Here are some very conflicted thoughts:

1. Great Idea. If you’re a company that likes to throw out lots of ideas and see what sticks, this is definitely worth trying out.
2. Kudos to Amazon and Jeff Bezos for having so much ambition.
3. Don’t think Mr. Bezos has ever seen a technology pie he didn’t want to stick a finger into.
4. Amazon Studios might end up being Kind of a Big Deal.
5. First get books right. There’s a grand curation problem in books – partly due to what Kindle has enabled. There’s a huge value perception problem in books – mostly due to what Kindle has enabled. It’d be really nice to see Amazon focus its attention on fixing that first.
6. The line of logic that ‘we can still give as much attention to books, while also doing movies’ doesn’t make sense. Resources, especially time, are finite.
7. Amazon Studios is to Movies and Kindle Fire what Kindle DTP is to Books and Kindle.
8. Amazon’s ambition is eventually going to get it killed. My vote would have been with ‘Amazon’s reluctance to build up a huge cash hoard or a huge patent hoard’. However, increasingly it seems that Amazon’s reach might exceed its grasp.
9. Amazon Studios should have begun to scare a LOT of movie producers. Not necessarily because it will replace Avatar – because it might be able to replace Paranormal Activity.
10. Perfectly efficient markets kill the participating content producers. Amazon Studios is almost certainly going to end up being a close-to-perfectly-efficient market.
11. Not sure why so many technical companies think algorithms can solve everything.
12. Not sure why so many technical companies think getting people to work for free or cheap and then making money from that (due to scale/volume) is a sustainable strategy.
13. It worries me that so many people and so many companies are now moving to an attitude that – ‘getting to have their books read/movies seen’ is enough reward for artists.
14. The contract is laughably one-sided IF your movie becomes a big hit.
15. If Amazon doesn’t option the rights - you have to still give it rights to use your movie.
16. At one level it just seems a way for Amazon to be able to win the mythical Who has the most free movies? contest. Never mind that 70% of Amazon’s ‘free’ Prime Movies will be produced by 15 year-old-kids and will star Mentos and Coke.
17. Amazon is like the jealous spouse who doesn’t even want you looking at someone else. Consider this:
    

    … for 18 months after you create a project at Amazon Studios, you cannot display, sell or license your script or test movie elsewhere, or withdraw it for any reason. However, when the option term ends, if we haven’t exercised our option and purchased your work, you will get back non-exclusive rights to your original material.

18. That last phrase is genius – ‘you will get back non-exclusive rights to your original material’. There’s a pretty strong vein of ‘We’re doing you a huge favor and you better not forget it’ running throughout the FAQ.
19. Amazon is the equivalent of a Stage 5 Clinger. Except, you have to take a blood oath that even if you break up, you will spend one weekend together in Paris every month.
20. Content Creators are probably so desperate Amazon could have introduced a ‘You will swim with sharks before we read your script’ condition and they’d still sign up.
21. There’s got to a more sustainable strategy than ‘let’s mass-produce cheap content and hope we get lucky’.

The one thing that really bothers me, and perhaps should bother anyone who loves books, is that Amazon doesn’t have the ends wrapped up with books yet.

Amazon should get the Kindle Store right first

There are lots of things that need to be fixed with books. The two biggest ones are:

1. How do authors get paid? And No – sharing out $700K amongst 7,000 indie authors every month is NOT a solution. 
2. Who does the curation?

Right now Amazon is just thinking – Wow, we figured out how to blow up an entire industry. Figuring out a new viable model is difficult. Let’s just go blow up another industry.

That’s a really strange way of looking at things. It’s very Amazon centric i.e. it doesn’t consider what happens to content creators or people or to quality.

You can’t make everything a loss leader

This is another example of what seems a strangely short-sighted Amazon attitude towards content.

1. Content Makers are desperate. Content Publishers are inefficient. Let’s blow up the market and turn content into a loss leader that helps us sell other stuff.

It’s become a bit much. History will look back at the rise of the Internet companies and perhaps consider them the biggest value destructors for people who create content.

1. Some tech companies want your creations for free so they can run ads against them.
2. Some tech companies want your creations for free so they can use them as a lure or as loss leaders.
3. Some tech companies want your creations for free so they can sell them for profit. 

Where on Earth are the tech companies that are willing to build sustainable business models? Internet companies make Microsoft and Apple seem absolute saints in comparison. To be honest – they really are. When you think of the number of HUGE companies that grew up based on the Personal Computer ecosystem. And the number of people who did well selling software and other things.

With Internet companies, it’s an anti-ecosystem. It’s a giant leech sucking all the blood out of content creators.

It’s great for consumers of content – until the malnutrition of content creators trickles through the system and blows it up.

Why do so many companies look for the easy solution?

It escapes me why the vast majority of tech companies want to build a model where they profit from other people’s hard work.

Capitalism is glorious. However, capitalism usually meant paying the people who made the products. The Internet in general, and Internet companies and people who have never had to sell anything in particular, are creating an environment where the creators aren’t getting paid. It’s just not sustainable.

And everyone is caught in the trap now. The glorious thing about it is that most of the tech companies using these strategies aren’t very profitable either. The Internet is just a huge destructor of industries.

At some point we won’t have people left who make a decent living. There’s not going to be a middle class. It’ll just be very rich people and poor people who’re supposed to feed themselves on the knowledge that invisible people on the Internet enjoyed their work and they got nothing at all from it.

Whether you sell a physical product or a digital one – It’s time to start wondering. What are you going to do when your arguments (an extra copy costs nothing, volume makes up for it, Internet makes everything cheap and efficient, X/information/value wants to be free) are used against you?

