Amazon selling iPad, Kindle for kids, more

Amazon selling iPad … that can’t be right

A few weeks after the Kindle 3 and Amazon came out with an ad slamming the iPad there’s news that Amazon has started selling the iPad directly from its website. Amazon seems out of stock now but lots of reliable sources like Fortune wrote about it so it must have had some stock.

All that can be found at the moment are iPads from 3rd party stores selling at a $50 to $100 premium. Perhaps Apple gave only a little bit of stock – It’s what they seem to have done with Best Buy. Anything that helps create scarcity.

Amazon selling iPads is remarkable – It’s Amazon having its cake and eating it too.

Let’s make fun of the iPad, let’s sell it and take a cut, … What’s next?

Free Kindle Book – Yet Again

Next, a free kindle book since it’s part of my blogger contract to mention one in every post (just kidding, seems more like the ‘free book’ albatross) –

  1. Remember Why You Play by David Thomas. Rated 5 stars on 3 reviews.

    If you enjoyed Friday Night Lights, this book is a must-read. Remember Why You Play documents the lives, struggles, and triumphs of the players and coaches of Faith Christian School in Grapevine, Texas.

    Sports columnist and author David Thomas followed the team for a full season, recording a story that will inspire readers to understand that relationships are more important than winning.

    One of the key events was a game that Faith Christian played against the Gainesville State Tornadoes, a school for convicted juvenile offenders. The story of this spectacular game is being made into a movie, titled One Heart, with an anticipated release in November 2010.

There’s so much in the write-up – Faith Christian taking on a school for convicted juvenile offenders, a Friday Night Lights reference, a movie to be released in a month. All we need is Aaron Sorkin to grant everyone the wit of Jeeves and Wooster and David Fincher to glam it up and mark it out as a social commentary on the post-Social Network generation.

Is Kindle 3 a good device for 9 to 11 year olds?

A very good question being asked at the official kindle forums. Let’s consider the Kindle WiFi’s suitability for children.

The pros –

  1.  It’s light and compact and even young kids’ hands won’t get tired from holding the Kindle WiFi
  2.  It’s cheap at $139 so even if they break it it’s not a big loss.
  3. Lots of free public domain books. All the classics for free and most of their assigned reading from school.
  4. Lots of free book offers.
  5. They’ll grow smarter. Instead of playing video games or farming in Farmville they’ll be reading books – hopefully good ones.
  6. With the Kindle App Store beginning to open up they have some basic games too.
  7. The built-in dictionary and the text to speech feature both add a lot of value.

These add on to all the other benefits – books in 60 seconds, carry all your books with you, a serviceable browser, no heavy back-pack. 

Something worth adding here is that the combination of a few factors makes the Kindle especially suited for kids who struggle with reading – ability to change the font size, option to change line spacing and words per line, text to speech, all the classics for free, a focus on reading. For kids who get distracted or who have reading problems the Kindle is a pretty good option.

Consider this comment from Joan –

My 12 year old daughter has my old Kindle 1, and because she has an eye sight problem, this is ideal for her.

She has it on the largest font size. She has been reading the Sisters Grimm books and loves them. She has never shown an interest in reading before this! This is such a good thing!

There are probably lots of kids who have ‘never shown an interest in reading’ because they had genuine reading struggles that weren’t being addressed.

The cons –

  1. They’ll probably be lost when their peers are talking about StarCraft and Farmville and Justin Beiber and Gossip Girl and other things young kids these days entertain themselves with.
  2. It is quite breakable and they might also lose it.
  3. No parental controls.
  4. The browser can also lead to bad sites.
  5. No password protection for purchases so you can’t exactly regulate buying unless you de-register the Kindle or remove your credit card information.
  6. The selection of children’s books is, to the best of my knowledge, a bit limited.
  7. Will the no-frills Kindle hold their attention as well as a mind-sapping flashy game console?
  8. Not many textbooks are available on the Kindle. English reading assignments – Yes. Textbooks – No.

Add on the other negatives – no library books so one source of free books is gone, eInk is still in its initial stages, new books are expensive.

What are parents saying about their kids’ experiences with the Kindle?

Mostly positive things and surprisingly positive things.

