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Old 03-03-2009, 11:30 AM   #1
rlsquires
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Post Lower Kindle cost thru cell phone adoption model

The perfect green device for the times, lower cost books while saving trees. They need to lower prices. perhaps like the cell phone service model; buy a coupon for $100 worth of ebooks and get $100 off the device. Thoughts?

Published my first work on Kindle - http://www.amazon.com/dp/B001TH7AEW

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Old 03-03-2009, 12:29 PM   #2
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Get a free Kindle promise to buy 20 books within 2 years
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Old 03-03-2009, 12:53 PM   #3
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That all sounds great but it's not very sustainable at the moment. The Kindle is a fairly expensive device to produce. The e-ink screen and the controller aren't cheap. Amazon's taking very little profit and possibly a loss on many of the $9.99 new releases and best sellers. I think eventually the business will be able to support these kinds of pricing models but I doubt Amazon could sustain the business as it is right now if they did that.
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Old 03-03-2009, 01:13 PM   #4
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It wouldn't be the first time a company took a loss on the hardware in hopes to sell software (Xbox? PS3?). I think Amazon will do just fine in the long run.
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Old 03-03-2009, 01:19 PM   #5
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Get a free Kindle promise to buy 20 books within 2 years
So, you think they should give away a kindle and you can buy 20 $1 books and they will make money? Even if you buy $9.99 books... that's $200 worth of books.

Why would they do this, when most kindle owners are probably buying more than 20 books in two years and still willing to pay $350 for the device?

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Old 03-03-2009, 01:52 PM   #6
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It wouldn't be the first time a company took a loss on the hardware in hopes to sell software (Xbox? PS3?). I think Amazon will do just fine in the long run.
In that case they're making good margin on the software. In this case, they're making a low margin or even taking a loss on the most popular books. One or the other has to be a money maker for the concept to work.
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Old 03-03-2009, 07:10 PM   #7
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It wouldn't be the first time a company took a loss on the hardware in hopes to sell software (Xbox? PS3?). I think Amazon will do just fine in the long run.
It wouldn't be the first time Amazon took a loss overall in the beginning to win the end game.

From http://en.wikipedia.org/wiki/Amazon.com


Amazon's initial business plan was unusual: the company did not expect a profit for four to five years; the strategy was effective. Amazon grew steadily in the late 1990s while other Internet companies grew blindingly fast. Amazon's "slow" growth provoked stockholder complaints: that the company was not reaching profitability fast enough. When the dot-com bubble burst, and many e-companies went out of business, Amazon persevered, and, finally, turned its first profit in the fourth quarter of 2001: $5 million, just 1¢ per share, on revenues of more than $1 billion, but the profit was symbolically important.


From http://www.paidcontent.org/entry/419-d6-jeff-bezos
Interview w Mossberg


—Can you imagine a day where Kindle is a really significant part of overall business? Bezos answers yes—without hesitation, What’s meaningful? Amazon did $14 billion in revenues last year, Bezos says, but won’t attach a number to it. He recalls being asked by his CFO when the Kindle process started: “how much are you willing to invest in Kindle?” His response: “How much do we have?”


Based on these comments, I don't assume Amazon is making a profit on Kindle. Kindle is bigger than that. Thus, the question is "how much is Amazon willing to 'invest'?"

So, I suppose Amazon could entertain a subscription model, or a subsidized model of some sort, even at an arguably bigger loss, but they don't have to do this when the product is apparently selling so well. Kindle 1 sold out at least once (2007) and probably twice (2008). I think they found their sweet spot.

Last edited by Thomas Ryan; 03-03-2009 at 07:12 PM. Reason: corrected dates
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Old 03-03-2009, 07:13 PM   #8
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Quote:
Originally Posted by rlsquires View Post
The perfect green device for the times, lower cost books while saving trees. They need to lower prices. perhaps like the cell phone service model; buy a coupon for $100 worth of ebooks and get $100 off the device. Thoughts?

