Amazon.com has just released Kindle 2, the second version of its portable e-reader, at a price of $359 (about the same price as the original Kindle, according to the Kindle page on Wikipedia). With that kind of price tag, it should be obvious that customers will buy a Kindle for convenience or the coolness factor, but certainly not to make any economies.
Amazon.com, though, markets the fact that "New York Times best sellers and most new releases are $9.99, and you'll find many books for less." (I have yet to find one Kindle download priced at less than $9.99, but maybe Amazon is referring to niche books I don't look at.) In contrast, it sells most hardcover new releases around $17, once the standard 30% discount is factored in; a typical hardcover sells for $25 in stores. It seems that this price differential matters a lot to Kindle buyers, though, because if you have been browsing through the Amazon pages of the latest releases like I have, you might have noticed plenty of low ratings - but if you actually read the reviews, you know that the "1 star out of 5" rating has nothing to do with the book. Instead, it has to do with Amazon pricing Kindle downloads at $14.99 instead of $9.99 as advertised.
An example of this is "The Women", by T.C. Boyle - an average of 3 stars out of 5 for 14 customer reviews is definitely a red flag, as customers often play nice and over-rate books. Few books are rated at less than 3 1/2 stars. But when you scroll down to the actual reviews, you'll notice that the negative reviews focus solely on the fact that the Kindle download was originally offered at $14.99; it has since been reduced to the standard price of $9.99. I can't say whether customer complaints have had any impact - I've noticed the same thing happening for other books once they'd been released for more than two weeks, and Amazon might have decided to offer the downloads at higher prices during the first 14 days of the sale period, simply to capture the higher willingness to pay of customers eager to read the latest book by their favorite author.
Sometimes, the bad reviews disappear once the price is reduced to $9.99, as was the case for "Cutting for Stone," by Abraham Verghese. I did read a "1 star out of 5" review for that book when the Kindle download was priced at $14.99, it has since been reduced to $11.99 and the bad review is nowhere to be seen. (Customers can delete their reviews after they've been posted, and other customers can report reviews as inappropriate.) Verghese is a doctor and first-time novelist, and while I can understand why Amazon would try to benefit from T.C. Boyle's name recognition, it is hard to justify penalizing a first-time author, even one who has received rave reviews and whose book is turning into a best-seller (#17 on the New York Times hardcover list this week).
When the book is a 1000-page-long monster, one can certainly understand why Amazon.com would charge a little more, and "Truman" by David McCullough [1120 pages in paperback and 3.2 pounds] is indeed priced at $13.20. (Not $12.99, mind you. $13.20. I wonder what kind of formula Amazon uses to come up with prices like that.) But at some point, Amazon will have to explain its pricing strategy if it wants to avoid customer backlash.
While increasing the download price by 50% was obviously extreme, we might see more and more Kindle books priced in the $11-$13 range - higher than advertised, but not high enough for customers to complain, to recoup the Kindle's development costs. In addition, if Amazon has decided to charge high download prices when a book is first released, and decrease them only later (after all, it can't count on one expensive hardcover edition and one cheaper one in paperback to take advantage of customers' variable willingness to pay), it should explain that upfront. In pricing some items at $15, Amazon.com has attracted a lot more attention on its practices than it expected.
I finally broke down and bought a Kindle 2, primarily for travel. The book I am reading now is a science fiction book only available in hardcover at $29.95 or trade paperback at $12.55. The Kindle version was $6.39. But I agree it is unlikely I will earn back the $359 I paid for the Kindle. For me it is convenience: both in having less to carry when I travel and in being able to get a book seconds after deciding on it. And there is a certain convenience in not cluttering my house any further with books! But I am glad to have a house full of books and already miss the feel and smell of a book in my hands.
Posted by: Michael Trick | March 01, 2009 at 02:32 PM
I think a killer app for the kindle would be textbooks. publishers could lower the price of books because with the built in drm, the used book market wouldn't be available. since the books could be cheaper, the price of the kindle could be recovered after a semester or two by the students. even if it took a bit longer, for me, the convenience of not carrying a huge intro to calc or physics textbook around would be worth a lot.
This may not work so well for art history kinds of courses, but i think it would probably be acceptable for sciences. of course, professors, may no longer be able to offer open book tests.
Posted by: Seth Wenchel | March 02, 2009 at 06:55 AM
Seth: I have talked with publishers and from what I can tell, they are not going to reduce drastically the prices for electronic versions of the textbooks. Combine that with the fact that an ebook cannot be sold back to the bookstore to be reused, and the financial incentives for students are gone. However, I believe that some students would be willing to get the electronic versions just to avoid carrying the heavy, big textbooks with them.
Posted by: Panos Ipeirotis | March 02, 2009 at 06:57 PM