Are we at the inflection point of maximum vulnerability for eBooks?

In some ways the current stretch seems like the exact opposite of end 2009.

End 2009 – eReader sales were assumed to be less than a million, eBook availability was limited, eReader prices were pretty high (around $299), eBook market share was only around 3% to 4%. For all practical purposes, there was absolutely no threat from eReaders and eBooks.

Now (Early 2011) – eReader sales are supposed to be over 10 million, eBook availability has more than doubled in the last 12-16 months, eReader prices are down to $139, eBook market share is 10% or higher. There seems to be little doubt that eReaders and eBooks are here to stay.

Just as End 2009 seemed dreary and harmless to Publishers, the current period seems to be bright and shiny and full of promise for eReaders and eBooks.

However, we only have to look back to what happened in end 2009 to see how dangerous complacency can be.

The End of 2009 Inflection Point

A few things happened at the end of 2009 that dramatically changed things -

  1. B&N announced the Nook. Nook’s feature-list looked like a prioritized list of Kindle customer pain points with PDF support, library book support, and a lot more. It even came in at a lower price.
  2. Amazon matched the price and some of the features.
  3. Amazon ended up selling perhaps a million Kindles in the holiday 2009 stretch. B&N sold perhaps half a million Nooks.

That holiday season was the foundation for everything that has happened since. The shift was so huge that by early 2010 Publishers were jolted out of their complacency and introduced the Agency Model. They even partnered up with Apple to weaken eReaders.

Basically, Publishers’ complacency through most of 2009 came back to haunt them.

End 2009 became one of the most important inflection points in the rise of eBooks and eReaders.

Are we at a 2011 Publisher-created Inflection Point?

There are three interesting things happening -

  1. The Big 6 Publishers are finally putting up a united front. All of them are now on The Agency Model – which becomes significant since they do have access to the majority of the literary talent.
  2. By using $15 and $13, Publishers have, in effect, bifurcated readers into ‘people who can’t wait/people who don’t mind spending more’ and ‘people who boycott higher prices’. They might not have shifted everyone to $13, but they’ve shifted enough people to be able to stick with the Agency Model for the short term.
  3. eReader and eBook companies are creating problems for each other. Apple is attacking eReader apps through its 30% tax, Publishers are forming partnerships with smaller retailers like Diesel Books and Scribd, Google is throwing its hat into the ring. Each new competitor is giving Publishers an opportunity to create one more Divide and Conquer crack. Each new competitor is confusing readers.

It’s an interesting theme – Publishers are uniting and they’re helping create divisions amongst everyone else.

Will eBooks be able to make it across the big divide?

Now, the Big 6 Publishers are all on the Agency Model. That means 60% of the ebooks sold, and perhaps a similar percentage of the best titles, will all be $13 at launch. It also means they will stay at $13 for 3 to 9 months after release.

A lot of people were buying eReaders because of cheap $9.99 books. If eBooks are almost as expensive as hardcovers the main reason to buy a Kindle or a Nook Color is gone?

Most of the advantages of the Kindle and the Nook Color aren’t obvious until you start using them. 60 second downloads doesn’t fully register until you actually get a book you want within a minute. No one’s been able to explain the benefits of eInk in language users understand – You have to read on it to get it. The list goes on.

For the rest of 2011, and perhaps for all of 2012, potential eReader owners will have to decide between -

  1. Buying an eReader and getting Indie titles for $1 and published novels for $13.
  2. Sticking with physical books and getting hardcovers for $14 and $15.

60% to 70% of the time the books people will want, will hear about, and will be waiting for – will be the $13 ebooks. Those can’t really compete effectively with $14 hardcovers.

Will indie authors be able to make up the difference? Will the FTC or some European Government strike down the Agency Model? Will published authors start leaving Publishers?

Something has to happen for eReaders and eBooks to regain their huge value for money advantage. The Agency Model has completely destroyed it.

We tend to underestimate inertia

The 10% of readers who have tasted freedom, who own eReaders, and who know all about lower prices and indie authors are not going to quit ebooks.

However, what about the 90% who don’t realize all the benefits?