Published my first work on Kindle - http://www.amazon.com/dp/B001TH7AEW

My web site - www.robertlsquires.com
Welcome to MobileRead, risquires, and good luck with your book.

we have a writers corner here, should you care to participate.
http://www.mobileread.com/forums/forumdisplay.php?f=75
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Old 03-03-2009, 07:16 PM   #9
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I prefer the current model where I purchase it at an unsubsidized amount with no monthly fees and no contract. I might consider an Audible like subscription though I would still prefer to buy the Kindle outright.
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Old 03-03-2009, 09:57 PM   #10
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Regarding subscription deals and similar things,

There's this idea running around that the cost of the reader should be subsidized by Amazon, who will then make up the difference by charging extra for the e-books. I think this is a terrible idea.

For starters, if the e-books have to pay for the reader, you can expect overpriced e-books DRM'd up the wazoo, and a Kindle that can't display e-books from anywhere but Amazon. Otherwise people take the "free" reader and read cheap or free e-books on it, and the Kindle goes out of business.

I don't like the idea of the "monthly fee for all you can read" model either. If I wanted to pay monthly fees to ransom my reader, I'd have bought an iPhone.

And the "buy 20 books and it's free" model suggested above--well, to pay for a 360$ reader they'll be, um, 18$ each, supposing the books themselves are, say, Project Gutenberg books that cost Amazon nothing. I'm not enthused about paying 18$ each for Project Gutenberg books that other people can read for free.

I'd much rather do it this way: pay up front for the reader and the all-you-can-read web access, and then buy books wherever I like (that has DRM-free Mobi) or download them for free if they're in the public domain. That's just the model I'm comfortable with: I'd rather pay more now and save money down the road, and buying a pig-in-a-poke (like something that has to be ransomed with monthly fees) makes me very uncomfortable. Plus I read a lot, so I like the books to be cheap.
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Old 03-03-2009, 10:31 PM   #11
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I think Amazon will do fine, but eventually publishers will really need to lower their prices a bit. They won't be paying for the physical book production, and changes like that will allow Amazon to try better business models like what you described.
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Old 03-03-2009, 10:54 PM   #12
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Quote:
Originally Posted by Ervserver View Post
Get a free Kindle promise to buy 20 books within 2 years
That does sound good. Perhaps to make it worthwhile they needed to get publishers on board and none came forward? Amazon's profit per Ebook might be fairly low compared to what the publisher is pocketing?
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Old 03-04-2009, 12:00 AM   #13
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I think Amazon will do fine, but eventually publishers will really need to lower their prices a bit. They won't be paying for the physical book production, and changes like that will allow Amazon to try better business models like what you described.
I think we're in for a bit of a painful transition but, yeah, eventually they will reap the rewards of a much leaner production process. At the moment, they're trying to use ebooks to help prop up their declining paper empire. If we look at the state of technology and what publishing should be and compare it to what they are, there's a big difference. We have good ebook technology as well as POD yet they're still speculating on how much to print and ship all over the country, storing in huge warehouses and crediting stores for unsold books. On top of that the ebook creation process is alienated from the print formatting process. This system is full of waste but there are too many executives with entrenched little fiefdoms whose careers depend on it and departments full of workers who have made their lives in print. I do feel bad for them but change always hurts somebody even when it's for the best.
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Old 03-04-2009, 07:24 AM   #14
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I personally liked the Softbook Reader model. They sold me the Softbook Reader for $200 and I agreed they could charge me $19.95 a month for two years in book store credits. If I didn't use all of my $19.95 it rolled forwards. If I spent more than $19.95 they charged it.

Worked great.
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Old 03-04-2009, 08:34 AM   #15
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I personally liked the Softbook Reader model. They sold me the Softbook Reader for $200 and I agreed they could charge me $19.95 a month for two years in book store credits. If I didn't use all of my $19.95 it rolled forwards. If I spent more than $19.95 they charged it.

Worked great.
They should make that an option for all Readers! You save so much off the list price of the device if you sign up for the credits. I'd love that!
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