Barnes and Noble intends to update its iOS app to support EPUB 3 sometime this summer. The company hopes to leverage its existing library of kids books and enhanced ebooks and bring them over to a singular app. The company is also expected to begin selling ebooks on iOS.
Nook Kids has been one of the most successful segments of ebooks on the entire line of Nook Android devices. It has features that allow the books to be narrated and spoken aloud to the children reading them. One of the big selling points of the Nook Tablet when it was released was the “Read and Record” feature. There are lots of interactive elements, such as animations, video, and audio. Barnes and Noble currently has a standalone Nook Kids App for the iPad and iOS. It said that the company currently controls 60% of the digital kids market.
Barnes and Noble plans on rolling out full support for EPUB 3 in its iOS app this summer. This follows Kobo and Sony, who have recently updated their Android apps to support the new ebook format which will allow B&N to compete against them. The main plan right now is to cannibalize Nook Kids and incorporate everything into a singular Nook app.
Many industry analysts at Book Expo America and IDPF told me that not only will Barnes and Noble adopt EPUB 3 into its iOS app this summer, but it will also start selling ebooks! This is exciting news and basically makes sense from a logistics point of view. B&N planned on expanding into Europe and Australia this year, but it never panned out. The costs of setting up operations with retail, book agents, and distribution rights were more than B&N originally estimated. Moving into the UK was basically the first time B&N moved from focusing exclusively in the US and it was a learning experience. I was told by at least five different people close to the matter that it is cheaper to give Apple 30% of every digital book sale, rather than expand into other countries.
Sony, Kobo, Amazon, and many other mainstream digital book sellers do not sell ebooks through their official iOS apps. This is mainly because Apple mandates that all in-app purchases be done via iTunes and it takes 30% of each sale. Instead, Amazon and Kobo both developed Cloud Readers that allowed customers to easily purchase ebooks with Safari and then transfer the purchases over to their official reading apps.
It looks like when the Nook app is updated to support EPUB 3, at the same time ebooks will be available for sale. There is no word yet regarding which countries or territories the app will allow access for people to buy books. Currently, you can’t even install the Nook app unless you live in the USA or UK. B&N is playing this very close to the vest, as it is in negotiations with publishers and imprints on this very issue. There were many senior executives from Barnes and Noble at BEA this year that were holding frantic meetings with the top six publishers. Penguin is currently assisting B&N to broker deals with other publishers, since the publisher owns a minority stake in Nook Media. It is obvious that Penguin and Random House will be on board to sell books globally.
There is also no word on whether Apple is cutting Barnes and Noble a deal on royalties or not. The standard royalty per in-app purchase is 30%, though I was told by three different people that this rate may change due to the sheer amount of sales that ebooks will generate. Apple and B&N are said to be negotiating very hard on this, and are trying to work something out. No one was able to confirm what exactly was happening with the royalty rates, and the main concern to all parties was that if B&N received preferential treatment on royalty rates, what about everyone else? Would Apple change its 30% policy if sales went above a certain threshold? Would ebooks have a different rate than, say, Donuts on Simpsons tapped out?
In the end, Barnes and Noble is at a crossroads. The company is not exactly in dire straights yet. Their digital book sales are doing very well, but its hardware sales are cumulatively sagging with every quarter. Opening up its ecosystem to more international markets with iOS is the smart play, rather than opening up offices, hiring staff, getting patents, and advertising.