Kindle Review – Kindle 2 Review, Books

Update: The DOJ has confirmed an antitrust review of the Google Book Settlement (July 2nd). It sent a letter to the Judge overseeing the settlement stating that it has opened an investigation based on public concerns that some aspects of the settlement may violate the Sherman Act.

Now, let’s talk about Google’s Strategy to fight Amazon and the Kindle.

Google has made some really interesting moves with books, ones that are very unlike Google -

1. Strike an agreement with Publishers to give them 67% of earnings from Ads and Sales. Given that its other partners don’t even get told what share of revenue they get this is unprecedented in many ways.  
2. The Book Agreement (which includes the above too) that indicates Google will assume ownership of orphaned works and sell them for profit. 
3. Google’s recent announcement that they would let Publishers sell books for whatever price they want in the Google ebooks store.

All of this makes little sense in the context of how Google has behaved in the past.

Why would a company ready to die in the name of altruism suddenly start selling information itself and start supporting publishers?

Newspapers ought to innovate to survive and at the same time Publishers can set whatever prices they like for their ebooks in the Google Store?

Killing the Kindle is the real motivation

Kindle is gaining traction via books and providing Amazon with a Google-free channel to customers. It wouldn’t take much effort for Amazon to flip a switch and start selling everything to customers via the Kindle.

The ‘people don’t read’ argument is moot because

1. 70 million baby boomers, who control 70% of resources, read. Kindle, with its changeable font sizes and light weight, is especially suited for them.
2. Most well-educated people read – both for work and pleasure. They also tend to be spenders.
3. Read includes newspapers, books, textbooks, blogs, online news sites, and a lot more. You read on every single online site you visit.

If a lot of people start using the Kindle for ‘reading’ Amazon has a direct channel to all of them.

Google sees this, and that’s why it’s suddenly focused on ebooks and is saying all the right things to make publishers ditch Amazon and side with Google.

Google cares far more that the Kindle doesn’t succeed than it does about its own success in books.

Google is going to pull a Two Buck Chuck on Amazon

Read the story here on Two Buck Chuck. Google is going to attack the Kindle in three ways (it’ll try these one by one) -

1. Get publishers to prefer the Google ebooks store to the Kindle Store. This is unlikely to work as Amazon has too much of a customer base for publishers to boycott it. Barnes & Noble going with the $9.99 price for ebooks also weakens the possibility that this approach will work.
2. Introduce a deluge of very cheap orphaned works (that, if the Book Settlement passes, no other company has rights to) to put pressure on the general book market.
3. Go with free books or nearly free books for all the books in its arsenal. Offset it via advertising etc.

My 2 predictions for Google vs Kindle

1. By end 2009, Google will be selling nearly every book in the Kindle Store and also giving away a ton of books. 
2. If Kindle continues to see success and growth, by end 2010 Google will try a free books approach to kill off Kindle growth. It’ll eat up the losses and offset them via ad sales. However, it will be giving away books for free.

Why?

Google makes its money off of traffic of good intent i.e. people who intend to buy something. Microsoft is trying to steal these customers with their cashback program and new features in Bing like the farecast airfare prediction engine. However, its still fighting on Google’s turf and by Google’s rules.

Amazon is taking an extreme, and extremely smart approach, by just creating a direct link to customers -

1. Rather than fight Google, they’re bypassing it entirely. 
2. Why take on Google in search where they’re literally the search verb? Instead, change the game to a different one.

Google gets this and they’re just going to straight out attack the Kindle and try to impede its success.

In 2009, its publishers (money from orphaned works, set your own prices) and in 2010, it’ll be customers (free books, reciprocation, altruism).

It doesn’t take that much effort to link The Origin of Virtue with Google’s strategy. Knowingly or unknowingly, Google is going to use the ‘we want to make books free (or very cheap) for everyone’ card to stall the Kindle. Whether they succeed or not is left to see.