Whether you like it or not – The argument extends to whatever you do. There’s always some idiot somewhere who’s willing to do your exact job for free. And there are more than enough companies willing to leverage that into creating Giant Leech ecosystems that will slowly suck everyone and everything dry. Movie Producers and Book Publishers are evil – but they don’t make money if they don’t sell movies and books for profit. That’s the one big lesson – Be careful what you wish for, you just might get it.

Because, it’s not the iPad.

This review is totally about this new $57 Tablet. We promise. We only refer to the iPad once or twice, and only because it’s like the Gold and Legal Standard to which all other squarish computerish devices shall forever be held. 

Patent Violations of Patents

Firstly, the $57 Tablet steals its rectangular shape from the iPad. It calls itself a Tablet and pretends it’s like an iPad. It even steals the idea of putting a computer behind a glass screen and having people touch the glass to control the computer from, you guessed it, the iPad. 

But it’s not the iPad.

Apple needs to call its lawyers already. Apple has patents - on Tablets being square, on touch screens, on touching a screen (hands off your TV, you little kid). All your Tablet are belong to Apple.

This $57 Tablet isn’t as good as the $499 iPad 2

The $57 Tablet is $57. That just screams cheap and low quality. Just the iPad’s smart cover is nearly that much. To be fair – it is smart, and it even has magnets. So it’s like totally 100% cooler than a $57 Tablet. Anyways, this $57 Tablet isn’t as good as the iPad 2 -

1. It only has a 7″ touchscreen. As any self-respecting Tabletophile will tell you – if it’s not 10″, it’s not awkward to hold. Then you forget how much you value holding it.
2. It uses Android. OMG – that’s like the biggest reason not to buy it. Android is just so slow. Like you touch the screen and it takes like 12 milliseconds before it responds. It’s like they are still using steam engines in there instead of the fighter jet engines iPad 2 uses (with a Tom Cruise in Aviators photo on it for like extra aesthetic impact).
3. Talk to the Hand. Yes, TALK to the Hand.
4. It only has 3 hours battery life. OMG OMG OMG. You can’t even see a full season of Jersey Shore. You might miss out on the life-changing moment that totally like changes your life or something. All because you were shallow and materialistic enough to buy the $57 Tablet. Be deep – go with an iPad.
5. It only has 2 GB of internal storage. It has something called an SD card but that’s too technical. I want 16 GB because that’s the gold standard. The Gold Standard that iPad set. It’s like 2 years and even now companies can’t meet 16 GB. Apple is so far ahead. It’s like it’s 40 years ahead of everyone else and everyone else is runnning in the wrong direction.
6. Except for like Samsung because they copied everything from Apple. What’s that you say? Imitation is the sincerest form of flattery. Stop using big words to confuse me. iPads are the sincerest form of Tabletry. Or something like that.
7. 256 MB RAM. Ram? No, I’m a Pisces. Anyways, whatever it is, it’s half of what iPad 2 has. And getting only half when you pay like $57 is terrible. It’s like you pay 1/8th and get 1/2. That just sounds like they’re stealing from your pockets. With both hands.
8. Look at how unaesthetic the bezel is. It’s like someone messed up at the factory and the top bezel stole half of the bottom bezel. That’s just hideous. That’s like whoever designed it never went to Art School or even to drawing class. This is what happens when you design paper planes instead of learning your drawing lessons.

The list is so long but I’m getting tired of all the big words like unaesthetic and hideous. That’s why iPad is so much better – cool, pretty, $499, good. It’s all simple words. Easy to understand. With $57 tablet you have words like open – What does open even mean? Would you want an open umbrella? Guess Not. Then why go for an open Tablet. My mother always used to tell me – don’t be so open-minded your brains fall out. Stop being so open minded and buy an iPad already.

The Apple and Oranges Review

Enough of all that technical mumbo jumbo. Let’s talk in terms that everyone understands.

1. iPad makes you feel like your life has meaning beyond having meaning.
2. $57 Tablet just makes you feel cheap. Would you wear $10 shoes? Obviously not. Then why be seen with a $57 Tablet. Gucci, Prada and iPad. The holy trifecta of external validation – don’t you forget it.
3. iPad 2 is the best computer ever created. It’s so cool how they fit everything into a tiny 10″ screen. And they even added a metal stand for the screen so it’s easy to hold. Don’t you want a part of that? To hold and caress it. To be one with the poetry of it. It’s like pleasure in a tablet. You just touch it and you feel amazing. It’s like a baby tiger in your hands.
4. You get what you pay for. Hence you should pay more.
5. Can you imagine the look on people’s faces when they have their tiny $57 and $199 Tablets and you walk in with your gigantic $499 Tablet. Isn’t that cool – not only is it more expensive, it’s also big and hard to miss. It’s like driving a muscle car while everyone else is in those awful Smart Cars.
6. You have to have it – all the cool people have it. Do you really want to be left out?
7. It’s a lifelong bond. Any other tablet and it’s like you’re buying just a device. With iPad it’s like you get a new family member – who’s cool and charming and sassy.
8. You can stand in line. You’d feel like an idiot if you had to stand in line for a $57 Tablet. They probably don’t even have lines – how inconsiderate of them. You can stand in line for an iPad and everyone will know how cool you are. You’ll be able to tell your grandchildren – Forget the Great Wars. Do you know what granddaddy did? He spent 16 hours camped outside waiting for an iPad 4. It even rained for a few hours but granddaddy stuck to his guns. That’s what real men do – camp outside stores whether it rains or shines.
9. Get the love you deserve. Is your dog not running to fetch sticks? Is your boyfriend not caring about your feelings? iPad cares. iPad fetches. iPad even wags its imaginary little tail.
10. Bring About World Peace. If the whole world had iPads they could channel their anger into Angry Birds.
11. Solve the Population Problem. Make it mandatory to take the iPad to bed and birth rates will decline as people watch movies in bed instead of making babies.
12. End Global Warming. People can spend all their time on their iPads instead of driving to work or flying for vacations. It’s work and vacation in your hands. Plus you save paper since you stop reading books.
13. The end of poverty. If you have iPad you don’t need anything else. Food, water, shelter – iPad channels all of those wirelessly into your bloodstream.
14. Save the World from Killer Asteroids. Pretty sure there’s an app for that.
15. Bring back Dinosaurs. Actually, this isn’t 100% guaranteed but sooner or later iPad is going to cross-breed with frogs and chickens. Anything could happen.

