Kindle Review – Kindle Fire Review, Kindle 4 Review

Jack Welch has this set of 6 rules and one of them is -

Face Reality as it is, not as it was or as you want it to be.

It’s ridiculously difficult to actually face reality because reality is often painful and we’re set up to avoid things that are painful – our natural inclination is to see things as we want them to be.

This inability to face reality is why you see people carry on with obvious delusions.

Reality about Publishing and eReaders

Here are things that readers might not like to face up to (that includes me) -

1. There will always be some company or entity (or a group of companies) that controls most of Publishing. Truly open and non-profit focused systems are always taken over.  
2. Publishers perform a very valuable function. 
3. The shift from print to digital probably only saves 10 to 20% of costs.
4. A benevolent, open type system like the Internet is more likely to kill authors than liberate them. Look at what is happening with blogs and content creators online.
5. It costs a lot of money to create quality content.
6. Quality will suffer if Publishers die out.
7. A lot of people don’t care about reading. It might be as much as 70% of the population. For them video games and TV really are better than books.
8. Young kids are growing up without as many books as we did.
9. The most benevolent seeming companies are usually the most dishonest.
10. Most of the companies jumping into books don’t care about books or about readers.

To expand a little bit on the first -

A corporation that makes profit will have more profit than someone doing things for free.

A company that builds a walled garden will have more control and revenue channels than someone who doesn’t.

The company with more profit and resources and a walled garden easily beats out the ‘doing everything for free’ company.

The only company that can threaten closed gardens is a company that pretends to be an open garden but focuses entirely on profit and path of least resistance. In a strange twist the only company that can beat an evil, closed company is a dishonest, apparently open company.

Publishers and Companies have their own delusions

Here are things that Publishers might not like to face up to -

1. They can’t put the cat back in the bag.  
2. As they are currently set up they just can’t compete.
3. They are at the mercy of the platforms.
4. By letting in Apple they are ensuring they end up with one or both of Apple and Amazon’s platforms.
5. If they succeed in killing off eBooks they might get power but they’ll shorten the lifespan of Publishing.
6. $10 ebooks on eReaders are a better business model than $25 hardcovers – even for Publishers.
7. Readers just want to read books and couldn’t care less what happens to Publishers.
8. Authors are much, much stronger brands than Publishers.
9. Publishers contribute 20% of the value and get 80% of the control and 50% or more of the profits. It’s all due to having power and resources. A lot of their ability to earn is a function of having money and power and not any ability to craft books.
10. They are replaceable. Quality will suffer – however, they are replaceable.

Here are things that Amazon and Apple might not like to face up to -

1. Their enemies have a very strong argument about openness.
2. The argument is strong because people are fundamentally opposed to paying for content. It’s about readers’ self-interest, not right or wrong.
3. They will have anti-trust sooner or later because their models are too powerful. In the tech field exceptional excellence is always rewarded by anti-trust cases and accusations of being ‘evil’.
4. Google will release advertising supported books and they will channel search users to Google Editions.
5. People will flock to cheaper books. Even if they have advertising people will choose cheaper books (we do mean the majority of people).
6. eReader companies are stupid enough to kill their eBook revenue channels (to compete with Apple and Amazon).
7. Publishers are critical for quality.

Amazon and Apple are the most honest to themselves and do mostly see things as they really are. Here are a few examples -

• They both realize that they have to control every aspect because otherwise they will become commoditized.
• Amazon building up every aspect of Publishing including encore, print on demand, the kindle store, and kindle app store.
• Apple leveraging Publishers to kill Amazon’s price advantage.
• They don’t buy the hype about openness – They obviously see through the posturing.
• They prefer to be honest and earn their money upfront. They realize that sooner or later people will become smart enough to realize there is no free lunch.

It’s not a random coincidence that Amazon and Apple are seeing more success than any web companies (with one obvious exception).

Reality about eReaders and eBooks

Here are the things about eReaders that eReader companies might find hard to swallow -

1. eReaders are successful mostly because readers love to read. Otherwise, technologically they don’t meet the bar.
2. The success of eReaders had more to do with meeting an unfulfilled market need than the beauty of the eReader.
3. LCD based devices are evolving faster than eInk based devices. This includes value for money, app stores, and usability. It also includes reading experience. It means that it’s more likely multi-purpose devices kill eReaders than eReaders survive.
4. Apart from the Kindle most eReaders are very difficult to use and have terribly unsatisfying user experiences. Even the Kindle pales when compared to the iPhone – It’s an unfair comparison because the technology and the stage of the device’s evolution are different – However, users don’t factor that in.
5. eReaders don’t earn their $259 until eBook costs are factored in.
6. Once the agency model kicks in eReaders will have to earn that $259 based on what they bring to the table (since there will be no $10 books).
7. The third generation of eReaders are it – If they don’t get it right there’s a 90% chance eReaders die out.

There are two directions for eReader devices to go in – Make eInk based multi-purpose devices or make much better reading focused devices. They might have to do both to survive – perhaps not in the same device but both nonetheless.

Finally, we get the inconvenient truth about ebooks -

1. Publishers (consciously) and eBook stores (unconsciously) are combining to create low quality and inconvenient to purchase ebooks.
2. eReaders create a good reading experience. However, they don’t add as much additional value as they could – For example, only one eReader has text to speech.
3. eBooks are probably going to die out with the Agency Model. 
4. $10 eBooks only work because the used book market and sharing are cut out. In addition they might need a minimization of piracy to survive.
5. A lot of people value ebooks at zero. Some of them will pirate books and encourage piracy.
6. Without low prices and convenience very few people would choose ebooks.  
7. Publishers have only one aim – to kill eBooks.

Not facing up to reality would mean a world without dedicated reading devices

Publishers who think they should get 70% of ebook prices and ebook prices should be $15. Readers who think ebooks should be $3. eReader companies who think they can take it easy and don’t have to evolve faster than LCD devices.

All three are combining to ensure the end of ebooks and dedicated reading devices. The Agency Model might do it all by itself.

The reality is that users aren’t forced to buy books, books are competing with other forms of entertainment, and eReaders are competing with other devices that can be used for reading. There are going to be winners and losers and even after facing and embracing reality eReaders might not survive.

Filed under: Reality Tagged: | future of ereader, see reality as it is