1. A $99 eReader. Controversial I know, but device makers are pouring into the space and while $99 may not come until 2011, I would not be surprised at all to see it this year. If you are selling an eReader north of $249, it had better sing and dance, clean the house… and make a mean soufflé.

2. The $4.99 Bestseller. Yes, eBook prices are going up, but what happens when some pubs go agency and some don’t? Prices will be all over the map, and publishers and retailers will test all kinds of pricing schemes. We may also see a class action on pubs going with agency.

3. Amazon Launches the Super Kindle. Lab126 (Amazon’s holding company that makes the Kindle) is hiring enough hardware engineers to launch a smartphone, tablet, and a line of high efficiency home appliances. Are they making a SuperKindle? Thanks to the NYT’s Nick Bilton for starting yet another hype cycle for a device that doesn’t yet exist but will descend from heaven and make all our lives better.

4. eBook buyers are collectors too, only faster. We’ll see a growing population in the Millennium Club in 2010 (ebook readers with more 1000 ebooks in their libraries)

5. Google Announces Google Editions. Again. And (a picture of) a Tablet.

6. We will share our eBooks in 2010. Sharing our favorite books is a natural and essential practice. Customers expect it, we’re ready, we just need publishers to come to the table

7. Over 15 million new eReaders sold in 2010. My best guess is that 3-4m were sold in 2009, mostly by Amazon and Sony. Forrester guessed 6m for 2010, but from my perspective they are missing the mark by about 2.5x. New entrants will diminish Amazon and Sony’s share (and I don’t mean B&N).

8. By 2015, At least 50% of eBook sales will come from entrants that don’t even sell hardcopy books today.

9. The Google Book Settlement (G.B.S., let your imagination run with other meanings for the acronym) saga continues. World governments, competitors, authors continue to block Google Books Settlement.

10. We’ll look back at 2009 as the zenith of hardcopy book sales in America.

TORONTO, ON and LONDON, UK — February 23, 2010— On the heels of a major funding announcement and re-brand, Kobo (previously Shortcovers) today launched in the UK. Kobo is an eReading service for smartphones, tablets, netbooks, laptops and eReaders. Kobo’s use of open standards like EPUB and its unique cloud-based service enables consumers to build their ebook libraries without being locked in to any one device. Kobo also keeps all of a reader’s devices in sync, enabling them to read from device to device. Since it launched in North America in early 2009, Kobo has been downloaded by more than one million users in 200 countries. The UK launch is the first region-specific launch for Kobo outside of North America.

Kobo features eBooks from leading UK publishers such as Random House UK, Penguin Group UK, Bloomsbury, Simon & Schuster UK and Faber & Faber. With these partnerships Kobo will have nearly two million titles available in the UK – with bestsellers from £8.99 and less. Kobo is working with the Independent Publishers Guild to ensure that regional and independent presses are represented alongside major publishing houses. The service will include a bestseller list unique to the UK store and UK titles featured prominently on the site.

“The UK presents a huge opportunity for Kobo to showcase its global capabilities,” said Michael Tamblyn, Kobo’s Executive Vice President of content, sales and merchandising. “Our focus is on assembling the world’s best catalogue of content for our readers and delivering a fantastic purchasing and reading experience on any device a customer chooses. We will also provide readers in the UK with a huge selection of content. The UK is the first of many international launches for Kobo this year.”

“The market for eBooks in Britain is growing fast and readers are looking for choice and the best possible experience. We are delighted that Kobo, with its excellent technology across the mobile spectrum and its deep commitment to authors and readers, is launching in the UK. Bloomsbury is working closely with Kobo to ensure that our publishing programme, including best selling titles such as Ben Macintyre’s Operation Mincemeat and Liz Gilbert’s Committed, is available as widely and as easily as possible”, said Richard Charkin, Executive Director of Bloomsbury Publishing Plc.