The $57 Tablet cannot do any of these things. It really is an Apple and Oranges review. An Apple a Day Keeps all the Evils Away. The only thing Oranges keep away is scurvy and what’s the point of that - With a $57 Tablet in your hand you’ll look like you’re suffering from much worse.

Don’t hesitate – buy that iPad 2 right now. Buy today and you will get the added satisfaction of buying an iPad 2 right before the release of iPad 3 and showing just how much money you have to throw away. Nothing says ‘well-fed and well-off’ like buying a device a couple of months before the newer version is set to be released.

The Zero Click Patent (in response to Amazon’s 1-click Patent)

• There’s a Buy With Zero Clicks button. You just hover your mouse over it. A small window comes up that says – Slide Mouse Up to Purchase. Do that and your purchase is done.
• Zero Clicks = Hover on the Button and then wait for a second and do an Up Swipe Gesture. Done.
• If you want to make it simpler you can make an upwards pointing arrow and just ask users to move their mouse upwards along that arrow.

Circle to Unlock (in response to Apple’s slide to unlock)

Apple has gotten a patent on slide to unlock. This is pretty strange since who would have thought ‘slide to unlock’ was patentable. Not to worry – there’s something easier.

• Circle to Unlock.
• There’s a green dot at the center of the screen. Just circle your finger around it to unlock.
• Or you could use a mix of fingerprint detection and two fingers pressed on the screen at the same time.

Patents are getting completely out of hand

Sometimes, it’s interesting to compare software patents to real world scenarios to see just how ridiculous they are.

• 1 Click Patent = 1 Swipe with Credit Card.
• Imagine if a patent was granted so that you could no longer pay by swiping your credit card once unless you paid Company X 5 cents per swipe. Your only other option – to swipe the card multiple times.
• Swipe to Unlock = Slide Garage Door vertically.
• Giving a company a patent that says no one else can use ‘swipe to unlock’ to unlock a phone or Tablet screen is like saying – This Garage Door manufacturer applied for a patent and now no one else is allowed to use Garage doors that open vertically.

Imagine a world where companies would patent handshakes and the words ‘Hi’ and ‘Hello’. If you meet someone, you aren’t allowed to use any of the preceding options – unless you pay 5 cents. That’s literally what software is turning into. Every single thing is being patented no matter how obvious or trivial it is.

Patents are, for the most part, attempts to keep out other companies

Patents were meant to preserve actually valuable technology.

However, big companies have started using patents as a means to keep out other big companies and especially small companies. Whether you look at Microsoft suing Android phone makers or Apple attacking Samsung – it’s the same common thread.

Established companies want to compete on terms that favor them. It’s not enough that they have first mover advantage and their war chests – they want to prevent other companies from even launching in the market. Patents become one of the easiest means to do that. Why waste money on making your product better when you can just prevent other companies from making competing products?

It should be a big warning sign for the Patent Companies themselves. If you have to start patenting trivial things to compete then it suggests your products are going downhill. In fact, even if your products aren’t going downhill, patents provide an incentive to get lazy about quality. Not to mention the opportunity cost of all the time spent in bed with lawyers and the patent system.

1. Dave Winer says: Apps are not the future because they can’t link to each other (Yes, that confuses me too. Apps being such unfriendly lone wolves with brooding demeanors and chiseled granite jawlines).
2. Brent Simmons at Inessential (the irony) has a very well-written counter-argument: The Future is Tangled (Isn’t everything tangled – our lives, electronic cables, yarn – and cursed to be tangled forever).

You know what this argument is similar to – iPhone vs Android, Kindle vs iPad, iPad vs Kindle Fire. Discussions that are nonsensical because they focus on things that don’t really matter. Somewhere in all the magical technological evolution and revolution we seem to have forgotten that devices are:

1. Meant to serve us. We are more important than devices or technologies.
2. Meant to do things for us. Devices and Technologies only matter as far as what value they provide us human beings.

The point Brent Simmons ends with is very interesting -

There are multiple tracks of evolution, but those tracks are heading to the same city. And there are plenty of hobos like me that love hopping trains — for fun, to satisfy curiosity, to tell stories and hear stories — on the way there.

My thought on that would be – While very elegant and nicely put, this still isn’t the right way to think of it. This is a case of an artist or a craftsman valuing the tools over himself and users, of the artist valuing the tracks and the train over the journey and the destination. It is, sadly, a disease that almost everyone in the software business seems to be afflicted with – loving the trains instead of the journey or the passengers.

The important thing isn’t the tracks or the trains or even the evolution of track mapping technology - it’s the passengers you are carrying to their destination and the shared journey.

