The Economist on the Kindle: Yes and No

See this story in The Economist, entitled Well Read, about Amazon and the Kindle, undoubtedly sparked by the recent Kindle 2.0 launch. The story starts with some history, making a point I’d not previously heard about overall book consumption by Kindle users:

So far, says Mr Kessel [a member of Amazon’s Kindle team], this does not seem to spell the end of paper books, since Kindle users buy just as many bound books as before, so that their total consumption of books goes up by 2.6 times.

Frankly, I found this surprising because, based on my personal experience, I think* I buy more total books (e.g., the Whispernet-enabled impulse purchase on the tarmac at JFK), but I believe I am buying fewer print books:

  • I love that I can read the standard Grisham, Baldacci et alia novels without the guilt of having to discard (or dubiously recycle) a physical book when I’m done
  • I love the pricing. I think I’m saving $5 to $10 every time I buy a Kindle book.
  • In fact, I even bought my first “book I want to keep” on my Kindle (Disrupting Class by Clayton Christensen, saving only $3.63 relative to print). I did this even though it felt odd because (1) I believe Kindle ownership is more permanent than physical book ownership (e.g., I should be able to make backups and if Amazon were smart they’d make such a service clearly available) and (2) with the Kindle I can carry my library with me.

Now the last point brings in the inevitable comparison exercise between iPod/Apple and Kindle/Amazon. The Economist weighs in here as well:

On the one hand the iPod, Apple’s now legendary music-player, and its associated iTunes store opened up a new market for legal digital-music downloads. On the other hand, the iPod accelerated the decline in CD sales and shifted power from record labels to Apple. Will the Kindle similarly put Amazon in a dominant position, while weakening publishers?

Their first conclusion is correct only for the inclusion of the word “narrative:”

This is unlikely. Books, says Penguin’s Mr Makinson, are different from music. Sales of CDs were harmed because iPod users could “unbundle” the albums that record labels had forced on them, and download only the songs they wanted. By contrast, there is no obvious reason to unbundle narrative books into individual chapters or paragraphs.

Yes, for narrative works it’s unlikely that you’d only want to buy one chapter, but lots of books aren’t narrative. Buying a cookbook to get a few recipes is the same as buying a CD to get a few songs. As is buying a travel guide to find a few hotels and restaurants. Or buying an SAT prep guide to get a few practice tests. Or buying a home gardening book to save one plant. Or buying a semantic web book to read the first few chapters.

Just as CDs were more unbundleable than people thought (songs were obvious, a $2B ringtone industry for song fragments wasn’t), so are books are also more unbundleable than you might think at first glance.

I don’t believe The Economist’s second conclusion either:

Nor is Amazon likely to achieve anything near Apple’s power over the music industry.

I think the Kindle is the strategy whereby Amazon will achieve precisely that — and the only thing I see stopping it is the Google Books settlement, where Google gets a shot at creating an Amazon-class bookstore for books — and derivatives thereof.

I have two other thoughts to share on the Kindle.

First, I fail to understand why no one makes the critical point of “device psychology.” I don’t like my laptop as a device; it’s slow and cumbersome. It takes forever to start. It always needs maintenance. And, most of all, it’s a work device. Other than the normal immense pleasure I derive from working, I do not associate anything “fun” or “recreational” about my laptop.

Ergo, the dead last thing I want to do is take my laptop in bed or to the beach and read a book on it. I feel quite differently about my Kindle. It is a fun device. It is a recreational device. And while it’s a connected device, it’s not one on which I can either be tempted (e.g., into reading email) or interrupted (e.g., getting a phone call). Technical advantages — such as the important ability to read in broad daylight — aside, it’s a device that I’m happy to bring to bed or the beach. And I’m surprised that I see almost no one writing about this particular angle, and instead just comparing it to laptops and/or cellphones for e-reading.

My second thought is that I don’t see why the whole book publishing value chain can’t reconfigure as follows:

  • Market (before) = publisher + author + book production + book distribution
  • Market (after) = publisher + author

I see no reason why publishers and authors must lose in a world that lacks printed books. Publishers still add value by talent spotting, editing, and promotion. Authors still add value by creating content. I don’t see why the non-need to have physical books created and shipped should effect the value chain in the other two areas.

