Amazon Prime – Amazon’s Push for Amazon Prime might include Kindle Fire 2 subsidies

While looking for updated news regarding the new Kindles, I came across something very curious. It dawned on me that of the last 6 press releases from Amazon, 4 of them have a distinctive common thread – Amazon Prime.

Seven Days ago – 8/21  Amazon announced an expanded licensing agreement with ESPN which added  popular titles from the 30 for 30 film series available for Prime members.

Four days ago  — 8/24  Amazon announced an expanded agreement with NBC Universal, adding hundreds of  TV episodes to Prime Instant Video for Prime members.

Yesterday  8/27 — Amazon announced that its catalog of over 180,000 exclusive Kindle books have been purchased, downloaded, or borrowed from the Kindle Owners’ Lending Library more than 100 million times. Nearly all of these exclusive books are available for Kindle owners with a Prime membership to borrow for free, as frequently as once a month, with no due dates.

Today  8/28 — Amazon announced that it now ships more items with Prime Free Two-Day Shipping than with Free Super Saver Shipping – the program Amazon launched in 2002 that offers free shipping on orders over $25. Currently, Amazon Prime offers 2 day shipping on over 15 million items from it’s online store.

In a nutshell, with a $79 annual Amazon Prime Membership you get:

  1. Free Two-Day Shipping on over 15 million items.
  2. No minimum order size.
  3. Unlimited instant streaming of more than 22,000 movies and TV episodes with Prime Instant Videos.
  4. A Kindle book to borrow for free each month from the Kindle Owners’ Lending Library of over 180,000 exclusive Kindle books.

Why the Push for Amazon Prime?

My best guess is that all this hype and hoopla about Amazon Prime means that the giant online retailer has something spectacular to show us during the Press Conference in Santa Monica on September 6th. The press conference is being held very close to Hollywood and the entertainment industry. My initial thoughts on this a few days ago was that Amazon would be promoting a new content provider, like a major network or studio. As it turned out, Amazon did expand their agreement with NBC Universal just 4 days ago. On August 21st, Amazon revealed an expanded licensing agreement that added popular titles from the ESPN 30 for 30 film series to Prime Instant Video.

Amazon now has agreements for the following networks and studios:

  • Warner Bros. Domestic Television Distribution
  • NBC Universal Domestic Television
  • CBS Corp
  • Discovery
  • Fox
  • PBS
  • Sony
  • Disney-ABC Television Group
  • Paramount
  • Metro Goldwyn Mayer (MGM)
  • Viacom which brought along MTV, Comedy Central, Nickelodeon, TV Land, Spike, VH1, BET, CMT and Logo
  • ESPN 30 for 30 film series

That’s nice and all but it’s not *spectacular*.

Purely Based On Rumor

What would be spectacular… the offering of a new Kindle Fire 2 — free and free movies with an Amazon Prime membership.

As awesome as this sounds, I’m not sure of the profitability of this for Amazon. The general consensus of everyone with an opinion in this matter, has been that the cost of a new Kindle Fire 2 will be $199 and the original Kindle Fire will drop in price. Amazon needs to keep the price of this new Kindle low to be able to level the playing field with other tablets such as Google’s Nexus 7 which sells their 8 GB device for $199 and $249 for the 16 GB device.

Purely Based On My Wild Imagination

Maybe these new Kindle 2’s will need data plans. That could explain the push for Prime. Downloading books and apps wouldn’t add much to a data plan, but I imagine streaming instant videos could break the bank if used heavily. Of course this data plan would come in handy with the introduction of another rumored device that may be unveiled at the press conference – the Amazon smart phone.

So they’re pushing the pure awesomeness of being an Amazon Prime Member – possibly giving away a new Kindle 2 with every Prime Membership – and then maybe nailing us to the wall with data plans while saying: ‘Hey, you got the Kindle 2 for free and we convinced (conned) you that you needed a data plan so as to enjoy all the great extras we have to offer – so why don’t you add an Amazon Smartphone to the mix?’

Now I can see profitability. Actually, I see the money meters spinning so fast they are nearly at a standstill.

But don’t forget – this is conjecture. And it’s my conjecture at that.

Wait! I’m not quite done here yet!

All my guesses, speculation and ramblings aside – there may be a very simple reason for the Prime push. It just may be that Amazon wants good customers. Prime Members are good customers. And loyal. Loyal customers will spend their money at Amazon. They will loyally and proudly purchase books, DVD’s, toys for the kiddies, electronics for the teens, groceries, clothing – yada yada yada, including the proverbial kitchen sink.