Any reader who is new to ebooks needs a huge impetus to push her past her inertia. It’s only then that she makes the switch to eBooks. That impetus has mostly been provided by low-priced books. The belief/reality that you would save a lot on books was a big reason so many people jumped fearlessly into eReaders and eBooks.

If eBooks are $13 at launch, the ‘cheaper books’ motivator is gone.

eReader companies will have to find some huge benefit that replaces the value/motivation ‘books at $9.99 or less’ used to provide. It can’t be something you only understand after owning an eReader. It has to be something potential eReader owners instantly see the value of.

It’s hard to imagine what the answer could be – Perhaps a free collection of back list titles and public domain titles. Perhaps some completely new feature. Perhaps a $79 eReader. Perhaps a $10 per month all-you-can-read subscription plan.

We are at another crucial inflection point – Random House joining the Agency Model has triggered it. How eReader companies and readers react will determine whether this is the inflection point that will take eBooks to 50% or whether this is the inflection point that stalls eBooks at 20% of the market.

$55,500 for indie author in 31 days – The 2nd tipping point

An indie author sold over 100,000 copies of her books in the last 31 days – By my calculation she earned at least $55,500.

It’s the signal everyone’s been waiting for. Now there can be little doubt that we are in the midst of a second gigantic tipping point. A tipping point that impacts indie authors, published authors, publishers, and publishing. Eventually, it’ll impact us readers too.

It’s the first time indie authors are earning so much that going with a Publisher becomes a financially unsound decision.

The second major tipping point

Let’s start by looking back.

Looking Back at the First Major Tipping Point

The first major tipping point was the end of 2009 – the great holiday sales for Kindle and Nook meant that eReaders and eBooks got enough traction to kick off a glorious 2010. 

In 2010 we had eBooks grow to 10% market share and eReaders sell millions and millions of units. In 2009 we were still under the impression that ebooks constituted just 2 to 3% of the market. Reaching 10% market share for ebooks in 2010 definitely suggests that the last few months of 2009 were a tipping point for ebooks.

Given that every eReader company is claiming much better eReader sales in 2010 than in 2009, you have to wonder – What tipping points are we going through right now?

Well, courtesy TeleRead, we find out about one of these tipping points – The rise of indie authors. We have 25 indie authors who are sharing their ebook sales figures – figures that clearly show we are at a tipping point for indie authors and for self-publishing.

The superstar indie authors

Please note that these are sales for just the last 31 days. They do include the Shopping Season bump, and the new Kindle owner bump – there might not be another stretch this good until Christmas 2011.

Please also note that most of these authors sell 1 or more of their books at a price of $1, and the rest at $3. We will assume that 70% to 85% of their sales were at $1, and the remaining were at $3. There are exceptions – authors who sell all their books at $1, and authors who sell all their books at $3.

Here are the indie authors who have triggered a new Tipping Point -

  1. Amanda Hocking – Over 100,000 books sold in the last 31 days. Assuming 85% of these sales are for the $1 books in her series, and that the remaining 15% are for the $3 books in her series, we get $55,500 in earnings. Note: This is the minimum – Her earnings might be a lot more than $55,500.
  2. Stephen Leather – This author spams the kindle forum so much that it pains me to even mention him. However, he claims to have sold over 30,000 copies.
  3. H. P. Mallory – 20,000 sales. Again, the first book is just $1 and is probably the one accounting for 70% of sales. That suggests $16,200 in earnings.
  4. Five authors who sold over 10,000 copies – Michael R. Sullivan, L. J. Sellers, Victorine Lieske, J.A. Konrath, Scott Nicholson. Here, we have J. A. Konrath, who’s selling his books at $3, and probably earned between $20,000 and $35,000. Scott Nicholson is selling all his books at $1, which suggests between $3,000 and $5,000 in earnings.
  5. Six authors who sold over 5,000 copies – David Dalglish, Terri Reid, Tina Folsom, Ellen Fisher, Imogen Rose, Bella Andre. These authors probably earned in the $1,500 to $15,000 range. The large range is because a $1 book earns just 30 cents per copy sold, whereas a $3 book earns $2 per copy sold. Additionally, over 5,000 copies could mean anything between 5,001 and 9,999 – We’re assuming 7,500 as the upper limit.
  6. A further 3 authors sold over 4,000 copies.
  7. 8 authors sold over 2,500 copies.