Lots of comments at this kindle forum thread on kindle for kids –

My nine year old daughter “inherited” my K2i and LOVES IT! She’s been extremely careful with it, and reads every night. ; ) HTH

I have a 10 year old boy who likes the K2. He likes it better than books. He likes to read and reads at about his grade level. We don’t find a lot of content at his level that is inexpensive, though. $9.99 a pop adds up. Some of the old classics are free or $0.99.

My 9 yr old daughter inherited my K1 and loves it. She has been an avid
reader since age 4. She is very responsible and we enjoy reading our Kindles together. My 7 yr old daughter is now asking for her own.

I got my then 12 yo daughter a kindle 1 2 christmas’s ago…and haven’t regretted for a second! She reads constantly, …

In some ways it’s a good way to teach kids to be responsible –

My K2 went to my son (almost 10) and daughter (7). My daughter uses it more than my son and she takes super good care of it.

I  have read other posts about children and Kindles and it seems that if the child is careful with it that it can work well.

It’s surprising to see so many replies (there are 56 comments). Hadn’t realized so many people are giving their kids Kindles and are seeing good results.

Follett’s Fall of Giants falls to a 2 star review rating

Regardless of whether you think it’s right or wrong you have to be impressed by this –

Check out the customer reviews for Follett’s latest “Fall of Giants.” Kindle pricing seems to have struck a collective nerve

2 star rating. 136 1 star reviews.

Plus you have to acknowledge that it is probably having an effect –

Were I to be browsing, looking for books, I would have passed this book by because it has a 2 star rating.

A few people are arguing that it’s still in the Kindle Store Top 10. Well, almost every big author release hits the Top 10 when it comes out and there are lots of die-hard fans that will buy it at $19.99. However, there are lots of people who will not buy it at $19.99 and lots of people who will not buy it because of the 2 star review rating.

Plus those reviews NEVER go away. 1 year from now people will just assume the book is terrible.

Do we really expect people to look at 1 star reviews and figure out the bad reviews are due to Kindle pricing?

Why all the 1 star reviews?

Because the ebook is priced at $19.99. Not $12.99 or $14.99 or even $17.99. It’s a gigantic $19.99.

The hardcover (all 1,000 pages of it) is at $19.39. 

Pricing the ebook at $19.99, higher than the giant hardcover version, is just pushing things too far. At some point it changes from making money to abusing your readers and rubbing salt into their wounds.

To make things worse the price is lower in other countries –

Yes, it’s only $9.99 plus $2 Whispernet charge for Australian customers too. I wonder why the US publisher priced it so high?

So Canada and Australia pay $9.99 but US readers are expected to pay $19.99.

What if Publishers are right about eBook prices?

In the last few days have run into a lot of books priced at $1 and $3 that are worth $10 in my eyes.

It’s quite puzzling as we seem to be diverging to two extremes in Publishing – The independent authors and self-publishing established authors who sell their books too cheap and Publishers who price their books too high.

Independent authors are giddy at the prospect of getting to readers and price their books at the lowest price possible i.e. $1. Established authors are happy to sell their back-list at $2.99 and earn $2 per book. Established authors are also willing to offer up one book for free to entice/hook readers.

At the other end we have Publishers trying to promote $12.99 and $14.99 for new releases and claiming $9.99 isn’t sustainable. It’s in fashion to mock Publishers and by doing things like wildly varying price and availability of a book across different countries they certainly earn themselves a lot of the mockery.

However, they do know far more about publishing books than anyone else – What if they are right about ebook prices?

What if $9.99 really isn’t sustainable?

As a reader it’s easy for me to empathize with the perspective that moving from physical books to ebooks creates a lot of savings and books should therefore be $9.99 instead of $14.99 and higher (the prices we see with hardcover books).

This perspective misses out on two things – the financing and risk taking aspect of Publishing, all the different experts (editors, copyeditors, illustrators, agents, etc.) that work together to polish a book.

In pretty much any discipline the difference between 75/100 and 95/100 is not 20 extra units of effort and time and money. It usually takes double to triple the amount of work to go from decent to exceptional. So there’s one aspect that we definitely can’t get rid of – the endless polishing of a book to make it excellent.

What if the risk aspect can never be removed?

The risk aspect of Publishing includes two huge costs related to failed books – the physical cost of shipping and the cost of returns, the effort put into polishing a book and making sure it has a high chance of success (you have to do this because you never know which book is going to be the big one).