On the other hand, there exist the fair-weather customers. They’ll purchase the Kindle Fire on sale and well-pleased with their discount will run to the nearest Android rooting exit. Because they are not loyal, they will go elsewhere for all their online shopping needs.

Amazon doesn’t make a profit from fair weather customers but they do from first rate loyal customers. It just may be that the push for Prime benefits both Amazon and the loyal customers. They make a profit and we get a lot of bang for our buck with Amazon Prime. Hey, we gotta shop somewhere, don’t we? Why drive all over the web when you can shop at the biggest online retailer? Think of the gas you’ll save. ;)

I would love to hear what you think the push for Amazon Prime is about. Does it mean a free Kindle Fire 2 with a 3 year Prime membership? Data Plans? Bundled with Amazon Smartphone? What do you think Amazon is hoping to do?

Leave your comments – and please don’t flame the author (me) for my wild imagination. Thanks! :)

Kindle developments and a couple of Kindle Deals

First, for your Kindle, two kindle deals -

  1. Once Dead, Twice Shy by Kim Harrison. Price: $1.99. Genre: Horror, Urban Fantasy, Young Adult, Dead but not Gone, Supernatural. The normal version is $7.99 and rated 3.5 stars on 55 reviews.

    My name is Madison Avery, and I’m here to tell you that there’s more out there than you can see, hear, or touch. Because I’m there. Seeing it. Touching it. Living it.

    Madison’s prom was killer—literally. 

  2. Beyond Justice by Joshua Graham. Price: $1. Genre: Legal Thriller, Suspense, Riveting & Inspiring, Power of Faith, Redemption. Rated 4.5 stars on 28 reviews. 

Next, let’s look at what’s happening in the Kindlesphere.

Kindle Developments

Some interesting developments in the last few weeks -

  1. Kindle with Special Offers was announced and started shipping. It’s met with such little enthusiasm and press coverage that it seems an incremental move to advertising supported books is both dead and very much alive.
  2. A $25 gift card is being offered with the Kindle 3 and with the Kindle DX. Combine Kindle with Special Offers and the $25 Kindle 3 discount and, as numerous people have suggested, it seems inevitable that a new Kindle or a new Kindle Tablet is around the corner.
  3. Library Book Support was announced. No date but ‘later this year’ could mean anything. There are also rumors that negotiations are going on for library book support in the UK.
  4. Amazon started a Kindle Germany store. That’s rather interesting.
  5. Not only iPad but all Tablets are facing component shortages. This is good for eReaders because it might mean more eReader sales.
  6. Amazon launched a 69-cent MP3 store – giving Steve Jobs yet another reason to support The Agency Model.
  7. An analyst speculates that Amazon is not selling Kindle for a profit. That seems to make sense.

There are also a few interesting Amazon related developments.

Amazon Developments

  1. Amazon suffered a massive cloud outage. Apparently, sometimes the cloud pours down as rain.
  2. Amazon missed its earnings by a mile. The stock went up 5% or so.
  3. Amazon stock is up significantly since its huge earnings miss.

A few analysts think the huge growth in revenue makes up for the low profits (profits are low due to heavy ongoing investment in capacity and technology). Other analysts worry. Overall, Analysts seem to think increasing profit dollars is more important than increasing profit margins. That’s an interesting way to look at things. Well, at least it’s an improvement from the time when revenue was so important companies didn’t even have to make a profit.

Kindle snippets & thoughts, ebooks continue to grow

Thanks to Damaso (his photographs are well worth checking out) for pointing us to Media Bistro’s coverage of news that eBook sales in January 2011 were up 115% from January 2010.

eBooks just don’t know when to quit

They just keep selling more and more. It’s awfully inconsiderate of them given the amount of effort people are putting into printing physical books, shipping them, returning them, remaindering them, shelving them, etc.

  1. eBook sales increased from $32.4 million in January 2010 to $69.9 million in January 2011. To the best of my understanding this doesn’t include indie author sales.
  2. Total book sales were $805.7 million in January 2011.
  3. Adult Hardcover sales fell from $55.4 million in January 2010 to $49.1 million in January 2011. That’s less money than ebooks generated (Please Note: That $49.1 million figure excludes Young Adult & Children’s Hardcovers).
  4. Adult Paperback sales fell from $104.2 million in January 2010 to $83.6 million in January 2011. That’s a 19.7% drop.
  5. Young Adult & Children’s Hardcover and Paperback sales both fell. The latter by around 17%.