Through its new strategic partners, Kobo has opened distribution channels in the U.S., Canada, UK, European Union, Australia, New Zealand, Hong Kong and other territories. Today, Kobo’s eReading service includes support for leading popular smartphones like the iPhone, Blackberry, Android, Palm Pre, and Android devices. In addition, Kobo’s support of EPUB downloads allows anyone to use Kobo as their eBook store on other eInk based eReaders, laptops, netbooks and, coming soon, tablet computers.

The Kobo application is available for free download on the App Store, BlackBerry AppWorld, Palm Pre App Catalog, Android Marketplace, or simply by visiting www.kobobooks.com. Kobo features thousands of free eBooks, so users can try eReading for free.

For more information or to download Kobo, visit www.kobobooks.com.

About Kobo, Inc.
Kobo is a global eReading service backed by majority shareholder Indigo Books & Music, Borders Group, REDgroup Retail, and Cheung Kong Holdings. Kobo believes consumers should be able to read any eBook on any device. With a catalog of over two million eBooks, and an open platform, Kobo enables retailers, device manufacturers and mobile operators to bring the joy of eReading to customers everywhere. For more information, visit www.kobobooks.com.

Kindle Apps! Developers drop Android and start coding hot new Sudoku apps with the Kindle Development Kit. Really? That seemed like a good idea? Clearly more to the story.

Random Nook Sightings have moved from blog lore to reality. There are a few of them out there now, making it a neck and neck race with the Daily Edition from Sony.

[Shameless Plug] Kobo announces tablet apps coming in February, and an iPad app in March/April.

And then there was the introduction of The JesusTablet. With tremendous fanfare, we all watched Steve Jobs surf the web on it for 20 minutes. We can’t wait to get one! Our app is well into development.

And with it comes the iBookstore – There’s an app for that! (But only on Apple devices, and maybe only the iPad.)

Ali vs. Frasier. Tyson vs. Holyfield. Amazon vs. MacMillian! Agency vs. eCommerce. Amazon pulled the buy buttons for MacMillan books in a shot across the Agency model bow. (MacMillian landed the knock out punch, at least according to the media)

Harper, Hachette and others announced that they would move towards agency, making eBooks more expensive for consumers.

At least one publisher had the guts to proclaim that they would make $29.99 eBooks available – significantly raising prices. The SuperExtendaMixEbook, loaded with extra videos of the author describing how exciting it was to write their latest book. Yawn.

So, what’s next? Change. In a couple days, I’ll post my predictions for what we’ll see in the next five weeks, which will make today feel like a distant memory.

Kobo continues to grow at a rapid pace – check out our new Jobs page at: www.kobobooks.com/jobs

The Current State of Pricing
Under the current model, we spend a great deal of time and margin turning publisher-provided prices into prices that consumers are willing to pay.

Here is what we get from publishers right now…

Here is what it turns into in purchases after we have discounted. (Note: these are trade fiction/nonfiction sales only.)

Notice the great many books being given to us at $20+ and the shocking few sold at that price. Here is how I’d generally describe these different regions of pricing geography today.

Some of this changes with agency. The $9.99 peak may shift northward and hopefully lose its margin-killing properties. Trade, mass and niche will hopefully be unchanged. But I suspect that the flat and featureless terrain north of $14.00, where so many ambitiously priced titles currently languish, will be unchanged as well.

As I said at Digital Book World, the part of this graph that doesn’t change under agency is consumer expectation. This is where the consumer, for better or worse, is currently predisposed to spend. And while you could argue that the $9.99 peak is self-fulfilling (”Of course sales at $9.99 are strong. That’s where all the good stuff is priced.”) this same price distribution has held reasonably true for us in non-US markets where $9.99 is not a dominant retailer-driven price point. We have plenty of titles priced over $13.00. They just sell much less often. So our hope is that publishers will proceed gently, with an understanding of current customer expectations.

As they proceed, we see some opportunities and a warning flag as well.