With ebooks there’s no guarantee the second aspect will go away. We might be able to find ways (crowd intelligence, algorithms, evolutionary algorithms, analyzing successful authors) to identify successes accurately or it might be a completely intractable problem.

eBooks eliminate the cost of returns and let us manufacture exactly as many copies as there is demand for. However, they don’t help us figure out which books will have demand and they definitely don’t help us identify the most promising authors. You could argue the latter is more of an art than a science and that it involves a huge amount of luck.

We also wouldn’t have any way of funding promising authors – We’d reduce every author to the same level where the author has to do everything by herself/himself. An author would have to first find success and only then would she/he be able to focus 100% on writing.

Perhaps after ebooks hit 40% of the market $9.99 ebooks just won’t work

Now that we’ve established that it’s not a given that the ‘identifying the successes’ part and the ‘funding the authors’ part is magically solved by ebooks we have to ask ourselves –

Could $9.99 ebooks cover the financial risk and the cost of funding authors?

It’s not a given. You have to make assumptions – that ebooks will sell more numbers than physical books, that authors will be able to get by on less money, that books will be able to succeed and sell with less polish. All of those sound like wishful thinking.

Whatever we might think of ebooks there’s little doubt that per book sold they bring in less money than hardcovers. Which means that if Publishers are right about there being certain minimum sustainable book prices then $9.99 ebooks might not be enough once ebooks are at 40% or more market share.

If $9.99 is a sustainable price we still aren’t home safe – $9.99 is not guaranteed to survive.

What if $9.99 is sustainable but unstable?

Look at the Kindle Store – Indie authors at $1, smaller Publishers and mid-list authors publishing at $3, smaller Publishers and back list books between $3 and $7, lots of free offers, lots of free public domain books.

There are far more books below $9.99 than there are at $9.99.

The minute we set $9.99 as the price for new books we do two things – We guarantee that the average book sale price goes down, we guarantee that $9.99 will become the new $12.99 and be universally reviled.

If Pat Conroy is coming in at $7.99 and Andrew Wylie’s treasure chest of books are at $9.99 each then how dare an author assume her first book is worth $9.99. For that matter how could any except the top 0.1% of authors try for $9.99. The remaining 99.9% of authors should sell for $4.99 and $5.99 since they aren’t as good (or as famous or as well recognized).

$9.99 won’t last for long if it’s established – There’s always downward pressure

The minute you establish $9.99 as the entry point readers figure out reasons it should be less.

The minute you establish $9.99 some authors find excuses to pander to readers’ perceptions. Other authors feel they can gain a competitive advantage by pricing below $9.99 – Theirs will be the only new book at $4.99 and they’ll get money and a spot in the bestsellers charts and more reviews and more favorable reviews.

It’s a very painful truth that it’s in the individual interest of every author to undermine established book prices – even if by doing so he/she destroys whatever sustainable ebook price we’ve reached.

The Tragedy of the Commons

Authors will find excuses and rationalizations to lower prices. When that happens other authors will find ways to justify even lower prices.

Yet other authors will start claiming books should be free. They’ll do this to curry favor with the masses and yet they’ll do it in a way that makes it seem the noble and right thing to do. Because what author in his right mind would say –

You’re a bunch of greedy pigs and you want something that takes money and blood and sweat and tears to make for free. At the same time you don’t want to feel guilty about it. So let me conjure up a justification that lets you steal and still feel good about it.

So the smartest (and simultaneously dumbest) authors will start claiming information wants to be free and that readers are bestowing the pleasure of being read upon authors. These authors will out-compete everyone else. They might even, for a while, profit since readers will be so glad to be freed of the guilt they feel deep inside.

It won’t last though. If you train people your work is worthless they’ll reward you at first for your generosity and benevolence and then stop paying and wonder why the vastness of your ideals doesn’t fill your distended belly.

Surely, great Guru of Free, the happiness of being read is putting food on the table. Spiritual food that sustains your soul for the body is but a vessel and can do without nourishment.

Authors will outwit each other until we get the smartest authors who will outwit not only all the other authors but also themselves.

Training users to not value its product is how nearly every Internet company manages to kill its profitability – it convinces its users that they don’t have to pay in any way other than by using its product.

That’s exactly what authors are in the process of doing.

Is there anything that could stop the race to the bottom? 

