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@ Kindle Launch: Understanding the Business Model; Still Some Unanswered Questions

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Following the Jeff-note (doesn’t quite have the same ring does it?), Amazon (NSDQ: AMZN) offered up a few company representatives to answer questions for the detail-hungry audience. One of the questions I had for Steve Kessel, SVP of digital at Amazon, was whether the publishers are at all fearful if iTunes redux, i.e. Amazon making money hand-over-first on Kindle sales, while the publishers fight for scraps on low-margin book sales. Kessel doesn’t see this playing out: “Publishers are really excited to be working with us… We have a history of working with the publishing industry,” adding that Amazon has always been able to grow the book business. As a followup I asked whether there was any talk among publishers of getting a cut of each Kindle sold, again, as many music executives now wish they had with the iPod. Didn’t get a direct answer on this one, though he reiterated that the business model is “just like in the physical world”. As for the company’s goals for the Kindle, in terms of sales or revenue, Kessel, not surprisingly, was unwilling to comment. A few other tid-bits from Kessel: when you buy a book, it’s locked onto the Kindle — no printing out or sharing it. And there will be an open platform for third-party publishers (physical or digital) to sell their content. More after the jump…

Also got a chance to talk to Amazon’s Lauro Porco, director of digital text vendor management, about the content available on the content. Although Bezos didn’t discuss it, Porco confirmed there is also a USB port on the Kindle that one can use to sideload content onto it. There’s also an SD slot. Porco added that it’s a misconception that open standards can’t be read on the Kindle, but this point was not clear. What publishers can do is upload the IDPF 2.0 standard to Amazon’s Mobipocket service — in other words, you can convert open standards to Amazon’s DRM. But when I asked whether a user could load IDPF files directly onto the Kindle via USB or email, I was told I’d have to follow up elsewhere (I’ll look into this further, although my hunch is that it’s not supported). Also from Porco: there’s no friend sharing system: the book is tied to the Kindle. But your books are yours forever. If you lose your Kindle or drop it in a pool, your library is stored at Amazon. And Amazon says it’s committed to supporting this standard forever, though obviously it’s always a possibility that Kindle consumers could get burned if the project fizzles.

So far, there’s been no hesitation among publishers to sign on, it says. All major publishers are on board, according to Porco, as well as every other publisher the company has contacted. If there are any books not available for the Kindle, it’s due to unique situations, such as the publisher not having certain rights (e.g. photo rights).