Opportunity: Dynamic Pricing
You, the publisher, roll out a new release at $14.99 and it sits there, unpurchased and unloved. What do you do? If you’re thinking like a retailer, you might lower that price. You’re a self-published author who is selling at $2.50 and your book starts to sell well. You might walk that price up and see what happens. There is tremendous possibility to be more responsive to consumers and to take advantage of the immediacy that comes with being able to reprice at the speed of metadata.

Opportunity: A Shorter New Release Window
There is an opportunity for a faster move through “new release pricing” ($12.99+) to “not-new pricing” (sub-$10). In our data, the large majority of sales for a new release title takes place in the first 120 days. Can we look forward to a more aggressive timeline for price reductions after we have filled early orders for the “Gotta read it now!” crowd and begin to serve those for whom price is more of a concern?

Caution: Publisher-set Prices Will Require Much More Collaboration, New Business Functions
Publishers have never done pricing without the safety net of retailers making adjustments to optimize consumer demand. Retailers spend a great deal of time on price analysis/optimization. As we work with publishers on agency, continuous review of price/purchase behaviour is going to be essential. Daily/weekly, not monthly/quarterly. We are going to be beefing up our reporting to help, but this is going to be a new business function for most publishers and a faster decision-cycle more akin to print inventory decisions than the leisurely process of setting publication price points at the beginning of each season. Get ready.

–footnote–
* If we’re very lucky, the next undiscovered Faulkner, Rowling or Eggers will not submit a manuscript in the next few months. The editor who would normally read those pages is tied up in meetings with agents debating digital royalties and that manuscript will be buried under a pile of agency model revenue projections.

If you’re an industry insider, you’ve been following this closely for the last few days. If you’re just catching up, you can get the background here and the color commentary here. Short version: Publishers are contemplating moving to an agency model* for ebook sales. Macmillan’s suggestion of agency to Amazon was what led to this weekend’s de-listing and subsequent twitterfrenzy.

It it a great idea? A bad idea? We’ll see. And more importantly, the consumer gets to decide.

While publishers sort through their options, we wanted to set out a few, simple ideas that are important to us and to our customers. A publisher working on new business models could do worse than to keep them in mind.

1. eBooks are the future. In the battle for ever-scarcer leisure time, they represent the best offense for the written word. They mean more people reading more often throughout the day, in more countries, all over the world. They mean carrying the world’s largest bookstore around in your pocket wherever you go. They mean buying instantly and carrying your whole library around with you always. They aren’t going away. (We know you know that, but it’s worth saying.)

2. eBooks should be priced less than their physical counterparts. Not free. But much cheaper. For all kinds of reasons, consumers expect that an ebook should be substantially less expensive than the print edition, and then get even cheaper over time. The agency model shows that publishers are starting to figure this out on new releases. The same will hopefully be true later in the ebook’s lifespan.

3. eBooks should be released simultaneously with print. Many ebook buyers have made a format choice — this is how they want to read. eBook consumers aren’t going to buy the hardcover because they’re prevented from buying the ebook. They’re going to buy something else (and maybe not a book at all!) And by the time that delayed ebook comes along 60 or 90 days later, the buzz may be gone, the author isn’t doing media, and there is something else that is top-of-mind. The result: lost sales for everyone. Which makes us sad, because we love selling books. Truly.

4. eBook list prices should be set by the publisher or author. Each publisher has to make the economics of each title work for them. If they can’t, it means fewer books published, fewer voices heard and fewer stories told. Not good.

5. Retailers should, as they always have, be able to drive sales and reward customers. Retailers have spent decades figuring out how to turn browsers into customers, how to surprise and delight them, reward and motivate them. That’s what we do. We should be able to continue to use all of the tactics that we’ve developed to grow the business — discounts, promotions, bundling, loyalty programs, and more. It would be a mistake to think that customers show up just because the books are on the shelves, virtual or otherwise.

