Driven in large part by the proliferation of tablets and e-readers, digital book lending is on the rise, according to OverDrive, a leading supplier of digital content to U.S. libraries. The company, which partnered with Amazon for its Kindle lending program, reported recently that it saw a 130% increase in traffic to its "virtual branch" websites last year. OverDrive works with 18,000 libraries to offer e-books and other digital content to members.

The Kindle Fire may not be an iPad killer, but it sure is mimicking Apple's early tablet sales growth. The device was the top-selling item on Amazon over the holiday season, with its e-ink counterparts not too far behind.

Mobile devices like tablets and smartphones have played no small role in the growth in library lending of e-books. OverDrive reports a 22% increase in traffic from such devices. In total, traffic to the company's virtual branches double from 2010 to 2011, to 1.6 billion page views. In addition to iPads and Kindles, the OverDrive borrowed e-books were accessed from Android devices, Nooks, iPods, Windows Phone and Blackberry smartphones, and the Sony Reader.

A startup called Coliloquy launches today to bring that concept to the e-book market starting with four titles. They're young adult romance novels, each written by an established author who took a bet with this new format. These teen fantasy stories will be a testing ground for whether interactive texts could be a new frontier for all kinds of publishers.

E-books have not quite reached mainstream ubiquity, but this past holiday season was a big one for the e-ink Kindles that Coliloquy supports. Coliloquy's timing is good, and its proposition is interesting. In the e-book era, a user-controlled storyline offers more than just deeper engagement. It provides feedback to the publishers and authors, so they can better tune the product to their customers.

Coliloquy enables episodic content unlike anything previously available on the Kindle. It's more democratic. Authors can adjust their future offerings based on what they learn about their audience from the choices they make. It's in-story analytics. And the readers get the satisfaction of influencing the outcome not just of one story but of a whole series.

A Writer and An Engineer

Coliloquy co-founder Lisa Rutherford says most of the other innovation around e-books is toward a more Web-like, multimedia experience. She'd rather stay focused on expanding the possibilities of text narrative. "What is a book?" she asks. "What goes on inside it?" She has a background as a writer, and her partner, Waynn Lue, is an engineer. They're able to work with both the technical and narrative challenges posed by this idea.

Rutherford thinks "it's a shame that, with the rise of digital fiction, innovation around the content has not kept up with innovations around the delivery." Coliloquy will "take away all the constraints" on the notion of the book, she says, establishing "communication between the author and the readers."

Active and Interactive

Coliloquy currently supports the Kindle Touch, basic Kindle and Kindle Keyboard models. It's also testing on the Web, iOS and Android, including the Kindle Fire and Nook. Kindle development is slow going. Coliloquy is in the Kindle Developer Program for Active Content, and Amazon delayed its release several times, even though the company was ready.

It's early days on this platform, but the potential is interesting, and Kindle is the right place for Coliloquy to be. These young adult romances are a good starting point, but the format could be expanded to all kinds of genres. Think about non-fiction. Imagine what long-form journalists or academics could do with this kind of feedback. Publishing articles could become a sort of Ask Me Anything thread. Here's my report. What should I investigate next?

Coliloquy is a bold use of Kindle technology, but I'm more intrigued by its implications for storytelling itself. "This isn't about replacing books," Lue says. "It's about expanding the canon." That's a noble objective. E-books free authors and readers from the constraints of the page, but they can also retain that comfortable format. Authors and readers who prefer linear text are not threatened by the e-book age. But for those who want to experiment, Coliloquy wants to make that possible.

You can learn more about Coliloquy and its current authors and titles, as well as the submission process for new authors, at coliloquy.com.

Files sent with Send to Kindle go to the user's Kindle Library, and they can be downloaded on the e-ink Kindle models as well as the iOS Kindle app. The last-read page, bookmarks, notes and highlights are synchronized automatically, except for PDFs. The Kindle Fire is not listed. Support for Mac is "coming soon."

This is actually a major feature. It makes sending Word documents, PDFs or text snippets to Kindle almost effortless. It turns Kindle into a powerful content-shifting service. It was relatively easy to send devices to Kindle via email before, and that feature still works, but now any file can be sent with two clicks, and any thing that can be printed can be sent to Kindle instead.

Content shifting was one of our top trends of 2011 because many impressive solutions for reading later popped up this year on different platforms. The Kindle service was already noteworthy for content shifting due to its whisper-syncing of books and other content, but now it's easy to send virtually any document to the Kindle.

Do you have a Kindle device? Which one(s) do you use?

