Seth Godin, an expert at offering advice on marketing and strategy, offers some advice for the Kindle. Not sure how he became a Kindle expert – guess being a marketing guru makes him a de-facto Kindle guru and qualifies him to offer advice and whip random numbers out of the air.
Let’s look at each piece of advice in turn.
First piece of advice for the Kindle
The paperback Kindle.
Don’t worry about touchscreens or color or even always available internet to download new books.
Make a $49 Kindle. Not so hard if you use available wifi and simplify the device. Make it the only ebook reader in town.
Well, it’s a little hasty to suggest a $49 price tag on a device that is selling for $259. He’s right in that touchscreens and color are not a must-have. The wireless downloads though are indispensable.
How do you simplify the Kindle?
There isn’t much left in terms of cutting down price and very little possible simplification.
It’s easy to play armchair quarterback and say – Make it $49. You can’t even get good quality digital photo frames for $49. The Kindle is a pretty amazing device and putting an impossible price target on it isn’t a solution. Let’s just say it should be $5. Perhaps Free.
Actually, Free is his next suggestion.
Second piece of advice for the Kindle
The Kindle as razor. Buy any 8 bestselling books on the Kindle ($10 each) and get a paperback Kindle for free.
This continues in the same vein of being completely detached from reality.
Amazon pays publishers 70% of $14.99 to $12.99 for bestsellers – That’s $9 per bestseller. 8 bestsellers mean that Amazon earns $103.92 and pays Publishers $72. Which leaves $31.92. That isn’t going to subsidize a Kindle – not even one that’s $49 and rides a unicorn.
Note: The Agency Model means the $10 Kindle bestseller price-point won’t be possible.
Third piece of advice for the Kindle
Kindle of the month club.
Sign up to get a Kindle book of your choice every month for 12 months and get a free Kindle. Amazon presents you with ten book choices, and since the cost of delivering it is zero, there’s plenty of margin for all…
This again veers into impossible territory. Amazon will earn at most $48 from 12 books under the current Agency Model. That $48 is less than the price of the mythical $49 ‘perfect’ eReader that Seth Godin suggests.
This point is also a re-hash of the 2nd point. Free is the answer to everything – except profitability.
Fourth piece of advice for the Kindle
Let publishers, leaders and corporations push PDFs and chosen books directly to their tribes via the Kindle. For example, I could put Kindles in the hands of the 1,000 service techs of my ventilation company and they’d see the new service manual daily.
This is a somewhat interesting idea. Get beyond all the marketing speak of tribes etc. and there’s some value here. Amazon could potentially create private mini-Whispernets for businesses. It has the Cloud Infrastructure and it has the Kindle device.
The Kindle is good for work documents to begin with. Throw in free Internet and a private whispernet and suddenly things look great.
Reviewing the main claim of the post
The main claim is that the only way to get authors and publishers to embrace the Kindle is to sell 20 million of them and the only way to do that (in the face of the iPad) is to make it so cheap to buy and use that its irresistable.
Amazon has constantly been given the ‘go cheap’ advice regarding the Kindle – The real suggestion here is that any device that does nothing except read should sell for $100 or $50 as that’s all reading is worth. It’s a pretty flawed claim because -
- People who like reading want the best possible reading device.
- Lots of people have lots of disposable income. Baby Boomers have 70% of the country’s wealth. They’re probably much more interested in a great reading experience and value for money than in a $50 price tag.
- People who read a lot value a reading device very differently from people who don’t read much. They also value features differently – people who don’t read might say they want a $50 eReader – However, they are unlikely to buy it and even unlikelier to buy enough books to sustain the books business.
- All this ‘psychological price limit of $200′ stuff doesn’t apply as much when it comes to smarter people and to things people love and things they want for themselves.
- $50 and $100 aren’t really sustainable prices. Just take shipping (Amazon currently has free 2 day shipping), software development, hardware design, customer service, returns, etc. and you’re probably already at $50.
Two out of the four pieces of advice are basically the same – they suggest a ‘Kindle as razor’ model. It’s an absurd argument -
- Sell eReaders to people who don’t value reading – sell them for $49.
- Additionally, make the eReader free in return for 12 books bought or 8 books bought.
However, that’s the path to ruin – Why subsidize an eReader and sell it to people who don’t read much and are unlikely to ever turn into profitable customers?
That first purchase of 8 or 12 books doesn’t even add up to $49 in profits for Amazon. Not even enough to cover a bare bones eReader – even if such a thing as a $49 eReader were possible.
Readers want the best possible reading experience and are willing to pay for it
It’s funny how so many people who’ve never sold devices (let alone reading devices) think they should be offering advice to a company that validated the eReader space.
Amazon have sold millions of Kindles -
- At prices from $259 to $399. Also, Kindle DXes at $489 (though probably not millions).
- To people who love to read books and buy lots of books. People for whom the device is worth it.
Why would they be interested in selling $49 devices to people who don’t even read?
Seth Godin cites the example of a 2-year-old operating an iPod Touch as the reason he feels the Kindle needs to become a $49 toddler device. The real reason is something else - When a company becomes very successful and validates and takes over a market bloggers and journalists are overcome by the urge to give it advice.
