Amazon’s Kindle: Loser, Loser, Loser

Economics News Publishing Technology


They have got to be insane. Amazon's new E-Book Reader, the Kindle, is now out on the market. It's generating a lot of chatter from OUP Blog to Engadget to Gizmodo to O'Reilly to Silicon Alley Insider to Newsweek, where Steven Levy goes on at some length about the way this device may shake up the mess that is book pricing:

Publishers are resisting the idea of charging less for e-books. "I'm not going along with it," says Penguin's Peter Shanks of Amazon's low price for best sellers. (He seemed startled when I told him that the Alan Greenspan book he publishes is for sale at that price, since he offered no special discount.) Amazon is clearly taking a loss on such books. But Bezos says that he can sustain this scheme indefinitely. "We have a lot of experience in low-margin and high-volume sale -- you just have to make sure the mix [between discounted and higher-priced items] works." Nonetheless the major publishers (all of whom are on the Kindle bandwagon) should loosen up. If you're about to get on a plane, you may buy the new Eric Clapton biography on a whim for $10 -- certainly for $5! -- but if it costs more than $20, you may wind up scanning the magazine racks. For argument's sake, let's say cutting the price in half will double a book's sales -- given that the royalty check would be the same, wouldn't an author prefer twice the number of readers? When I posed the question to best-selling novelist James Patterson, who was given an early look at the Kindle, he said that if the royalty fee were the same, he'd take the readers. (He's also a believer that the Kindle will succeed: "The baby boomers have a love affair with paper," he says. "But the next-gen people, in their 20s and below, do everything on a screen.")

Electronic formats and book pricing are two very important topics, but I don't understand why both Levy and James Patterson aren't emphasizing the big gigantic flaw in the Kindle sales pitch. The device costs $400. Nobody will buy it for that price. I really don't see what more needs to be said about this.

Can Amazon and James Patterson and any of the journalists quoted above actually believe consumers will pay $400 for a standalone book reading device? Am I the one who's losing my mind here? Let's just say I know a lot a lot a lot of people who buy books, and I can't imagine anyone I know buying a $400 book reader. Me, I wouldn't even cross the aisle at BestBuy to look at one, so irrelevant do I consider this offering.

Here's a hint (a hint worth more than $400) to those companies looking to profit from electronic books. Forget standalone devices. Consumers want their devices to serve multiple purposes -- camera, music player, internet browser, phone, organizer -- and that's the way we're going to want to read electronic books. If you want to succeed in the e-book business, find ways to make full-length books look good on existing high-end devices (iPhones, Blackberries). Work with manufacturers of lower-end devices (cheaper music players, video players, cell phones) to find ways to make full-length books look good on future versions of these devices too. And then, most importantly, as Steven Levy says above, use the transition to the new format as a chance to reach new readers with new pricing structures.

Electronic formats are a thing of the future, but Amazon's bloat-priced Kindle is dead on arrival. Next player!
18 Responses to "Amazon’s Kindle: Loser, Loser, Loser"

by Billectric on

Here's one thing they should do...You know how there are at least three ways to do anything on a PC? Like, you can click on icons to copy & paste, or get the drop-down from "edit", or right click...Well, a digital book should be designed so you can either open it up like a real book, with two pages showing, and you can hold it like a real book, OR you can fold it back flat onto itself and make each page appear, one at a time on one side. Different people are comfortable holding books different ways.

by Ken Cooper on

I'm retired. I want an Amazon Kindle. I'll be able to read newly released books for $10 rather than $28. That's $18 per book savings. Twenty-two books and it will have paid for itself. No more having to wait for the softcover version when money is tight.

Easy to browse for new books. Best seller list right at your fingertips. You can read the first chapter of any book without having to commit. Anytime an unfamiliar word comes up it can be looked up right there on the spot - Can even go to Wikipedia for more information.

No monthly fees unless you want magazines or newspapers (most new media gadgetry requires a monthly fee).