Software and even Physical Devices are just a means of Delivering Value

A Kindle is a way to get books to users and to let them read books. It isn’t the destination. It’s no more the essence of books than a scroll or a paperback’s spine and paper. Writers write books and readers read them. For too long we’ve associated too much importance with ‘the act of getting the book from the writer to the reader’. Technology, and especially the evolution and magic and revolution in technology, should help us to eliminate everything in between the writer and the reader – not glorify it.

Three Rules for Software and Devices worth Considering

1. Focus on providing value to users.
2. Focus on being a great and efficient provider of value.
3. Stop taking your devices and technology too seriously.

It’s about time the makers of software and devices focused on value and on users. There’s a lack of purity in how software and devices are portrayed these days – as more important than end users, as the core value (versus being providers of value). Mostly because software and device makers are delusional and because companies are focused on capturing the value transmitted – as opposed to focusing on transmitting value.

If doctors started thinking the way we software makers think 50% of patients would die because the doctor was arguing about which surgical procedure is the most sophisticated. Instead of curing patients doctors would focus on philosophical arguments on Tylenol vs Aspirin.

Rather than saying – How can we make devices that transfer 99% of the value that authors create to readers? Device Makers and Software makers are saying – How can we capture 80% of the value that our devices and software transmit?

It’s completely the opposite of what software and devices are supposed to do.

Software and Devices exist only because Users use them

This is common sense. A software isn’t excellent because it has the most lines of code or because it uses the toughest technology or because it is very elegantly made. That would be like claiming a hammer that is nothing but an exquisite handle is the best hammer ever made.

Software applications and hardware devices are excellent to the extent that they benefit users i.e. provide value to them. If a tree falls in the forest and no one hears it …

Software and Device Makers focus so much on devices instead of users that they fail their core purpose

It’s very easy to stay stuck in the domains you understand, and to keep working in those domains. That’s the temptation. A temptation that more and more technology makers are succumbing too.

1. Do we really think TV remote makers make terrible remotes on purpose? No, they just choose to forget that the core value the TV remote provides is to let users change channels and interact with the TV. It’s not a contest of how many buttons or how much technology you can fit in - It’s a TV remote.

That’s exactly the mistake everyone making devices and software is falling prey to – they are focused on how elegantly the tracks are laid out, what material the tracks are made of, whether the train has wood panelling, who the driver of the train is, and other such nuances that are secondary to the task at hand – delivering value.

Software Companies and Device Makers have users, their passengers, and they have a destination (providing value to users in the most efficient and user-friendly manner). Those are the only two things that matter. If they aren’t delivering value then they don’t exist (like the Squirrel scurrying along the tree that just fell in the forest … perhaps). If they aren’t focused on users then they are messing up the value delivery part – their core purpose.

While everyone in technology is fighting over which tool they should anoint as the magical tool that solves everything, and which everyone must absolutely use, users are just standing there wondering when people in technology will realize that without providing value to users, software and devices might as well not exist.

It’s a pleasure writing for you.

Thank you very much for reading the blog. And for sharing it with your friends and family.

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Secondly, thinking about the future of books has made me realize that the blog’s actions and aims are pretty deluded at this stage. Reality has a way of punishing us for our delusions and perhaps it’s time for me to be super forthright with myself and everyone else – before the punishment arrives.

1. This blog needs to focus 100% on what’s best for readers. That means you’ll see a few changes – links to Nook Touch and Nook Tablet on every page (which I make no money from, though I do from Kindles). Honestly think they are (along with Kindle Fire and Kindle Keyboard) the best eReader and Tablet choices – so not linking to them all this time was being dishonest.
2. Removing links to Kindles that are not 9 stars out of 10. Kindle Touch and new Kindle are good but they aren’t the very best. So the multiple links to them on every page are now gone. Might go through various review posts and make updates in the posts themselves too – However, there are 3,000+ posts on this blog so it’s probably not going to happen soon. A $99 Nook Touch with physical page turn buttons and no ads is better than Kindle Touch – so it gets the link on every page.
3. This blog needs to switch to either – Link to all eReaders (to avoid financial bias to one company) OR Link to all eReaders without associate links.

I think money always leads to a loss of purity and the hope is that we can make our apps business big enough to end all the associate earnings from this blog and focus it purely on books and readers and authors.

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Thirdly, as far as the focus on free books – it’s a difficult choice. There is value to readers. At the same time, the tons of free book offers are definitely destroying the value of books. In the short-term, they benefit readers and hurt authors. In the long-term, they hurt everyone.

There’s also some fundamental flaw in me linking to free books that make authors nothing but make me a commission (due to other things bought at Amazon). It’s treating books as loss leaders and goes against my love for books and the desire to see them valued for what they are.

By January 1st, 2012 I’ll make a decision (and will let you know) between:

1. Option 1: Only mention free books that are (ironically) from Publishers and rated 3.5 stars and above OR are indie but rated 4 stars and above. Not mention short stories.
2. Option 2: End the free book updates. There are lots of good options like eReaderIQ and Kindle World so it’s not a big loss.

In either case, I will stop using associate links with free books – If the author is not making money, then I don’t want to either. This whole concept of giving away books for free for the imaginary carrot of future sales is a delusion. There are no future sales – only tons of hungry authors willing to be the next group of idiots giving away their work for free.

*********

Fourthly, disclosing all conflicts of interest.

I’m part of two companies and together we cover:

1. This Blog.
2. Apps for Kindle.
3. Apps for Kindle Fire.
4. Apps for Nook Color. Pretty much equivalent to 3. since both use Android and have the same screen. When we have our apps polished enough for Kindle Fire, I’ll let you know.
5. Blogs for Kindle Apps (more than one). We can’t really compete with companies like EA unless we reach customers directly and that’s why the blogs.
6. Blogs for Nook Apps (one). Same motivation – to reach customers directly.