Amazon increased its monthly funding for KDP Select from $500,000 to $700,000 this month after the strong showing. KDP authors earned $1.70 per borrow. The top 10 KDP Select authors saw a 30% increase from lending on top of the royalties they earned from sales of the same titles. Amazon's end-run around Big Publishing shows promise for authors.

The Kindle Lending Library itself launched on November 2. It's available to Amazon Prime members. It has tight restrictions - users can only borrow one book per month - so 295,000 titles in one month means 295,000 people.

For authors in the KDP Select lending program, the numbers are great, but Amazon is characteristically cagey about other specifics. It won't share the exact size of the sales bump KDP Select authors got over non-lending KDP authors. It doesn't disclose how many books were lent in the Lending Library program overall.

The biggest bugbear of them all for Amazon reporters is the specific number of Kindles sold. Amazon will report percentage growth in Kindle sales, but they never disclose exactly how many devices are in people's hands. Still, we know this: 295,000 or so people borrowed Kindle books from independent authors last month, and some of those authors made lots of money.

Do you have an e-reader? Which one? Do you read on it often?

Apple's in-app purchasing rules prevent e-book sellers from offering stores in their native apps (without giving Apple a 30% cut). The route around that was to include a link to the Web store inside the native reader app. Last July, Apple forced Amazon and other e-reader apps to remove this link, so users of e-book platforms other than Apple's iBooks must buy their books in the browser, in a separate place from where they read.

Amazon's first strike against this rule was to launch the Web-based Kindle Cloud Reader, so that users could read and buy books from the browser on any device, not just the iPad. It's a nice experience, but the native Kindle app's performs better and is more useful offline, even though it doesn't offer direct access to the bookstore.

In December, Amazon brought the Kindle Fire Newsstand to the iOS app, so iPad users could receive subscription publications from Amazon in the Kindle app, in competition with Apple's own Newsstand. After beefing up the Kindle app, the new standalone Kindle Store Web app better serves Kindle users who want to use the native reader instead of the browser-based one.

Apple and Amazon come at each other head-on in this market. Their approaches are basically opposite. Apple wants controls over the media available on its devices, because content is an inclusive service it provides to make its profitable devices more attractive. Apple breaks even on content, but it wants to lock users into its devices with the convenience of that service.

Amazon's business is selling content on razor-thin margins. Its Kindle devices are the service, while the content is the product. That's why Amazon offers so much support for iOS devices, even though it just launched its own Kindle Fire tablet. Amazon loses $2.70 on each Kindle Fire, but it's sure to make up the loss in media purchases. Sales to iOS users are pure profit for Amazon. The new iPad Kindle Store is its best possible solution for its customers allowed on Apple's devices.

Do you read e-books? What's your set-up?

With the rise of the smartphone and tablet, all kinds of content can be saved until after work or school. Content shifting helps us concentrate on the tasks at hand. It also reformats it for more enjoyable experiences. Now that the Web is no longer limited to our desks, content shifting allows new media to take their rightful place on the couch.

Podcasting has been the content-shifted future of radio since the early days of the iPod. But its growth was limited by the barriers of regularly syncing via USB. The era of the smartphone and tablet has freed users from that constraint.

The tablet in particular has made leisure reading and viewing of Web content a reality. Sales of the iPad have smashed expectations. Amazon's Kindle Fire, which is specialized for leisure content, has found mass appeal as well.

We've seen some great studies from Google and BBC.com this year showing that consumers love the tactile, personal tablet experience. They use tablets as leisure devices, allowing them to separate the fun stuff from the work stuff they do on their PCs.

Apple & Amazon's End-to-End Content

The big end-to-end consumer tech companies have tried to keep this all under their umbrellas. With iOS 5, Lion and iCloud, Apple proposes a vision of content shifting that happens unconsciously. Music, videos, documents and bookmarks are all just there when users look for them, no matter which device they're on.

Apple added a feature called Reading List to its Safari browser, which lets users create temporary bookmarks for Web articles. It also expanded Safari's Reader mode to the mobile versions. Safari Reader pops up a clean version of an article, without navigation or ads, to make reading on the Web more sane. The combination of Reading List and Reader mode makes for a basic but pleasant content-shifted reading experience.

None of it works perfectly, of course, but Apple would like it to.

iPad Is A Product, Kindle Is A Service

For Apple, content is more like a feature. Apple's in the device business, and it offers content to support users of its devices. The iPhone, the iPad, the iPod and the Mac are the products. Amazon does things the other way around. Amazon's new Kindle Fire tablet rounds out its line of inexpensive, less powerful devices that give users access to Kindle content, which is where Amazon makes its money.

