Well, that caught everybody napping, didn’t it? A day after telling Robert McCrum that Waterstones would be “different” and “better” than Amazon when it came to selling digital books, Waterstones announces that it’s signed a “commercial agreement with Amazon (NASDAQ: AMZN) to launch new e-reading services and offer Kindle digital devices through its UK shops”.
Twitter this morning has erupted in a volcano of dismay, incomprehension and more than a little sarcasm. The words “suicide note” are being bandied around. And on the face of it the deal does look barking mad: plucky British bookseller puts its head in gigantic American lion’s mouth, instead of lying down on the plush sofa in the next cage.
Some random thoughts on all this:
- Commenting on any deal like this is like shooting a pistol in a dark room. There’s an information imbalance here. If one assumes that neither Waterstones nor Amazon is run by reckless idiots with an appetite for self-immolation, one has to consider what the reasons for a deal like this would be. In fact, when a deal is this startlingly unexpected, one has to think even harder.
- The Waterstones press release is short, lacking in detail and, perhaps, a bit rushed? One of my first thoughts was that perhaps this deal is a reaction to something else external to both Waterstones and Amazon. What could that be? Well, is Nook up to something (see below)? That’s the kind of thing that could have sent Waterstones scurrying into the arms of Amazon.
- This is, paradoxically, a bet on the physical, by both companies. Waterstones is essentially saying it is happy to outsource much of its digital future to a third party, leaving it to concentrate on physical bookselling. Whatever you think of the intelligence of that move, you shouldn’t ignore the benefits of freeing up management headspace. Digital has been a huge distraction for Waterstones; arguably, it now won’t be. Again, I should say that doesn’t make this a smart move. But it might be a tick in the “pro” column. Also, some analysts in the U.S. have been saying that Amazon’s main weakness is its lack of a physical High Street presence; this is certainly the line Barnes and Noble has been peddling. Well, that problem is now sorted, in the UK at least.
- So much remains to be made clear. I find it interesting that the press release refers to “new e-reading services”, which seems to be a careful phrase with lots of headroom. How then will Waterstones handle DRM? File formats? Buy one format, get the other free (presumably impossible without publisher buy-in)? Customer data? And, following on from that, community activities like highlighting and commenting and sharing – all of which sit within the Kindle data store? What are the “dedicated digital areas” in stores the press release mentions?
- What is Nook doing? Did it have a deal with Waterstones which was then dismissed? Was Waterstones using Nook to negotiate with Amazon? Is Nook talking directly to publishers about direct digital distribution of their books?
- Did WH Smith just become the most complete, vertically-integrated bookselling company in Britain? What does that mean for book retail, and for publishers?
Random thoughts, as I say. Will add to them as and when. But what do you think?
Here’s the video Waterstones have put out with James Daunt discussing the deal. It doesn’t really answer any of the specific questions, but the emphasis is very much on the “reading experience”.