As small companies we have very little control over things. Hence the need for direct channels to our customers.

When you come to the blog you should be aware that every Kindle sold and every Nook sold and so forth has a benefit and thus introduces bias.

The various conflicts of interest probably cancel each other out in Kindle and Nook Land but are probably HUGE when it comes to Kindle+Nook vs iPad.

*****

Fifthly, the blog’s aim of helping readers and books has devolved into helping Kindle sales. That’s sad and it’s far less than what the blog could achieve. It would be a pity to have a chance to do something good for the future of books and not take opportunity of that.

So it’s time to change direction of the blog.

What is the new direction of this blog?

Well, actually, it’s what the original direction and aim was. Before it got thrown off by getting too attached to Kindles and forgetting the larger issues and getting distracted by financial considerations.

To Help Readers and Authors and play whatever positive part possible in the Democratization of Publishing. To help positively in some way to build a better future for books and for readers and authors.

The Old Man and the Wasteland (in a good sense) and The Hunger Games (in both a good sense and a bad sense) are the two books which motivated me to rethink what this blog is doing and the net conclusion was that it’s not really doing a net positive for books.

If the authors of these and other good books have to still struggle with gatekeepers. If they still have to struggle to earn what they deserve. Then as readers we should be sad at the missed opportunity.

We are in danger of ending up in a world where authors exist (yet again) at the mercy of a gatekeeper and where books are devalued to almost nothing – and it’s time for this blog (and hopefully all of us) to join the resistance.

The one real good that has come out of all of that has happened with eReaders and eBooks is that readers own their Kindles and Nooks and Tablets. Readers are very smart people. So the only thing missing is an intelligent, social crowdsourcing engine. That, along with old Publishers and new Publishers and platforms, would form a really good basis for a healthy Publishing world.

Now I’m going to figure out a way to focus this blog on the only three things that matter in Publishing: readers, authors, books. And to keep that focus and act in the best interests of these three parties.

Scenario 1:

• Publishers and Booksellers Control Everything.
• Authors get only 8% to 15% of earnings.
• Readers have to read what Publishers decide is good enough.
• Publishers have almost complete control over authors and their art.
• A huge chasm between the creators (authors) and the appreciators (readers).
• Value of Books is preserved by artificial scarcity.
• Curation is done by Publishers with the downside of them having control.

for Scenario 2:

• Amazon and B&N are Beginning to Control Everything.
• Authors get 70% if they self-publish and take on a ton of headaches.
• Value of Books is going to zero as Amazon increasingly uses books as a loss-leader to get people to Amazon.com. The Library Lending program is the perfect example of how making a user a Prime customer is more important to Amazon than what happens to the value perception of books.
• Readers get to decide what they read – but the lack of curation is overwhelming.
• The Bestseller lists take on a totally crazy amount of importance.
• Instead of the Gatekeepers’ approval, it is now the crushing number of available books that is the author’s primary barrier.
• Value Perception of Books is taking further knocks as desperate authors burn down the entire structure to be able to get someone to read their books.

Basically, the problem we are solving is:

How do we get books from authors to readers freely while allowing platforms to take over control from Publishers? How do we let books become a bargaining chip or a loss leader that platforms can use to establish their dominance?

The problem that we probably should be solving is:

How do we get books from authors to readers with minimal waste of time and money while maintaining the curation aspect and maintaining the value of books?

This latter problem, in my opinion, is the real Publishing Problem. The one that the eBook revolution should be solving. Publishers were only bad because of the share of the profits they took and how wasteful they were – everything else they did was good, and was necessary.

Instead of exchanging a bad situation for a better one, we are exchanging it for one that is as bad. Plus it promises to get a lot worse.

We are exchanging one set of gatekeepers, who took most of the money but kept the value of books intact, with another set of gatekeepers who are detached from the future of books (i.e. they will still survive – even if books blow up). This latter set will be, without a doubt, more damaging in the long run since they are removing quality control (which is bad for readers) and lowering the value of books (which is bad for authors). They are treating books as a means to an end rather than the end itself.

The new Gatekeepers of Publishing are, in their rush to capture the crown of Publishing, drastically reducing the value of books. It’s going to cause huge problems down the line. You could argue that it’s already causing hugs problems.

Books and Publishing are a glittering ‘tens of billions of dollars a year’ prize. Unfortunately, as Internet companies and technology companies are wont to do, the competitors for this prize are not thinking of the ramifications of their actions. They seem either unaware of, or uncaring of, the fact that, in their attempts to win it, they are destroying the prize itself.

There is no doubt that the Kindle Single will suit our culture’s literary wants and needs.

Writers of articles often have an issue with being unable to delve deep into their arguments and observations. The pages of magazines and newspapers simply don’t have room for twenty-thousand word articles. Kindle Singles make it possible for these writers to share their work without the constraints that usually come from article writing.

There has been some debate regarding the intentions of the authors of Kindle Singles which are filed under fiction. Some people have asked whether those releases are lazily written novels that are so condensed because the author did not know what he was doing; however, many writers of novels struggle far more often with editing out the unnecessary parts of a novel. The Kindle Single takes a lot of effort because of the need to fit in the story in such a short format; thus, forcing the author to consider which passages help the story and which are irrelevant. The process of writing a novel, long or short, is such a tedious one that anyone lacking real passion for the craft would simply not attempt it.

