kindle maths 101 12.07.2007, 9:19 AM
posted by ben vershbow
Chatting with someone from Random House's digital division on the day of the Kindle release, I suggested that dramatic price cuts on e-editions -? in other words, finally acknowledging that digital copies aren't worth as much (especially when they come corseted in DRM) as physical hard copies -? might be the crucial adjustment needed to at last blow open the digital book market. It seemed like a no-brainer to me that Amazon was charging way too much for its e-books (not to mention the Kindle itself). But upon closer inspection, it clearly doesn't add up that way. Tim O'Reilly explains why:
...the idea that there's sufficient unmet demand to justify radical price cuts is totally wrongheaded. Unlike music, which is quickly consumed (a song takes 3 to 4 minutes to listen to, and price elasticity does have an impact on whether you try a new song or listen to an old one again), many types of books require a substantial time commitment, and having more books available more cheaply doesn't mean any more books read. Regular readers already often have huge piles of unread books, as we end up buying more than we have time for. Time, not price, is the limiting factor.
Even assuming the rosiest of scenarios, Kindle readers are going to be a subset of an already limited audience for books. Unless some hitherto untapped reader demographic comes out of the woodwork, gets excited about e-books, buys Kindles, and then significantly surpasses the average human capacity for book consumption, I fail to see how enough books could be sold to recoup costs and still keep prices low. And without lower prices, I don't see a huge number of people going the Kindle route in the first place. And there's the rub.
Even if you were to go as far as selling books like songs on iTunes at 99 cents a pop, it seems highly unlikely that people would be induced to buy a significantly greater number of books than they already are. There's only so much a person can read. The iPod solved a problem for music listeners: carrying around all that music to play on your Disc or Walkman was a major pain. So a hard drive with earphones made a great deal of sense. It shouldn't be assumed that readers have the same problem (spine-crushing textbook-stuffed backpacks notwithstanding). Do we really need an iPod for books?
UPDATE: Through subsequent discussion both here and off the blog, I've since come around 360 back to my original hunch. See comment.
We might, maybe (putting aside for the moment objections to the ultra-proprietary nature of the Kindle), if Amazon were to abandon the per copy idea altogether and go for a subscription model. (I'm just thinking out loud here -? tell me how you'd adjust this.) Let's say 40 bucks a month for full online access to the entire Amazon digital library, along with every major newspaper, magazine and blog. You'd have the basic cable option: all books accessible and searchable in full, as well as popular feedback functions like reviews and Listmania. If you want to mark a book up, share notes with other readers, clip quotes, save an offline copy, you could go "premium" for a buck or two per title (not unlike the current Upgrade option, although cheaper). Certain blockbuster titles or fancy multimedia pieces (once the Kindle's screen improves) might be premium access only -? like HBO or Showtime. Amazon could market other services such as book groups, networked classroom editions, book disaggregation for custom assembled print-on-demand editions or course packs.
This approach reconceives books as services, or channels, rather than as objects. The Kindle would be a gateway into a vast library that you can roam about freely, with access not only to books but to all the useful contextual material contributed by readers. Piracy isn't a problem since the system is totally locked down and you can only access it on a Kindle through Amazon's Whispernet. Revenues could be shared with publishers proportionately to traffic on individual titles. DRM and all the other insults that go hand in hand with trying to manage digital media like physical objects simply melt away.
* * * * *
On a related note, Nick Carr talks about how the Kindle, despite its many flaws, suggests a post-Web2.0 paradigm for hardware:
If the Kindle is flawed as a window onto literature, it offers a pretty clear view onto the future of appliances. It shows that we're rapidly approaching the time when centrally stored and managed software and data are seamlessly integrated into consumer appliances - all sorts of appliances.
The problem with "Web 2.0," as a concept, is that it constrains innovation by perpetuating the assumption that the web is accessed through computing devices, whether PCs or smartphones or game consoles. As broadband, storage, and computing get ever cheaper, that assumption will be rendered obsolete. The internet won't be so much a destination as a feature, incorporated into all sorts of different goods in all sorts of different ways. The next great wave in internet innovation, in other words, won't be about creating sites on the World Wide Web; it will be about figuring out creative ways to deploy the capabilities of the World Wide Computer through both traditional and new physical products, with, from the user's point of view, "no computer or special software required."
That the Kindle even suggests these ideas signals a major advance over its competitors -? the doomed Sony Reader and the parade of failed devices that came before. What Amazon ought to be shooting for, however, (and almost is) is not an iPod for reading -? a digital knapsack stuffed with individual e-books -? but rather an interface to a networked library.
sebastian mary on December 7, 2007 9:50 AM:
The thing I missed most about leaving academia was no longer having free, constant access to a library with a copy of pretty much any text I wanted to get hold of. If the Kindle, or something of its ilk, offered that service - a gigantic reference library at my disposal - I'd buy one tomorrow.
