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Monday, June 02, 2008

More thoughts on Amazon's Kindle

This one comes to me somewhat circuitously, from my José Afonso Furtado Twitter feed. José is amazing. He Twitters about book news every day, practically all day, and I'm beginning to wonder when the man sleeps. His feed is like a stock market ticker, only for book mavens.

So apparently, Amazon.com's electronic reading device, Kindle, which I blogged about back in November, caused something of a stir at this year's BookExpo America. The event, which wrapped up this past weekend in New York City, is the major annual book industry trade gathering in the United States.

At the Expo, publishers expressed concern with the price of Amazon's Kindle editions. In almost all cases, they're lower than those of the corresponding bound, physical volumes, and in many instances, Amazon has been selling the e-editions at a loss.

This pricing strategy is consistent with the company's prevailing business model, which has tended to forgo short- to medium-term profit in favor of building longterm customer loyalty. With Kindle, Amazon's reasoning seems to be: a major economic incentive is the only way to encourage sufficient numbers of people to switch over to electronic books and thus to make the technology viable on a mass scale.

This scares the heck out of publishers, many of whom, as today's New York Times notes, want to charge the same amount of money for e- and p-books. (That's what I'm calling paper-based editions these days.) Their reasoning seems to go something like this: the book industry's hurting (isn't it always?), and the only way to increase profit is to eliminate as many fixed capital costs as possible.

What's intriguing to me about this latest ebook kerfuffle is the book industry's apparent short-sightedness. It seems to be assuming that there's an absolute price threshold below which it cannot sell enough books to maintain profitability. To put it differently, the industry seems disinclined toward Chris Anderson's notion of the long tail, which stresses sustained, aggregate sales of digital goods over the long term.

The BEA controversy therefore makes me wonder how much the book industry's professed economic woes, and indeed broader laments about the "decline of reading," have to do with publishers' unwillingness to get more creative with their pricing. It seems intuitive to raise prices to increase profits; this has been the book industry's fallback position for decades. But Amazon seems to be saying the opposite: lower your prices, and you'll gain readers and increase sales. Could there be a more apt illustration of 20th vs. 21st century business models?

With that said, I still have serious misgivings about Kindle, which I expressed back in November. I'm also planning to say more about Kindle here in the coming months and at this October's American Studies Association conference. Stay tuned.

2 comments:

Kim Christen said...

Ted--great to stumble on your blog after leaving IU a few years back. This is a fantastic blog.

As to your post today, I recently blogged about using author agreements as a way to get publishers to be more creative/flexible in their strategies. You can see the post here:http://www.kimberlychristen.com/?p=328

I think the key is opening a dialogue between authors and publishers -- which is a smaller scale change than the focus of your post, but it is part of this larger shift that digital technologies are pushing publishers to deal with.

Ted Striphas said...

Hi Kim,

Thanks for the kind words about the blog. Yours looks great, to, and you should expect to find it on my blog roll forthwith.

As for the authors-publishers point you raise, I agree. Any changes to publishing will need to take place on several fronts. The challenge, I think, will be to find ways to convince authors that their (our) interests aren't always aligned with those of the publishers.