It's high speed wireless ..

by bubbagunny on

I' retired too. I recently bought the smallest of the new Compaq Presario's for $400 at Amazon, nice unit, and I just yesterday bought The Complete New Yorker--500,000 pages--for $40. Great deal. When you're retired you can STAY HOME and read.

by GSlusher on

Ken Cooper wrote:

"I’m retired. I want an Amazon Kindle. I’ll be able to read newly released books for $10 rather than $28. That’s $18 per book savings. Twenty-two books and it will have paid for itself."

Not quite. Ken fell for Amazon's disingenuous comparison of the Kindle books with FULL PRICE retail. But, Amazon doesn't charge full price for most books. Instead, compare the Kindle books to Amazon's price for the physical books. It comes out a LOT worse. I did just that with the first 10 $9.99 Kindle books Amazon listed when the Kindle was announced. The average "savings" over the Amazon price for the physical books was only $6.05. That means that it will take more than 65 books to "pay" for the Kindle, not 18.

by Levi Asher on

Ken Cooper -- I appreciate your feedback, but I must ask: why did you say "I want an Amazon Kindle" instead of "I just bought an Amazon Kindle"? The fact that you want one but didn't buy one seems to prove the point I'm trying to make.

by Sandra Gagnon on

I have no problem with a stand alone bookreading device. In fact, I prefer that. I don't want to pay for a lot of extra functions that I won't use. I especially like the convenience of an onboard dictionary -- hope it's an unabridged version -- as I like to look up words I don't know so as to get the full, nuanced meaning the author intends. The $400 price does floor me, though. The day that price gets cut in half, I'll happily order a Kindle.

by Jake Sidney on

My Kindle arrived the Saturday after Thanksgiving. I love it! It has a user interface that is perfectly designed for readers. I am a reader. The features that are included are exactly the ones I want - built in dictionary, highlighting, clipping file, searching of text. Navigating is SO intuitive to me. Maybe not to people who use technology for other entertainment, but exactly how a reader does it. I ordered the NYTimes, and books. They arrived in minutes, with absolutely no hassle. I fear that buying books is too easy! Kindle is wonderful. Cute, too!

by Chelsea White on

I may seem like a crusty (19 year-) old antiquarian, but the Kindle seems too impersonal. When I'm reading a book I like to smell the pages and feel the weight of the thing in my hands. The Kindle is surely convenient, but even if they discounted it to a reasonable price, I don't think I could be enticed to purchase one.

by Jym on

Sony already has a reader for $299, prices will come down inevitably. Let those with some money buy the 1st ones, workout the bugs & then we can pick up state of the art ones for less.

by Levi Asher on

I hear you, Jym, and I agree with you that that's an okay long-term outlook. But I'm tired of the book industry's "trickle down economics".

OK, so first of all, the fair disclosure bit - I am a current employee at Amazon.com but I have had nothing to do with the Kindle project.

I agree with some of the points made in this piece but they also remind me of what everyone told me when I bought the original iPod (incidentally, that was also $400). Everyone said that there were larger MP3 jukeboxes available for less money. Everyone believed it was doomed to fail (except for a couple of press outlets) due to the outlandishly high price and proprietary shackles to the the Macintosh platform. So how has that investment turned out for Apple? Pretty well I think ;^)

I own a Blackberry and I use it to read a lot of internet content but I would never use it to read long-form fiction. The fonts are too small and the backlit screen is incredibly fatiguing over longer periods of time. After playing around with both the Sony Reader and the Kindle, I will attest to the fact that reading on both of them is actually quite pleasurable. What I like about the Kindle is the integration to the Amazon store, the wireless connection, and the ability to store my notes and bookmarks forever in the cloud.

I just placed an order for a Kindle last week. Unfortunately, the status of my order leads me to believe it won't arrive in time for Christmas because Amazon is entirely sold out. I guess somebody's buying them...

Future versions of the device will obviously improve and the cost will most likely continue to be lowered (if the iPod life cycle is any guide).

by Levi Asher on

Eric, thanks for your comments, and it's good to hear from somebody inside Amazon about this. FYI, there is some background to my comments about pricing -- we have spent a lot of time here on LitKicks discussing the fact that high book prices drive potential customers away, so it was easy to come to the conclusion that the Kindle is doing the same thing. Your comparison to the iPod makes sense -- but even as the Kindle's prices come down, it still seems to me that the iPhone model (a single device serving many purposes) will be most effective here. I like the way Amazon is pricing books for the Kindle, and I think this reasonable pricing is a good future trend for e-books. I just wish Amazon targeted these affordable e-books at, say, iPhone users instead of introducing a new single-purpose device.

