Magazine publishers must look with wonder, and a certain amount of dread, on the $315 million deal by Indigo Books & Music to sell its 44% share in e-reader Kobo to Japanese e-commerce firm Rakuten. Thereby, Indigo makes a tidy return on its initial investment in the business, but gets out before the necessity for $100 million plus in capital that would be required to continue to play against large, global participants, according to an interview by Jordan Timm of Canadian Business with CEO Heather Reisman and Kobo CEO Michael Serbinis.
The dread may be because Reisman makes it even more clear that Indigo is moving away from the print-on-paper business to be some other sort of business altogether.
While publishers continue to rely on Indigo for its dominance in the single copy sales business, Reisman's thoughts clearly continue to be elsewhere and that can't be good.
We must and will fundamentally transform Indigo. The idea of a book retailer as it existed up until the last two years—that option no longer exists. We did two things two years ago: we made the decision to commit to Kobo, and we also made the decision to fully transform Indigo into a whole new kind of retailer and e-tailer, and we are on that track right now. And there’s no doubt that some of that money will be used in that transformation process, both digitally and physically. We caught the wave on e-reading and had a tremendous success with Kobo. I see Indigo as that kind of innovative platform, and we'll do it again.Whether that innovation includes, or squeezes out, the newsstand is something that will be of very real concern to magazine publishers. Indigo's trajectory over the past two decades was to decimate the independent and small chain bookstore sector; it is no longer there to backstop the magazine single copy business when (if?) Indigo loses interest.