Lexcycle, the small software company that makes the Stanza e-book reader software for iPhones, PCs, and Macs, announced on Monday that it has been acquired by Amazon. Terms were not disclosed.
This development, like Amazon’s purchase of Mobipocket four years ago, has gone relatively unnoticed in the industry press, but it’s significant. It gives Amazon a piece of the action for e-books in two DRM-enabled formats that are readable on Stanza: Adobe Digital Editions and Fictionwise eReader. DRM-enabled e-book formats are important because they enable access to major publishers’ frontlist content. (Stanza can also read several other e-book formats without DRM.)
Furthermore, Amazon does not just have a proprietary e-book format with the Kindle and Mobipocket; it also has support for the industry standard EPUB format. And Amazon now also owns both of the major e-book retailing channels to the Apple iPhone and iPod Touch: the Kindle iPhone app as well as Stanza.
In the near-term, this is a competitive move against other entrants into the e-book market — including Apple, which is rumored to be working on a tablet-format device that could be well suited for e-book reading. If Apple sells e-books, it will almost certainly do it through iTunes and not make its e-books interoperable with non-Apple devices.
In contrast, Amazon is surely working on offering such interoperability — along with an integrated device and service (the Kindle) that keeps things simple for the non-tech-savvy. It’s hoping to offer the best of both worlds between Apple’s user-friendly, vertically integrated stack and a flexible but complicated platform a la Microsoft Windows Media.
Even now, Amazon has many of the pieces in place to offer e-book interoperability. It uses the same format and DRM on the Kindle as it does in its Mobipocket software for PCs, BlackBerrys, and various other portable devices. It stores information about users’ e-book purchases on its servers, so that users should eventually be able to download multiple copies of e-books for different devices tied to their Amazon accounts – the so-called rights locker approach.
Amazon needs to negotiate licenses from major publishers to offer content rights that span multiple devices; currently major-publisher front-list titles are only licensed for the Kindle but not for Mobipocket. Front-list major-publisher content is already available for Stanza through Adobe’s platform and retailers such as OverDrive.
The next step is to offer cross-device interoperability between the Kindle/Mobipocket world and the Stanza/EPUB world. This should help Amazon capture a bigger share of the e-book market as it grows. In general, Amazon is working aggressively to reposition itself as the e-book market moves from an early stage to mass-market adoption — or in the words of technology marketing guru Geoffrey Moore, from the bowling alley to the tornado.
Amazon’s recent moves confirm that it does not intend to ape Apple’s iPod/iTunes strategy in e-books; beyond that, they’re just smart strategy. It is now up to publishers to decide whether to license their content into Amazon’s interoperable ecosystem and thus how much market power to give the company.