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Summary:

In addition to launching its new color tablet the Kindle Fire last week, Amazon also announced another price drop for the original Kindle, which is now just $79. Could the e-reader eventually become free, and if it did, what would that mean for the e-book industry?

Amazon’s recent announcement of the Kindle Fire — its color tablet that may or may not become a competitor to the Apple iPad — was what got the most attention last week, but the online retailer also made some other announcements at the same time, including a drop in price for the original Kindle to $79. Based on the consistent and gradual declines in Kindle prices, some have speculated that Amazon could soon offer them for free, sponsored by advertising or other similar deals. Which raises an interesting question: What would free e-book readers do to the book industry?

As we’ve pointed out before, Amazon’s rationale in offering a tablet or other hardware (some think a phone is also a possibility) is the exact opposite of Apple’s. Apple makes most of its profits from selling hardware like the iPhone and iPad, and uses content — books, magazines, music, etc. — as a way of fueling demand for that hardware, while Amazon’s primary business is content, and it uses hardware as a conduit for getting that content to as many people as possible. So the original Kindle, for example, is simply a pipeline for getting books to people, and Amazon has continually expanded the types of content that Kindles can deliver, through programs such as Kindle Singles.

These not-quite-books can be written and uploaded by anyone, and offered at whatever price point an author decides: as little as 99 cents, or even free. Offering a free — or ad-supported — Kindle would presumably just provide even more of an avenue for these kinds of books to reach readers, and that in turn could (theoretically at least) make it possible for more writers to make a living from their writing.

New possibilities for e-book authors

You might not think authors — or Amazon, for that matter — would be able to generate much from 99 cent books, but you would be wrong. Young-adult author Amanda Hocking has become famous for making millions of dollars from her Kindle books in less than a year, without the help of an agent or a publisher (although she has since signed a publishing contract). Other self-published authors such as John Locke have sold millions of copies of their books. Some authors, such as J.A. Konrath, have noted that when they lowered the price of their books to 99 cents, they sold orders of magnitude more copies.

This message hasn’t gotten through to traditional publishers, who want to maintain the pricing structure that worked with physical books, and pushed through the “agency model” with Apple’s help (a move that’s currently the subject of a class-action lawsuit) in order to do so. As a result, Amazon has taken to doing an end-around publishers by signing up popular authors like Tim Ferriss. How long until it’s Amazon signing deals with self-publishers like Amanda Hocking, rather than a traditional agency?

Not everyone is happy about this state of affairs, obviously. Author Sam Harris wrote an eloquent blog post recently about the disruption of the market for books and other content, and how that is affecting writers like him:

Where publishing is concerned, the Internet is both midwife and executioner. It has never been easier to reach large numbers of readers, but these readers have never felt more entitled to be informed and entertained for free… there are reasons to fear for the life of the printed book.

But Harris himself is also an example of how to deal with this evolution: he says he has been publishing short e-books for $1.99 as well as writing traditional printed books and publishing on his blog. And while he notes that some readers have complained his books are too short for the price he charges, his latest e-book still hit number 9 on the top Kindle content list, and may well have generated interest in his other novels.

E-books don’t want to be free — just cheap

What I think Harris is struggling with is the fact that books don’t want to be free; they just want to be a whole lot cheaper than they are. And when you make books (not all books, but some) $4.99 or $1.99 or even 99 cents, people will buy more of them. Even Harris himself admits he has grown tired of paying full prices for 600-page books, because many of them just don’t seem to be worth the time or money. But he and plenty of other people would probably pay $1.99 or $4.99 for a pleasant read that didn’t take too long, as Amanda Hocking and J.A. Konrath have shown.

There’s even the possibility that books could be free and still make money: Amazon has an ad-supported Kindle, so why not extend that model to the books themselves? Magazine writers publish their content in an ad-supported medium, so why not books? Authors such as Charles Dickens and Arthur Conan Doyle wrote many of their novels on a monthly basis as magazine supplements. And Amazon apparently already has a patent that covers advertising-supported e-books.

As we’ve pointed out before, the book is evolving as it becomes digital — there are Kindle Singles that aren’t much longer than a magazine-length feature, and some magazines and newspapers are packaging features in just that format, as well as newer services like Byliner that have been commissioning custom content. A free Kindle could be just the beginning of an explosion of book-like content from Amazon and others: The company is already talking about a “Netflix for books”  that would offer content for a monthly fee.

Why not offer a subscription to an author, so I can automatically get whatever he or she writes, regardless of length or format? This would blend the worlds of blogging, Kindle Singles, magazine-length features and novels into one stream of content, and I’d be willing to bet more people would read more as a result. The printed book, as Seth Godin wrote recently, is a fetish of sorts, like an expensive watch: something we buy because we like to look at it, but something that is no longer really functional or necessary. In the end, that’s likely to be a good thing, not a bad one.

Post and thumbnail photos courtesy of Flickr users Marcus Hansson and Mike Licht

  1. I’ve been asking Google to make ad-supported books to “disrupt” Amazon for over a year now, before they even launched Google Books. I was disappointed when they didn’t do it. I can’t see any other way for them to take share from Amazon. And they are even in a pretty good position with Androi + Admob to pull this off. But they just don’t seem to be serious enough about this, and try to compete incrementatly with Amazon instead (a loser’s strategy against the clear market leader).

    Seeing the pace of Amazon lately, it might even be Amazon themselves who will do this in 2-3 years perhaps. First, they will give it a shot with the “all-you-can-eat” subscription, though, and see if that works.

