July 29, 2010 86 Comments

Amazon and the Kindle Conspiracy

The iPad is Powerful I need to be very clear. I believe Amazon is positioned to be the winner in the content delivery war. Have you really looked around Amazon.com lately? You can buy a jar of peanut butter, a set of spark plugs, and all the digital content you can consume. As an Android phone user, they’re my iTunes stand-in. And with the way they’re sneaking Kindles out into the universe, it’s all going to go even deeper.

The Ultimate Distribution Coup

People are out there saying, “iPads are kicking Kindle’s butt.” Perhaps they missed the Kindle for iPad memo. Or the Kindle for Android memo. Or the Kindle for iPhones memo. It’s not about the device.

USA Today reports that Amazon’s announced it’s 3rd generation Kindle at a price point of $139 US. That’s getting close to dirt cheap. Hell, if I were a book publisher, I’d mail Kindles to my top 20,000 personal buyers.

But They Can’t

Because Barnes & Noble (and I’m a huge huge huge fan of the store) has the Nook, and because Borders (fan of them, too) has whatever they call their new ereader (sorry, Borders, but no one’s buying them – but thanks for the iPad app). And won’t this kill the independent?

That’s where the publisher’s head has to be in this game. They have to be very Switzerland. They have to be WalMart friendly, indie friendly, etc. And it’s a position that I think will choke them into some really surprising moves in the next 3 years or less.

The Kindle Conspiracy

Distribution is everything, friends. The iPod was reasonably neato. It had great marketing: 1000 songs. That was so easy to understand that people rushed in and bought them. But the iTunes Store was everything. Distribution. Suddenly, the universe fell in on itself for a while there.

iPhone? Same thing, new market.

Kindle is doing that. As the iPad gives us all a “hey, this is a strange device in search of a market,” it’s given Kindle more ground. As the Kindle app will run on your desktop, your phone, your tablet, the Kindle tablet, whatever, they’ve got you in the mood to swipe up books without much thought.

The moment the Kindle stretches distribution to other things, it’ll be the big giant explosion.

And in the mean time, Amazon, who owns Audible, who owns video distribution, who owns all various kinds of other media products besides books, can (will) cut out the weaker of the publishing houses and/or buy them at pennies on the dollar.

Distribution is the Key

Don’t look at the device. Don’t fret about the device. Think of it as yet another way to gain ground in distribution. Keep your eyes on this, and also think about how this impacts your business. Think further on whether there are ways you could do distribution differently (better, partnered) and what that would give you.

It’s a clever world out there, if we watch for it.

Related posts:

  1. Thank You Amazon-Thank You Friends
  2. Amazon is Creating Micro-Cults
  3. Amazon Offers Groceries!
  4. Why I Use Amazon Affiliate Links When Reviewing Items

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  • http://www.socialphototalk.com Aaron Hockley

    Exactly. I've had an iPad since day one, but have purchased only one iBook. Why? Because the iBook store didn't have what I needed. Amazon has it, through their Kindle system, and I can consume that content in any number of places (iPad and beyond). It's not the device… it's the reach. And reach means device-independence.

  • http://twitter.com/StartupSidekick Jason Sullivan

    Interesting article. Amazon appears to be so well positioned for the imminent shift to digital media. Their company has taken steps to position themselves at the vanguard of this upcoming transition, and as a result, they will be quite a force.

    Jason
    http://www.facebook.com/pages/StartupSidekick/1… (follow me on Facebook for more entrepreneurial advice)

  • http://www.wordandmouth.com Dave Thackeray

    Am I right in thinking the draconian DRM employed by Amazon via Kindle will effectively kill it off as the device that it is today?

    I'm still stunned that a leviathan can marshall consumers in this way. It smacks of contempt but I know somewhere there has to be an ulterior motive and doubtless in 2011, we'll all see the light.

    Maybe as you say, because publishing houses will be acquired/nailed to the wall. We'll have no option.

    Or maybe self-publishing and OS will win the day. Crossing fingers…

  • http://kellyport.net/blog Kelly

    So true about distribution – Amazon is amazing at delivering the content. From a competitive standpoint, Kindle for iPad and nearly every other device out there) changed things to shift away from direct device competition back to content delivery. For me, the multi-platform support (and my love of reading) shifted my perspective from trying to decide between an iPad OR a Kindle to “which ereader when and which tablet when?” The announcement today ended the “which ereader” debate for me.

  • http://vsellis.com Scott Ellis

    It's funny how Amazon consistently flys just under the radar (for the most part) quietly sweeping up business. Never to be underestimated in my book. Lot's of people thought Bezos was nuts when he started Amazon.. heh

  • http://180journey.com Traci

    Totally agree. I have an iPad but only have a few iBooks – the selection is so limited. My spending at Amazon has increased substantially since getting an iPad. With “one click” delivery to the iPad and a huge selection it's really easy and convenient. Wish I could highlight text like I can with iBooks, though.

