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!