Kindle Review – Kindle Fire Review, Kindle 4 Review

The Year of the eReader is threatening to become The Year of the Death of the eReader and the Agency Model is poised to slow the growth of ebooks and perhaps even kill ebooks. Let’s take a quick look at the things eBook and eReader companies have to be wary of.

Top 5 Threats  

Here’s a stab at the 5 big threats eReaders and eBooks face -

1. Publishers. 
2. Fragmentation due to different devices and different formats and encryption schemes.
3. Readers getting distracted by pretend-eReaders. 
4. Race to the bottom in eBook prices.
5. Improvements in quality and delivery of competing forms of entertainment.

Feel free to skip the next 5 sub-sections as they are just a bit of an explanation on why each of the above are real threats.

Why Publishers are a threat to eBooks

Publishers are optimized for a world where physical books rule and Publishers control everything.

What is best for books and readers isn’t necessarily best for Publishers and ebooks are a great illustration of this. A lot of people are under the illusion that Publishers would choose what’s best for books over their own survival – That’s expecting too much. You can read up accounts of how ebooks were killed 10 years ago or see the pattern now (Agency Model, higher prices, sales tax on ebooks).

Note that this is not a value-judgement. There is no right or wrong. Perhaps Publishers feel the best thing for books is to kill off ebooks. Perhaps Publishers don’t realize they are inadvertently attacking ebooks. Even if they were consciously killing ebooks solely to preserve their control and profits it’s still not good or evil.

Publishers are the biggest threat to ebooks because in the end it might come down to only one out of ebooks and Publishers surviving.

The Dangers of Fragmentation

Having a multitude of choices and not having a single device be the overwhelming leader presents huge problems -

1. Companies can’t hit economies of scale.
2. Companies can’t generate enough profit to do the necessary R&D.  
3. People are unsure of what device to go with.  

Similarly, the lack of one format (we’re including DRM used as part of the format which rules out ePub) to rule them all means -

1. Lack of interoperability. 
2. Scares off some readers and they don’t buy eReaders and eBooks.
3. Publishers and Authors have to work with different formats.
4. Stores have to work with different formats.
5. It confuses users.

Fragmentation is a very close second to Publishers.

Pretend-Ereaders seducing Readers and then distracting them from reading

We’re not talking about any device that gets readers to read more than they would or gets non-readers to start reading.

We’re talking about a device that is optimal for something other than reading and which people who love to read are led to believe is a better option than dedicated eReaders. Once they own the pretend-Ereader they end up reading less than they would on a dedicated reading device. Sometimes they will end up reading even less than they did before.

Take a device that -

• Takes a user who would buy a Kindle and then buy 3 ebooks a month.
• Turns that user into a pretend-reader who buys 5 movies a month and buys just 1 book every 2 months.  

No matter how you slice it that device is damaging to reading and ebooks.

It also has long-term repercussions – profits now flow into R&D for devices optimized for things other than reading.

Race to the Bottom in eBook Prices

This might be unavoidable.

It’s almost the reverse of the Publisher threat. Here we have a complete lack of barriers to entry which results in infinite competition and authors and publishers are forced to compete on price.

As prices go below a certain threshold quality will probably suffer. That in turn might lead to less interest in reading.

Basically, whatever company wins over Publishing needs to keep Publishers around to manage quality control. It also needs to implement some sort of floor on pricing - That is exactly what Amazon’s ‘To get 70% royalties books must be priced between $2.99 to $9.99′ stipulation is.

Competing Forms of Entertainment improving their quality and increasing value for money faster than Publishing

We’ve seen this happen over the last few decades. eReaders and eBooks and the price savings and convenience they offer are perhaps the only improvements books have had. Books need them to be able to compete with all the new improvements in TV, movies, video games, and music.

The more Publishers fight ebooks and ereaders the more they weaken the attractiveness of books.

If Publishers are successful in stalling ebooks they might have managed to eliminate their best chance of strengthening the attractiveness and viability of books.

The Lesser Threats

There are also a number of other threats to eReaders and eBooks -

1. Advertising supported eBooks. Pretty self-explanatory.
2. Low quality eReaders. A lot of the clone factory eReaders provide a terrible reading experience and could end up souring users to ebooks and ereaders. It’s rather unfortunate that they are usually cheap and promise ‘free’ and other appealing things.
3. Overwhelming selection of ebooks combined with Lack of Discoverability. We have hundreds of thousands of books being published every year. Removing the barriers to publishing means all of these are available. The lack of a really good recommendation system means users have to wade through everything that doesn’t make it to the bestseller lists.
4. Amazon and Sony and B&N potentially getting distracted. We need at least 2 of the Big 3 to stay committed to making a dedicated eReader. Amazon is especially critical as it understands its about providing a service and not just the shiniest device.
5. Snail Pace of eInk innovation. eInk seem to do more interviews talking about what they have in the pipeline than working on the pipeline. Hopefully all the competition arriving in 2010 leads to a much more rapid pace of ePaper innovation.
6. The notion that books need to evolve into apps. At some point it gets rather annoying - Non-readers want to tell us whether or not reading is good, what device we should be reading on, and what form our books should take.
7. The Press. Perhaps this should have been in the top 5. The Press have hated eReaders since day 1 and they keep coming up with new angles of attack.

That’s just some of the threats eBooks and eReaders face.

It’s a $23.8 billion industry (books in the USA) that just had a billions of dollars a year industry (eReaders in the USA) added on top of it. There are obviously a lot of profit-greedy companies (every company is profit-greedy by the way) looking to carve out a slice.

The honorable ones do it by releasing dedicated devices and giving users what they really want and what’s good for them. The dishonorable ones try to use tricks.

Filed under: eBook Reader Devices Tagged: | future of ebooks, future of ereader