[jlong7]

The reason e-books never caught on with the Amazon crowd is that you can't print the things and no one wants to read an entire book (anything you can't finish in one sitting) on a computer screen.

I have a hazy notion that it's not the publishers who don't want e-books to take off. Its the printers, distributors, and bookstores. I know that many publishing houses are vertically integrated (they publish, print, distribute, and retail). But if you look at publisher's core competency, it's finding, editing, and marketing good books to customers. Amazon's competency is providing the marketplace. I would imagine that Amazon and a publisher, if they stick to their core competencies would be happy to sell e-books and pass along a large percentage of the savings on to consumers in order to steal the rest of the percentage from the middle men. The only thing holding the innovation back is consumer reluctance to buy a book they can't print (e-readers solve this) and some fixed costs (publishers having invested vertically). Of course Amazon could solve the first problem with subsidized e-readers. It could really take over allot of the bookstore chain business if it gave the instant gratification of downloading and reading a book within seconds rather than the minutes it takes to drive to a bookstore or the days it takes to ship. Just imagine the shipping costs Amazon would save by pushing the adoption of e-books.

There is every reason for Amazon to want to push e-books. They have the customer base. They understand virtual products and virtual shopping. They have the above mentioned incentives. And they have the brand name and the staying power associated with it. I can't see them not taking a stab at it. The question is how much of the savings can they pass on to consumers?

Let's think about the savings. No paper, no distributors, no warehouse, no shipping. They pay for the writer, the publisher (editor), marketing costs, servers, and bandwidth. Surely they could increase revenue and pass along some savings too. Of course they have to either pay an e-reader subsidy or sell enough that economies of scale bring down the per unit cost. With the size of their market, I don't see it as an infeasible investment.

Here's a model Amazon already seems to be playing with. Buy the book and download the e-books for $3 more. Or what about the model that online music stores/cell phones are using: access to 10 million books for $20 a month (tiered subsidized e-reader with a 12 or 24 month contract). Or the PS3 model/Amazon used books model: book publishers have to pay Amazon a royalty to use their platform which includes a subsidized e-reader. Or a Yahoo/Google model: discrete advertising in e-books subsidizes the e-reader. Or an Steve Jobs/i-Pod model: tell the publishers to drop their prices or else. Or the Microsoft model: Amazon uses their platform to push it's own publishing house. Wow, I can see why publishers are nervous now that I think about it. But give it 5 years and it's impossible that Amazon would not launch a loss leading e-reader.