Those are stunning numbers. We are truly in the midst of the second major tipping point.

4 Figures that will set the Publishing World on Fire

Consider these 4 figures -

  1. $55,500 or more in earnings for Amanda Hocking in the last 31 days. This is the figure that’s going to get mid-list authors and published authors to go indie.
  2. 100,000 books sold in the last 31 days. Amanda Hocking has single-handedly proven the sustainability of self-publishing. If a hundred thousand Kindle owners were willing to take a chance on one indie author, it probably means that hundreds of thousands of Kindle owners will be willing to take a chance on indie authors.
  3. 5 or more authors who earned over $15,000 each in the last 31 days. This is the figure that’s going to show indie authors it’s possible to make a good living selling books yourself. One Author earning a ton is great – However, when you see 5 authors doing it, then it’s obvious that you have a shot too.
  4. There were 25 indie authors who sold over 2,500 copies of their books in the last 31 days. For a lot of people selling thousands of copies of their books is motivation enough.

The walls have been broken down – main-stream acceptance and financial success are now both attainable goals for indie authors.

There isn’t just one indie author who earned over $15,000 last month – There were at least 5.

There isn’t just one indie author who sold over 2,500 books last month – There were at least 25.

It’s remarkable – And these are just the indie authors who shared their figures, and who we know about. There are probably quite a few others.

Example: Nancy C. Johnson, D. B. Henson, Richard Phillips, and Cort Malone are all indie authors who were in the Top 100 in December 2010. That’s 4 more authors who might have earned $10,000 or more in December.

Who in their right mind would choose Publishers?

Amanda Hocking, for the month of December 2010, had her books at sales ranks 23, 54, and 75. That was enough to earn her $55,500 or more.

Perhaps you only get sales rank #33 and have just 1 book. You could still earn $10,000 or $15,000 in a month.

Perhaps you get a higher sales rank, say #11, for a busy month, and have more books. Then you could earn $100,000 or more in a month.

All of this is happening at a time when there are just 10 million eReaders, and eBooks have just 10% market penetration. When ebooks hit 50% market share in 2012, then there might be multiple authors taking home $500,000 each in the month of December alone. There might be indie authors who make over a million in earnings in 2010.

There are 100 slots in the Top 100. Publishers are too greedy to compete on price. They are too lazy to improvise. The stage is set for indie authors to take over.

What would you rather do – Spend 3 years trying to get a book deal, or self-publish your books and make $250,000 in the month of December 2011?

Will Kindle 3 end the eReader wars?

The one question the Kindle 3 has made me ask myself more than any other (well, besides Graphite or White?) is – Does Kindle 3 end the eReader wars?

The easy way to answer that question is to hide behind ‘Kindle 3 will sell millions’. However, lots of eReader companies are going to sell millions of eReaders before and after the eReader Wars are decided.

The real question is – Which eReader is going to win the eReader wars and end up with an overwhelming (90% market share) or dominant position (70% market share)?   

Kindle 3 is the first eReader (including the $139 Kindle WiFi under the ‘Kindle 3′ umbrella) that threatens to provide a firm answer.

How would we know Kindle 3 has ended the eReader Wars – What’s the criteria?

Let’s say there are two possible criteria for announcing an end to the eReader wars -

  1. A Microsoft Office like dominance with 90% or more of the market. A situation where there isn’t really a viable competitor. 
  2. A Google Search type dominance with 70% or so of the market. A situation where the 2nd and 3rd best companies in the market are not really a threat.

Forget the companies and the market – The 70% to 90% market share and the cemented #1 position are the key criteria.

If Kindle 3 and Kindle WiFi help Amazon get to 70% market share AND cement the Kindle as the #1 eReader then we can safely say the Kindle 3 has ended the eReader wars.

Please note that we are talking about dedicated eReaders. So number of iPhones sold or number of cigarette lighters with LED displays sold doesn’t factor in.

Kindle 3 and the Invisible Competitors – Nook 2, Sony 606, iPad 2

There are bound to be strong reactions to a ‘Kindle 3 as decider’ post.

