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Kindle Pricing, Business Models and Source Code
narramissic writes "A trifecta of Kindle-related news surfaced this week, with Jeff Bezos speaking at Wired's 'Disruptive by Design' conference on topics including Kindle pricing and business models. And yesterday, reports blogger Peter Smith, 'there was a flurry of blogging activity yesterday stating that Amazon had released the Kindle source code. Once everyone caught their breath, it became apparent that the files in question were just some open source libraries that Amazon had modified (they're being good open source citizens and releasing mods they've made to open source code — good for them!), not the complete source code.' Now, back to the Kindle pricing: According to a post at Wired, Bezos said Amazon opted to sell the Kindle for 'something akin to the actual cost for hardware,' rather than subsidizing the hardware costs and requiring a monthly subscription or requiring the buyer to purchase a certain number of books per month because 'fees and minimum purchase requirements create friction.' Smith has a different take: 'If I'm buying a Kindle from Amazon that enables me to buy books from Amazon, I'm broadcasting a desire to buy Kindle books. I would welcome some subsidization of the hardware since I'm going to be buying content anyway. No, I really think Amazon priced the Kindle the way they did because they thought they could get away with doing so (and they were right, it would seem).' Meanwhile, over at the New York Times, Bezos said 'that he sees Kindle-the-device and Kindle-the-book-format as two separate business models, and that the Kindle iPhone App won't be the last software reader to appear.'"
Rupert Murdoch has apparently been watching the Kindle closely and has been planning on coming-out with his own version to give away to subscribers of his newspapers. Perhaps Bezos really did have the timing right with the Kindle and it just MAY unseat a large portion of the print periodical industry. Should be interesting to watch, no matter how it works itself out.
put the what in the where?
there's more than one "Kindle-the-book-format", though. There's the regular Kindle file, azw, and there's one they call the "Topaz" format (azw1), and it sucks. I love Vernor Vinge, and unfortunately, lots of his stuff is in topaz format on the Kindle.
Huge numbers of artifacts - lines printed over other lines, skipped lines, and sometimes the first word of a sentence has huge amounts of whitespace between the first and second letter.
Other than that, love my Kindle.
"If I'm buying a Kindle from Amazon that enables me to buy books from Amazon, I'm broadcasting a desire to buy Kindle books. I would welcome some subsidization of the hardware since I'm going to be buying content anyway. No, I really think Amazon priced the Kindle the way they did because they thought they could get away with doing so..."
Why is it only in the tech-gadget industry that people expect manufacturers to sell items for *less than cost*?
98% of books and 99.9% of magazines I never re-read. I'd prefer a library model, say $1 a day to read a book, then I could stop access and paying for it. The main exception would be course-texts.
I have a hard time with the buzz on Amazon's device.
Right now, their stock is trading at an astronomical P/E ratio.
Their balance sheet has an equally astronomical Goodwill valuation.
Does someone follow the corporation's reporting enough to publish some facts regarding how much this device contributes to their bottom line?
If this were a big win for Amazon, it would show up in their numbers.
Now, how many of you *actually* stuff another device in your laptop bag to read books?
Or, maybe it will be like the days when Apple introduced the ipod and many on /. said it was doomed, only with Amazon the expectations are backwards.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
The thing that stops me taking the Kindle is the huge upfront cost. I can buy 200 books for the price of one Kindle. Obviously, the Kindle has all sorts of advantages over regular books, but it's quite a steep cost.
I think Amazon should subsidise the books. Make the Kindle come with, say, $200 worth of vouchers redeemable in the Amazon store. Make it $100 worth of general vouchers and $100 worth of 2-for-1 deals. Anything to cut the apparent cost of the hardware.
Digital content has no intrinsic cost, so it's not much of a subsidy on their behalf.
If a square is really a rhombus, why aren't all triangles purple?
Digital content has no intrinsic cost, so it's not much of a subsidy on their behalf.
While I'm a huge fan of free stuff, I would like to point out that they still have to pay the authors and publishers for use of the copyrighted material.
They do subsidize the books (if by subsidize you mean "sell for less than hardcopy"). I just bought Outliers for Kindle for $9.99; hardcopy is $14.83 from Amazon, or $18.19 from B&N.
Digital content has no intrinsic cost, so it's not much of a subsidy on their behalf.
Digital content has no intrinsic cost to the publisher. To Amazon, who has to pay the publisher a royalty fee for every sale, digital content has a very real, per unit cost that they cannot go below. Just like the television and film industries learned very little about digital content from the music industry, so it would seem that the publishing industry has also chosen to ignore the lessons learned by those who have gone before them. The transition to digital print is going to be every bit as painful as it was for movies and music, and it's going to take several years of publishers taking their lumps before they finally come to grips with a pricing model that actually works for most of their customers.