We are in a pretty bad situation –

  1. We’re not sure $9.99 is a sustainable price for ebooks. Put aside your distaste for Publishers and your natural inclination (a very justified one) to think that they’re trying to steal from you – We really don’t know if $9.99 is a sustainable price.   
  2. It’s pretty evident that $9.99 isn’t going to last for long. If the best indie authors are pricing their ebooks at $1 and some of the best authors are placing their back list books at $2.99 then new books can’t keep coming out at $9.99.
  3. Not only is $9.99 not a floor for new book prices it’s quite likely there is no floor. Authors are always competing with other authors and now that price is fully flexible it will go to zero. We can pretend all we like that it’s a brotherhood and it still doesn’t change the fact that every author is competing for the same readers and will keep undercutting other authors.

We suddenly go from a pitched battle for fairness –

  • The Fight for $9.99 and fair prices and justice for all.

To the completely opposite concern –

  • Avoiding the race to the bottom and establishing some viable range of prices.

In typical Amazon fashion the Kindle Team is already trying out a solution.

Could Amazon’s ‘$2.99 to $9.99 prices for a 70% share’ gambit work?

Actually, it has zero chance of working.

We see it already with independent authors who refuse to budge from $1. Instead of creating ‘indie books at $2.99 and backlist books at $4.99 and new releases at $9.99’ all it’s done is set the stage for ‘Indie Books at $1, most other books at $2.99, some books struggling to maintain $9.99’.

Getting $2 per book is hugely appealing to mid-list authors and other established authors. It’s probably more than they get from paperbacks. However, these are authors who were successful. All the money spent to make them successful and all the money spent on failures is not accounted. The author seeing $2 per book doesn’t realize that this figure might be enough for him but is guaranteed to not be enough to finance taking risks on future authors.

Is there any way to stop the race to the bottom?

Unfortunately not.

It’s a free market and the brutal competition between authors in itself would have been enough to take prices to zero. We also get some other very interesting factors that accelerate the race to zero –

  1. Authors’ desire to have their books read is often far stronger than readers’ desire to read books. Which means lots and lots of authors will gladly share their books for free.
  2. eReader makers will eventually use free books as a ruse. If they can sell eReaders what do they care about the long term?
  3. A few companies adept at destroying profits are entering the market.
  4. Some of the players are in dire financial straits and are likely to encourage unsustainable scenarios.
  5. Readers are in control and readers are as capable of self-delusion as Publishers. Power definitely corrupts – you see it when readers who paid $15 for hardcovers are turning around and asking for $1 and $2 ebooks.

There is absolutely no solution that comes to mind for stopping the the race to the bottom. The question will keep changing –

Is $9.99 sustainable?

Is $5.99 sustainable? Can we stall prices at $5.99?

Is $2.99 sustainable? Can we stop here?

Is $0 sustainable? Can we sell t-shirts with authors’ faces on it? Can we have a bail-out? Can we use tax payer money to fund authors?

Users have shown with the Internet and with news and with piracy and in numerous ways that when they get total freedom and total power they abuse it just as much as Publishers and Movie Companies and Music Labels do. The real question everyone should be asking is –

Why would books be different?

When faced with a choice between paying $1 or looking to the future and paying a sustainable price like $9.99 what will readers choose? What will readers choose when ruthless companies and desperate companies are trying to gain an edge and selling readers on the idea that $1 really is a sustainable price?

Kindle 3, Kindle WiFi and the $9.99 boycott

The potential impact of the Kindle 3 and Kindle WiFi on the Agency Model isn’t really being discussed.

It’s worth wondering –

Will Kindle 3, Kindle WiFi owners cause a strengthening of the $9.99 boycott? Could they cause the downfall of the Agency Model?

Are people paying $139 for Kindle WiFi and $189 for Kindle 3 going to pay $14.99 for books?

Probably Not.

If you’ve waited for the price to get to $139 to buy a Kindle WiFi you’re likely to be willing to wait for an ebook to drop below $10. That or pirate the book or get it from the library.

New Kindle owners will probably stick to buying books that are reasonably priced.

$14.99 and $12.99 will frustrate new Kindle 3 owners and strengthen the $9.99 boycott

We’re now getting a lot of people who simply couldn’t afford to pay $259 for an eReader or didn’t think an eReader was worth that much. In either case they are likely to feel that an ebook isn’t worth $14.99 or even $12.99.