People who read on the Nook or Sony and people who read on the iPad (no jokes please, we mean the 5% who actually do read) will be aghast. As will a lot of people with an axe to grind (Press) or whose future depends on the death of the Kindle (Publishers, Paper manufacturers).

Well, they have a valid argument – We haven’t seen what Kindle 3 competitors will bring to the table.

We have the iPad 2 which will try another round of ‘LCD (this time with Retina Display) is better than eInk’.  It’ll also keep drumming on ‘the number of people who could possibly read on their device’ as opposed to ‘the number of people who actually read a lot on their device’.

The Nook 2 already has FCC clearance and this time it is Amazon that has made the mistake of announcing its features in advance – though you have to suspect (with the microphone etc.) that Amazon might have kept a few things in reserve. Nook 2 may have the eInk Pearl screen, it might have some new feature that blows us away, and it’s likely to match Kindle 3 in price (even if it bleeds B&N dry).

Sony offers a big threat – An alliance with Google Editions would add the missing range of books and supply some much-needed infrastructure. Sony’s new devices might figure out a way to do touch without sacrificing visibility. Sony has been delivering good devices – It’s the store and eco-system they mess up and perhaps they finally realize it and figure out a solution.

Perhaps the biggest threat is the giant search company and who knows what they might bring to the table.

All these companies face a few big challenges.

Kindle 3 has set a very high bar

There’s little doubt that Amazon had the best store. It also had amazing infrastructure – Free 3G wireless is pretty impressive no matter how you put it.

It was the Kindle that was the weak link. Firstly, the improvements were all incremental. Secondly, the Kindle 2 was 1.5 years old and had old eInk screen technology. Thirdly, Amazon’s avoidance of ePub and lack of openness and lack of library books and lack of WiFi were real disadvantages.

Kindle 3 changes most of that – We’ve gone from a state where the Kindle Store and WhisperNet were letting Kindle edge other eReaders to a Kindle 3 that can stand on its own. In fact, it beats the other eReaders handily (unless ePub or library books are a must-have for you).

As we go through this list of Kindle 3 improvements keep in mind that Nook and Sony Reader will probably match the Kindle 3 on some (perhaps even all) of these improvements -

  1. The eInk Pearl screen is better than any other eReader screen available. The graphite casing adds to the contrast and Amazon has added tweaks to further improve the contrast.  
  2. Kindle 3 is lighter, thinner, and more compact.  
  3. Kindle 3 has double memory and double battery life with wireless off.  
  4. The PDF support has been extended to include search and taking notes and making highlights. You can adjust the contrast and can do incremental panning when zoomed in.
  5. There’s a microphone that’s going to be used for at least 1 killer feature (nothing yet).
  6. There’s a Kindle App Store in the wings and it will almost certainly make a difference.
  7. New Accessible menus combine with the super size fonts to make it very usable by blind and low vision readers.
  8. There’s finally WiFi.
  9. Support for CJK fonts and Cyrillic fonts lets Amazon sell in China, Japan, Russia, and lots of East European countries.

Those are just the big improvements – We also have faster page turns, better button placement, sharper fonts, three font types, auto-disappearing book title bar, a webkit browser, and an article mode in the browser.

Keep in mind that this has arrived 4-6 weeks after a massive Kindle 2.5 upgrade that added PDF pan and zoom, Collections, sharper fonts, super sized fonts, and the ability to share passages on Facebook and Twitter.

Kindle 3 is an eReader which, on its own – without factoring in Kindle Store and Kindle Whispernet, is clearly better than the competition. It’s almost unfair that it gets the backing of the best eBook store and the best eBook/eReader eco-system and infrastructure.

Nook 2, Sony 606, iPad 2 have to beat Kindle 3 by a margin

Here we’re assuming the iPad 2 is going to pretend to be a dedicated reading device which just happens to have a screen optimized for playing games. So we consider it a competitor.

When the Nook 2 and Sony 606 arrive later this month, and when the iPad 2 arrives later this year, it’s not enough for them to match or beat the Kindle 3. They have to beat the Kindle 3 by a wide enough margin that Kindle Store and Kindle WhisperNet and free 3G can’t make up or exceed the difference.