Now it makes perfect sense.

  • Part 1 of the Puzzle: eBook sales are doubling while paperback sales are falling 20%. Hardcover sales are also falling.
  • Part 2 of the Puzzle: Publishers are raising their ebook prices to make sure that their share of the ebook market keeps going down.

Publishers’ strange ebook pricing makes perfect sense when you factor in their considerate and giving nature – Publishers just want to step aside so that indie authors and smaller Publishers get a fair chance.

Be the writer for a Choose Your Own Adventure Game

JamesTheNumberless at GameDev is looking for a writer/author to partner with on a Choose Your Own Adventure type game. It’s a pretty cool idea – to partner with an actual author. A few details:

  1. Story must be branchable and must have multiple endings.
  2. James is looking for someone who is writing a novel, not a game.
  3. Not interested in high fantasy or in zombies, vampires, and werewolves. 

It’s a good opportunity for an indie author – release the game and your novel (set in the same world) at the same time. Perhaps bundle them together.

The Real Reason Amazon’s Android App Store is Genius

Google’s Android Market sends a bit of a strange message -

  1. To users it says – Get ads for free. Also get apps with those ads. We don’t waste money in screening ads so you might get malware or someone stealing your information – that’s just one of the risks of free. If you want to pirate, feel free.
  2. To developers it says – Freedom. You get to run ads and give away apps. You also get to sell apps if you don’t want to run our ads. Users are just waiting to pirate your apps, so instead go with free and make us and yourselves money from ads.
  3. To competitors it says – We give away Android for free. Search revenue funds it. We are even making some ad revenue from apps. How can you fight free?

To some people this sounds perfect.

To a lot of people it doesn’t – users who don’t mind paying a reasonable price for a good app, users who only want safe and high-quality apps, developers who would rather sell apps than advertising-displaying snippets of code, anyone who doesn’t believe that advertising-supported free is the best thing since sliced bread.

So you have the Android ecosystem neatly carve itself into two main parts -

  1. People and developers who love advertising-supported free. This includes people who expect free apps and don’t mind ads.
  2. Customers and Developers of Good Purchase Intent. People who would prefer to sell and buy apps, rather than deal in selling personal information and ads.

The second group is very poorly served by Google. Google is basically telling them to either embrace advertising-supported free or get lost.

This is where Amazon steps in. It says – We are going to build an ecosystem within an ecosystem. A place where developers can earn decent money without stealing information or drowning users in ads. A place where users can pick from amongst high quality apps with the added peace of mind that there will be no malware.

That focus on quality is why Amazon’s Android App Store debuted with 3,800 apps instead of 100,000. And that focus on quality means that Amazon will gather up 90% of the customers of good purchase intent.

What group would you rather have – 100% of people expecting free-everything OR 90% of people willing to pay for good stuff?

Numbers show that iPad really killed eReaders

An article on eInk and ePaper offers these estimates and projections -

  1. Gartner: 3.6 million eReaders sold in 2009. 
  2. Display Search: 14 million eReaders sold in 2010. 
  3. Display Search: 20 million eReaders sold in 2011.

Yeah, that shows how eReaders have completely died due to the iPad.

The article has some interesting parts – it covers what’s happening with the various ePaper technology companies.

B&N fails to sell itself

Bloomberg reports that all 7 ‘interested parties’ are no longer interested in buying B&N.

… some potential bidders balked at a purchase because of how long it may take the chain to generate more digital sales, two of the people said ..

A few private-equity funds determined Barnes & Noble is relatively unproven in digital sales and would have to compete in that area with companies such as Apple Inc., Amazon.com and Google Inc.

If B&N goes down, and it’s a big if, the company that manages to get Nook and 20% of the ebook market will have found itself a steal. The even bigger steal would be Nook Color – It’s the only Android Tablet capable of competing with the iPad (there would have to be some tweaks made, of course).

B&N trying to sell itself makes no sense. You have 20% of the ebook market, the #2 eInk eReader, and the hottest non-iPad tablet. Why sell yourself?

There is no Bubble

FlipBoard is an app that takes other people’s sites and newspapers and blogs and collates them with updates from Twitter and Facebook. It wraps all of this into a pretty magazine style format.

