Kindle Fundamentals

Many of the conversations over the release of the Kindle have focused on its features, or perceived lack thereof; there has been some discussion of what reading might become, or how authorship might change. I was impressed with the rather complimentary review of Michael Hyatt, CEO of Thomas Nelson Publishers. And, meanwhile, the Kindle is popular enough (despite a rating of 2.5 out of 5 stars from Amazon reviewers as I write) that Amazon promptly sold out of its first-day supply.

There has been less discussion of the business fundamentals associated with the Kindle, and little contemplation of how reading fits into long term trends in media consumption.

After a Thanksgiving with aunts and relatives who have seen the Newsweek article on the Kindle but continue to espouse the sanctity of print, it’s useful to look at the Kindle and the greater transition it is part of — a potentially fundamental and historically unique transformation in how we share knowledge and entertain, with a concomitant shift in the underlying economy of those transactions.

Here are some thoughts of Joe Esposito, Portable CEO and formerly an executive at Simon & Schuster and at Random House, a former President of Merriam-Webster, and CEO of Encyclopaedia Britannica; and Bill Janssen, a senior researcher at Xerox PARC for many years in the fields of digital texts, ebooks, and the user experience.

Joe Esposito,

While all this talk about Kindle rages (yes, a pun; sorry), sober observers of this industry should note at the least the following.

First, it doesn’t cost anywhere near $200 to digitize a book. It may cost Penguin that much, but that’s because they aren’t paying attention. No way Amazon is spending that much. Amazon is one of the world’s great industrial-process companies; it’s Wal-Mart to the nth. It may be costly to digitize a single book, but it’s peanuts to digitize millions.

Second, most reviews (blogosphere and MSM) spend time on all the features Kindle does not have. In my view, it has too many; it’s the Microsoft Word of PDAs. One friend says it doesn’t support color. I spend a couple thousand dollars on books a year, and not one of those books has color. Someone complains that it doesn’t support PDF. Of course not. The Kindle is an Amazon product. Is Adobe a shareholder of Amazon?

But the biggest mistake is this nonstop chorus of “the users, the users, the users”. Business is not about making people happy. Business is about making capital happy. This is why Apple has a proprietary format for the iPod and why Amazon is attempting to lock users into its broad ecosystem. The Kindle is not a device. It is a component of a system.

The Kindle may or may not succeed (I am a skeptic), but it won’t fail because it doesn’t support open standards or lacks this feature or that or even because the price is high; it will fail if it doesn’t self-evidently provide ten times the value of hardcopy, and a return on the capital for everyone in the value chain. Two times better, maybe, but ten times? We are still waiting.

Joe Esposito

Bill Janssen,

In the hype around the Kindle, I haven’t noticed a mention of Monday’s NEA report, To Read or Not To Read. Seems much more interesting.

I’ve been saying for a few years that we are entering an age where textual fiction is becoming less and less significant, particularly for the canonical long text, the novel. The novel is a relatively recent innovation in entertainment, and the popular novel is a product of cheap production and distribution, thanks to the industrial revolution.

The delivery channels have multiplied, and the economics have changed. Television killed off the pulp magazine (and crippled the market for short stories). What would replace the novel? Something which would produce a ludic experience for hours at a time — a movie. But movies have not succeeded in killing off the novel. They’re too expensive and too complicated, and major players control the distribution channels. The best they could do was to absorb years of talents like Chandler and Faulkner.

But now we have kids who don’t read, the Web, game engines, and the writers’ strike. Game engines and machinima make it possible for writers to produce and direct their own work without actors or sets, for a relatively modest capitalization (a game machine). The Web provides free distribution. Kids provide a hungry audience. But the wild card here is the WGA strike. Suddenly all the folks who normally spend their days creating teleplays are looking for other outlets for their creative energies. Maybe write that novel they’ve been talking about? Maybe not. People like Rob Long (Cheers) are suddenly blogging. Maybe someone will tell them about machinima. We may be entering a twilight for the popular novel, perhaps relegating it to a niche more like opera.