I read this as Bezos saying that they'll support Amazon Kindle ebooks on other "mobile" platforms (a la various smartphones, etc), but that they won't support them on anything that is a direct competitor (a la E Ink-based reader devices) to the Kindle. This view is totally consistent with the words he said.
This guy's the limit!
That's not a subsidy. They can't sell digital copies for the same amount as hard copies because their customers know that it costs them significantly less money to produce. They're still selling both the hardware and content at a profit. A subsidy is when you use profits from one product to offset selling another product for a loss (eg Sony sells the PS3 at a loss but makes it up by charging a $10 royalty on every PS3 game made, even if they had no hand in the development/production/distribution of the game).
I have a Kindle. I love it. But I'm not buying books from the Kindle store for my Kindle, because they're DRM-encrusted. I'm buying my ebooks from another legitimate source which sells them to me in formats I can convert, and I convert them into Mobi and put them on my Kindle using Calibre.
So, buying a Kindle does not automatically signal a desire to buy Kindle books. Some of us just like the hardware.
I read this as Bezos saying that they'll support Amazon Kindle ebooks on other "mobile" platforms (a la various smartphones, etc), but that they won't support them on anything that is a direct competitor (a la E Ink-based reader devices) to the Kindle. This view is totally consistent with the words he said.
I agree with your interpreation. In Bezos' opinion, the iPhone does not compete with the Kindle, it complements it. In my usage, I've found this to be true. I do MOST of my reading on the Kindle, but I do get in a page or two of a book on the iPhone while in the bathroom. It's entirely possible for the iPhone to offer some competition, but I don't think it's a big concern for them- iPhone only customers are still buying their books, after all.
There's no way a Sony Reader would complement a Kindle in a similar way. They compete, plain and simple.
First: the DRM has been broken - AZW is the Mobipocket file-format with just one byte changed so a Mobipocket reader software won't accept it. So to break Amazons DRM google for "MobiDeDRM" and "Kindle Mobipocket conversion" - it will be the #1 hit ;-).
Now having said that you might notice something: Mobipocket has free to download readers for just about 12 different devices. So if Amazon wanted what you suggest all they had to to is not change that one byte. So in changing that one byte it is a clear signal that that they want there books to be read on Kindle and Kindle alone. And iPhone is just a special exception.
Before you wonder: Amazon owns Mobipocket [1] - so no they won't change there reader to accept Kindle books. In fact Mobipocket has stopped producing new reader software all together.
It is not difficult see the evil masterplan behind: The typical Embrace, Extend, Extinguish plan which is now in the last phase: Mobipocket to be extinguished by not creating new software for todays devices. Amazon even got as far as stopping the finished Mobipocktet iPhone reader. And last not least: not licensing the Mobipocket file format to Sony.
For those who own Mobipocket books - ahh sorry mate you loose. Only by now Amazon has pissed of European customers [2] big time. After all we can't buy Kindle and feel the Mobipocket demise double. And we found out about Sony.
Martin
[1] http://www.mobipocket.com/
[2] http://www.mobipocket.com/forum/viewtopic.php?t=15520
If you notice, though, newer books with paperback editions, typically the Kindle version is $9.99 and the paperback less.
You have to get to much older books for Kindle prices to be lower than paperback prices, and even with old sci-fi novels, its typically 5% less.
That is just not true. Amazon guarantees that the Kindle price will always be less than the dead tree edition. I've never seen the kindle edition of a book which has begun selling trade paperbacks be $9.99. Occasionally the price at Borders or Barnes & Noble will be cheaper because they have the hardcover on sale for 40% off, and the Kindle price is only 30% off the listed hardcover price, though if you can wait a week or two for new releases the price goes down from the price on the release date.
If you comply with a common good out of fear of the repercussions of not doing so, is that objectively different than if you comply with a common good out of love of the community? And how does an outside observer accurately know the difference?
Assuming you know someone's motivations is usually a mistake, and certainly arrogant and prejudiced.
Amazon did the right thing. "Why" is ultimately irrelevant.
Welcome to the Panopticon. Used to be a prison, now it's your home.
The difference that makes Kindle distinguishable from your example is that Amazon doesn't manufacture the blades. They are reselling other author's works and need to pay those authors a fair price. This is a significantly different business model from Gillette.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
It seems unreasonable to me for someone to ask a company to sell their wares at less than it costs to produce it. Amazon could make that choice if there was reasonable competition and they wanted to take the hit to compete (assuming they couldnt be competitive at production cost) but suggesting that amazon take a loss when clearly the market is willing to support production price is just stupid. If you don't want to pay it, feel free not to but dont expect them to cater to you.
Bottles.