  • SirTomster

    Because Amazon is working to make itself king and rule the world, I will not touch them.

    They do carry a big bat and have used it to force people to do what they want instead of the other way around. The recent ebook hoopla shows how they are.

    So I do my utmost to avoid them at all costs. But even before that I went with the nook because it was more open than the Kindle.

  • http://twitter.com/EllisTweet EllisTweet

    Distribution-exactly. Anybody remember WalMart executing that strategy to seriously hamstring competitors KMart & Sears, among others? And where is KMart today? Sears? Exactly.

    Outstanding observation, Chris!

  • http://twitter.com/kindracotton Kindra Cotton

    I always figured to “iPads are kicking Kindle’s butt” argument was faulty, because I knew someone gearing up to buy a Kindle right before the iPad came out, and they considered the iPad briefly, but realized that it and the Kindle (the dedicated reader) suited their needs. To me, buying an iPad is the equivalent of buying a Swiss Army Knife, when all you really need is a steak knife.

  • http://www.dogwalkblog.com/ Rufus Dogg

    I bought iPad and the first app I downloaded was Kindle. If Kindle for iPad didn't exist, I would have waited. I do enjoy reading books on iPad much more than the physical Kindle device, but Amazon gets a sale either way. iBooks, Nook, not so much. The physical Kindle will be like a newspaper or paperback; the iPad is more like a finely crafted hardcover or a well-designed magazine (Amazon needs to buy Flipboard.. that will be the standard for magazine publishing)

    I am struggling with concentrating all my reading material into one bucket where it can all disappear on a whim OR worse, they can not only track what I read, but where I read, what page I read and what content I linger over… that is a bit scary. But, for sheer market share, Kindle (on iPhone, iPod, ipad, Kindle or PC/Mac) is the reader.. everyone else will dry up.

  • keer
  • http://www.bronsonharrington.com/ Gnuboss

    Just under the radar is often the best place to be. No one sees you coming!

  • http://www.dogwalkblog.com/ Rufus Dogg

    One more point and I'll shut up. Books are easy to format for Kindle. The huge distribution opportunity is newspapers and dynamic coupons, but they HAVE to fix the formatting on these devices. Reading my local newspaper on Kindle is a pain. Also no reason why the Dayton Daily News can't buy a branded Kindle for each of their M-F readers and just give it away, then stop delivering the paper. Just a thought…

  • http://www.smalltownromanceblog.com Yair Yona

    so true. if you got distribution – you've got a business.

  • http://nathanhangen.com/blog Nathan Hangen

    At over 200 bucks, I wasn't listening, but now it's reaching the price of a commodity, and I'm starting to. Only problem is that now I have an iPad, what else do I really need?

  • http://chrisbrogan.com Chris Brogan

    I quite agree. I think the iPad is MUCH nicer to read books on. If you can't afford an iPad, a Kindle still beats the alternatives.

  • http://chrisbrogan.com Chris Brogan

    Kings happen with or without us, Sir Tomster. I went with who'd get me the books I needed.

  • http://chrisbrogan.com Chris Brogan

    They needed some way to protect intellectual property. I saw a guy hocking my audio version of Trust Agents for free of a download site last night. That's money that doesn't go into my daughter's college fund.

    Draconian or not, they need some method to protect authors.

  • Rich

    Perhaps you will recall the razor/blade marketing strategy from yester-year.
    Cheap or free razors, but the blades had a higher profit margin. Amazon is placing their “razors” everywhere and making it unbelievably easy to buy their very high profit margin blades, oh I mean books!
    However, Apple too knows this concept. They are successfully placing their devices (razors) everywhere. In fact they are becoming the default name to consider when buying any “razor”. And if you for a single minute don't think that iTunes and the App store are not their “blades” then you have missed the entire point.
    The interesting thing about all of this is that it would appear those who arrive first into a market are at an advantage and it is up to them to effectively loose the market rather than someone else to take it away. Apple and Amazon are experts at maintaining the market lead even when they stumble. Compare them against what Microsoft has done in the same time period.
    Hurray for razor blades!

  • Rfa Desert

    Distribution is important and the article spot on. Another key factor: Amazon Kindle was never about selling books. It was about another service to attract and keep consumers returning to the site. All that peanut butter has to be bought by someone. Amazon is always mindful of their real business; on line sales. Other ereaders sell books and media. Kindle owners are treated to the Amazon way of customer service and often become loyal to the brand as others are loyal to Apple. The big picture is that Amazon will win because it plays a different game. [PS. Love my first edition Kindle because it is a BOOK. I don't need it to do anything else.]
    Rita Ashley, Career Coach
    Author: Job Search Debugged
    Author: Networking Debugged

  • Ellanbethia

    I second the opinion. As a (wannabe) author, I am carefully watching what is going down and weighing my options.