6. $9.99 is not the only price. If publishers start having more say in the sale price of books, there is always one thing they can’t control: what the customer is willing to pay. Right now, we sell a lot of books at $9.99, even more below $9.99, and a fair number above $9.99 as well. That’s unlikely to change. The right price is one that allows a retailer to eke out a living, the publisher to cover costs and pay the author, and the reader to feel that they have enough change left over to buy another book soon. We’ll get there.

7. A locked-in book is a less valuable book. Want to preserve the value of ebooks? Avoid proprietary formats. Readers should be able to buy their books from any retailer and read them on any device. Does anyone really believe they’ll be reading on hardware from the same manufacturer thirty years from now? That’s like saying “I will only store my books on these IKEA Billy shelves I bought as a college student. If I ever choose to buy non-IKEA shelves, I will throw out all of my books and start over.” A reader should never have to worry about “leaving books behind” or “losing their library”. If you can’t download it and move it somewhere else, it’s worth less. Seriously. They’re books, not Atari 2600 video game cartridges.

If we can keep these seven basic ideas in mind, I have no doubt we can find a model that works. Over the next few months, we’ll be working with publishers to strike agreements that are both sustainable for the industry and affordable for the reader. We won’t be pulling anyone’s books from Kobo. We’re all grownups here. In the meantime, we’ll keep doing what we’ve been doing — providing two million ebooks in more than 200 countries with a solution that lets customers read on the devices they choose. We’ll make reading better on smartphones, tablets, eInk devices, netbooks, and desktops. Along the way, you’ll tell us whether its working through your decision to keep buying ebooks from Kobo. And that’s all we ask.

——footnotes——

* In the agency model, the publisher sets the price (probably USD $12.99 for bestsellers, 12.99 to 14.99 for other new releases). Retailers get a fixed cut of sales (about 30%). Every retailer sells for the same price. We all compete on everything else: our ability to merchandise well, develop cool apps, support great devices, have excellent titles available. The publisher may end up making less money**, but at least the perceived value of a book is several dollars higher and they don’t have to worry about retailers coming back at them to support a money-losing pricing model.

Why “Agency”? It’s about who has the power to set the price. In the traditional wholesale/retail model, the publisher sets a list price, sells books to the retailer at a given margin, and then the retailer can price it however they want as long as the publisher gets their percentage of the original list price. In the agency model, the retailer is acting as an “agent” of the publisher, passing the book along to the consumer at a pre-agreed price. It’s like a real estate agent selling your house. You set the price, they sell it for you. You give them a commission. The agent never owns your house. They just helped out.

** Side note on the agency model. It isn’t really a revenue grab for publishers. In most cases, the publisher makes less. That $35.00 Under the Dome that the publisher made $17.00 on? With agency, they might make $10.50. But they won’t run the risk of some retailer forcing them to price it at $15 and making $7.50.

Today we all got our first look at another beautiful product from Apple.  It will be a great device for reading and Kobo will be on it from Day 1.  You will be able to use Kobo’s existing iPhone app, and I’m excited to announce that we are already working on Kobo for the IPad.  We will launch tablet apps for all major platforms – Apple, Windows, Android – and you can start using them in February.    

With Kobo for iPad, you will be able to read all the books you have already purchased, buy and read new ones, highlight, annotate, and leverage some very exciting new features we have in store for our new apps.   I can’t wait for you to see Kobo for iPad when it ships in 60 days.  In fact, we are so excited about it – we’ve included some screen shots of Kobo for iPad.

We also heard today that Apple recognizes that eBooks are going mainstream, and will launch an eBook store of their own.   This is further validation that eBooks are the future, and will no doubt be good for the entire market.   Welcome to eBooks Apple, and thank you for your support of the ePub standard!

We, of course, plan on building the best eReading service – apps, store, content – worldwide, in an open manner that gives consumers choice.  We believe consumers want choice on the content they consume, where they shop for content and the devices that they use.   