This is perhaps the biggest thing people are going to misunderstand when they get upset about the ‘Will Kindle 3 end the eReader wars?’ question. Kindle 3 just needs to make sure it’s not worse than the competition. The Kindle service/ecosystem (including Kindle Apps on other devices) and Kindle Store will take care of things if there’s a tie between devices or even if another eReader is slightly better.

Which means Nook 2 doesn’t just have to match the 10 to 15 solid improvements the Kindle 3 has made – Nook 2 has to find an additional 5 to 6 improvements and implement them successfully.

It’s the same with the iPad – especially since Kindle 3 has improved on almost every advantage Kindle 2 had over iPad. Kindle 3 is cheaper (well, the WiFi model is), lighter, has battery life of 1 month with wireless off, its more compact, and the eInk screen has amazing contrast. Kindle 3 also cuts down on Kindle disadvantages – there’s double the memory, page turns are faster, there are 3 font types now, PDF support is better, and there’s a WebKit browser. 

Quick Synopsis – Where we stand on our Kindle 3 argument

We’ve established a few things so far (feel free to disagree in the comments) -

  1. Kindle 3 is much better than Kindle 2 and also much better than Nook and Sony Reader.
  2. Kindle 3 has the support of the best ebook store (Kindle Store) and the best eBook/eReader infrastructure (Kindle WhisperNet).
  3. Nook 2 and Sony 606 would have to beat Kindle 3 handily to make up for their comparatively poor ebook stores and for their weaker infrastructure.

We’ve also set 70% or higher market share and a cemented #1 position as the criteria for Kindle 3 to end the eReader wars.

Now, let’s look at why it’ll be exceptionally hard to catch up with the Kindle 3.

Kindle 3 and Amazon’s Kaizen Strategy are hard to beat

Amazon is in the enviable position of having the current best eReader (Kindle 3), best store (Kindle Store), and best infrastructure (Kindle WhisperNet). However, it’s biggest advantages are its kaizen philosophy, its focus on reading, and its deep pockets.

Sony cares only about gadgets. Apple cares only about selling beautiful things to cool people. Apple sells iPads to us strange people despite us wanting to read books – not because they care about books or reading but because they care about iPad sales. Nook is hampered by B&N’s financial struggles.

Amazon is running faster than all of them in the race to develop the best reading solution – Apple could catch it but Apple doesn’t want to run in this race. Sony thinks it’s in the race but it only cares about making a great gadget for reading (it couldn’t care less how, what, or if people read on the gadget). Nook is the only real competitor and unless Google saves it (or buys it) it won’t last (B&N just doesn’t have the resources to compete long-term).  

Amazon has basically done a few key things -

  1. It has focused on reading. The iPad was perhaps the biggest temptation to veer from that path and Kindle 3 shows Amazon has resisted it.  
  2. It has set itself up to invest in the Kindle for a long time.
  3. It has improved relentlessly. Until Kindle 3 we only saw the impact of the Kaizen philosophy in the service and the bookstore and in Kindle Apps. You have to look at the sheer number of improvements in Kindle 3 and realize kaizen is beginning to show up in the device too.

The Kindle 3 is the best current eReader – and still Amazon is improving the device, store, and infrastructure relentlessly.

Not only do Nook and Sony Reader have to catch up to the Kindle 3 they have to do it given that Amazon is improving faster than they are. It’s a race where the runner in front of you suddenly reveals bionic legs and starts accelerating.

With eReaders the inflection point is going to become apparent like it did with ebooks – 6 months after it has occurred. We’ll look back and realize the inflection point has long since passed and will try to piece together exactly what happened.

Well, the Kindle 3 happened.

The only question left is – Is it an inflection point only for the survival of eReaders OR Does it also cement the Kindle 3 as the winner of the eReader wars?

Amazon hints at ebook inflection point, continues to confuse on Kindle sales

Amazon announced some very impressive numbers on Kindle book sales and some predictably vague details on Kindle sales. It’s hard not to get the feeling that it really, really doesn’t want to give out any details on Kindle hardware sales and at the same time wants to put an end to the ‘iPad has killed the Kindle’ nonsense spread by people who don’t really read.

