Thursday, December 06, 2007

Kindle: An e-platform for the masses?

In mid 1998 I had an audience with Jeff Bezos together with several French publishers. During the meeting the conversation moved to a discussion about what was going to be when it grew up. The supposed genius in the group (me) volunteered that Amazon would remain true to its book retail focus and not become some type of on-line mall. At the time, Amazon remained very close mouthed about their plans but in retrospect it's my suspicion they had every intention of becoming the emporium we now know them to be; moreover, they knew exactly how they were going to get there. Since the launch of Kindle, I have thought a lot about this meeting in 1998 because I don't believe anyone has a clue what Amazon sees as the future of this device.

Tim O'Reilly blogs about the relationship between ebook pricing and attention. There is obviously more to the post than that and the comments are worth a read as well. His article argues a salient point: Because reading is an 'active' past-time there is only a certain amount we can read given the time we have available. Raising or lowering prices will not (de)increase the "supply of time" dedicated to reading. In other words, I can only read one book a week and even if book two were free it wouldn't mean I could somehow read two.

The price of the Kindle is approximately $300. I would argue, rather than reducing ebook prices to $5.99 (versus print prices of $20) the pricing for the device should be similar to the razor blade/razor model. Even then I am not sure the model would work. Why? Because most readers don't read that many books. Most of the readers of publishing blogs like this one, O'Reilly Radar and those with a publishing audience represent a skewed view of the appeal of reading. We all love it and we all do a lot of it. Regrettably, the rest of America is not like us and on average the average book buyer will read less than 3 books per year. (Research studies note that even 'book buyers' are a small group).

So aside from early adopters and techno-fadists who flocked to acquire the first Kindles who will buy the next batch? If the average reader buys three books a year for a total of $90-100, why would they buy an ebook reader for $300 even if those three books were free? Your average consumer is not a dummy and can do the math.

So what of Amazon? They absolutely have the best information available about purchases so perhaps they believe they can sell enough Kindles to the small segment that reads over 10 (or 'x') books per year: I wonder about that. It would seem to me that on the basis of ebook sales alone for use on the Kindle, the device will be a failure. I believe the Kindle represents the first generation e-platform rather than a pure ebook reader. Amazon has a much broader view of how and what content will migrate to the Kindle.

There has been much discussion, argument and commentary about the Kindle and what it means but one thing is clear to me. Amazon has a plan that most likely exceeds our expectation about the positioning of this device. What that is I can only speculate but I suspect as an e-platform they will aggressively start establishing content relationships with all kinds of publishers, content providers, service providers and broadcasters to build out this device beyond the book world. Just like, books may represent the strong footings of the business but it won't be all they do on the Kindle. Any discussion about pricing ebook versions of paper books likely misses the point in terms of their long term strategy.


Fran Toolan said...

well stated, Michael. I completely agree that Amazon is a long-term thinking company. And yet, all of us who watch them (me especially), always seem to be duped by whatever their present move is.

Joe Chip said...


In fact, the side of me attuned to more devious impulses (not mine, of course) believes that the first version of Kindle is a feint - a deliberate focus on a non-tenable marketplace - 'mainstream' book buyers. In effect, it is designed to fail but in a 'golly, the world isnt ready for such a cool thing' way.

But what they are really doing is getting a shopping tablet in to peoples hands, and thats what they will build on. Basically, an online mall, open 24/7, in your pocket (well, big pocket or purse - gotta do something about that funky form-factor).

Kindle = Trojan horse

MC said...

Thanks for the comments and sorry for the delay in posting them.