I got an email this morning announcing that Amazon.com was lowering the price of the Kindle, and decided to send my thoughts to Amazon's customer service
department.
This morning, I received an email announcing that you were lowering the price of the Kindle by $60. That's all well and good, but frankly it's not nearly enough to make me consider buying one.
There is no doubt that eBooks are extremely convenient, and will likely only increase in popularity. On my iPhone, I have both Stanza and the Kindle application installed, and use both regularly.
The problem is that the price of the eBooks themselves do not justify the price of the Kindle. Even your own prices are evidence of this; for example, one of the eBooks I purchased for my iPhone Kindle application is Simon Singh's "Trick or Treatment." As I type this, the Amazon.com paperback price of the book is $12.21--and the eBook price is $12.57, *more* than the paperback.
That simply doesn't make sense. There is no good reason why the retail price of an eBook is even *comparable* to the price of a paperback, much less *more* than the paperback.
It's no secret that a sizable portion of the wholesale price of a book (and therefore, a large chunk of the retail price) is the expense of printing, binding, shipping, storage, etc.--expenses that do not apply to eBooks. (As an application developer, I know full well that the per-book cost of eBook file storage and delivery is practically negligible.)
As far as I can tell, the only expenses that hard-copy books and eBooks have in common is the intellectual property itself, editing, and promotion, which make up a fraction of the price of a hard-copy book. Based on that, I would consider the fair price of an eBook to be between 25 and 50% of the price of the paperback version of the book.
The main attraction of eBooks is the convenience of having an entire library in the palm of your hand. In a struggling economy, it takes quite a bit of chutzpah to ask people to shell out $299 for what amounts to a luxury of convenience.
You need to take a lesson from Apple. The first iPods were expensive, but Apple was smart enough to realize that they could compensate for that expense by charging substantially *less* for the music than buying a retail CD. The average cost of a CD is about $16, whereas most albums on iTunes cost $9.99 or less (sometimes more for extended albums, like 2-CD sets). That's roughly a 40% discount on music, PLUS convenience, PLUS you can burn it to a CD if you so choose. (You also have the added convenience of simply buying a song or two rather than an entire album, but that's rarely applicable to books, so I don't think it's a fair comparison.)
Apple didn't stop there, either. They started coming out with cheaper models, for those who didn't need to store an entire massive library on their portable music player. Today, the average price of a portable CD player is $20-$50 depending on quality; but for $79, you can get an iPod Shuffle that will hold about 1,000 songs, or 50-100 albums. So consumers get more for their money if they get an iPod and buy their music online than they would by listening to CDs.
As I see it, the main difference between the iPod model and the Kindle model is that while both add convenience, there is financial incentive for a consumer to go the iPod route. Consumers save enough money buying songs through iTunes that they quickly recoup the cost of the iPod itself, and save money in the long run. In contrast, given examples like "Trick or Treatment," even the most avid reader may *never* recoup the cost of the Kindle, or save money at all. The Kindle has convenience, but Apple has convenience *and* makes sound financial sense for the consumer.
In short, I feel that you've missed the boat. While the Kindle is a great piece of technology, your business model is, frankly, guaranteed to make sure that it will never even approach the success of the iPod. I know that, at this point in time, I simply have no desire to buy a Kindle. It doesn't make financial sense for me to do so. The convenience is not worth the hefty price tag.
To change my mind, you need to seriously change your business model. Specifically:
- Flexible pricing on the Kindle hardware itself; different models, with different prices, for different needs. Some people will want to carry an entire library, some people will only need/want to have a book or two and maybe some newspapers or magazines. Give people a less expensive option.
- Lower the price on Kindle eBooks to, at most, 60% of the paperback cost of the same book. Give people a reason to buy them beyond the convenience of having them all on a handy electronic device. I think, if you price it correctly, you could even get away with charging slightly more for newer books, and lowering the price after six months or so.
If you don't fundamentally change the Kindle's business model, its success is going to be extremely limited. What's more, you're opening yourself up to another company (such as, for example, Apple) to come in with a more consumer-friendly business model and destroy your marketshare.
Thanks for reading this, and I hope you consider what I've said when you determine the future of the Kindle line. I'm posting this letter on my blog at http://underthetoilet.blogspot.com, and from speaking to other people, I don't think I'm alone in my criticism of the Kindle's business model.
