Recently, there has been a large amount of buzz around Amazon's "Kindle" e-reader. Some of it has been great, and some has been extremely negative. Today, I'd like to take a look at where the Kindle came from, its competition, and what kind of implications the Kindle business model has with regard to content management and delivery in the future.
The History...
Jeff Bezos made his original fortune in books. All the other stuff: Music, Frying Pans, DVD's - pales in comparison to Amazon's domination in the world of books. For many years, Mr. Bezos was supremely happy with the being the premium purveyor of paper on the internet. Then, something happened that flipped the "order online, delivery in 2-3 days via FedEx" model on its head: the iPod, and its synergistic, symbiotic sister, iTunes, were released in 2001. Needless to say, these inventions took more than a small chunk of Amazon's CD/Music revenue.
On the other hand, it seems to have shifted how people viewed delivery of content. Instead of needing an external, physical medium on which to store content, which would then be delivered to a player (e.g. CD -> CD player), you could now deliver content in the form of a file, which could be stored internally, and delivered instantly. The iPod also flung the door wide for full acceptance of proprietary media formats, and by extension, Digital Rights Management.
So, imagine you are Jeff Bezos, and Apple just took a large portion of your supplementary income. What do you do? You take Apple's highly successful business model, and apply it to your primary source of profit: Books.
In early 2004, Jeff announced the launch of the first generation of the Amazon "Kindle", which was intended to be the iPod for books. It licensed a proprietary technology known as "e-ink" for the display. E-Ink responds like normal text to daylight, and reduces eyestrain for the user. A side-effect of using E-ink is that Amazon cannot use backlighting for the Kindle display, as the text is opaque, meaning they could not pass light through the text, even if they wanted to.
Bezos also topped the iPod model in features: The Kindle's shopping cart and product delivery system were completely based on cellular, wireless broadband connectivity. This meant that product delivery for customers would be instant, and unlike the iPod, a customer wouldn't have to wait until they were in front of a computer to buy a product they liked.
Whispernet, as Amazon called the Kindle's internet service, would allow a closed loop shopping cart, where the device, the content, and the content delivery system were contained in the device. Prices for digital books, in Amazon's proprietary AZW format, often sold for $10 less than their hardback counterparts. Amazon singlehandedly overcame any objections that a customer might have, by enabling user to engage in relatively inexpensive, compulsive purchases. Brilliant. (Incidentally, Apple copied this model with the release of the iPhone, by making App and Music purchases available over the AT&T network.)
The first model sold so well, that Amazon has since released 2 other models: The Kindle 2, and the Kindle DX( a widescreen version of the Kindle that clocks in at 10 inches, instead of the usual 6). The biggest improvement in these models happens to be that the new E-Ink displays support displays in 16 shades of gray. The Kindle 1 only displayed text and illustrations in 4 shades of gray.
Now that we've covered the history of the device, let's talk about...
The Competitors...
Whenever money is being made, there you will find competition. Sure, you may be the first to offer a certain type of service, or business model in your industry, but you won't be alone for long. Amazon's competitors in this space are myriad.
Sony released and eBook store, and a reader in 2006, and it does not have a proprietary book format. They, however, left out the most important feature: Wireless connectivity. Although it is rumored that it will be included with newer models of the reader, an official announcement has yet to be made. In addition, there is no guarantee that there will be online store integration with the same level of integration that Amazon has included.
Competitor number 2 is not a company that instantly springs to mind when you think about books. Google, through their books project, has scanned and digitized nearly every book that has ever been printed. In addition they've invested money in making sure that their unrestricted access to those books remains unchallenged. They paid a settlement of over $185 Million USD to authors, publishers, and copyright holders to ensure search access to those books. How many books does Google have in its library? Over 3 Million. That number excludes periodicals and newspapers that have been digitized. Currently, you can purchase access to copies of these books through Google Book Search, and then port them over to your E-Reader. While they don't currently have an E-Reader, imagine what would happen if Google suddenly decided to release a reader of its own, and then subsidize that reader with advertising. The Kindle's revenue would fall overnight, and Bezos & Co. would be watching Amazon stock decline faster than they could download one of their books.
What about the most obvious competitor? I am of course, speaking of Apple. After all, who has more experience manufacturing sleek little information appliances that work both as a statement of fashion and practicality. Currently, Apple has allowed an application through the App store, that grants the iPhone to read books purchased through your Kindle account. It then transmits the place you stopped reading a book over to your Kindle device, so that you can pick up where you left off. It's a very short journey from compatibility to replacement. Apple has confirmed a tablet/stylus type laptop will be formally announced in the near future. What if Apple could find a way to build a screen that was dual-mode in nature...say it used E-Ink in one mode, and acted like normal LCD in PC mode. They have the engineering know-how, along with the marketing and PR machine to make it a huge success. I would be willing to bet that such a device is in development right now.
While there are several other minor competitors out there with excellent products, I think you get the general idea: The E-Reader/Digital Book market of the future is going to be crowded. The biggest questions concerning the future of such an industry have yet to be answered, which is why I am calling the next section...
I Hadn't Thought of That...
Amazon recently upset a bunch of people by remotely deleting 2 different books: George Orwell's Animal Farm and 1984. Those of you who have read the books will recognize the irony of the situation. The problem, according to Amazon, is that the books had been digitized and sold on Amazon's store without obtaining the appropriate copyright and licensing permissions to do so. In Amazon's defense, they did credit the purchase price of the books back to the account holders, and later apologized for deleting the books without fair notice.
This single action raises a myriad of problems that Digital Content Providers, like Amazon and Apple, have yet to address to the public's satisfaction.
Who actually owns content? By that I mean, when a person purchases the content, do they actually have full possession to use the product as they please. Evidently not, as Amazon was able to remotely delete content that users had purchased, weeks, or even months after it was purchased.
If you own it, then are there restrictions on how much you can access that content? In this case, the answer seems to be "that depends" or "No." Amazon says you can only redownload the product 6 times before you will have to repurchase the product. While that doesn't seem very restrictive, imagine the amount of times you might have to reformat/and or change devices over the course of 5 years. Then understand that you never have to buy a new copy of a physical book after a certain period of time.
If I own it, then I should be able to lend it to a friend, right? Ummmm....that is a most definite "Ixnay, Nein, No." In fact, doing so could result in a lawsuit, fine, or even jail time, in the most severe cases. Unless your buddy is taking the whole Kindle device home with him, you don't have that right. That has never been a problem with physical media, but definitely is a sticking point with Digital.
If I own other content that I purchased elsewhere, and store it on a Kindle, does Amazon have the right to inspect it, or remove it based on suspicion of copyright infringement? This has yet to be tested, but if lawsuits filed by the music and film industry are any indication, then this type of legal question is going to be examined frequently in the days ahead.
In case you haven't figured it out, you don't actually own any content you purchased on the Kindle. You just entered into what could be described as a very strong, conditional lease of a book. Those terms may eventually evolve, and files may operate the same, regardless of whether you have the file on a Sony Reader or Kindle. That is not a guarantee, however.
So before you spend $300+ on a reader, and a couple hundred for the entire collection of your favorite space novella, you may want to take a closer look at the privacy, convenience, and legal issues that the Kindle has sparked.
Kurt Hartman has meandered to the beat of a different drummer his entire life. He's been a marketer, AV Pro, and general techie for the better part of his existence. His main goal is to share his knowledge with others.
In doing so, he prays that he has made your life a little easier, your thought process, a little richer, and your laugh, measurably longer.