Kindle is a service, not a product. The devices are just windows into Amazon's store of content, which is streamed or whisper-synced down to them. Amazon uses its powerful cloud to keep the latest content on each Kindle device, and even on iOS and Android devices running the Kindle app. For Kindle books and magazines, content shifting is as simple as syncing your page number.

Content Shifting In the Consumer Cloud

There's still plenty of room for content shifting solutions from Web companies that aren't tied to particular platforms.

Evernote, a company working on many different problems in the consumer cloud, has built Clearly, an article-saving service. It's a browser extension for Chrome and Firefox that creates a cleaned-up article view, similar to Safari Reader mode, but it also allows saving of the clean version to one's Evernote account with one click. The article can then be read later via the Evernote app on a tablet or smartphone, as well as on the desktop.

Instapaper has an established presence in the iTunes App Store as a dedicated read-later service. Using a browser bookmarklet or connecting to the many RSS readers and Twitter clients that allow fast link saving to Instapaper, readers can save clean versions of Web articles they want to read with just one click.

When you launch the Instapaper app, it caches the articles, so you can even read offline. This is a solution to the attention problems posed by the real-time Web. If you see an article you want to read, you don't have to be distracted. Just send to Instapaper and get back to work. Check out our interview with Instapaper creator Marco Arment for his perspective on how content shifting is changing reading.

There's also Read It Later, an Instapaper competitor that's going for cross-platform presence rather than focus on two devices. Its creator used Read It Later data to publish a fascinating blog post at the beginning of the year demonstrating the content shifting trend. It compared desktop, smartphone and tablet users' reading habits, and the iPad users are clearly shifting their content to the evening, with a little bit of reading over breakfast.

Content shifting of articles is happening, and it's getting started with Web-based video, too. The Internet TV service Boxee offers an iPad app and bookmarklet that allows saving of Web videos for later, whether on your TV or your iPad (if you've got the gadgets). It takes a bit of work to get it going, but Richard MacManus wrote a how-to guide for content-shifting video with Boxee.

Some of the sharpest minds in the industry are thinking about content shifting, and we had some great interviews about it from this year. Tech investor extraordinaire Fred Wilson talked about content shifting at our 2Way Summit this year. We discussed the iPad and the future of reading with Instapaper's Marco Arment. And we talked to Jori Lallo, creator of a link-saving service called Kippt, about the practice of saving Web links on your digital bookshelf.

Do you use any content shifting services? Share your workflows and playflows in the comments.

For Amazon, this is an "of course they would" moment. The company loses money on the hardware for the Kindle Fire and basically breaks even on other Kindle products. Amazon then must push consumers to its digital products. What better way to do so then by highlighting some of its best paid apps and expensive books?

The top recommended Kindle book is "Steve Jobs" by Walter Isaacson, the official biography of Apple's founder. "The Social Network," about Facebook's founder Mark Zuckerberg, is the top movie.

What really of interest to us are the apps. ESPN Score Center is the top recommended Android app, followed by LinkedIn, QuickOffice Pro, The Weather Channel, EasyTether, Exchange by Touchdown, Pandora, Urbanspoon, MapQuest and Zillow Real Estate. Those seem like some strange choices for a best of list. LinkedIn's Android app has been thoroughly lambasted by the tech media while MapQuest is distinctly NOT Google Maps.

The regular suspects dominate the list for Android games. Angry Birds takes the top spot, Words With Friends second and Bejeweled 2 in third.

Software has two Office products in the top listings, with Microsoft Office: Home & Student 2010 the top and Office Mac Home & Student 2011 second.

Of course, Amazon is touting its own apps as well with Kindle for (pick your platform), Amazon Mobile, MP3, Price Check, Deals and Windowshop all on the list.

What is your "best of" for 2011? Did Amazon's editors get it right? Let us know in the comments.

In addition to the 400 magazines and newspapers, the iPad app can also now display "print replica textbooks," which are more like giant PDFs than interactive applications. All iOS devices, not just the iPad, now support the Send-to-Kindle feature, allowing users to send documents to the device by email. They can also open PDFs from email or the browser in the Kindle app.

The Kindle Fire itself is off to a good start, at least in terms of sales. It's the fastest growing tablet since the iPad. Amazon has also released the first over-the-air update for that device, fixing some of the performance problems.

The Verge has a nice hands-on review of the new Kindle Fire update with photos and video.

It's a compromised device, and it's positioned as a service, not a dedicated hardware product like the iPad. Rather than making money off the device, Amazon wants to put the device into as many hands as possible in order to make money on the content.

