Google has over the past few years promised the market new revenue streams beyond search. While there are a couple of areas with significant potential (e.g., display), not much revenue has been generated comparatively to date. Now Google is saying that it will be a real competitor to Amazon in the ebook market. According to the NY Times:
In discussions with publishers at the annual BookExpo convention in New York over the weekend, Google signaled its intent to introduce a program by that would enable publishers to sell digital versions of their newest books direct to consumers through Google. The move would pit Google against Amazon.com, which is seeking to control the e-book market with the versions it sells for its Kindle reading device.
Google’s move is likely to be welcomed by publishers who have expressed concerns about the possibility that Amazon will dominate the market for e-books with its aggressive pricing strategy. Amazon offers Kindle editions of most new best-sellers for $9.99, a price far lower than the typical $26 at which publishers sell new hardcovers. In early discussions, Google has said it would allow publishers to set a suggested list price, but that Google would ultimately set consumer prices.
Google and Sony also previously announced a deal to give Sony Reader owners access to Google’s library of public-domain works.
There are a range of pretty speculative ebook revenue forecasts out there. But all argue that ebooks will become a multi-billion dollar market in the next few years. That’s not hard to imagine with the arrival of sleek (though expensive) new devices like the Kindle 2 and DX, with others to follow. In addition, proliferating smartphones will also operate to some degree as ebook readers. Once the devices that facilitate ebook downloads and distribution are in place the consumer purchases will follow.
As pointed out in the Times article this move to sell ebooks is separate from Google’s efforts to finalize its book search settlement, which has been criticized as giving Google too much control over out-of-print books. In particular UC Berkeley Law Professor Pam Samuelson previously argued:
The Book Search agreement is not really a settlement of a dispute over whether scanning books to index them is fair use. It is a major restructuring of the book industry’s future without meaningful government oversight. The market for digitized orphan books could be competitive, but will not be if this settlement is approved as is.
To address objections to the settlement, Google is doing its best to explain how the settlement opens up the market and trying to reassure critics and the Justice Department that it won’t have anything like a monopoly over out-of-print book sales. Google explains:
A few weeks ago we blogged about how the Google Book Search settlement agreement will expand access to books for readers in the United States. We recently took another important step forward, when the University of Michigan announced an expanded agreement with Google that will take advantage of the settlement to expand public access to millions of works from the University’s collection.
Today we want to explain one area of the settlement in more detail: how the agreement increases access to out-of-print books, including books that some refer to as “orphans.”
If Google were to put a serious effort behind ebook sales — and this is a big question – it could generate many billions in revenues potentially. If that were to happen Google might find e-commerce to be a better secondary revenue stream than enterprise licensing of apps and maybe even display advertising.