I know things didn’t work out this way for magazines, because I’d long held onto a flawed notion shaped by pre-Internet conventional magazine wisdom: “subscriptions pay for the physical product and advertising generates the profits.” If that were true, I postulated, in the online world you should be able to eliminate both the subscription and the physical product at net-zero impact. Of course, that’s not what happened: magazines kept the physical product and the costs associated with it, and online ads fetch only a fraction their print cousins. Lose/lose.

But I still wonder if the book value chain can’t reconfigure in a way that simply wipes out the parts the we don’t need (physical books) and keeps the part we do (e.g., publishers, editors, and authors). The biggest threat I see to that evolution is Amazon itself. Once/if the world moves to e-books, and if Amazon controls e-book distribution at that time, then it’s not hard to see Amazon trying to dis-intermediate publishers out of business, which, by the way, they already do.

Footnote
* = any data miner will know that what people think they do and what they actually do aren’t always the same.

10 responses to “The Economist on the Kindle: Yes and No

  1. Do u think that the spread of the Kindle could be limited by it not having a model to share books as we often do with (paper books) friends and family?

  2. First I’m not sure it’s not possible. The Kindle has a compact flash card and I wonder if we could share books that way? (I suspect there’s DRM in the Kindle that won’t let a given book be authorized on two at once, but who knows — perhaps it’s an iTunes-ish “no more than 5” type rule.)If sharing is not possible, then I suppose it could limit penetration, but for me personally, I don’t share a lot of books. (Despite at one, when I lived in Paris, having tried really hard at it with pop paperbacks.)So my guess is it’s a potential impediment, but a second-order one.Thanks for reading!

  3. andreaskluth.org

    Very thoughtful response to my article. (I’m the author of that piece in The Economist).I quite agree that all books that are NOT narrative WILL be unbundled. I no longer have a phone book, cook book, encyclopedia or dictionary….So, am I right that you think Amazon WILL become as powerful as Apple in music?

  4. Indeed, Amazon is already trying to dis-intermediate publishers out of business. But I would argue there are parts Amazon does not do well — i.e. selection/filtering. Do we know how much self-publishing business they do, either in $ or as a per cent of their total book business?Best,

  5. The new content distribution model you describe sounds great, as long as I have a Kindle. Do you think it’s a good idea to limit book access to those who can afford the intermediary technology?And what happens to libraries? Will I check out an e-reader to take home?

  6. it seems like the Kindle is a practical step toward saving trees since it is so much more convenient to carry around than a stack of books.

  7. Would Kindle make any sense even without the over-the-air option? i.e. is it worth purchasing for us chumps that have US credit cards but live abroad? How much of a hassle is it to get a book over USB?

  8. Thanks Andreas. In short, yes, I do believe that Amazon will get as powerful in books as Apple is in music. Perhaps even more so. The thing stopping them, it seems, is the Google Books settlement which seems to pretty clearly indicate that Google wishes to be an Amazon-class bookseller. So my guess is it’s Google / Amazon in the clash of the titans. And while Google may know more about search, Amazon knows a heck of a lot more about retailing and merchandising.

  9. Timo, personally I think the Kindle does *not* make sense without the Whispernet connection. Then again, I’m lazy, but I think most people are. Having to hook the thing to your PC, download books on your PC, and then synchronize the devices, reminds me, well, of what I hated my Palm Pilot.

  10. w/r/t ‘lending’ — (i’m a new kindle owner) — i would very much like the ability to lend my titles. to be clear. i do not want or need the ability to make more copies of my content. i visualize a situation in which i beam or transfer my title to a friend, and it is no longer in my library while that friend is reading it.right now i’m the only kindle owner i know. the ability to borrow and lend would greatly increase market penetration. but — also for now — i think we could be in an either/or situation. either we could lend; or we can continue to have our purchases backed up and re-accessible if our kindles melt in a house fire and we have to replace them. a constellation in which both co-exist would take some thinking and more data infrastructure. add to that my own desire to be able to set a lending period of six months or a year to my book on my friends’ device so i don’t lose it entirely when they move or if they lose their device…it’d be nice, but would be spendy, and was not a deal-killer for me. for the time being, i can always recommend a title on goodreads, and my friend can run to the local library and check out a copy.sincerely,mary

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