We all knew this day would come but it arrived sooner than some of us had expected. On July 19, Amazon announced it had sold more e-books than hardcover books over the past three months. Further, the growth rate in e-books accelerated during that time. In the month leading up to the announcement, Amazon sold 180 e-books for every 100 hardcover books, compared with a ratio of 143-to-100 during the three-month span.

Amazon also said unit sales of its Kindle reader devices had accelerated every month during the second quarter, both on a year-over-year basis and on a sequential basis. The company further noted that growth in Kindle unit sales had tripled since Amazon cut the price of the device to $189 from $259 on June 21, 2010.

There’s a lot that these numbers don’t tell us, starting with the raw numbers of Kindle and e-book units or the revenue associated with those product lines. Growth rates can be dodgy without broader context, particularly if the trend curve starts at a low point.

What we can glean from Amazon’s update is that the e-book business is a vibrant and fast-growing segment of the digital content universe. Analyst Mike Shatzkin, founder and CEO of the Idea Logical Company, predicted that, within a decade, fewer than 25% of books sold would be print versions.

The Amazon figures also suggest that predictions of a head-to-head battle between the Kindle and the Apple iPad may have been overstated. When the iPad launched earlier this year, The New York Times said Apple was on “on a direct collision course with the Kindle.”

However, in the second quarter, Apple sold 3.27 million iPad units, according to the company’s latest earnings report. While there’s no data on how many consumers own both devices, I’d be willing to bet that the overlap is significant.

Jefferies & Company managing director Youssef Squali suggested as much when he said Amazon’s announcement was “clearly an indication that the iPad is complementary to the Kindle, not a replacement.”

Mike Egan of ComputerWorld elaborated on this point by summing up 13 reasons why iPad owners still need Kindles. The main takeaway from Mr. Egan’s commentary is that the iPad does exactly what the Kindle doesn’t, and vice-versa. As long as this remains the case, there should be room for both items in consumer’s gadget wish lists.

Images courtesy of Wikipedia

… or put the genie back in the bottle. Pick your metaphor, as long as it means “impossible task.”

Last year, Time Inc. CEO Ann Moore wrote an all-company memo on “how to put the genie back in the bottle.” The memo described an effort by senior VP John Squires to develop a paid content plan for the company’s editorial brands, which include the flagship title, People, Sports Illustrated, Fortune, Life and others.

The fruit of Mr. Squires’ efforts is a pay wall that appeared quietly this week. Suddenly, when readers on Time’s website went to access articles that appeared in the print edition, they were met with this message: “The following is an abridged version of an article that appears in the July 12, 2010, print and iPad editions of TIME.”

I guess calling this a pay wall is a misnomer, since users can’t buy articles a la carte, or even through a print or digital subscription. Their only options seem to be running to the Apple store to buy an iPad (if they don’t already own one) or running to the newsstand to buy a print copy of Time (if they can find a newsstand). Not exactly the kind of strategy that leads to impulse purchases.

Time Inc. spokeswoman Dawn Bridges told All Things Digital’s Peter Kafka:

Our strategy is to use the web for breaking news and “commodity” type of news; (news events of any type, stock prices, sports scores) and keep (most of) the features and longer analysis for the print publication and iPad versions.

To which Newsweek senior articles editor Mark Coatney replied in a blog posting:

Why would I come to Time for this? I can get the wires from dozens of places, including CNN, MSNBC, etc. that have more complete, up-to-the-minute offerings. And Twitter gives me breaking news faster than any web site ever could.

Granted, Coatney works for the competition, so you wouldn’t expect him to sing Time’s praises. But he has a good point. If Time’s strategy is to make people pay for everything except the most commoditized content, then the company is going beyond The Wall Street Journal or planned New York Times pay walls, which at least give print subscribers free or discounted access to digital versions of articles in the paper edition.

In fairness to Time, the restricted content involves only articles that appear in the print versions of Time and, presumably, other titles in the stable. It does not stretch to the vast amounts of web-only content on Time’s many digital properties. But the lengths to which the publisher is going to “protect” its print content seem extreme at a time when so much content is available for free or under more flexible pay models.