  • http://www.YvonneFBrown.com/ Yvonne F Brown

    Nice post Chris. I wonder what Amazon is doing for people like me who already own a Kindle. As they rush forward with this new marketing and sales effort have they considered current users? Don't get me wrong, I think what they're doing to keep themselves relevant is great. Early adopters like me shouldn't be abandoned though. We should receive some new functionality as well.

  • roborr

    I don't know that I have the same disdain that you do for Amazon, but I understand your point which is why the variability of platforms on which it's available is a GOOD thing for me. When I think of books I need to order, I think of Amazon.com. I rarely think of anyone else. I don't see it as being all that different in essence than iTunes and that platform has a captive audience as well (even more captive IMO). It's about the delivery of the content. We'll see where this all goes.

  • roborr

    Totally agree on this point Chris. Writers need to have their intellectual property protected – I don't object to that at all. But, I'm not a fan of the price point for the digital media so far – it's still a bit too high for me and a barrier for entry. If the hardcopy that I can put on my bookshelf is only $4 more then I'll opt for the hard copy and I buy a LOT of books. IMO I think the prices for digital content need to come down a bit. Maybe their needs to be an open-source type platform by which authors can offer their digital content independent of Kindle et al, and set their own prices and reduce the effect of the costs associated with publishing houses.

  • http://startupmeme.com Sardar Mohkim Khan

    But with the Kindle App and distribution of the content Amazon has [books,etc] do you think that Amazon [might] won't be really concerned how good the device does?

  • http://www.future-frontiers.net Justin

    Don't forget Chris, Amazon also makes it easy, very easy, to bring content makers into their fold. They have their own self-publishing platform, and even if you don't use theirs, you can still easily add your book to their fold and get access to the largest distribution platform in the world

  • http://startupmeme.com Sardar Mohkim Khan

    haha nice analogy. But don't you think that at times it helps to really opt for a Swiss Army Knife instead of a steak knife. Lets put aside price for no and talk about additional functionalities.

  • http://www.future-frontiers.net Justin

    The problem is you're still reading on an LCD, which is useful at night, but hard on the eyes (or at least mine).

  • http://twitter.com/ThingsBright Elizabeth Drouillard

    The ease of Amazon is awesome. Having one major distributor of information is scary, though.

  • http://twitter.com/BTRIPP Brendan Tripp

    Interesting points, Chris … I passed it along to the LibraryThing.com folks who spend a lot of time thinking about the Kindle and it's competition!

  • http://badsphincteroedipus.com matt searles

    Err, I think.. and I'm not even sure about this.. but I think… I can only agree with what you're saying in a kind of Hegelian Dialectical sense.. which is sorta to say that I think what you say make's sense in the context of where a lot of folks are at right now.. that the difference between what you are saying, and the perception that “it's about the device” equals the right sorta direction for someone to go in there thinking.. if they are are starting from an “its about the devise” stand point.. but if we were to think about the subject independent of all this.. I don't know that I would go so far as to say it's not about the device. Err, am I communicating clearly?

    What I think it is actually about is nether device nor distribution.. what I think it's actually about is the emergence of a new multilinear asymmetric game bored for business… which gets interesting in a rapidly changing environment… where the rate of change inhibits situational awareness: You can only keep track of / plan for so much.. and in a Tao Te Ching sorta sense.. the more you focus your eye, the less you can see the big picture, and vice-a-versa..

    We live in times where we have yet to fully appreciate the value of holistic thinking.. we are still compartmentalists.. not yet even on that David Weinberger meta data kind of level of it.. and if we don't have a way to relate the data to our conceptual frameworks.. we don't get no knowledge..

    So I'd argue that the first step is to come to appreciate holism..

    Err.. maybe I should put this less abstractly?

    Google, Amazon, Apple.. they are all playing different games, right? So.. are we saying that it's not if you win or loose that counts, but what game you play? If you are the only one playing “your game” are you more likely to win that game then anyone else? What of asymmetric side effects?

    I'm always wondering why we focus so much on the Googles and Apples of the world.. In a world where David is super empowered by various force multipliers.. I think the dynamics of power relationships has put things in a different position then our thinking represents them.. I mean if you can go and make a site like wiki leaks and freak out the pentagon?

    So I think the issue of what game to play, distribution or other, is sorta besides the point.. that the point is finding a mode of being, to put it in a certain way, for this emerging environment.. which I suppose is a problem for the future of management science? LOL.. which I think actually got worked out in old school Hindu metaphysics..

    How's that for an off the wall response?