The Kindle app for iOS is Amazon's extension of that service onto Apple's platform. Apple's own Newsstand has given publishers a major bump since the launch of iOS 5 in October. The Kindle app is popular on the iPad for e-books, though, and Amazon hopes to divert some attention away from Apple's Newsstand with today's update.

Download Kindle for iOS from the iTunes Store.

Do you read on a tablet? Which one do you use?

If indie authors are willing to sell their e-book exclusively through Amazon for 90 days, those books become available through the Kindle Owners' Lending Library. Each time a writer's book is loaned through the system, they get a cut of revenue on top of the royalties they get from book sales.

Who Needs Big Publishing Houses?

Not too long ago, the only way for an author to get significant reach and income was to get on board with a major publishing house, no small feat for any author. Today, thanks to the spread of e-books and programs like this, the barriers to entry are much lower and the financial pay-off keeps getting more attractive.

Last year, Amazon increased the revenue share it offers Kindle authors to 70%, likely in anticipation of the launch of Apple's iBooks store.

By offering an extra stream of revenue via KDP Select, Amazon boosts those profits for writers while making its own lending library seem more attractive to them. After all, why participate in a program that doesn't generate any revenue, especially if you're the little guy (or gal)?

Amazon has set aside $6 million for the fund in 2012, but wasted no time getting things started. They've already pledged $500,000 for the month of December.

Last year, the e-commerce giant announced that e-book editions of best-sellers had outsold their printed counterparts on the site for the first time. Then, earlier this year, the company revealed that it had sold more e-books than paperback and hardcover books combined.

Its line of Kindle e-readers was already doing quite well when the company launched its full-color, Android-based media tablet the Kindle Fire. As the holidays approach, the $200 device is expected to land in the hands of many more consumers. On Black Friday alone, Amazon sold 400% more Kindles that it did on the same day last year.

Media reports have pointed to the existence of such an investigation since last year, but yesterday an Justice Department official publicly acknowledged it, saying, "We are also investigating the electronic book industry, along with the European Commission and the states attorneys general." That's right, Europe and a handful of U.S. states are concerned about e-book pricing as well.

Authorities are looking into allegations that Apple took this route as a way of challenging Amazon, which had started selling e-books at prices lower than most paperbacks, something the publishers view as a potential threat to their traditional revenue streams.

Governments weren't the first to raise their eyebrows at the practice. These investigations come after several class action lawsuits were filed against Apple and the major publishing houses for alleged price-fixing.

For publishers, having prices set higher means more than just increased revenue. It helps them delay the cannibalization of print sales, which still make up the majority of their income as less lucrative e-books grow in popularity. For Apple, such an arrangement with the publishers enabled them to launch an e-book marketplace to compete with Amazon and better market its iPad tablet as a device that's ideal for reading and content consumption.

For consumers, however, the pricing model doesn't make as much sense. In many cases, people end up paying just as much for an e-book as they would for a paperback. That doesn't quite add up considering e-books forgo the costs of printing and distributing.

Just as in the French, each of the new stores is opening with the new basic Kindle reader available for 99€. The international stores also support Amazon's new Kindle Direct Publishing service, so independent authors and publishers can make their books available in these new stores.

The Italian store is available at amazon.it/kindle, and the Spanish store is at amazon.es/kindle. For Kindle Direct Publishing, visit kdp.amazon.it for Italian and kdp.amazon.es for Spanish.

Do you have an e-ink reader, or do you prefer books?

Amazon also refreshed the e-ink Kindle line this year, introducing a touchscreen version. Amazon is usually cagey about Kindle sales and won't specify numbers or the breakdown across the Kindle family. But 2011 has been the year of the Kindle, and Amazon wants to demonstrate its success.

Amazon treats the Kindle line as an end-to-end retail service, rather than just a range of products. While it touts the hardware and its features, Amazon describes the Kindles as a "service" for consumers who buy media and other goods through Amazon, especially through Amazon Prime membership, which brings streaming video straight to the Fire.

The Kindle & Online Shopping

This year's Black Friday sales were "good" for retailers, so the story is that it was "good" for America. It's hard to argue that consumers pepper spraying each other to get at the goodies is "good." But the clear trend this year is toward online shopping and, consequently, away from the "chaos" of stores.

More than five times as many people shopped from mobile devices to beat the rush (and skip the violence) this year. The Kindle family is Amazon's handheld digital shopping portal, and its success this Black Friday is in line with this marked trend toward digital shopping.

Have you shopped on a handheld device this holiday season?

