Kobo Gives the Shelfie Story a Happy Ending

The story of Shelfie, the Vancouver-based print and e-book bundling startup that ceased operations back in January, has a coda, and quite possibly a happy ending after all. Shelfie’s fellow Canadians at Kobo had agreed to maintain the Shelfie service so that users could access their DRM-protected e-books and transfer their e-book libraries to the Kobo platform. Last week Kobo — owned by the Japanese e-commerce giant Rakuten — took a step further last week by acquiring the company’s technology, intellectual property, and staff.

Shelfie is a service that lets users obtain discounted or free e-book versions of titles they already have in print. With the Shelfie mobile app, users take photos of their shelves of print books (“shelfies”), and the service identifies the titles.  In cases where Shelfie has a deal in place with a book’s publisher, the users can purchase an e-book of it at a discount, or in some cases get it for free. Some of the e-books are encrypted with Adobe’s e-book DRM, which is compatible with Kobo e-readers and apps; this enabled Kobo to take over the DRM license management for Shelfie e-books without much effort.

Kobo has stated that it will integrate Shelfie’s app functionality into its Android and iOS e-reader and retail apps.  That in itself should be a boon for user engagement with the Shelfie functionality, which had been isolated in its own apps. Beyond that it’s not yet clear how Kobo will integrate Shelfie’s technology into its e-book retail platform.

I suggested a direction when I wrote about this back in February: use it to strengthen ties to brick-and-mortar bookstores, to help compete with Amazon.

Amazon is building out a chain of physical bookstores; at this time of writing, it has five locations open in the United States with seven more “coming soon,” but no announced plans to open any outside of the U.S. It’s going to take even Amazon a while to match the retail footprints of established chain bookstores or networks of independent booksellers.

Kobo can use the Shelfie technology to create “Shelfie Stations” in physical bookstores. People could bring their books in, get them scanned, and get free or discounted e-books where there’s a deal with the publisher. If the store sells used books, the customer could even trade her print book in for an e-book. Customers needn’t use an app to take photos and wouldn’t need to hand-sign the books’ copyright pages (a step that the Shelfie app required in order to curb abuse); they’d simply need to show some indication of their Kobo accounts, such as a barcode on their phones.

Kobo could also start enabling bookstores to offer free or discounted e-books with physical book purchases. This is mainly a function of making deals with publishers, and it’s something that Kobo could have done previously through its retail partners around the world.  But the Shelfie acquisition makes it easier because the technology already has the capability to represent those deals and their terms. Shelfie had already tried pilot “P+E” bundling programs with indie bookstores and found that they led to big increases in sales on the titles involved.

All this would help bring traffic in to physical bookstores and finally strengthen their relationships with customers through e-books instead of having to compete with them. And if enough bookstores were interested in doing this, publishers might even be motivated to do more P+E bundling deals (which they aren’t now), because it would help invigorate competition against Amazon. The word “synergy” may be an old cliche, but it certainly applies here.

This could even enable Kobo to reinvigorate its presence in the U.S. market, which it all but abandoned a few years ago when it stopped selling its e-reader devices and promoting its mobile apps here. Kobo still has a partnership with the American Booksellers Association (ABA), the trade group for indie bookstores, through the ABA’s IndieCommerce program, which enables indie stores to sell e-books through store-branded websites. But the program lost much of its value when it stopped being possible to buy a Kobo reader anywhere in the States — let alone at the indie bookstores, which were the only ones promoting the program anyway.

The “Shelfie Station” idea is an especially good fit for indie bookstores because many of them already sell used books.

Yet Kobo has partnerships with many physical bookstore chains outside of the United States, in many countries including much of Europe, India, Mexico, Brazil, and of course Canada. It could integrate the Shelfie technology with them as I’ve described. This would be a boon for those booksellers, and — by invigorating the industry through competition — the book retail industry overall. It’s a safe bet that Amazon will revive its currently dormant interest in P+E bundling when it has opened a critical mass of physical bookstores, but again, this will take a while, giving Kobo a significant window of opportunity.

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