Not sure why Amazon wouldn’t wait till its Earnings Release on Thursday to talk about Kindle and Kindle Book sales figures.

Kindle Sales Growth Rate is Accelerating, Kindle selling more every month

It’s like a chart of Kindle growth rates with nothing on the Y axis. We know sales are improving but nothing beyond that.

Amazon still coy and vague about Kindle Sales figures

While everyone is oohing and aahing, and to be fair there is a lot worth marvelling at in today’s Amazon Kindle news release, it’s hard not to notice that Amazon continues to be vague about exactly how well the Kindle has been selling. For example, we now have a very vague idea that Kindle sales are increasing -

Kindle sales increased each month in the second quarter, the same period that Apple began selling the iPad, 

… the growth rate tripled after Amazon lowered the price of the Kindle from $259 to $189 in late June …

Some news sites are already tripping over the ‘growth rate tripled’ part and writing that Kindle sales tripled. Growth rate tripled could mean absolutely anything – Perhaps it went from 100% to 300%, perhaps it went from 10% to 30%.

Here are Mr. Bezos’ exact words -

Today, Amazon.com announced that Kindle device unit sales accelerated each month in the second quarter–both on a sequential month-over-month basis and on a year-over-year basis.

“We’ve reached a tipping point with the new price of Kindle–the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189,” said Jeff Bezos, Founder and CEO of Amazon.com.

That acceleration each month is easily explained by the release of the Kindle 2.5 upgrade, a price cut from $259 to $189 on the Kindle 2, the release of a new $379 Kindle DX, and the availability of numerous refurbished Kindles at really cheap prices. The acceleration in sales serves only to prove that the iPad hasn’t killed the Kindle (and probably not killed other eReaders either).

Beyond that it only says that Kindle sales have increased – The ‘tripled in growth rate’ part is rather vague and it could mean absolutely anything.

The fact that sales are more than they were last year isn’t even worth mentioning – last year the eReader market was just beginning to explode, the Kindle was at $299, the Kindle DX wasn’t out until June, and there were no $109 and $139 refurbished Kindles.

Amazon’s simple message about the Kindle

Basically, Amazon is sending a rather simple message -

The Kindle is alive and kicking though we won’t tell you how hard.

We did better than last year – which should be a given.

We did better each month – which should also be a given.

The growth rate tripled – This way we can indicate things are going well without revealing any figures at all.

The iPad didn’t kill us. The Nook price-cut didn’t slow us down.

In typical Amazon Kindle press release style they’re doing this without mentioning exactly how many Kindles have been sold.

Kindle Book Sales knock it out of the ballpark

Amazon are much more transparent when it comes to Kindle book sales and prove beyond a doubt that the ebook inflection point is well behind us and might have passed us as far back as December 2009.

  1. Kindle books are outselling hardcovers on Amazon.com. This excludes free Kindle book downloads (the remaining numbers exclude free Kindle book downloads too).
  2. For the last 3 months there have been 143 Kindle books sold for every 100 hardcover books sold at Amazon.com. For the last month the ratio has been 180 to 100. 
  3. Kindle book sales growth has beaten the industry wide numbers – which includes beating the industry-wide 207% growth in ebook sales for the first 5 months of 2010. Amazon sold over triple the number of ebooks they sold in the first 6 months of last year in the first half of this year.
  4. Out of James Patterson’s 1.14 million ebook sales 867,881 were Kindle books. That’s 76.13%.
  5. 4 more authors have sold more than half a million Kindle books – Charlaine Harris, Stieg Larsson, Stephanie Meyer, and Nora Roberts.

If you’re a Publisher you have got to be wondering what you’ll be doing in a few years. If this growth rate for ebooks persists Publishers are going to start dying out by early next year.

Amazon even take a jab at the Agency Model by pointing out that 510,000 of the 630,000 books in the Kindle Store are at $9.99 or less.

Amazon’s simple message about the Agency Model

Again, we have Amazon sending a direct message -

We now sell more Kindle books than hardcovers and the writing is on the wall – eBooks are going to rule and within ebooks Kindle Store is going to rule.

