is no new Nook. I think that mention of the Nook Touch might be a red herring; at the very least there won’t be a new one this Summer (Fall, maybe).

B&N’s other future plans include releasing new Nook Apps, but as you might recall from yesterday many current apps appear to have been abandoned. With that in mind I do have to wonder what Bill Lynch was smoking when he made this quote:

“We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device.”

Oh, really? Then when will I be able to read the graphic novel I bought from B&N on my PC? What about the magazines?

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Folks, the only change that B&N announced today was that they were no longer going to make tablets and instead were planning to put their brand on tablets made by a 3rd party (Sony, Samsung, Asus, Acer, Gajah, the list is endless).

That is a relatively minor change in their business model, and I am not convinced that it is enough to rescue the company. And that goes double when you consider that the same fools who ran the ship into the iceberg are still in charge.

P.S. Last week I made a wild prediction that B&N would either sell off or shut down the Nook platform. Neither prediction came true, but only because B&N failed to make a radical move to save themselves.

O’Reilly Tools of Change conference kicks off today, and the International Digital Publishing Forum has just announced their new digital reading initiative. Rather than let Adobe, Apple, and other companies take the lead on deciding how Epub3 should look on your screen, the IDPF is going to release a reading app that meets the Epub3 standards.

Readium is going to be their reference implementation, and it will be based on the Webkit open source browser which can be found in the core of many browsers and reading apps.

So what is Readium? It’s not an ereader, and right now it’s not even an app. But in the long run it’s going to be an open source reading app that anyone will be able to integrate into their own app or ereader. They’ll need to provide their own DRM (if desired), of course. So if you were hoping Readium will help you avoid the Adobe tax, sorry but it doesn’t look like that will happen.

But on the upside, in the long run Readium is going to make things a lot easier for ebook developers. There won’t be a need to test an ebook on a half dozen devices just to make sure there are no quirks in the design. Readium  should also  improve the reading experience of the bottom-of-the-rung ereaders; hardware developers will be able to use Readium rather than whatever cheap crap they’re using now (you haven’t see the crap I have). Readium also could potentially spur innovation. Assuming it’s built right, software devs should be able to add experimental features without having to code the entire reading app.

The IDPF expects to release a feature-complete implementation of Readium, including an Android app, in mid-2012. If you like, you can try an early beta release of Readium right now. There is a proof of concept release available as a Chrome plugin. Chrome doesn’t have many reading options, so this is good news.

beta release

Readium

If you’re in San Francisco, you might consider following in the footsteps of the SF Public Library, who just donated 130 thousand books to the Internet Archive.

Like most public libraries, the SFPL hold a book sale every year as part of their funding efforts. They sell off old and unused books from the collection and they sell any and all books, videos, movies, etc that was donated by library patrons.

There’s usually stuff left over after the sale, and this year the Internet Archive got the dregs of the sale. This was the second time for the IA, and they ended up with enough books to fill a warehouse. They’ve  catalogued about a third of the mass and found 20 thousand titles that the IA didn’t already have. The IA plan to scan and upload any book that they don’t already have and then save the book itself in their Physical Archive.

If you would like to clear out your shelves, I suspect that it would be a little awkward to donate the books to the IA. But you can instead donate them to the Salvation Army, a local charity shop, or your local library. Most have yearly sales and thanks to falling tax revenues I’d bet most are desperate for funds.

That’s what I did when I cleared off my bookshelves a couple months back. As you can probably guess, I had crossed over to a digital only reading habit years ago. There were books on my shelves that I hadn’t touched for years, and in fact the only books that were used regularly were the stacks of paperbacks that accrued in various places (next to the bed, by the toilet, etc).

Most of my books were discarded by my library and sold in the yearly sale, so I didn’t think they’d want them again. I ended up giving them all to the various charities that have been bugging me for donations.

But I did keep a handful – just the ones that I regard as collectible as well as the ones not available in digital form. For example, I kept all my copies of Shel Silverstein’s books, the boxed set of Calvin & Hobbes comics, and I also kept a bunch of difficult to find books that (barring a pirate deciding to rescue the book) I never expect to see in digital form.

Yes, when someone illegally scans an obscure out of print book I see it as rescuing it, not piracy. I have books held together with rubber bands that if I ever lost I know I would never find another copy.

There’s a reason why some say that obscurity is a greater risk than piracy; one house fire would cost me everything, but a digital copy could last potentially forever.

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Late last year Kobo hired their first Manager for the European market. Pieter Swinkels is the head of Pub. & Ind. Relations, and he’s responsible for driving forward Kobo’s ambitious expansion into the European market.

A few days ago ereaders.nl caught up with him and they asked him a few questions. It turns out Kobo have a goal of dominating the ebook market in Europe. It’s not just a dream; it’s their goal and they know how they’ll do it.

Kobo is going to set up teams to work with publishers all over Europe. They don’t just want to sell ebooks; they want to sell everyone’s ebooks. In fact, those teams are going to be organized by country and language. The sheer expense of it all should give you an idea of how serious Kobo are about this.

As a first step, Kobo plans to have local content from Germany, Spain, France, Italy and the Netherlands by April of this year.

Unfortunately, they’re not quite doing it the best way. One blogger I follow is furious because Kobo started collecting the local taxes for Romania, which is 24%. They don’t actually have to collect that much because they don’t physically operate in Romania. They only need to collect the taxes for whichever country they’re in, and pay it to that country. For example, Amazon.de only collect the 8% that Germany charges, and this is perfectly fine under EU tax laws.

Update: Minor goof here. Ebooks in Germany still get the full standard VAT at 19%, not 8%.

I knew Kobo would be one to watch back when I first noticed the job posting last year. They’re ambitious, and they’re the only ones who have the vision I want to see. With luck, this time next year we’ll be talking about which of the leading ereader makers will have tied their devices to the Kobo ebookstore.