I’m struck by this quote from Time managing editor Richard Stengel in The New York Times:

I think we’ll see what works and doesn’t work. We’ll adapt and change. We’re in the hunt like everyone else to figure this out … We kind of wanted to draw a line in the sand.

This is some of the most wishy-washy language I’ve ever heard from a corporate executive who’s empowered to speak to the media. Phrases like “I think,” “we’re in the hunt…to figure this out,” and “we kind of wanted to draw a line in the sand” don’t exactly convey confidence. Makes you wonder if Time Inc. really thought this through.

As with the recently unveiled Hulu Plus, I expect the Time Inc. pay wall to undergo substantial changes in the very near future.

I admit I wasn’t expecting to be bowled over by the arrival of Hulu Plus. But even considering my low expectations, the official unveiling of the service leaves me underwhelmed. The service will carry a price tag of $9.99 per month, for which subscribers will have access to multiple seasons of older TV shows no longer on the air, as well as all episodes from the current seasons of many shows on the participating networks (NBC, Fox and Disney/ABC).

Hulu CEO Jason Kilar told PaidContent that Hulu Plus will be “incremental and complementary.” Maybe. But even if this service delivers the extra bit of revenue Hulu needs to achieve its holy grail of becoming cash-flow-positive this year, the company won’t hit a home run until it shifts the cost/value proposition in favor of the latter.

Here are some specific steps that would help:

• Either lower the total fee to somewhere on the order of $7.99 or offer a “lite” version for, say, $4.99 per month.
• Reduce the ad load in the paid service. The Wall Street Journal reported today that Hulu Plus will run “as many ads as the free version of Hulu.” As a consumer, if I’m paying $10 a month for content, the first thing I expect is to see fewer ads than in the free version of the same service. In fact, I’d go further and argue that a $10 subscription should guarantee NO ads, a la HBO.
• Go deeper in offering content depth and exclusivity. I realize there are contractual obligations that preclude the level of access that consumers would like to have, but $10 should net something more than a deeper catalogue of back episodes of shows that are mostly available on the free service. One attractive possibility might be a live broadcast of a season premiere or season finale, or at least a shorter delay between broadcast and streaming for select content (say, 2 hours instead of 24).
• Hurry up and line up other content providers, starting with CBS. I expected CBS to be part of the Hulu Plus launch announcement, but so far the network is MIA from the service. The only media companies supplying content to Hulu Plus are the joint venture partners: NBC, Fox and Disney.
• I realize getting Viacom on board will be a stretch, but I hear incessant grumbling about the absence of Comedy Central from the Hulu lineup.
• Hulu on the iPad/iPhone has been a long time coming, but support for other devices and operating systems (Android, PS3, Xbox 360) needs to happen ASAP to build critical mass. Hulu’s “guided tour” of Plus suggests the service will be available on PS3 in July, while the rumor mill suggests it will be available on Xbox in early 2011.

I know this is an invitation-only “soft” launch and some of the things that I (and probably millions of other consumers) would like to see will happen over time. Still, I can’t help feeling a sense of disappointment, and I suspect I’m not alone.

Whether Hulu Plus can successfully monetize the 58.9 million people who watch full-length TV shows online in the US is anyone’s guess. Online video viewing in general is shifting to longer form content (and with it, online video advertising dollars), and Netflix has proven that viewers are more than willing to pay a subscription fee for an excellent online video service—actually, an excellent ad-free online video service. The question is whether Hulu Plus’s video archive will be “excellent” enough to overcome customer qualms with advertisements and sustain long-term growth. So far I’m not convinced.

Last week saw the annual Future of Digital Marketing conference in London, presented by Econsultancy. For me, a long day’s exposure to many stimulating speakers boiled down to a multifaceted take on the concept of value. How can marketing deliver value for advertisers in 2010? What value (and values) do consumers look for when they consider the options presented to them? What new behaviors made possible by digital media are attaining value? Below are a few points raised or prompted by the occasion.

Value comes in many forms these days.

