Don't blink first

It’s an indication of how much the book business has changed in the past 15 years that the arrival of Tesco as a serious e-book retailer — via its blinkbox books launch this week — has been greeted with almost unanimous approval.

Since the end of the Net Book Agreement in the 1990s, supermarkets have done as much as anyone to devalue books and drive independent booksellers to the wall, yet in the digital space Tesco (along with Sainsbury’s before it) arrives as something of a white knight into a world that would otherwise be dominated by one seller. As Jonny Geller, joint c.e.o. of Curtis Brown, put it: “It’s in everyone’s interests for there to be more players in the market.”

The context to this is compelling, and troubling. Amazon continues to dominate this growing market. Yet its pursuit of growth at all costs clearly damages those companies around it that would otherwise contribute to a more diverse environment. Sony’s 20p e-book promotion probably looked like a good idea, until Amazon relentlessly price-matched and drove Sony away. In the US, as Kobo has now confirmed, the loss of agency pricing has made business significantly tougher.

The fact that legislators around the world remain blind to this remains one of the great mysteries of the digital age. Amazon benefits from being both a pioneer and innovator, but its ultimate goal of becoming the de facto sales channel for all books remains an unpalatable prospect. With Penguin Random House signalling its intention to stay out of this transactional business, the onus is heavily on retailers to provide the kind of diversity of channels the book business needs.

In the UK, Amazon’s dominance in the e-book space has yet to be significantly tested. Blinkbox books unfurls its sails with a decent wind behind it. It has taken an already existing e-book platform (Mobcast) and built on it; it has a device ecosystem, with half a million Hudl tablets already sold; and its knows its customers well, all 20 million of them.

The bigger test will be convincing enough of its customers to take up reading on a tablet. That said, its impact on the marketplace cannot be taken for granted. If Tesco wants to make a dent, it is going to have to be both bold and unflinching; it will need to compete on price, and back it with customer service. It must not underestimate the short-term costs of this, and it should be careful not to overestimate the medium-term rewards. It will need to treat it like a sprint, but understand that it’s a marathon.

If my former colleague Douglas McCabe, now at Enders Analysis, is right when he says: “Tesco does not do things lightly”, then it may be in with a chance. Don’t blink
first though, or it’ll all be over.