Barnes & Noble has just launched its ebook store and its ereader software (Mac, Windows, iPhone, Blackberry). Give credit to Barnes & Noble for (re-)entering the market. They’re certainly not quitters.

The company does a lot of things right. Its built in note taking feature is excellent. Click on the corner icon and up pops a note taking window that keeps track of all notes and their locations. Its bookmarking feature is just as good. It is all very intuitive.

But it’s not all good news. The Mac version has no way of downloading books or organizing your library. To purchase any content, Mac users will need to leave the B&N software and launch a browser. Now, this forced use of a browser doesn’t ruin the purchasing experience; but, the incoherent website does. After purchasing a book, Mac users must go to an entirely different part of the website in order to download that new book. Sound confusing? It is.

Once the book is downloaded and opened, the individual software is good. But, the overall ecosystem is incomplete. Barnes & Noble has received a lot of attention for allowing users to access their content on multiple screens. You can have your book on your home computer, your laptop, and your phone. This makes sense as I don’t want to drag my laptop onto the subway or cuddle up with it on my couch. I’d rather pull out my phone (or the soon to be released Plastic Logic device). The problem? In the B&N ecosystem, devices do not communicate with each other. If you’ve read a couple of chapters on your laptop, your other devices have no idea. When you pull out your phone, before you can begin reading, you’ll need to flick your way through the book to find the exact place you left off. Reading should not be that hard. Whatever benefit they hoped to achieve with its multiple screen capabilities is not worth the frustration caused by local-only copies of content.

Overall, it’s a decent start. The software and the store will work well for single device users. But, if the company hopes to grow an ebook business and compete with Amazon and Sony, it needs to provide a comparable experience surrounding all the devices its consumers use.

In his book Free, Chris Anderson talks about micropayments -- paying pennies (or fractions of pennies) for content.

As I read this, I was reminded of the current discussions concerning the online news business model. Proponents of micropayments suggest that newspapers can return to their previous glory (or at least solvency) by charging small amounts for articles. In theory, this model sounds promising -- we throw pennies away; why not throw those pennies at the newspapers? From a purely financial standpoint, I agree that this makes some sense.

But do consumers really make decisions using only rational, financial information? According to Anderson, decisions are heavily influenced by transaction costs that include “the cognitive load of having to process information.” With micropayments, clicks to new content are now burdened with the constant, nagging thought of “do I really want to pay for this?” The relatively cheap price has now become expensive.

What’s more, micropayment proponents miss an even more basic point. Consider what will happen when the first previously free newspaper decides to start charging. Consumers, faced with these new cognitive costs and the plethora of free alternatives, will flock to other sites. With the reduced traffic, the advertising revenue will in turn decrease. A bad situation has now become much worse.

When a company’s revenue model is based on a two sided network, pricing decisions should not be made without first understanding the consequences for the overall platform.

There’s been a lot of talk lately about what books should be. Daisy Whitney (a.k.a. Book Chick) asked this question in a recent video.

Here was my response:

I think the answer to this question invariably depends on who is being asked. Certain individuals will undoubtedly only want a traditional, printed copy of a book. I have spoken with numerous individuals who prefer this version precisely because it lacks certain elements found in other mediums. For example, they like to piece together their own vision of a scene instead of having a movie director tell them how it looks. This version, therefore, provides the best experience for them.

Others, however, welcome newer, different versions of these books. These versions will include static e-books seen on a computer screen or on a Kindle-like device in addition to dynamic, interactive versions in which readers can link to videos, pictures, electronic maps, etc. For these readers, these new elements serve to enhance the experience beyond what is offered from a printed book.

Given the significant differences between these two groups of users (and, in fact, among each broad group), publishers and authors would be well served by taking a lesson from their own history. We currently have several methods of distributing books -- hardcover versus paperback; print versus audio; new versus used. These different distributions represent a strength of the trade book industry because they allow companies to segment the market and most profitably capture each segment’s willingness to pay. These new versions of books provide additional methods of market segmentation and represent a profit opportunity for many market stakeholders. The question authors, publishers, and distributors should be asking, therefore, is not what do we (collectively as readers) want our books to be. Answers to this question would inevitably lead, at least on some level, to the incorrect conclusion that all readers should be lumped together. Instead, companies should focus on the boundaries between these different segments and help individuals within them further differentiate their needs.

Check out the final three responses (and vote for mine!).