I am glad to hear, anyway, that the Kindle is finding some customers.

by Jack Donohue on

I got my Kindle from UPS yesterday. I haven't put it down except to sleep. On the subway I read the NY Times and Washington Post for a fraction of the newsstand price.

I don't know how many YEARS of wireless broadband service I jus bought for $400 but the device will pay for itself on just the book and Newspaper savings in a few months.

Then there is the idea of being to travel with 50 books. Oh did I mention the OED free. Oops I forgot my Gmail 24/7 on the road.

by Cecil on

Interestingly, there are two people (so far) that are actual owners of Kindle and both of them seem to swear by them... not to mention the one that is awaiting his which is on back order.

If two + individuals are perfectly happy with their machines and several replies theorize why they wouldn't own a Kindle, who knows better? Hmmmm... Myself, I would much rather hear what the owner has to say rather than some irrelevant complaint by someone that does not own one, wouldn't you?

How much print is wasted on the negative?

by Levi Asher on

Cecil, I am also watching these comments from satisfied Kindle owners closely, and am impressed by the enthusiasm. Who knows, perhaps my prediction that this device will go nowhere are wrong? If so, it wouldn't be the first time I was wrong.

I would be happy to see the Kindle succeed, since I am generally enthusiastic about the future of e-books and I'm impatient to see the format find its first major success. My criticism was from the point of view of somebody who wants to see the business model succeed, and my negativity is born only of frustration. If I'm wrong, I'll be glad to discover it. Let's hear from other Kindle buyers out there!

by Jack Donohue on

Day two with Kindle device:

THIS THING IS A REAL WEB BROWSER ALSO!!

There are any number of websites -BBC News, MSNBC,Google, Wikipedia that are or soon will be optimized for this thing. No charge for wireless broadband because I alreday paid one time only in purchase price!

Bought two books so far at $9.99 that are listed at $40.00. That's a $20 savings on my first two titles.

The case needs a bit of work but It's far better than using naked device. Nice tacky texture to it and the blak color is leather-like.

by Bob Autrey on

Levi,

Who's your prediction for the Superbowl? I'd like to bet against your pick since your were so far off with this prediction.

How anyone can write anything negative about a product they've never used is beyond me. You might as well have joined the "non-owner" negative reviews that make up 99% of the Kindle feedback on Amazon. Saying that people won't pay $399 for a reading device is like saying people won't pay hundreds and hundreds for a gaming console or a couple of grand for golf clubs. Consumers will spend their money on their passions and past times. Not to mention that there are many of us readers out here who are environmentally conscious enough to see the value of a tree saving device such as this. So if a few hundred dollars from me will help save a few trees from being used for my reading materials then I think it's money well spent.

Your statement that readers won't pony up for something that allows them a fantastic solution for access and portability of their reading materials really sells us short.

by Levi Asher on

Bob -- I'm picking the Miami Dolphins in the Super Bowl, of course.

I hear you about going negative on a product I haven't seen. But it occurs to me that LitKicks.com may be a product you haven't seen much of, because you don't seem to be placing my article in the context of this site's other commentary on the publishing business. Here at LitKicks, we have written a lot (a real lot) about book pricing, and I have argued (ad nauseum, some might say) that the book industry constantly shoots itself in the foot by pricing exciting new novels too high for typical readers, and by burying promising content in the deadly hardcover format. My remarks about the Kindle must be understood in this context. I am not really interested in reviewing tech gadgets, but I am interested in seeing literary fiction get a better popular foothold with general readers, and I think the book industry is stuck in ineffective high-price models. The Kindle seems to fall into this pattern, and that's where my remarks are coming from. I wish Amazon well, and despite my negative remarks I do hope the Kindle eventually manages to be a success (this will most likely happen once they lower the price).