Heart of Darkness by Joseph Conrad is a book with huge critical acclaim and a word count of less than fifteen-thousand. Books like it, classified as novellas, would be a rare find today. Kindle Singles is trying to change that and make Novellas more popular. Novellas tend to explore the character and the plot in detail while leaving out a lot of the things that function more as embellishments. They also are much more accessible in terms of time committment. The authors of these shorter works realize that their writing and words must be tight and engaging.

There are thousands of longer novels that have stood the test of time just as well as novellas; however, those novels seem to be read less often these days. How many people do you know who have read James Joyce’s Ulysses in its entirety?

Our fast-paced society does not leave time or allow for an attention span long enough to read such epics. If the smallest good action is worth more than the noblest thought, perhaps a novella read is worth more than a grand novel left untouched.

The Kindle Single fully fits our culture’s tendency to want our entertainment to be quick and easy without sacrificing quality. The tightness and detail of the story really allow for the reader to be consumed for an hour or so and then be on her way. Upon deeper consideration, Amazon pushing Kindle Singles so heavily is not a surprise.

A particular section has been stuck in my head and tonight (thanks to reading The Strain for half the night) it finally struck me why. First, let’s consider what Mr. Jeff Bezos wrote:

There are two types of companies: those that work hard to charge customers more, and those that work hard to charge customers less. Both approaches can work. We are firmly in the second camp.

This is really, really interesting. Particularly when you take a look at the diagram in this article on why the iPad and Kindle Fire are Mirror Opposites.

1. iTunes feeds the funnel for iPad. Apple makes most of its money from the iPad.
2. Kindle Fire feeds the funnel for Amazon.com.

So, and we are taking major liberties here, we could translate Mr. Jeff Bezos’ statement into -

There are two types of companies: Those that work hard to create a very attractive ecosystem where the price of entry is a premium device, and those that work hard to create a very attractive and low-priced device that brings you into their ecosystem.

Both approaches work. We are firmly in the second camp because we think we can sell people everything.

Both approaches do indeed work. Amazon is certainly in the second camp.

Why else would it sell the Kindle Fire (whose bill of materials alone is around $191) for $199? Why else would it sell the new Kindle for $79 (an insane price no matter how you look at it)?

This strategy is a very dangerous strategy and my gut feeling is that it’s not going to work the way Amazon intends and it is going to cause a metamorphosis of Amazon.

The Coming Metamorphosis of Amazon

Going back to the excellent Apple/Amazon/Funnel article, we get this gem -

• Apple can happily ‘just about break even’ on music downloads because of the way it helps sales of their high margin i-devices
• Amazon can happily price the Kindle Fire so aggressively that it is priced more like an MP3 player (and expect to lose money for the near term at least) because of the volume of sales of content it expects / hopes it will drive

Notice the rather critical part -

… expect to lose money … because of the volume of sales of content it expects/hopes it will drive.

Hopes and Expectations don’t make a good bedrock for future profit. Especially when the Internet and the common people are busy driving the value of content to zero.

Amazon can’t let that happen (except perhaps in certain loss-leaders like music).

To Guarantee Profits, Amazon has to Build a Very Closed Ecosystem

If people start buying Kindle Fires and Kindles and buying/getting content elsewhere, Amazon will never make a profit.

This forces Amazon to do some interesting things -

1. Amazon has to lock users into its ecosystem. That’s why we have no ePub support. That’s why there is unlimited Cloud Storage for Amazon content but just 8 GB storage on the Kindle Fire. That’s why Kindle Fire doesn’t have an SD Card slot. That’s why Amazon has to build a custom version of Android and its own Android App Store.
2. Amazon has to figure out how to make money from content. Amazon has to ensure it makes money from content because it’s selling Kindles and Kindle Fires at a loss. It’s a painfully amusing situation - content owners themselves can’t make profits from their content and yet Amazon is expected to make a profit from its 30% cut.
3. Amazon has to figure out how to sell more and more things to users. Since there is no guarantee that selling content will make up for subsidized Kindles, Amazon has to sell people everything it can (including kitchen sinks and designer shoes).

Amazon wants to become ‘The One Shopping Destination’. However, it is taking such big risks to achieve this that it is putting itself into a position where it MUST become The One Shopping Destination.

A closed ecosystem is one way to try to guarantee things don’t go to Hell. Amazon is, perhaps to a larger degree than it realizes, trapping itself into this ‘Closed Ecosystem’ requirement. It’s already at a stage where it needs the Closed Ecosystem just to make a profit.

What if the Profits from Content don’t materialize?

Amazon has been delaying gratification and growing bigger and reinvesting into growth. There are a few possibilities:

1. It doesn’t want gratification. It’s OK with forever delaying gratification. In that case all bets are off.
2. It expects that all this delaying will lead to amazing gratification at a future point of time.
3. It expects gratification at a slow but steady pace for many, many decades.

If Amazon is trading instant gratification for constant gratification over a long period of time, or even if it is trading instant gratification for huge gratification at a future point of time, it needs to find a way to profit from existing customers.

Every customer getting a subsidized Kindle or Kindle Fire has a ‘Delayed Gratification Tax’ attached to her. What happens if the Content Strategy fails? What if all these customers turn around and say – We never signed up for the ‘Delayed Gratification Tax’.

The funny thing about us (as humans and as customers) is that you can almost guarantee that all of us will forget we got a subsidized $199 Kindle Fire  as soon as we get it. As soon as Kindle Fire is in our hands we will simply want content for free or for ridiculously cheap prices (perhaps not all of us, but enough of us to make profiting from content sales rather difficult).