 So here’s Kobo’s commitment to you: 

• We will be insanely focused on delivering the best EXPERIENCE for readers including amazing browsing, searching, shopping, reading, and a library in the cloud to manage all your books, journals, newspapers, magazines, notes, and ideas.  We even have some surprises in store…
• We will continue to build the biggest catalog of eBooks, newspapers and magazines.  We have over 2 million eBooks with New York Times bestsellers at $9.99.
• We will be on ANY AND EVERY DEVICE that will be great for reading.  Smartphones, Tablets, eReaders, Desktops….Kobo is already on iPhone, Blackberry, Palm Pre and Android.  You can already download to an eReader with eInk screens, and very soon – you will be able to use our own eInk App!  In February we will begin supporting Tablets running Windows and Android, and in 60 days, we will have Kobo for iPad.    This means your books go with you wherever you are.  You can bounce from device to device with a seamless reading experience. So, read on your iPad while you are at home. When you’re on your way to work, pick up where you left off on your iPhone or Blackberry.  No device lock in.
• We will be EVERYWHERE you live, read, shop.  We already have users in 200 countries and that’s a big advantage out of the gate. We have retail and device partners all over the world, and we will be announcing new partners in addition to Borders, Indigo, RedGroup shortly. 
• We will be OPEN, in every way.   

Today was an exciting day for the eBook market, but it won’t be the last.  This market is white hot and we will continue to see more devices, more content, and more innovation coming from Kobo – that I can absolutely guarantee.

They read many news reports signaling the end,
For St. Jobs had a press conference he would soon attend;

The techies were tweeting 140 characters or less
Dirty visions of touch screens made them a mess

And Bezos in Seattle, and I in the Great North,
Had just settled in for a long eBook war

When out in Silicon Valley arose such a clatter,
Publishers and app co’s wondered what was the matter;

Off to New York I went in a flash,
Just last month I raised $16M in new cash;

Publishers were uniting and considering new prices,
$9.99 eBooks had their pensions in vices,

When what to my wondering eye should appear,
In just 18 hours it will all be so clear;

As CEO I raced to prepare for the iTablet,
Miss this opportunity and from the Board I will have it,

So I whistled and shouted and called them by name:
“Hey developers, marketers, biz dev, get on your game!”

Random House, Harper, Simon & Schuster,
Now’s the time to voice all the power you can muster;

eBooks are here! eBooks for all!
Choose Kobo dear friends, we’re having a ball;

Like a kid Christmas morning I can’t wait for iTablet,
I know for our industry it will be great;

But Apple you must, keep the platform open,
For with iPhone we know the consumer has spoken;

The more apps the more fun, and more units sold,
Lock it down and you’ll leave users out in the cold;

Sleep well technophiles, tomorrow we’ll see.
A “new creation” our friends will envy .

TORONTO, ON — January 21, 2010— With applications in development for Windows 7, Android and additional operating systems, Kobo, Inc. today announced that the service will be available for various tablet and slate computers in February 2010. Kobo (www.kobobooks.com) is a global eReading service that offers mobile applications on the iPhone, Android, Blackberry and Palm Pre, as well as support for netbooks and dedicated eReaders, like the Sony eReader. Kobo’s selection of popular books includes more than two million titles with content from major publishers including Random House, Harper Collins, Hachette, Simon & Schuster, Penguin and Harlequin.
“This announcement is in line with our mission to deliver the best eReading experience on any device,” said Michael Serbinis, Chief Executive Officer of Kobo. “2010 is proving to be the year of the tablet and we are working with major OEMs to ensure that Kobo apps are made available on those devices. Tablets give Kobo an opportunity to deliver eBooks, newspapers, and magazines to readers on yet another screen that is well equipped for reading.”
Free Kobo applications for tablet computers will be available beginning February 2010. Kobo’s applications will provide support for Windows 7, Android, and other key operating systems. Running on these platforms, Kobo will remain in sync across various devices, allowing users to read on their iPhone then switch to their tablet and continue where they left off.
Core to Kobo’s strategy is making eReading available everywhere and on any device, and the company believes the tablet platform is a significant new form factor for eReading. Kobo supports open standards like ePUB format, which gives readers the flexibility to read on any device.
For more information or to download Kobo, please visit www.kobobooks.com.
About Kobo, Inc.
Kobo is a global eReading service backed by majority shareholder Indigo Books & Music, Borders Group, REDgroup Retail, and Cheung Kong Holdings. Kobo believes consumers should be able to read any book on any device. With a catalog of over two million eBooks, and an open platform, Kobo enables retailers, device manufacturers and mobile operators to bring the joy of eReading to customers everywhere. For more information, visit www.kobobooks.com.