The basic new Kindle - which sells for $79 with ads and $109 without - has been available in stores since just after launch on September 28. Now the $99/139 Kindle Touch and the $199 Kindle Fire tablet will appear on physical shelves.

The announcement was timed for the day after Barnes & Noble revealed its new Nook Tablet, an upgrade and rebranding of its Nook Color with boosted specs and a nice $249 price point ($50 more than the Kindle Fire).

Barnes & Noble has 705 stores of its own and operates 636 more college bookstores. The special stores get their own sales nook for Nooks. With the holidays approaching, Amazon and B&N are jockeying to sell their new readers by putting them directly into consumers' hands.

Amazon's Scale Advantage

Barnes & Noble may have more control over its in-person retail experience than Amazon does, but Amazon is bigger in several key ways. Its Android app marketplace is broader, for one thing. But it's Amazon's massive cloud computing scale that gives it the real edge. Amazon is able to accelerate its Silk Web browser and stream Amazon Prime video to the Kindle Fire thanks to its scale. It can also offer high-bandwidth, digital-only services like a lending library for the Kindle.

Barnes & Noble's only response to that is that the cloud is "unreliable." If B&N turns out to be right about that, the Nook's bigger internal storage will turn out to be an advantage. But it will be a hard sell to consumers that all Amazon's on-demand content is actually a disadvantage.

Amazon's move to bring the Kindles into 16,000 physical stores will give it some brick-and-mortar scale as well. Then the Kindles and the Nooks will only have features left on which to compete.

Remaking Retail

Amazon is doing things the old-fashioned way by putting the Kindles on retail shelves, but it has always been aggressive towards brick-and-mortar stores. Other recent developments at Amazon don't look kindly on the retail experience.

Last week, it launched Amazon Flow for iPhone, an free, augmented-reality shopping app that scans products and finds them on Amazon.com. When the Amazon price is lower than the in-store price, which are consumers going to choose?

Amazon's retail interests are best served by temporary partnerships like the ones announced today. To sell a new device in the traditional shopping season, and to compete with the last brick-and-mortar media giants left, Amazon will put Kindles into big-box stores.

But the whole line of new devices is built around digital-only media. Amazon's push in physical retail is only to sell a device that will keep its ideal customer from buying a CD at Best Buy - or a book at Barnes & Noble - ever again.

Are you buying a new tablet this holiday season? Which one appeals to you and why?

We had our own discussion today, in the staff chat room, and opinions were mixed. Some of us have been Prime members for years but at least one writer was uninterested. Interestingly, the holdout did say the Kindle Fire was almost enough temptation for Prime.

We wondered how you felt though.

Does Amazon's Kindle Lending Library Entice You to Buy Prime?

We asked and culled your responses from Facebook, Google Plus and Twitter and we used Storify to present it all back to you. If you have additional responses, please leave them in the comments.

"It's all about discovery, discovery of ideas, clips, people and other related materials. Over time we hope to conceptually connect peoples' findings to enable discovery," says BetaWorks Founder and Findings.com Co-Founder, John Borthwick. "We aren't collecting what people are reading right now on their devices (e.g. Kindle). We are collecting what they annotate."

Findings is the brainchild of writer Steven Johnson, BetaWorks Founder and CEO John Borthwick and Findings Co-Founder and Developer Corey Menscher.

It all began in 2004, when Johnson wrote a blog post about Devonthink that delved into the idea that eventually became Findings:

"The other thing that would be fascinating would be to open up these personal libraries to the external world. That would be a lovely combination of old-fashioned book-based wisdom, advanced semantic search technology, and the personality-driven filters that we've come to enjoy in the blogosphere. I can imagine someone sitting down to write an article about complexity theory and the web, and saying, 'I bet Johnson's got some good material on this in his 'library.'"

Shortly after that, Johnson wrote an article for the New York Times Books section, entitled "Tool for Thought," which alluded to the idea of better "tools for thinking."

These ideas converged in the creation of Findings.

How the Findings Metadata Works

The metadata from the page is dropped into the data model, placing long-form reading clips into a social context and "giving them that marginalia that we're used to in the real world," says Borthwick. Every clip that someone makes on Findings has its own canonical link.

"We did a first version at BetaWorks three-and-a-half to four years ago, but never pushed out a public version of it," he says. "Four years ago there weren't Kindles or iPads, and ereading was something people were talking about but not doing. So we waited."

In 2011, John Borthwick, Steven Johnson and Corey Menscher finally thought the world was ready for Findings. "People are clipping, finding stuff, the concept of a central repository where you can pull in lots of things you think are interesting clip-wise, and then build a social context around it."

Findings is now live.