Update: Thanks to gous for a wonderful comment. First, this gem -

What strikes me is how vulnerable to disruption the digital content side of Amazon looks. The Google that created Android would scent blood and attack by attempting to drive the selling price of that content to zero so as to sell ads. Whether that Google still exists is another story.

And then this great link: Musings by Michael Mace on Amazon and Apple.

Gous’ comment above really is what I meant to point out and didn’t do a good job of.

Amazon must either make the Content Strategy work or a Metamorphosis will happen

We don’t know what the metamorphosis will be.

We do know that if all this ‘Delaying Gratification’ and ‘Taking a Hit on Kindle and Kindle Fire’ doesn’t get rewarded down the line, Amazon will be in some amount of trouble. Companies in Trouble do very interesting things.

If its Content Strategy works, Amazon will rule the retail world – to an extent that makes Wal-Mart seem trivial. If its Content Strategy doesn’t work, Amazon will be in a rather interesting conundrum.

We don’t know what the metamorphosis of Amazon will be (in case its Content Strategy doesn’t work) but we do know what might be the facilitator.

The Metamorphosis of Kindle and the Metamorphosis it will facilitate

Kindle and Kindle Fire play a very critical part in Amazon’s Content Strategy, and they will play an even more critical part if the Content Strategy fails.

Consider another section from Mr. Jeff Bezos’ letter:

 We are building premium products and offering them at non-premium prices.

Again, we’ll take some liberties (we aren’t good at denying gratification), and restate it as -

We are building premium mini-Amazon stores and making them very compelling by offering them at non-premium prices.

The Kindle and the Kindle Fire are not exactly devices -

1. They are mini Amazon.com tributaries. It’s the perfect analogy – tens of millions of little tributaries joining into the great Amazon.com river and turning it into something vast beyond comprehension. What happens when there are 27 million Kindle device owners and they all are gifted Amazon Prime and do 80% of their purchasing from Amazon.com? What happens when the number grows to $100 million?
2. They are a direct channel from customers to Amazon. A channel where Amazon doesn’t have to pay Google for traffic or CBS for advertising slots.
3. They are an emotional and physical connection between Amazon and Customers. We only have to look at devotees of the various tech religions (Android, Apple, etc.) to see how powerful this could be.
4. They are behaviour capturing devices. We don’t mean ‘in an evil way’ – just in a ‘what does she buy, what does he wish for, what do they covet’ sort of way.
5. They are a defence against competitors.

We are way beyond the stage where Kindles were eReaders. The Kindle has metamorphosed into an Amazon.com tributary.

Ask any shopkeeper what he would give to have mini-stores in customers’ hands. Ask grocery stores why they hand out those points cards and membership cards. Ask any marketer what she would give to get a full history of customers’ purchases and customers’ explicit and implicit wish lists.

All of that is dwarfed by what the Kindle and the Kindle Fire promise to deliver to Amazon.

In the end it will come down to Kindles and Kindle Fires

Pick whichever path you like - Each ends with there being a hundred million Amazon.com tributaries in people’s hands.

If Amazon’s Content Strategy works then each is a steady source of profit for Amazon. And that’s just from the content.

If Amazon’s Content Strategy fails it might still be able to profit by ramping up the mini Amazon store aspect.

If everything else fails, Amazon still has a hundred million direct channels to customers. Companies are willing to pay for Search Ads and even for Ads on sites where people have zero intent to buy anything. What would companies be willing to pay for a channel where customers’ main intent is to buy?

We haven’t considered all the aspects and all the possibilities. Once you have Kindles in enough users’ hands there are a lot of different things that can be tried.

Amazon, if it is forced to metamorphose, will almost certainly base the transformation on the hundred million Kindles and Kindle Fires it will have in circulation. At its core, Kindle is a hedge of a spectacular kind – it plays an absolutely vital role no matter what happens. It’s gold and stocks at the same time. It’s emerging markets and developed markets in parallel. It’s the Schroedinger’s Cat of retail.

If Amazon’s gambles pay off, Kindle and Kindle Fire will be the channels delivering consistent and comforting gratification to Amazon. If Amazon’s gambles fail, they will morph into devices of resurrection.

That letter from Mr. CEO is genius. Perhaps explaining exactly why Amazon is in the second camp would be overkill. However, it would certainly be interesting to hear more on exactly why Amazon is working hard to charge customers less and why/how it is able to sell premium products at non-premium prices.

Here are the options:

Standard WordPress Subscriptions

The best option if the new email format is working for you: Use the Email Subscription option that comes with WordPress.

Kindle Review WordPress Email Subscription (Click on the button that says ‘Free Email Updates’).

If that link doesn’t take you to the button – There is a link to the right of any of the pages at the blog that says: Email Updates. And there is a ‘Free Email Updates’ button.

You can choose whether you want ‘instant’ emails or daily or weekly.

If emails are not working for you

You can either wait until WordPress fixes the Email Errors (which depends on them, not on me – so no ETA). Or you can switch to one of the below options.

New Subscription Options

I’ve added two new options. Please be patient as I’m new at this. Just send me an email at booksummit at ymail dot com or leave a comment if it doesn’t work for you.

Option 1: Kindle Review Free Book Emails.

Get Instant Emails whenever there is a post about New $0 Books. You can enter your email at this page and it will subscribe you. You will have to confirm the email subscription. Then you can unsubscribe from WordPress.

The Format etc. are under work so leave a comment if something doesn’t work for you.

Option 2: Kindle Review All Post Emails.

Get Instant Emails whenever there is any new post (includes Free Book Posts). Again, you enter your email and it will subscribe you. You will have to confirm and after that you can end your WordPress subscription.

Currently, there is no option for Daily or Weekly Posts (as opposed to one email per post).