It just raised money at a $200 million valuation.

It’s hard to understand that valuation until you read the sort of language Kara Swisher uses to describe FlipBoard -

… the elegant Flipboard – which McCue recently told me in an onstage interview at the South by Southwest conference in Austin had zero revenues thus far has changed the game on the consumption of social media.

Its innovative social magazine concept is attempting to make the social networking universe more accessible, consumable and, perhaps most importantly, visually arresting via its rich app.

Essentially, Flipboard pulls information from sites such as Twitter and Facebook data streams and then reassembles it in an easy-to-navigate, personalized format in a mobile tablet touchscreen environment.

Right now, the Flipboard app is free and the business plan is advertising and some possible subscription scenarios.

Was unable to resist bolding the two most interesting parts of that flowery description.

Let’s just list them out -

  • Zero Revenues thus far. Makes total sense that zero revenues would translate into a $200 million valuation.
  • Business Plan is advertising and subscription. They don’t even make the content. Is that really their business plan? To run advertising against, and subscriptions for, content they don’t even create.

Wow.

Who cares about making a profit or having any revenue if the app is ‘visually arresting’ and ‘reassembles’ content in a ‘mobile tablet touchscreen environment’.

Closing Thought

All the dots connect to … Well, either Amazon is going to start using Android with the Kindle, or it is going to release an Android powered Kindle Tablet.

Either move will be interesting.

A lot of people believe that Amazon is the only company capable of challenging Apple’s iPad. Truth is that Apple has that market to itself – the Tablet as Status Symbol market.

The market that is wide open is the Tablets for Everyone Else market. That’s the one Amazon is probably after.

Contrasting the books Sony Reader Store and Amazon are promoting

Got an email from Sony Reader Store promoting ebook deals. Around the same time Roger Knights forwarded on an email Amazon is sending to customers in the US featuring paperback deals (it happens to be identical to the one I got so it’s not user-specific).

Here’s a quick comparison – no idea if it’s worth anything.

Amazon vs Sony Reader Store – Books being promoted via email

Amazon’s email newsletter has -

  1. 4 categories – Literature & Fiction, Biographies & Memoirs, Mystery & Thrillers, Children’s Books. Strange to see nothing related to Romance.
  2. A Focus on Bargain Books – However, no prices are listed.
  3. The email talks about savings of up to 60%.
  4. Featured Books include Gilead, The Clinton Tapes, Angels & Demons, A Secret KeptThe Uncommon Reader, Good Enough to Eat, and Labor Day. The paperbacks are mostly in the $5 to $10 range. Kindle editions are mostly around $10.
  5. It really seems like an unintentional attempt to show how badly Publishers are pricing ebooks.

Why would Amazon send an email promoting paper books when we know Kindle Books are outselling paperbacks? Is it that all Kindle editions are now priced higher than paperbacks, or is it that the books Amazon selected just happen to have higher prices for the Kindle editions?

Sony’s email newsletter has -

  1. Multiple categories – $5.99 and under, $3.99 and under, $1.99 and under, Free.
  2. A Focus on Bargain and Free eBooks.
  3. A few free books are featured at the bottom. There is also a giant banner below these free books enticing you to click on it for even more free books. 
  4. The $1.99 and under section has Wicked Lovely by Melissa Marr and 3 more books. Wicked Lovely is $1 in the Sony Store and $1 or $2 in the Kindle Store. 
  5. The $3.99 and under section has Switched by Amanda Hocking for $2.99, Even by Andrew Grant for $2.89, and 2 more books.

 It’s as if someone switched the two book stores.

Sony is offering up bargain ebooks and focusing on cheap books? The highest priced section shown is $5.99 and under? What’s going on?

Even more puzzling is Amazon featuring Paper Books instead of eBooks. Plus it’s featuring paper books for which the Kindle editions are noticeably more expensive.

It brings up an interesting question.

What does Amazon do, now that Kindle Editions are over $9.99 at launch, and now that Kindle Editions remain at high prices even after paperback versions are out?

It’s happened a year too soon. One more year and the indie authors and smaller publishers would have been much better placed to replace Publishers.

The Big 6 have acted very late but it might turn out to be not too late.

What can Amazon and B&N do to counter this?

Featuring paperbacks hardly seems like any sort of solution. Should Amazon and B&N start featuring the smaller publishing houses much more prominently? Are companies like Open Road and Samhain and Bell Bridge Books the answer? Should Amazon embrace indie authors more warmly?

