Amazon.com's Kindle: Publishing Industry's iPod?

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Themes: Strategy
Pub Date : 2009
Countries : US
Industry : Services

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Case Code : INA0111
Case Length : 25 Pages
Price: Rs. 200;

Amazon.com's Kindle: Publishing Industry's iPod?

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Kindle and the Future of Publishing Industry cont...

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Adding to the woes of the newspapers, even the e-readers such as Kindle are not allowing newspapers to display advertisements on the e-reader versions. In a way, e-readers want to make sure that customers enjoy reading newspapers without ads popping up. But, in a survey conducted, the users of e-readers had varying experience while using the e-readers for the first time. They noted both the positive and negative features of the e-readers though they encountered few problems while using them.

Sceptics inquire to what extent readers would be ready to pay for content that is widely available free on the net. In September 2009 Forrester Research conducted an online survey on 4,706 US consumers of e-readers to find out the value they would pay for e-reader devices. Most of the consumers felt that an e-reader would be worth if it is priced between $50 and $99.45 In spite of all these drawbacks, Arthur Sulzberger, Jr., chairman of the New York Times said, "We knew for more than a decade that one day an e-reader would be a significant platform of distribution for our content."46

While on one side, Kindle is treated as a boon by some of the publishers, on the other hand it is criticised by few publishers who strongly feel that the e-readers are a bane to the book publishing industry. They are contradicting the idea of paying less for e-books. Even, David Shanks, CEO, Penguin Group (US), Inc., said that he does not support the idea of paying less for e-books.47 Also, Dominique Raccah, CEO of Sourcebooks48, which issues 250 to 300 new titles annually, observed, "It doesn't make sense for a new book to be valued at $9.99. The argument is that the cheaper the book is, the more people will buy it. But hardcover books have an audience, and we shouldn't cannibalise it."49 On the other hand, Bezos is supporting the launch of his product. Speaking on the threat posed by Kindle to the publishing industry, he said, "Stuff doesn't need to go out of print. It could shorten publishing cycles."50

Amazon tied up with universities as well to cater text books on e-readers to the students. Amazon launched a pilot programmme with six universities namely Case Western, Pace and Princeton among the six to cater Kindle DX as a textbook reader. Speaking on the availability of textbooks on e-readers such as Kindle, Van Baker, analyst, Gartner Inc.51 said, "If all [a college student's] textbooks were available in e-book format and much less expensive, that would make for a compelling business model."52

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45]"Read It and Weep: Will Amazon's Kindle Succeed in India?", http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4426, November 5th 2009
46]Hidary Jack, “Live from the Kindle DX Launch”, http://www.huffingtonpost.com/jack-hidary/live-from-the-kindle-dx-l_b_198000.html, May 6th 2009
47]"The Future of Reading", op.cit.
48]Sourcebooks, Inc. is an independent book publisher outside of Chicago that publishes fiction, romance, children's books, college guides, history, etc.
49]Trachtenberg A. Jeffrey and Fowler A. Geoffrey, "Publisher Delays E-Book Amid Debate on Pricing", http://online.wsj.com/article/ SB124744388627630253.html, July 13th 2009
50]"The Future of Reading", op.cit
51]Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company.
52]MacMillan Douglas, "Amazon's Kindle 2: No iPod for Books";, http://www.businessweek.com/technology/content/feb2009/tc20090210_262587.htm, February 10th 2009