Its Advice that will help a dominant, trailblazing company make more profits by quitting everything that has worked for it so far. The pattern is repeated endlessly -
- Apple should open up their App Store to everyone.
- Kindle should start selling $49 devices.
- Microsoft should start making its Office and Windows software more like the competitors that own less than 1/10th the market share.
How about some advice to Mr. Godin – Perhaps you should manufacture such a device yourself.
It’s obviously an elegant solution, straightforward to implement, and it would totally take over the eReader market. Let go of your generosity and keep these insights secret and build out your own eReader. Getting it right would mean owning a $23.8 billion a year business. Why waste such insightful strategy on Amazon?
Filed under: kindle Tagged: | everyone's an expert, kindle insights
I must disagree with the need for wireless downloads. Due to DRM, none of my books are from Amazon. They are all from Oreilly, Apress, Manly, and a few others. I just transfer the files manually. It is extremely simple.
In addition, the Internet functionality in the Kindle is quite pathetic. I tried it but found it quite worthless and cannot remember using it since.
I just want a dedicated e-book reader. Nothing else. If it does not do something well, such as Internet, then I would rather have it removed.
$260 is still too expensive for most people, which may explain why none of my friends or acquaintances have an e-reader. $99 is the magic price to meet, so there is still a long way to go until then.
I think you’re a little hard on Seth Godin, and if everyone who makes thought-provoking suggestions to Amazon were required to start companies themselves to prove their ideas, you would be among the new group of entrepreneurs, right?
I see him pointing in a valid direction here, albeit in an exaggerated way. A lighter, cheaper Kindle without 3G makes a lot of sense to me as a way for Amazon to clear the field of other e-ink competitors and lock up the rest of the 25 percent of book readers who read a lot of books. I’m surprised at how often I reach for the Kobo, just because it’s such a pleasure to hold because of its light weight and attractive design.
That Godin’s ideas often work is best illustrated by the success of his own books, where he has innovated and challenged traditional publishing ideas with good results. He’s also an enthusiastic Kindle user.
Part of my impulse to stand up for him here comes from the thoroughly enjoyable interview I did with him on The Reading Edge, in which I found him to be thoughtful, curious, and very smart. It’s at http://thereadingedge.com/2010/02/24/tre-11-seth-godin-2/
He does have very good ideas.
I do think people should work on their good ideas – Guess will just have to start doing it myself.
Seth might have been a little low on the pricing but the ideas were pretty solid. A subsidy from amazon could get a lot of people off the fence and sell a ton of books. I think a $99 price point would do the trick.
You wrote: “The wireless downloads though are indispensable.”
While I absolutely love the wireless downloads, I have to disagree with you. I don’t think they are a must have.
I’m baffled why many people (not just you) do consider it a must have feature. My confusion doesn’t result from me projecting my own feelings onto the public — it comes from me seeing a huge inconsistency in the public’s opinion on wireless issues. Think about the iPod and other mp3 devices:
Have you every heard anyone critisize iPods because they can’t download songs wirelessly onto them? Have you heard anyway say they will refrain from buying an iPod as long as you have to connect it to a computer with a USB cable to add songs? In other words, everyone thinks it’s prefectly reasonable to use USB to add music to a portable device — so why is it a problem to use USB for books?
Again, I love the convenience. And if it’s out there I will use it. But if I was designing my own device and wanted to keep it affordable, that would be a “nice to have” not a “must have.”
Don’t have an iPod so can’t really compare the two experiences. Any book in 60 seconds – anywhere. That’s a pretty compelling feature.
My whole point is that what actual readers want is not an affordable device. Why is it that tech journalists get to justify $500 on an iPad – which isn’t really a specialist at anything – just because they want to own it?
Because it’s a free country.
If a reader wants to buy a $259 device or even a $500 device that’s absolutely wonderful for reading then they should be free to. It’s tech journalists’ bias that reading doesn’t merit a separate device which is troubling.
Wireless downloads mean you don’t need to involve — or even have — a computer. I’m sure I mentioned this in an earlier comment thread: I bought my mom a Kindle, and she loves it. Absolutely loves it. She’s bought books using it, and only had to ask me one question one time. While she has a computer, and knows how to use it well enough, it’s a relative hassle to go into the guest room, pull up amazon.com, etc. when she can get a new book without leaving her recliner.
When you think about it, that’s why the Kindle has a cell connection rather than wifi — I can get a decent cell connection even out here in boonie-land; if I had to depend on someone else’s wifi I’d have to drive 10-15 miles… and at that point, I might as well go another 10 miles to the nearest B&N. I’d like the option of wifi, but I also have the infrastructure necessary to support it here at FAR Manor.
As far as “go cheap” goes, eBook reader prices *will* come down. Those of us here are the early adopters. The sales models are still shaking out (and Penguin can waddle off and go freeze itself for all I care), but I expect things will be a little more consistent and reasonable in a few years.
[...] – Item 1: Seth Godin’s free advice for Amazon with reaction from Abhi and a followup interview by The Wall Street Journal. Item 2: A slippery slide on e-book market [...]