The Agency Model isn’t killing ebook sales and it’s not taking over – We’re still selling lots of books below $9.99 (80.95% of the Kindle Store to be precise).

It isn’t affecting our dominance either. We’re growing faster than the rest of the industry.

In stark contrast to the vagueness with Kindle Sales figures we see a lot of clear data with Kindle book sales.

Reactions to Kindle book sales figures 

New York Times points out that paperbacks probably still sell better than Kindle books

It’s a good thing they do – lest we start thinking the war is already won. Here’s what NY Times has to say about exploding Kindle book sales -

The Kindle sales figure does not include free Kindle books,

Amazon does not disclose how paperback sales compare with e-book sales, but paperback sales still probably outnumber e-books.

… even with the popularity of the iPad, which Apple has marketed as a leisure device for reading and which has its own e-book store, sales of the Kindle are growing, Amazon said.

It highlights something – Amazon’s vagueness is going to cause a lot of confusion. It is a bit strange to give Kindle Book vs Hardcover figures and leave out Kindle Book vs Physical Book figures.

Wired strike out twice

In some cases Amazon’s vagueness really trips up reporters. We have Wired writing that ebooks outsell paper books on Amazon.com -

E-books have hit the mainstream, and for the first time are consistently outselling their pulp-and-ink brethren, according to Amazon.com.

Amazon hit a symbolic milestone last holiday season, when for one day its sales of e-books exceeded the number of dead-tree books it had sold.

How do you confuse hardcovers for ‘all paper books’?

Wired achieve the rare distinction of not only confusing hardcovers for ‘all physical books’ but also confusing ‘growth rate tripled’ for ‘Kindle Sales tripled’ -

Amazon also stated that sales of its Kindle e-book reader have tripled since it cut the price from $260 to $190 …

The little cherry on top is their analysis that Kindle owners recoup the cost of the Kindle after 11 ebook sales.

Bloomberg address Kindle vs iPad

Bloomberg brings up the whole Kindle vs iPad angle and talks to an analyst who thinks there’s room for both -

Its release of growth figures may be aimed at quelling concern that the iPad has crimped Kindle demand, said Dmitriy Molchanov, an analyst at Yankee Group.

“There’s a real perception that the iPad has completely squashed the e-reader space and that’s really not the case,” said Molchanov, who’s based in Boston.

“Amazon is doing really well and both companies can profit at the same time.

That’s very true. There’s little doubt both companies will profit. The question is – Which of these two is going to get a top two spot and really make money from eBooks? Could it be both?

Jacket Copy wonders whether Amazon can continue to dominate ebooks

It’s good to have a few people who aren’t dumbstruck by the Kindle book sales figures. Carolyn Kellogg at Jacket Copy (LA Times) has some Kindle book sales questions -

what isn’t being said is that these aren’t necessarily new books; most of these authors have an impressive backlist.

How much of Amazon.com’s Kindle sales are an echo of this —  readers purchasing much-loved favorites in a new format –

Once, the word ebook was all but equivalent with a book sold for the Kindle. Amazon.com may be a huge part of the ebook picture, but now it has to share the stage with other players.

The last point is particularly relevant. There will be a lot of companies eager to steal a share of the 80% of the ebook market the Kindle Store has. We have to wonder how Amazon are going to hold on to such a large chunk.

Galleycat says Amazon just rocked the Publishing World

You bet it did.

Galleycat points out the good and the puzzling about Amazon’s Kindle Books announcement -

Amazon founder Jeff Bezos rocked the publishing world with a Kindle sales quote today.

Nevertheless, the company still has not released straightforward figures about total Kindle sales or total eBooks sold.

In a way you have to love the vagueness when it comes to the effect it has on Publishers. They probably have a very good idea of hardcover and ebook sales from Amazon – Yet, the way Amazon puts it they have no option but to either reveal figures (which hurts their whole ‘power and control and secrecy’ obsession) or have people think ebooks are completely destroying hardcovers.

Amazon has well and truly rocked the Publishing World. If it wasn’t painfully obvious to them yet that this time they can’t sabotage eBooks and eReaders it should be now. Can’t wait till next year’s July Kindle news release announcing that ebooks have surpassed combined paper book sales at Amazon.