Such ridiculous ebook prices (especially since hardcovers are just a few dollars more and paperbacks are cheaper) will cause a lot of anguish and force new Kindle owners to choose from amongst the few available options –

  1. Pirate eBooks. Most people aren’t particularly inclined to do this – It’s too much of a bother and it isn’t exactly ethical.  
  2. Stick to books priced below $9.99.  
  3. Give in once in a while if you really want a book.
  4. Wait for the book price to drop.
  5. Get it from a library or buy it used for a few dollars.  

The Kindle Store might have 510,000 out of 630,000 books priced at $9.99 or below – However, most new releases are priced at $14.99 and $12.99. It forces new Kindle 3, Kindle WiFi owners to delay gratification and a lot will probably join the $9.99 boycott. 

Where do we currently stand with the $9.99 boycott?

We are in an interesting stalemate where the Agency Model has failed to establish $14.99 but has managed to get $12.99 working –

  1. In the top 25 – 8 books priced at $12.99. Rest below or at $9.99.
  2. In the top 50 – 13 books priced at $12.99, 1 at $11.99, and 1 at $10.99. Rest below or at $9.99.
  3. In the top 100 – 18 books priced at $12.99, 1 at $13.65, 1 at $11.99, and 2 at $10.99. Rest below or at $9.99.                              

22 books out of the Top 100 priced above $9.99 might not seem very bad. However, before the Agency Model the number used to be 4 to 8. 

On the other hand, 22 is an improvement from about a month back when there were 28 books at $12.99, 4 books at $14.99, and several at $11.99 in the Top 100.

$12.99 is the current new book price-point and new Kindle owners will hate it

What the last section does show is that the Agency Model has managed to establish a new $12.99 price point – most new ebooks arrive at this $12.99 price.

The new wave of Kindle owners will attack this as they expected $9.99. They didn’t get the benefit of the ‘Try for $14.99, Settle for $12.99’ trickery Publishers played on all of us and will fight hard against $12.99.

There’s little doubt new Kindle owners will strongly resist the $12.99 and $14.99 prices of the Agency Model.

Will their resistance make a difference?

Can the Agency Model withstand Kindle 3, Kindle WiFi owners?

We do know a few things from the first Publishers vs Kindle Owners battle –

  1. $9.99 books sell better than $12.99 and $14.99 books.
  2. $14.99 failed as an experiment.
  3. Kindle owners (the ones who bought Kindles when they were $399, $299, and $259) fought hard against the Agency Model.
  4. Lots of Kindle owners participated in the $9.99 boycott. Lots of them still do.
  5. There’s a general perception that $9.99 is a fair price for new ebooks.

With new Kindle 3, Kindle WiFi owners we are going to see the same things and a few additional factors –

  1. New Kindle owners are probably more price-sensitive. They are going to come in expecting $9.99 prices.
  2. They are likelier to boycott prices above $9.99. They are likelier to buy books priced below $9.99.
  3. New Kindle 3, Kindle WiFi owners are going to help increase Kindle ebook sales. We may hit 15% to 20% market share by end of the year.
  4. They will strengthen the ranks of current Kindle owners – most of whom have resisted the Agency Model.
  5. Their arrival will revitalize current Kindle owners. Suddenly we all feel we have more say and Publishers seem weaker.

Publishers get a new group of Kindle owners who come in with the exact opposite mind-set of what Publishers would like. New Kindle owners are probably going to fight for $9.99 far more vigorously than current Kindle owners do.

As the number of Kindle owners increases Publishers can’t afford to play games

While ebooks made up 5% of the market Publishers could afford to price ebooks at $14.99 and $12.99 and let rivals like smaller publishers and independent authors get more ebook sales. As the number of Kindle and Nook owners goes up and ebooks’ share of the market increases Publishers can no longer afford to lose ebook sales.

It’s all fun and games to fight against a small group of customers – overprice your books, flex your muscles, dare customers to boycott higher prices. As the number of eReader owners increases and the market share of ebooks goes up to 20% Publishers will have to get serious.

Would they be willing to lose 20% of their sales? Perhaps. 

However, as the market share of ebooks increases it becomes tougher and tougher to mistreat/exploit Kindle and Nook owners.

Perhaps the best way to kill the Agency Model is to simply sit back and watch the new Kindle 3 and Kindle WiFi owners join the $9.99 boycott. New kindle owners who are even less willing to pay prices over $9.99 than we are. New Kindle owners who will probably strengthen the $9.99 boycott enough to kill off the Agency Model.