Kindle Review – Kindle Fire Review, Kindle 4 Review

Munsey’s makes fun of an exclusive, 7 day workshop cruise for authors that Publetariat are promoting.

The cruise workshop is brilliant from a business perspective and it begs the question -

Would you rather be catering to people who want to pay $3 to $10 for an ebook or to people willing to pay $600 for a workshop?

Authors willing to pay thousands are just one part of a bigger shift.

If Books get turned into ‘information wants to be free’ skeletons we’ll still have lots of money exchanging hands.

The money-making opportunity in Books is evolving.

Here are 6 areas that are going to be crucial -

1. Selling services to Authors. 
2. Selling Readers to Authors and Publishers. 
3. Selling eReaders. 
4. Providing Platforms.
5. Selling eBooks – still worthwhile, just not as worthwhile.
6. Selling Products to People who buy and/or read Books.

These are a few of the main opportunities (there are others) - let’s look at each of these.

Authors will be paying instead of getting Paid – Why not let them pay you?

We’re in the middle of this fascinating transition -

1. We’ll no longer have Authors getting advances and then Publishers trying to recoup those advances.
2. Instead we’ll have Authors first paying for services and then paying for customers and hoping to recoup their investments down the line.

Had wondered in the past whether Authors are a bigger market than books and we might be headed in that direction. Here’s a snippet -

For every book that’ll be written in the new few years, you’ll need -

1. Computers and Word processing software.
2. Editing, Design, and Formatting.
3. … 
4. …
5. Authors figuring out a way to sell books online.
6. Marketing and PR Costs.

What will be the biggest product being sold to Authors?

Actually, there will be two -

1. Hope.
2. Find Success Quickly/Easily products.

There will be lots of money to be made in both.

There will also be actual intelligence being shared – However, who wants to hear that they have to spend 2-4 years building their brand if they can pay $1,000 to find out Twitter Secrets that will make them the next J. K. Rowling.

Readers will become a commodity instead of customers

Consider the sources readers have for books -

1. Public Domain Books from non-profits.
2. Public Domain Books from companies.  
3. Free Books from Independent Authors. 
4. Cheap Books from Independent Authors.
5. Cheap Books from Established Authors.
6. Free Books from Established Authors trying to expand their customer base.
7. eBooks from various eBook Stores. 
8. Pirate Sites.
9. Libraries.
10. Discounted Hardcovers.
11. And many more.

Now, consider where authors can find readers -

1. Publishers – although Publishing is still a black box.
2. Spend 2-3 years creating your own channel.
3. Kindle Store.
4. iPhone.

Those are the only big channels.

At some point the laws of supply and demand are going to kick in and authors will be paying to get readers – readers that hopefully turn into loyal readers and at some point begin paying for books.

At that point whoever has a stream of readers has the option to make a ton of money.

When do we see a Marketing Platform?

The major money would be in a marketing network/platform that bought space on reading related sites and in books and sold that to upcoming authors and established publishers.

eReaders as a big Revenue Stream

While eBook prices will keep going down and multi-purpose devices will eat a bit into reading, there will still be a huge market for eReaders -

1. eReaders for reading books.
2. eReaders focused on school and college.
3. eReaders as the new paper.

There will be low-end and high-end eReaders and 30 million eReaders sold a year by 2013 is not out of the question.

Who’s best placed to take advantage of this?

Amazon, Apple, Google (possibly), Barnes & Noble, Sony.

If we’re talking 10 million high-end eReaders ($250 price, $50 profits) and 20 million low-end eReaders ($100 price, $10 profits) a year, that’s -

1. $500 million a year in profits from high-end eReaders.
2. $200 million a year in profits from low-end eReaders.

More than enough money to make some companies happy.

Providing Platforms

Amazon and Apple are both poster-childs for this.

1. Amazon gets 65% of all indie books and some percentage (40-55%) of published books.
2. Apple gets 30% off all iPhone Apps.

That really is the way to do it – to profit off of every single book sold.

• Publishers profit off of their successes and take hits for their failures.
• Platforms make money off of authors who succeed and authors who fail. Every single transaction makes a platform money.

There are some other good smaller examples of platforms -

• Smashwords for one.

Figure out a platform that provides a suite of services and profits off of every single author and off of every single book sale.

Selling eBooks

There’s still money in this. However, it’s worth considering (if you are or want to become a Publisher) -

1. It benefits readers and every other element in the system to marginalize you.
2. Authors have more power now.
3. Platforms have a lot more power.
4. Prices are falling and they will continue to fall.
5. The value perception of ebooks is going to zero.
6. There is going to be a lot more competition.
7. There’s always an author desperate enough or a company foolish enough to undercut prices.

Every Publisher should be evolving into a platform – Build Authonomy++. Bring indie authors into your fold.

Every company is trying to devalue your product and transfer value to other parts of the eco-system. You have no choice but to expand and become more and more of the ecosystem.

The most important part of that is controlling the channel to customers – If Publishers don’t build a Hulu for Books they are dead.

That brings us to the really huge opportunity with eBooks.

Selling Products to People who Buy Books

If a person is using your product, or buying something from you, they become your customer.

• They will prefer to buy things from you if all other factors balance out.
• A lot of the time they will prefer to buy things from you even if a competitor is somewhat better.

You also have them in the flow of buying -

• They might see the $200 dress and buy that too.
• They might decide to buy all of their Christmas Gifts and spend $500 at your store because you are selling Hardcover Books for $3 cheaper than your competitor. 
• You get them in the door and then good things are guaranteed.

That’s extremely powerful – It’s why WalMart and Amazon are pricing the most anticipated hardcovers at $9.

There are lots of directions you can take a user’s book purchase -

1. Use the book purchase as the foundation for a relationship. 
2. Capture specific user information.
3. Sell users other books, DVDs, music, and items that would appeal to their tastes.
4. Sell them big-ticket items based on their tastes.
5. Lots of things that companies hopefully stay away from.

Just look at what Amazon is doing. From selling just books its evolved to selling everything. The Kindle is just a manifestation and strengthening of that customer-Amazon relationship.  

It’s the only way to survive.

Moral of the Story

Authors, Publishers, and Booksellers need to realize that companies promoting a $0 value perception of ebooks are just trying to steal value.

eBooks are going to go to zero but the value is not disappearing. Companies are going to steal that value off of the Books eco-system.

Publishers and Authors and Bookstores can’t stop them because customers love $0 books. The only answer is to steal the strategy of the value-stealers.

Filed under: publishing Tagged: | making money, race to zero