Alain Pierrot on December 7, 2007 11:06 AM:
"This approach reconceives books as services, or channels, rather than as objects"
Let me fully support this remark: editors and publishers too often seem to consider their core business as tied to the object when their customers buy a product for a purpose, and can consider other solutions than the codex to fulfill this purpose.
This is generally fairly obvious for "how to" titles, but the same can sometimes be said for novels: customers buy the book for entertainment -? with very good value when it comes to time and availability against price. Still they spend for leisure and entertainment, with lots of competitive non-book solutions.
Remember how easily calculators killed the market for printed logarithm tables and slide rules.
E-books opportunities must be assessed, IMO, according to segments of readership, not as a whole "book market". This doesn't allow to use global figures of the publishing market as the potential market for e-readers. Sad for investors, but realistic?
Matthe on December 7, 2007 11:06 AM:
I don't have much of a business mind to begin with, but something in me feels like you hit on something with the off-hand reference to textbooks. Explain to me why it wouldn't be a great idea to market the Kindle (and like products) to the academic world. I always hated carrying around my textbooks (in high school and in college), but if I'd had a Kindle with all my textbooks on it, well that would have been a very different story. And if you're talking about the human capacity for book consumption, students represent about the only market that lacks a choice: they have to buy the books, regardless of whether or not they'll read them. Add to that the average young person's natural affinity for gadgets, and it makes sense to market hard to that group, and even to the universities. A lot of schools already give (in exchange for a bump in tuition, of course) students laptops, so why not a kindle, too, and just sell the textbooks on the school's intranet?
Charles F. Wilkes on December 7, 2007 11:15 AM:
I've had my Kindle for about 4 days now, and I love it. Rather than bitch about a few design problems -- buttons on the edges, etc., I have chosen to look for solutions.
One which I am very close to doing, is to use epoxy cement to immobalize the large page forward button along most of the right hand edge. I'll leave the small page back button on the right, and both buttons on the left.
I read with my Kindle in the book case, so the buttons on the left don't bother me. This leaves me with the full choices of paging forwards or backwards, but no more problems of having the buttons accidentally pressed as I handle the Kindle. Other than that, everything is just fine, and I love my Kindle. I've bought five books and I am amazed at how fast they downloaded -- all in under one minute.
Gary Frost on December 7, 2007 11:49 AM:
This thread needs the tag "textbook" just as Matthe carefully indicated.
"This approach reconceives books as services, or channels, rather than as objects." I would delete "re" since that suggests that the book has not long served as reference. In fact airline schedules were once printed and 19th century street directories are precursive to "place based" reference.
This thread is a wonderful positioning of the Kindle device not apparent in the reviews that I have noticed. Is this a validation of the if:book forum? Yes!
David on December 7, 2007 11:54 AM:
There is something to be said for marketing Kindle to the academic market. It could especially be useful for high schoolers, who are not very attached to the physicality of a book. (Many of my students spend their class-periods drawing on or in their books-?which, as a bibliophile, I find offensive, excepting in the case of Dover Thrift Editions.) To give them a Kindle with all their readings on it might not be such a bad idea - ?one less thing to lose. A talking ebook (are these available? Probably...perhaps someone can help me out here?) might be useful for ESL students, who can often read far better than they can speak,in many cases never having heard the words which they recognize only by sight. Additionally, it might be useful for a teacher to have a Kindle at her disposal to reference other books while teaching. Of course, with the cost of Kindle books as high as they are, schools - ?high schools anyway - ?would lose money by using ebooks, since they would first have to buy the device, then pay for the ebooks, many of which can be purchased very cheaply from book wholesalers.
bowerbird on December 7, 2007 1:11 PM:
i guess it's time for me to "retire" from here...
because it seems to me you're repeating yourselves,
and doing it so often that it seems "new" to you...
as far back as i can remember, the _whole_idea_ of
a cyberspace library was universal access to the
cultural and scientific and literary heritage of
our civilization, by the entire earth's population.
now it seems it's been watered down to something
like "a subscription to the amazon.com holdings".
and even _this_ is presented as "thinking out loud".
by "the institute for the future of the book", no less.
and one more thing. tim o'reilly can go on and on about
how the "economics" of publishing won't suppport books
that are low-cost, but he's simply not in touch with the
hard cold reality that cyberspace lets authors cut out
the middlemen whose salaries tim is trying to maintain...
tomorrow's authors -- like tomorrow's musicians -- will
use the magic of virtual-zero-costs for e-distribution to
go directly to their audience, who will in turn _shower_
them with love, some of which will take the form of cash.
enough cash that those authors -- like those musicians --
will end up having _more_ cash than they had in the past,
when they were expected to settle for only a portion of the
proceeds, a portion that compared rather unfavorably to
the portion which the middlemen retained for themselves.