At the most basic level, there is value in technology itself, including Internet access and mobile devices. These things make it easy to get information, find products and services, save time and save money. A milestone in this appreciation of technology as value, as keynote speaker Gerd Leonhard reminded us, is that from July 2010, access to broadband will be a legal right in Finland.

While some things are gaining value, others are losing it. A corollary of recent technological development, Leonhard observed, is that the intrinsic value of copies (such as songs, video and written content) has declined, turning many old business models on their heads. Now it is often the context of information or creativity that makes it valuable, and those who can create a compelling context will attract audiences.

One of the greatest sources of contextual value is online community. Facebook is the headline example—demonstrating that not only the site itself but advertisers who use it well can reap big rewards. But there are countless examples of smaller communities creating value through shared interests.

One speaker, Rowan Gormley of Naked Wines, has built his business on a blindingly simple win-win premise: Wine lovers get together to support independent winemakers with a proven pedigree, and commit to buying specific wines before they are made. Because the winemakers effectively pre-sell those wines, they don’t need to market them, and many upfront costs are also met. For their part, buyers save an average 33%—often more—on the wines themselves. The earlier they commit to buy, the lower the price.

Of the 80,000 members of Naked Wines, 20,000 also spend £20 per month to support winemakers who need modest investment to launch a new wine or begin a new project—perhaps buying an additional parcel of land to cultivate. In 2009, Gormley noted, Naked Wines was the largest single investor in new wine ventures in the world. Beyond this, the company works to harness the full value of users’ comments and to provide good customer service.

It’s not difficult to see the concrete value in Gormley’s business: for winemakers, for wine drinkers, and for Gormley himself, who clearly loves his job. Tom Savigar of the Future Lab discussed value in a broader sense. Savigar aimed to look “beyond retail” in his keynote speech, and ask questions that are fundamental in the multichannel age: “Why do I go to a store? Why do I go to a Website?” What are the differences, and how are these categories blurring as we all learn to shop in different ways?  More importantly, how are retailers recognizing the value they provide, and using that knowledge to rethink their businesses?

Angela Maurer, senior marketing manager at Tesco.com, lifted the lid on the grocery giant’s API strategy to reveal another win-win situation. First, Tesco managers spent some hours together brainstorming ideas for online and mobile applications, and drew up a list of priorities in various areas. These were written on Post-It notes and stuck to the walls of their very large meeting room. That same evening, the firm threw open the doors to interested programmers recruited online.

Browsing among the posted ideas, programmers could choose the projects they wanted to tackle. Tesco managed the assignment process, and gave programmers all the information they needed about the store’s API and related infrastructure. Result: Tesco is taking advantage of some of the best brains in the field, programmers get payment and credit, and the customer gets better service. Moreover, said Ms. Maurer, the entire process of brainstorming, commissioning and delivery took a tiny fraction of the months that older processes would have required.

Marks & Spencer is also squeezing extra value from existing assets—in this case, its branded video content—according to Chris Gorell Barnes. Barnes is CEO of Adjust Your Set, which helped the retailer launch M&STV. The site is now populated with more than 1,000 pieces of intelligent content, and has generated over 4 million minutes of views.

Much of the content is also syndicated for broadcast on video sharing sites, social networks and other content and media portals. Crucially, these videos incorporate a click-to-buy facility, taking viewers straight to M&S for purchase. So far, data shows customers who viewed M&STV spending 23% more. And, said Gorell Barnes, video delivers value in other ways. His firm has seen e-mail response rates rise by up to 300% when outgoing messages contain video elements.

Inevitably, Facebook plays a growing role in any assessment of value on the Web. Beyond its importance to users and product advertisers, however, is its growing value as a broadcaster. As Gerd Leonhard noted, even content from major media owners is increasingly seen within this social environment, as a currency shared between friends or given new meanings by Facebook groups. Content owners are just beginning to think about how this may raise or lower the value of what they produce, and how their business models need to alter in response.