The latest update of Facebook, where it follows you around like a particularly creepy and persistent stalker/paparazzi hybrid, is very interesting. We might soon see attempts to do the same thing with books. Companies might offer us free or subsidized books and in return will package and sell the information they get from our reading habits.

The underlying trend – of free products/services in return for personal information - is very interesting.

Some Companies are Selling Customers to Companies

Imagine a supermarket where representatives of Large Corporations walk in and they can walk down aisles – Insecure Teenage Girls, Aspirational 20-year-olds, Rebels without a Cause, Bored Housewives, Health Ailment X, Middle-Age Crisis Afflicted Men, and so forth.

The company says – Let’s take a dozen million orders of Insecure Teenage Girls. Let’s target their insecurity, let’s show how Product Z will fix everything, and then let’s sell them Product Z. Note the key thing here – Z may or may not actually be a solution. In fact, Z being a solution is less profitable than Z being a half-solution or no solution at all.

Having this knowledge of people’s insecurities and needs and desires gives companies the option to do a lot of things.

If you think people buying $100 of Purple Cows and Green Carrots on Farmville is ridiculous – Imagine the potential if companies could find out information about the really important things in our lives. How much money could a company make from a Diabetes patient by selling him miracle cure after miracle cure? How much money could a company make by promising parents that they would cure their child’s #1 disease risk?

This is why the Supermarkets selling Customer Information are becoming a very big deal. A company that buys customer information and unique identifiers for 12 million Insecure Teenage Girls can make money from them repeatedly and in ridiculous amounts. It can turn them into Even More Insecure Young Women. It can exploit them all the way to their graves.

Of course, you could argue that all companies have amazingly strong inner moral compasses and we should just trust them.

Companies that offer Customers Everything Free are sometimes selling Customer Information

The companies running these Supermarkets need as much information as possible on users and as much uniquely identifiable information as possible.

Who supplies all this information? Who is going to sell user data about insecurities and health concerns and other target points?

The companies who are offering lots of stuff for free. All the ‘Everything is Free on the Internet’ companies don’t have special fields of trees growing money. Given that we have companies that haven’t ever charged for any of their products (Twitter, Facebook, etc.) you have to wonder – How are they still running? Do they have some plan to make money? Do they make money in ways we don’t understand?

It’s far more dangerous when you don’t know how a company makes money from you as a customer. If you pay $3 for a loaf of bread you know the costs for making that loaf of bread are covered. If you pay nothing for a service you get on the Internet – the cost to deliver that service to you has to come from somewhere. And it might be a lot worse than you imagine.

Companies that Sell Products to Customers

Let’s take something like the Kindle or the iPad or Windows software.

These are transactions where a product is being sold to customers. Customers are not the finished product – they are purchasers of the finished product.

Here are a few advantages of this approach -

1. Customers know exactly what they are paying.
2. The initial purchase and the subsequent purchases (content) are enough to keep the company in the black.
3. There isn’t a treasure-chest of customer information left FOREVER with the ‘free service’ company.
4. There isn’t a temptation to ‘sell customer information that shouldn’t be sold’ and ‘collect customer information that shouldn’t be collected’.
5. There is transparency – we know exactly what each side is offering and getting.

The biggest problem with customers being offered free products for their information is – Customers have no idea of just how much of their information is being taken, and they have no idea of how this information will be used in the future.

Another big problem is that companies that aren’t getting money upfront are often desperate to survive and profit. Desperate companies tend to do desperate, desperate things.

This is a level beyond advertising and subliminal advertising

Most people think they are immune to advertising (even though this isn’t the case). However, this goes way beyond advertising. It goes to the level where even the most complacent customers will (thankfully) start getting worried.

An advertiser doesn’t know what physical places you’ve visited in the last 15 days, what sites you’ve visited in the last 10 months, what your pay is (approximately), what your physical ailments are, what you concerns are, what you hope for.

But now companies know all of this and they are selling it to anyone who will pay.

Customers (and that includes me) like to think we’re getting something for free and advertising can’t affect us - it’s a steal. We have fooled these idiot companies. We can have our cake and eat it too. However, the truth is that it has turned into the equivalent of a contest where one side knows nothing about the other side (customers know very little about the Customer Information Supermarkets, most don’t even know they exist) while the companies know almost everything - including what we are most likely to do in any given situation.

We don’t know what the end result will be. Perhaps it will be the same as advertising – where it gets less and less effective as users get smarter.

Perhaps it won’t.

The danger is that companies have enough information to do some real damage. There is very real power in knowing how many kids you have, what ailments they have, what you hope for them, and similar things. There is very real power in knowing what diseases and fears you have.

Which creates a very real risk that some day a company will figure out a way to very effectively exploit all this information. That it will take things from the realm of free will to the Matrix.

How is this relevant to Books?

It’s not. The only possible relevance is that a company might decide it can get enough valuable information from our reading habits to make it worthwhile to offer us free books (in return for this information).

And we will probably have the same reaction that most people have to invasive companies offering free products now -

They can’t trick us. We will just get the free books and give them all our information. There’s nothing they can do with it. We are the special ones and even our darkest secrets and fears and hopes and dreams can’t be used against us.

We might be right or we might be wrong. We are, however, certainly stacking up the odds against ourselves.

The great hope was that when we got rid of most of the technological challenges to providing a good life for the majority of people we would switch over to letting everyone have Life, Liberty and the Pursuit of Happiness. What we are seeing is a movement towards something else entirely – A movement to entrap and shrink-wrap people and turn them into products sold on the shelves of the Supermarkets of Customer Information.