We renamed, rebranded from Shortcovers to Kobo, and launched a new web site and mobile apps early this morning.  Kobo is an anagram of “book”, and a name that we think will resonate globally.   Here is why that is important….

We’ve spent the past year assembling a group of investors that can offer the retail and mobile distribution channels needed to build a leading global eReading brand.   Today marks a major shift in the global eReading landscape.   We have a massive opportunity in front of us, and we look forward to Kobo powering eReading services everywhere.

Kobo is now officially a global eReading service backed by Indigo Books & Music, Borders (US), REDGroup Retail (AU), and Instant Fame, a subsidiary of Cheung Kong Holdings, a global investment conglomerate with interests in retail and telecommunications.   Today, we raised $16M from our founding and majority shareholder, Indigo Books & Music and these leading partners who will also give us distribution on four continents by the end of 2010.  Our vision is to deliver any book on any device, and we strongly believe that you as a customer should have choice.

You should choose Kobo, and here’s why:

1. You can use any device – your smartphone, computer, tablet, eReader or any other device you choose.  You can try it for free- without having to commit to buy an expensive device.  As of today our free apps have been downloaded over 1M times…and still counting!

1. We have over 2 million titles – with US$9.99 bestsellers and over 1.8M free titles.

1. We are open standards based – we support open standards like ePub and you can buy from us and use on other devices, or software – not just ours!

1. We are global – We have users in over 200 countries today.  We will bring Kobo powered partners to market globally throughout 2010, so you can try eReading anywhere you shop today.

You can also count on continued, relentless innovation, at top speed.  A number of advances are coming soon, including dedicated eReaders, newspapers & magazines, innovations in the reading experience and more.  We expect to bring dedicated eReaders to our customers and partners starting in the first half of 2010 and will release more details soon.

We have a massive opportunity in front of us in a dynamic market, and with our partners we look forward to serving the eReading needs of customers everywhere.

We have changed our name from Shortcovers to Kobo.  Kobo is an anagram of the word “book”  and we think that it is a name that will appeal to readers around the world….plus we think it’s a catchy name!

We’ve also updated our web experience (http://www.kobobooks.com and mobile apps.  If you are a Shortcovers customer,  your account, password, library, profile – all remain the same.   In addition to the new look and feel of Kobo, we have added a number of features on our web site:

• Browse by categories like Fiction, Romance, Biography and over 100 more
• Regularly updated Top 50 eBooks list
• Easy to use carousel with lists such as NYT Bestsellers, Top Free Books and New Releases
• Recommended reading lists and improved search for discovery your next great read

Our updated apps for iPhone and Blackberry are available now.  Palm Pre and Android will be updated soon!

Also Coming Soon, we’ll be adding:

• Over 1.8 million free eBooks from the Internet Archive!
• New apps for smartphones, and the desktop (PC & MAC)
• New supported devices…
• More books from publishers around the world and the ability to buy in your local currency

Our objective with all of these changes is to give you, our valued customer, the ability to read ebooks anytime, anyplace, on the device of your choice.  We hope you love our updated look and feel, new features and apps.  There is more to come soon!