    But you’re right, the publishers are by far the biggest obstacle here for both the subscription plan and the ad-supported books. All Amazon can do (and Google, if they ever decide to get serious about Google Books) is to push for authors to become self-publishers, and hope that will also scare publishers into accepting the new business models over time.

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    1. Thanks for the comment, Lucian. I agree that Google is about the only company that could compete on this kind of level — it does seem odd that they haven’t made more of a push in that direction.

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      1. The AAP burned their bridges with Google, and now Amazon is going to have a monopoly over the ebooks which aren’t outright stolen.

        And for the record, after buying $200 worth of books from Amazon I now steal everything. Selling at hardback prices, including Orwellian DRM, and for a large amount of titles, regionally segmenting markets so I can’t buy from them (forcing me to now steal by default) will be as suicidal to them as it was to music.

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  2. I appreciate your optimism, but I’m not sure I share it, even if the book publishing industry evolves into the “cheap but not free model.” I think my unease comes from this assertion:

    “When you make books (not all books, but some) $4.99 or $1.99 or even 99 cents, people will buy more of them.”

    Is there a proof point for that? Will people really buy enough cheap books to make it financially viable to keep writing them? (And I guess I’m talking about ambitious books that take years to create.)

    I guess it’s better than an all-out collapse of the book publishing industry, but it feels more like mitigating a disaster than reinventing and revitalizing the sector.

    I believe that the limitation for many book readers is time at least as much as money. No price slashing will change that.

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    1. I honestly don’t know, Patchen — but I think Amanda Hocking and J.A. Konrath have shown that people will buy tons of books if they are low-priced. Whether that model will help with “serious” books, I can’t say. Thanks for the comment.

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  3. It’s slightly offtopic, but all this talk of 1.99, 99 cents, 4.99 is (and always has been) ridiculous. After half a century of this consumerism, are we still so dumb to believe that “€5″ or “$1″ is somehow more expensive?

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  4. <>

    Oh boy, wouldn’t that be niiice!!!

    @Patchen, people buy books for specific reasons — maybe to be entertained/diverted, maybe to learn something, maybe for status reasons.

    That’s not going to go away.

    The industry is in upheaval now, no question about it, but this is hardly the first time people have had to roll with technology-driven changes that affect their jobs. C.f. buggy whip manufacturers ;-)

    The only thing we can control is our response to it. Konrath, Smith, Hocking, and many other lesser-known writers have made the transition and are generating nice income as a result. To my mind this suggests that it’s not only possible to do, but even more: there might be new opportunities waiting in the wings. Things nobody has even thought of, yet . . .

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  5. Anyone wanting to try the ‘subscribe to an author feature’? I’d like to adapt http://readbeam.com to that if anyone is interested.

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  6. The only thing ad supported ebooks will accomplish is to introduce into the market a lot of worthless writing. When the product itself has no value, no effort will be put into producing it. If the money is made by selling ads, writing will just become an advertising medium. There’s already enough crap out there we have to wade through, we don’t need more.

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    1. The Swedish band OK Go works with sponsors to fund their tours.

      It’s similar to the way artists once worked with wealthy patrons.

      In an article for the WSJ, Damian Kulash, the band’s lead singer and guitarist wrote that his arrangement gives OK Go “complete creative control.” They get the money they need “to make what we want,” their fans get free videos, and their sponsors get exposure. “While most bands struggle to wrestle modest video budgets from labels that see videos as loss leaders, ours wind up making us a profit.”

      http://online.wsj.com/article/SB10001424052748703727804576017592259031536.html

      My worry is not that ad-supported books will result in worthless writing. It can’t — because if the writing is worthless the books won’t sell, which means the ads won’t have value.

      My worry is that writers will be cut out of the deal.

      What we really need is a way to broker our own ad deals.

      The idea of a Google stepping in and becoming the middle man would represent a huge missed opportunity for writers, IMO. Perish that thought, thank you very much.

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  7. One correction… it is not “the original Kindle” that is $79, it is a brand new, bare-bones model that does not have a touch screen or a keyboard. It has wifi connectivity but not 3G, and it cannot read books aloud. Amazon has clearly designed it for people who only want to read and don’t need to annotate books.

    I don’t see Amazon ever offering a Kindle “free” unless it is a bonus for buying something else, like Amazon Prime. But if they do, I suspect it will accelerate the drive to digital format and the decline of print. It will also put substantial pressure on Barnes and Noble to offer a similar plan.

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    1. That’s a good point, Carmen — I should not have called it the “original” Kindle.

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  8. Excellent piece, Mr. Ingram. I see many of the possibilities you describe coming to pass as millions upon millions of young people discover reading. Armed with cheap personal electronics, micro-payments and modest budgets they will make their own buying decisions. Just like with music.

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  9. I, and about 800,000 other local residents, have gotten together in a joint-stock company to buy books and house them in a physical building (for the printed ones) and an online distribution service (for the e-books). I pay a certain amount each year for this, but then I can read any of the books the company has bought without paying an additional fee.

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    1. Jack Caughran Friday, October 7, 2011

      We have the same thing in our town. We call it a public library. And it’s free.

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  10. Krista Blogger Thursday, October 6, 2011

    Even though there is a huge amount of self published works out there today, it’s a far cry from the traditional published works. You will find that people will still buy the traditional books. A very well written, edited self published work is hard to find under the mountain of ebooks out there, and a lot of people will not try. The majority of your buyers will stick to purchasing what they know and are comfortable with, but traditional publishers would find it wise to continue to offer the lowered prices of the ebook to reach the wider audience of those of us who love to compulsively buy with our magic 1click buttons.

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