These are tough times. Tough and very interesting.

eReaders in February 2011 – 10 random thoughts

Well, here they are.

1) It’s rather strange that Apple hasn’t announced iPad 2 yet. By this time last year the main news sites and big blogs were already writing obituaries for the Kindle and Nook. It seems less and less that iPad 2 will be reading focused and more and more that it will be Tablet focused.

It’s also not going to be the same – When Steve Jobs says ‘Look it even has wooden shelves’ it suddenly seems that wooden shelves are more important than having electronic ink or readability in sunlight. When Tim Cook says ‘It replicates leather-bound books and smells of rich mahogany’ everyone thinks Ron Burgundy should go back to being anchorman.

2) The previous 40 days might have been the most boring ever. There haven’t been any new releases or announcements. Even CES was a desert for eReaders.

3) About that wave of tablets that is going to fight iPad and destroy eReaders. Let’s see -

Xoom (with a name that bad you’d think it was an eReader) is going to be priced at $1,199.

The only good option is the Nook Color. So, a reading tablet is the best non-iPad Tablet right now and threatens to destroy eReaders. Except it’s a reading tablet.

Notion Ink Adam might be a decent option – only hitch is they sell their Tablet using the same distribution and shipping model that people making ancestral rugs in Burma use. You want to give the company $500 and they don’t have the product in stock, and when they will it’ll ship from somewhere in Asia and if something goes wrong you have to ship it to Timbuctoo and wait till the next harvest festival of the cockatoo.

4) Apple might be making a mini-iPhone, just like it might be making a mini-iPad.

The mainstream press is rejoicing. It can just recycle all its ‘iPhone will destroy Kindle’, ‘iPhone will destroy Baz Luhrmann’, and ‘iPhone as a signalling mechanism for primates’ articles from past years.

5) Guess what this is – 1, 10, 1, 13, 10, 5, 1, 5, 1, 4, 5, 10, 3, 3, 15, 5, 6, 5, 1.

That’s a list of the prices of the 20 best-selling items in the Kindle Store. A 13, a 15, 3 10s, and 15 books at prices Publishers probably can’t survive on.

6) Amazon really, really likes Kindle Singles.

Every single page of the Kindle Store has this sequence of links at the top – Kindle Store, Buy a Kindle, Kindle eBooks, Kindle Singles, … everything else.

So Singles get priority over Newspapers, Blogs, Magazines, Accessories, Discussions, and Support. Or to put it another way – Amazon only considers selling Kindles and selling Kindle Books more important than selling Singles. It must really believe Kindle Singles have a future.

7) It’s rather uncomfortable to think that this week Borders might announce its bankruptcy.

One of the blogs is claiming its due to the Internet. Blogs seem to love attributing everything to the Internet – Egypt, Iran, everything. It’s like some neanderthal village where the villagers all assume their shaman, the Internet, is responsible for everything.

8. Washington Post is writing about how Kindle is the only eReader to not offer library books.

Amazon added ebook lending in December 2010 and is adding page numbers now. Can we give the anti-Kindle articles a break for the next few months?

9) There are rumors that Apple has set an end of March deadline for the Kindle App. There’s also an article claiming that this rumor is utter nonsense.

However, you can feel a showdown between Amazon and Apple is imminent.

10) Kobo has a $20 off coupon on its Kobo eReader (Kobo20). That takes the price down from $139 to $119. Based on what people have written about the Kobo eReader and about Kobo’s customer service (or lack thereof) it’s still not worth it.

Bonus Thought

If B&N is making a loss on every Nook Color sold it’s in trouble.

  1. Thanks to using ‘open’ Android, the Nook Color is easily hacked and repurposed as an Android Tablet.
  2. Thanks to using ‘open’ ePub, the Nook Color can read books from just about any store selling ePub.
  3. Thanks to being hackable, and thanks to Kindle for Android, the Nook Color is a great reading tablet for people with a large Kindle book library.

The common thread – Book sales not going to B&N.

Nook Color is an absolutely beautiful reading tablet that 25% of people are hacking into a Tablet, 15% are using with other ePub-based ebook stores, and a further 15% are using with the Kindle Store.

B&N is probably left with 45% or so of Nook Color owners. If it’s assuming each Nook Color owner is going to buy enough books to offset a $100 subsidy, B&N is going to find itself in a ton of trouble very soon.

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