The emerging mobile arena was another key topic of the day. Douglas Orr of price comparison engine Sccope discussed the rapidly growing market for mobile commerce. His firm is the global m-commerce partner for BlackBerry, which aims to launch mobile buying facilities from this August. Orr and other speakers on mobile were joined on a panel by Jo Vertigan, Head of Digital at England 2018 (promoting England’s bid to host the FIFA World Cup eight years from now) and Patrick Mork, CMO of GetJar, a site offering “appsolutely everything” in the way of applications for mobile handsets.

M-commerce promises greater convenience for buyers and a new revenue stream for sellers. But what other values attach to mobile? Are apps better value for advertisers and consumers than mobile Websites? Advertisers often opt for a site strategy, which removes the need to cater for different handsets. But will the mobile Web win out in the long run?  

Mork, not surprisingly, favored apps over sites. Apps offered deeper brand engagement, he said; users experienced no network delays, and payment was (at the moment) easier and more secure from within an app. But he acknowledged that advertisers interested in reach probably find better value in building mobile sites.

A final insight agreed by all the FODM speakers: The pace of change in the industry, though frightening, is also inherently valuable, keeping marketers on their toes and sparking innovation.

It’s a good question, and one that I debated yesterday with Gregg Hano, the VP of publishing for Bonnier Corporation (publisher of Popular Science, among many other titles), and David Steinberger, the CEO of Comixology, a Web and mobile technology platform for comic book publishers. The event was the first in a three-part series entitled “The Magazine Mobile Imperative” presented by the Magazine Publishers of America in conjunction with eMedia Vitals, an online publication that serves print media executives transitioning their business to digital.

In terms of the question at hand, the available survey data present a decidedly mixed outlook. A recent CMO Council study, “Leveraging Loyalty to Transform Publishing,” found that the vast majority (92%) of US magazine subscribers still get their favorite publications in print format and prefer print in nearly equal proportions. However, as awareness of e-readers increases, a growing portion of consumers are starting to consider switching their subscriptions to mobile devices.

Consumer attitudes toward paid content are likewise in transition. As my colleague Paul Verna noted in his March 2010 “Paid E-Publishing Content: Books, Newspapers and Magazines” report (available on eMarketer Total Access):

More than 90% of online newspaper readers and publishers in North America consider news content “somewhat” or “very” valuable, according to the American Press Institute.

However, when it comes to paying out of pocket for that content, most US consumers would take a pass.

A February 2010 Nielsen study, “Changing Models: A Global Perspective on Paying for Content Online,” found that only 36% of respondents had paid for—or would consider paying for—an Internet-only news source.

In an even more discouraging finding for content owners, an Adweek Media/Harris Poll study noted that only 23% of US Internet users were willing to pay for online news.

Other survey data presented in the report reinforced this rather gloomy outlook. And yet, we have word that Wired sold 24,000 copies of its iPad app in its first 24 hours of availability (in other words, since yesterday). Granted, the Wired app benefited from a great deal of pre-release buzz, including a video that was widely distributed in the wake of its presentation at the TED conference in February, but it does suggest that consumer attitudes toward paid content, and specifically mobile paid content, are slowly shifting.

As might be expected, the magazine publishers who attended the MPA/eMedia Vitals event were both very interested in and concerned by the growing level of media consumption on mobile devices, from smartphones to tablets. The excitement in the room was palpable when Gregg Hano took the audience through Bonnier’s development of the Popular Science iPad app, which will serve as the basis for a platform Bonnier will use for its other titles. Popular Science has also been the beneficiary of some significant buzz: during his April presentation of iPhone OS 4, Steve Jobs referred to the PopSci iPad app as the “king of the hill” of iPad magazine apps (Hano did not detail the impact of Job’s endorsement but it’s hard to imagine that it didn’t result in a spike in interest).

Similarly, the audience listened with rapt attention as David Steinberger described that by mobilizing comic books and putting a vast catalog of titles in front of a large mobile audience, many of whom lack access to print comic outlets, his company’s platform has actually boosted, not cannibalized, print comic sales.

Overall, the consensus in the room was that while many magazines had failed to effectively utilize the Web to build readership and drive incremental revenues, tablets, and the iPad in particular, represent a huge opportunity to get right what they had previously gotten wrong.