What’s the point at which customers get upset enough to leave?

There have been a few separate things that make this a good question to consider -

  1. Facebook changing its privacy policy. 
  2. Publishers increasing their prices via the Agency Model. 
  3. Amazon and Penguin continuing their stand-off.

It’s interesting to see how customers’ attitudes change and the point at which they start switching and leaving.

Companies can get away with incremental downgrades to an extent

The first thing that’s becoming very clear is that you can get away with small changes -

  1. If the price increase is tiny or done incrementally it mostly goes unnoticed.
  2. If the user inconvenience is increased a little bit users tend to learn to live with it.
  3. If user rights or privacy is reduced a little bit users don’t mind.

There are a small portion of users that do make a big hue and cry – However, there isn’t a big uprising and very few, if any, users actually leave.

Large Changes are not received well

A big change like the Agency Model where prices go up dramatically does not go over well.

$9.99 to $14.99 is an inelegant price increase. If Publishers had done incremental changes from $9.99 to $10.99 to $11.99  in a few years they could have hit $14.99 easily. This also brings up the fact that Publishers probably want to create a HUGE shift. They want to make ebooks very unappealing and there’s no better way than to attack the biggest selling point i.e. the $9.99 price point.

There is a breaking point – It’s further away if you make incremental changes

Various groups of users have various breaking points. They react very differently to reaching this breaking point based on how we get there.

Consider a group who’s breaking point for privacy is that their list of friends gets shared.

  1. If Facebook (or another company) does changes incrementally then when this point is reached it’ll be a small change. Earlier everything except friend’s list and personal contact information was shared. Now everything and friend’s list is shared. While it may be the user’s ‘limit’ or ‘breaking point’ it’s such a small change that it doesn’t carry as much impact.
  2. Note that in addition to not carrying impact it’s a compliance chain. Every little change that eroded privacy and that users agreed to – because it wasn’t such a big change – made them more and more compliant to exposing themselves.
  3. If on the other hand Facebook went from very private to sharing everything including Friend’s List (and only leaving personal contact information untouched) then we would have had people protest in huge numbers and leave Facebook in droves.

Try it with a friend – get them to do little things for you and then ask for a big favor and they will do it even if it’s something they don’t want to – Could I borrow your pen? Could you please lend me a dollar? Could you lend me your car?

It’s used in sales all the time and they call it compliance building.

Users tend to give their trusted company the benefit of the doubt – to a surprising extent

There’s another element here which is very interesting.

If a user loves a company and trusts it the user is very, very reluctant to ever attribute anything bad to it. This is why one of the best strategies for companies is to do lots of ‘good’ things like donate 5 cents per product to the environment and build up a store of credit.

Then when they do something ‘evil’ that huge store of credit built up from seemingly trivial (and actually trivial) things like their donations and various small good deeds excuses them.

Of course, the store of trust applies to really customer-focused companies too. Take a company like Zappos (now owned by Amazon) that has amazing customer service. If they make a mistake they will often get the benefit of the doubt.

Whether it is earned through real, tangible excellence (great customer service, great products, great prices) or imaginary things (5 cent donations, claims of being environmentally friendly without doing much) the Trust and Goodwill built up are powerful and can be used -

  1. To do ‘evil’ and get away with it.  
  2. To get away with genuine mistakes.

Closing Thought – Incremental Downgrades vs Huge Swings

Facebook’s gradual slide towards killing privacy indicates it was well thought out and they do fully intend to expose all user information.

Publishers’ huge shift in prices indicates that either they didn’t think it through or they did and intended to kill ebooks.

The Penguin fiasco is interesting – it’s a gradual shift since users expected a decision in a few days as in Macmillan. However, it’s dragging on and lots of Amazon customers are beginning to reach the end of their patience.

Perhaps it’s a huge issue holding up the negotiations. Perhaps it’s not. Amazon needs to reveal the details soon – otherwise customers will start assuming it’s Amazon’s fault and start leaving. In fact, Amazon have already delayed this too much – It’s beginning to actually hurt customers and that’s simply unacceptable.

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