(the recording companies got _rich_ by ripping off artists.)
authors used to have to settle for a $1-$2 out of $10-$20.
in the future, they will get $3 (out of $3, given _willingly_
by fans, because a tip like that is what we give the waitress
who brings us _lunch_, thank you very much, and we darn well
understand that culture is important too), and the middlemen
will get zilch. now you know why the middlemen are screaming...
it has nothing to do with "supporting the artist" and everything
to do with protecting their own selfish middlemen bank accounts.
oh, and the audience? we'll have more money in our pockets too,
because we were finally able to dodge the middlemen pickpockets.
Siva Vaidhyanathan on December 7, 2007 1:12 PM:
Tim O'Reilly might be correct about pricing except for the textbook market, where price sensitivity is high yet consumer choice is nonexistent because replacement goods are nonexistent (thanks to tyrannical professors such as myself).
Still, it seems to me that deep discounts matter a lot to consumers when they choose where and how to buy books. B&N knows this all too well.
So I am unconvinced.
bob stein on December 7, 2007 1:39 PM:
i'm with Siva on this one ...
buying more books than we have time to read makes sense when they exist as objects that can sit on our coffee tables and night stands. having a bunch of disconnected PDFs on my computer or iphone isn't all that compelling. however, if ebooks were formatted properly for on-screen reading and it were easy to search your entire elibrary, then i think there is a basis for purchasing lots of ebooks which goes along with likely new styles of reading marked by grazing and zooming in to bits and pieces. if i can buy well-formatted searchable ebooks for a couple of dollars a piece, i'll start to assemble a serious elibrary. price will make a huge difference.
Aaron Pressman on December 7, 2007 1:59 PM:
I'm confused about your main point -- Kindle e-books are generally much cheaper than the print editions right now. I just saved about $10 buying Nixon & Mao on my Kindle instead of paying even the discounted hardcover price (versus a regular bookstore, I saved almost $20). I saved even more percentage-wise buying a double-book of the first two volumes in George R.R. Martin's current fantasy series for just $4 on Kindle.
Second, what this analysis misses is the ultimate profit margin on e-books versus print books. Many costs are cut out, including printing, shipping and storing, plus there are no returns and the book is never out of print. The whole economic model for the publisher is different. Even if the exact same number of books are sold, publishers will make more per book and more total revenue over time.
Finally, isn't O'Reilly just wrong? I mean didn't Barnes & Noble take over the world by cutting prices on books? And didn't Amazon's web site grow to massive proportions by cutting prices on books? Maybe publishers don't care about that, I don't know, but it seems like the business model for discounting books is sound.
ben vershbow on December 7, 2007 2:03 PM:
Hearing the discussion, I'm actually coming back around on the price issue. While e-books are far less appealing as objects than paper books -? not to mentioned wrapped in DRM, and vulnerable to hardware and file format obsolescence -? I can see how acquiring large numbers of cheap e-books onto a portable, searchable device would be appealing, and how radical price cuts would probably translate into more books sold.
It's interesting, trying to think this through with a business hat on (a hat that generally does not sit well on this pate), O'Reilly's time as limiting factor thesis felt persuasive. Putting my reader's cap back on, I see again what price cuts would open up. This perhaps gets closer to the problem: publishers aren't thinking enough as readers.
Yes, book buying is seldom in a one-to-one relation with book reading (the unread piles in my apartment attest to this). I still think a subscription library is a more appealing model though.
bowerbird on December 7, 2007 2:46 PM:
by the way, you can buy 10,000 kindle books
at silkpagoda.com (formerly blackmask.com)
on a d.v.d. for the princely sum of $9.99...
that's 1/10th of a cent per book, isn't it?
and you get 'em in .html form as well, for
"backup", or if you want to repurpose them.
these are, for the most part, e-texts from
project gutenberg, but moynihan has spruced
up most from their ugly plain-text format...
they're also available for the sony-reader,
in either its native "lrf" format or .pdf...
of course, .pdfs will work on your laptop too.
note: _this_ is the way books should be sold,
to hundreds of millions for pennies a piece.
p.s. but you might wanna wait to buy a machine
until you can get one with the memory to _store_
tens of thousands of books, like an ipod touch.
barbara fiser on December 8, 2007 9:09 AM:
The last big "e-books will change everything" moment, circa 2000, went down in flames because everyone was trying to cut someone out of the picture and rake in the savings. There was blood all over the walls, but no workable solution.
We need editors. They have to earn money. We need designers to make the books aesthetically attractive, unless you're okay with every book looking exactly the same. We have to have ways that new books are made known. All of this costs some money. Authors sell direct already - lots of them, both in print and e-book formats. It's not generally a pretty picture, and they aren't raking it in.
