ebookfling_logoWe know how popular ebook readers have become off late, growing at a higher rate than ever. Sure there are tablets spoiling their niche party but ebook vendors have found their way around by introducing ebook stores on all mobile OS and PC platforms. The industry saw an eye popping $1b spent on ebooks by consumers in 2010 which will triple by 2015 according to a report by Forrester Research. Although the market is growing via first time users the industry had to find a way to make money out of ebooks already sold to consumers.

Amazon and B&N did what was natural to physical books – allow users to rent books from friends (only). This limited scope of book sharing has spurred the emergence of new startups in the book lending space like Lendle, Booklending and Ebookfling that are aiming to transform an already evolving industry. Lendle and Booklending allows lending and borrowing ebooks on the Kindle platform (on any mobile OS or PC) while Ebookfling allows you to rent and borrow ebooks on both the Kindle and Nook platforms. But how does Ebookfling stand out from the rest? Well, they let you borrow and lend books using what they call a credit system within the Ebookfling ecosystem where you get 1 credit point for every book you lend which can be used to borrow another ebook through the system.

First time user? No problem – you can purchase credits at $1.99 a credit point. So how does it change the ebook ecosystem? This model potentially limits the amount of money flowing into the Amazon and B&N’s coffers by cutting off a substantial number of first time ebook buyers. For example, if Ebookfling has 1000 books available for renting and the system takes off, no new ebook adopter has a reason to purchase books directly from Amazon of B&N. Instead of spending an average of $10 per book, a lent book only costs 20% of the price although it stays with you only for 14 days before it goes back to the original user. Plus the used ebook is always in mint condition no matter how many people you lend it to.

So will it permanently damage the revenue source for Amazon and B&N? That aspect is yet to be explored. The recent API block episode where Amazon blocked its lending API to Lendle should serve as a notice to future entrepreneurs treading this path. Although Amazon reinstated the API’s access to Lendle, it was not before heavy media exposure to the issue. just like Apple’s App store policies frustrated developers (even today it does!) the ebook lending policies will require a lot of fine tuning and tweaking before it becomes a sustainable, profitable model and eventually create an ecosystem like the Apple App store. Ebookfling CEO George Burke notes that “the initial reaction may be a negative.  Publishers and authors will claim the lending feature is being abused and causing cannibalization of sales.  Authors are already bending over backwards by giving away many of their backlist (older) books free in the Kindle never needing to purchase.”

From an analyst’s perspective the market is ripe for more than 5 lending services to co-exist and be profitable in the long term. Let’s just hope Amazon and B&N do the right things over the next year.

Related Posts