Wall Street Journal
by JEFFREY A. TRACHTENBERG, JESSICA E. VASCELLARO and AMIR EFRATI
December 1, 2010
Google Inc. is in the final stages of launching its long-awaited e-book retailing venture, Google Editions, a move that could shake up the way digital books are sold.
The long-delayed venture-Google executives had said they hoped to launch this summer-recently has cleared several technical and legal hurdles, people close to the company say. It is set to debut in the U.S. by the end of the year and internationally in the first quarter of next year, said Scott Dougall, a Google product management director.
In recent weeks, independent booksellers, which are expected to play a big role in Google Editions, began receiving contracts from their trade group. Several publishers said they were exchanging files with Google-a sign that it is close to launch, publishers say.
"Because of the complexity of this project, we didn't want to come out with something that wasn't thorough," Mr. Dougall said.
Google Editions hopes to upend the existing e-book market by offering an open, "read anywhere" model that is different from many competitors. Users will be able to buy books directly from Google or from multiple online retailers-including independent bookstores-and add them to an online library tied to a Google account. They will be able to access their Google accounts on most devices with a Web browser, including personal computers, smartphones and tablets.
That's a different approach from Amazon.com Inc., which is estimated to have as much as 65% of the market. Users of its proprietary Kindle device can purchase books only from an Amazon store, although they can read them on dozens of different devices that run Kindle software and can access free books from other sources.
Key details of Google's e-book project remain unanswered. Foremost is what percentage of revenue Google will share with independent bookstores and other retailers. It also isn't clear how many bookselling partners it has lined up and who they are. More than 200 independent booksellers in the U.S. could sign up, according to the American Booksellers Association.
Because of Google's reach-its search engine attracts 190 million U.S. Internet users per month, according to comScore Inc.- many believe Google Editions has the potential to transform the burgeoning e-book market. Digital book sales are expected to more than triple to $966 million this year, according to Forrester Research, from $301 million in 2009.
Google says it is on a mission to reach all Internet users, not just those with tablets, through a program in which websites refer their users to Google Editions. For example, a surfing-related blog could recommend a surfing book, point readers to Google Editions to purchase it, and share revenue with Google. Through another program, booksellers could sell Google Editions e-books from their websites and share revenue with Google.
"Google is going to turn every Internet space that talks about a book into a place where you can buy that book," says Dominique Raccah, publisher and owner of Sourcebooks Inc., an independent publisher based in Naperville, Ill. "The Google model is going to drive a lot of sales. We think they could get 20% of the e-book market very fast."
The strategy of not having its own e-reader device could actually give Google a competitive advantage, says Brian Murray, CEO of News Corp.'s HarperCollins Publishers Inc. As the number of mobile reading devices-including tablets and smartphones-proliferates, Google Editions will benefit "because their technology may be the least dependent on specific devices," he says. News Corp. owns The Wall Street Journal.
Google has signed deals with many major book publishers, and is expected to offer hundreds of thousands of titles for purchase, and millions more for free.
The majority of titles that currently are available in other e-bookstores would be available on Google Editions, "at launch or shortly after," said James Crawford, an engineering director at Google. Retail prices will be similar to those at Amazon and Barnes & Noble Inc.
But Google is also facing considerable hurdles due to its late start and different model.
Many digital book buyers have long-established retail loyalties based on proven shopping experiences. Google's retail experience has been largely limited to selling ads.
The company is already facing resistance from some major booksellers who say they don't need its services. "I don't see the advantage in pushing their content, especially since it may be small in terms of total revenue," says Michael Edwards, chief executive of Borders Group Inc.'s bookselling unit, which sells e-books through an agreement with Toronto-based Kobo Inc.
Nevertheless, some independent booksellers that can't afford to open their own e-bookstores believe that Google Editions could be their gateway into the digital marketplace. The independents will install Google technology on their websites so they can sell e-books and receive a percentage of revenue.
"If I don't change with what is going on, I am going to be behind," says Liz Murphy, owner of the Learned Owl Book Shop in Hudson, Ohio, who is eager to see what Google will enable. "People are getting e-books but they aren't getting them from me."
The e-books store is an extension of Google's ambitious-and sometimes controversial-plan to scan the world's 150 million or so books and make them accessible to users of Google's Web-search engine. Thanks to several book-scanning centers located near major libraries, Google executives say the project, dubbed Google Books, is 10% complete.
Google's launch, which publishers cautioned has been delayed before and could be delayed again, comes at a pivotal moment in the digital books transformation.
E-book readers have become much more affordable. When Amazon launched its Kindle reader in 2007, the device cost $399. Today, new e-readers can be found for $150 and less, pushing them into the mass market. Spurred on by the launch of Apple Inc.'s iPad last April, more than 15 million e-readers and tablets will be sold by the end of 2010 in the U.S., compared with an estimated 2.8 million e-readers sold in 2009, Forrester predicts.
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