  • http://twitter.com/nevinbuconjic Nevin Buconjic

    Borders sells the Kobo e-reader which is a decent ebook reader, essentially made by Indigo Books — Canada's largest book seller. Kobo came out at a price of only $159.95, unfortunately since then everyone has dropped their pants, I mean prices…

  • Biggercapital

    Awesome post Chris. Have you tweeted from the Kindle? It works great. I actually posted a tweet about a book ….Trust Agents…. ;-)

  • Muhammad

    I don't understand the 'conspiracy' part of this post.

  • SirTomster

    As more and more people use the Kindle (either the ebook reader, or the software for an iPad, PC, iPhone, or Android device) Amazon will have a larger market share. And as they increase their market share they will be able to use that power to force companies to do what Amazon wants and not necessarily what the company wants. Google “amazon hachette dispute” and you can see how Amazon likes to use its power. Or Google the recent Macmillan ebook issue from earlier this year. Both illustrate how Amazon uses its power of Distribution to get its way (although it lost the Macmillan battle).

    So as Amazon gains more control of the distribution, expect to see similar things happen. Some see this as Amazon fighting for us, I personally see them fighting to control the market (ala the Rockerfeller's and Standard Oil). The short term was to our benefit, but the long term?

    So that is the conspiracy I see, dunno about Chris or others.

  • http://scottgould.me/ Scott Gould

    Very good thoughts. I've been consulting more with publishers, and it confirms again the need for them to adopt a value-based approach and build a deep understanding of communities and meet their needs.

  • http://twitter.com/mikeatqazam Michael Senchuk

    TBH I think the Kindle has improved my life more than any other device in recent years. It's an extraordinary device that never needs to be connected to any computer, I get my news, books, and reference files in one light, small package. This week's addition of being able to tweet that information from the kindle itself just makes it even more of a must-have communication package. I'm looking at an iPad, and undoubtedly the first app I'll throw on it is the kindle one.

  • Michael Bigger

    and do not forget: The Agency pricing model developed by Steve Jobs & publishers was not in the best interest of customers. When it comes to Trust….Amazon wins hands down. In Amazon we trust.

  • http://twitter.com/karinu Karin Ulik

    Ah, yes, distribution is certainly the key. And with all Amazon's Kindle touch points, you don't even mention that they now sell the device at Target stores. One more barrier down in that potential customers can see, feel, touch, try first.

  • http://www.bestebookreaders.com Cyrus

    It was never about hardware. It never will be. Amazon has got it and others are getting it.

  • http://www.justinrussell.com Justin Russell

    The biggest weakness of Amazon's strategy is that nobody seems to know what “Kindle” means. Is it the device? Is it the distribution channel?

    In terms of distribution, Amazon wins hands-down. That's the ballgame for them. The Kindle device (and Nooks, and other e-readers) have a place in the market now, but as prices go down and competition heats up for touch devices like the iPad, I don't see how dedicated e-readers will have much of the market in a few years.

    I'm a little worried that Amazon's strategy might confuse readers. Do you need to own a Kindle to read Kindle content? They've been doing a good job promoting their apps for other devices, and they really need to keep that up. That's how they'll win in the end.

  • ambercleveland

    Chris, I just wrote this long comment about the device (and then as I was re-reading the post, I saw you took time to note that it's not about the device). Darn – so at least I can say it's a good thing that it's not about the device (at least for Kindle anyway) because that device did not meet my expectations. Hope you are well, Kat and kids too : )

  • http://www.joshchandlerva.com Josh Chandler

    Justin,

    I think that each will dominate it's own niche. iPad will dominate social gaming, Kindle will dominate e-books. Neither will dominate both.

    In regards to your theory on brand confusion, I wouldn't say that I've noticed anyone finding it tough to understand the meaning of “Kindle”. Technically, what does iPad mean to you? Neither have logical brand names, but that's what makes the difference for their respective brands.

  • http://www.joshchandlerva.com Josh Chandler

    Correct. Without the power of the apps, neither the iPad or Kindle would be successful.

  • http://seanstirling.wordpress.com/ Sean Rhys Stirling

    Thanks for that one, Chris. As I continue to retrain my artist brain to add a section for business this post of yours gave me a good kick in the head to explore more distribution paths. I had just looked at the publishing paths that Kindle provides yesterday – and opened an account for publishing. Thanks for all that you do.
    Sean Stirling, Musician Under Construction

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  • http://www.future-frontiers.net Justin

    Not to mention the “draconian” DRM as you put it is optional. As someone who is setting up a kindle book to sell, right there on the setup page they have an option to include DRM or leave it off, so they're really not the one to blame. They're just providing an option to publishers who might not use the service if it doesn't

  • http://www.future-frontiers.net Justin

    I don't think they're concerned. The kindle was the first mainstream e-reader and even then detractors decried it as a gimmick that would never sell, yet it has gone on to be the best-selling e-reader ever made. Additionally while the ipad does offer more functionality, it can't beat the battery life, and I know people who chose the kindle precisely for that reason.

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