And somehow distribution has to happen so seamlessly and not bound by a single seller or a single publisher that when someone wants a book, they can get a book - without lots of locks that have to be fiddled with. Yes, libraries do this fairly well. Readers decide that they'll pay a fee (through taxes) that will distribute a lot of books to the community. Hmm, what's right with this picture? A lot.
Still, it would be nice to have access instantly to a larger collection that includes niche titles that appeal to a widely scattered community. Kindle may suggest that, but it's all goofed up.
Amazon isn't really selling books through Kindle. They're letting you pay to borrow the book. You can borrow it forever, but you can't pass it on, resell it, pull some quotes out of it to paste into an essay you're writing. That's not ownership, its a weird subscription through one bookseller to a large but hardly universal library that is functionally tricky.
IF the only e-book model publishers will play with is going to be hedged around with DRM, then let's just be real and call it subscription or rental or something. It's not ownership if you can only take a look. And let's make it a rental with a flat rate to a whole bunch of stuff. Then you can afford to be impulsive and experimental rather than think "hmm, ten bucks. I'd like to read it but I'm not sure. And once I read it ... then what? Hmm...." Hardly a healthy way to support growing the market. Only those who already spend a lot on books will spend some of that money on buying/renting Kindle versions.
Imagine if Netflix started out by saying "we'll sell you a movie for half the price of going to the theatre. What a deal! You can keep it as long as you like. You can't give it to anyone though, and you can't swap it, and you can't sell it. And you have to buy our expensive DVD player because you can't play these DVDs on your computer in case you start copying them or sharing them, and we can't have that. But we'll sell you more when you like."
It's certainly not as attractive to consumers as their "as many as you want, one flat monthly fee" policy is. All you get with Kindle is an expensive, lightweight box to hold a lot of books that aren't really yours.
Neven Jovanovic on December 10, 2007 3:30 AM:
If Google Book Search would offer "Full View" access to all of its books -- either as subscription or otherwise -- I, as a researcher relying on books, would buy it immediately.
McKenzie Wark on December 10, 2007 1:22 PM:
The unpleasant IP attached to Kindle will prevent me from buying one. It's ironic that their ads include, as one of the things you could read on it, boingboing, given that this is exactly what bb criticized about Kindle.
But sooner or later someone will figure it out. The first thing is to dispense with 'book' as a conceptual unit. Books are artifacts of a given system of production. There's no reason fo the future of text to include 'book'.
The second is to dispense with the idea that people read books. Few people read books. Most people read parts of books. Even more people would read parts of books if they had not already paid for the whole damn book.
The third is to see that what people want is not access to 'books' but potential access to textual universes. I might not want to read all of the texts on my device related to a given topic, but i want access to them.
Say i am sent by my company to Australia for a month to set up a new business operation. If i take books, i might ration myself to a history book about Australia, a book about business law in Australia and a guidebook to Sydney. Then on the plane i find out all these books suck. The history of academic, the guidebook is for backpackers. The law book is out of date. But say i had a device loaded with 50 books about Australia, business law, history, etc. Plus a file of news stories about my industry going back 5 years, etc etc.
And say that the 'book' is the sum total of related reading events I perform about a network of topics pertaining to 'Australia' and 'my industry' and 'Sydney restaurants'. Then i am no longer a reader of a book somebody edited, but the editor of the book i am reading.
One can see how on this model a lot more people will want access to a lot more potential reading experiences, if only the price per page can drop sufficiently to make it competitive with the current tree-killer model. The editor component is a fixed cost, nothing one can do about it, but design, marketing, etc might move from the book-unit to the data-base unit.
Debby Dietrich on May 14, 2008 1:02 PM:
To me the appeal of the Kindle is for travel. As an avid reader, with too little time, vacation time is an excellent time for catching up on the books I've been meaning to read. Yet, I want to travel light.
When I pack for a two week vacation, I'm torn over the book to clothing ratio. Sometimes it seems like half the space in my bag is taken up with books. Even with that, I often find myself trying to find an bookstore that carrys English language books so that I can purchase more reading material.
I'm definitely asking my husband for a Kindle for the next gift event. The idea of being able to take a limitless number of books with us in the form of an item no bigger than a paperback is very, very appealing to me. The only problem will be that though he disparages the idea of another gadget in our lives, I know he'll be snagging my Kindle when he runs through the books he's brought on vacation.
Sharyl Shubrooks on June 30, 2010 2:57 AM:
I defnitely think that the Kindle electronic reader is very impressive. I bought one the other day, and I absolutely love it! I had no idea there were so many things available for it already. I now subscribe to a newspaper and two magazines, plus I have several books I downloaded, some were even free!