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Friday, June 19, 2009

Kindle DX - Is Charging Premium Access For Content The Best Strategy?

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The Kindle DX allows publishers to charge premium access for content. But is distributing locked-down, must-pay-for content through a proprietary platform a good strategy for content publishers?


Titles are being pushed into Kindle format as quickly as Amazon can handle the conversions and postings.

In a year in which print book sales are sluggish, the reduced price of Kindle-edition books offers publishers a discount-bin pricing strategy with zero inventory or print-on-demand cost exposure.

But are low-prices and easiness of publishing really sufficient to stand the army of netbooks and other mobile devices used to read most content today? And, most importantly, are publishers fully prepared for extending their workflow to include an e-book media format addition?

In this article, content media author and corporate publishing expert John Blossom dissects and analyzes the Kindle content sales and distribution strategy and the opportunities and issues it opens.

Here, Mr. Blossom valuable insight on the future of the ebook distribution market:



The landscape of Europe is dotted with the ruins of hundreds of castles and city walls dating from the Medieval era of feudal rule, when local kings, dukes and other land-owners defended their claims to farms and forests through their ability to repel invaders from behind their castles' walls.

Castle defenses worked reasonably well for several centuries, but eventually the use of castles as power bases became obsolete.

Was it improved war technology that made castles charming antiquities? To some degree, perhaps, but the larger force that made castles irrelevant was the rise of a new way to store and protect wealth: banking.

Once the rise of wealthy merchants made the marketplaces of towns and cities the real battlefields for proving out power, castles protecting farmlands became far less important for securing power than having an economic system that could enable efficient trade. Yet those old castles still stand, and, darn, they do look rather nifty even today.


The Kindle DX Opens a Promising Market


Fast-forward to 2009, as Amazon introduces its Kindle DX, the latest iteration of their wireless ebook reader that offers a larger screen with eInk technology.

Just as those kings and dukes were thrilled to build ever-larger battlements against their enemies, publishers are flocking to the Kindle as the wonder machine of choice, now with a screen size that lends itself to larger materials such as magazines and newspaper articles.

With a USD 489 price tag, the Kindle DX is hardly an economy model digital device; in fact, many new netbooks with similar screen sizes go for hundreds less and offer color displays with Web and PC functionality.

But as the copy from the Amazon catalog page reminds us, this new Kindle is slim, "Just over 1/3 of an inch, as thin as most magazines".

Why even compare a Kindle to a netbook when it offers such obvious advantages and comforts to print readers? And if the price is a little to steep for some people, a few of them may be able to rejoice (a little): some major newspapers such as The Washington Post, The New York Times and The Boston Globeare offering a discount off of a USD 400 - plus annual subscription to their papers via the new Kindle - if you live beyond the delivery range of their paper editions.

This new-fangled technology does allow some miraculous breakthroughs, doesn't it? It's not as if the Kindle does not have its own unique virtues - or its own promising revenue streams. Sales of smaller Kindle units have been brisk, and the affluent older people buying them online are also fueling skyrocketing ebook sales.


Charging Premium Access For Content


Silicon Alley Insider notes that Amazon CEO Jeff Bezos brought a stunning statistic to light during the Kindle DX intro show: when Kindle-formatted books are available on Amazon, about 35 percent of those books' sales are now through Kindle editions.

There was no breakout as to how many buy a print edition as well, but the chart behind Bezos at the intro showed this percentage hockey-sticking from only 14 percent in February of this year.

Based on my own experience with getting my Content Nation book into a Kindle edition, much of this growth is actually publisher-driven: titles are being pushed into Kindle format as quickly as Amazon can handle the conversions and postings. In a year in which print book sales are sluggish, the reduced price of Kindle-edition books offers publishers a discount-bin pricing strategy with zero inventory or print-on-demand cost exposure.

In other words, in a year in which the slowly-moving denizens of print are trying to salvage some semblance of sensible quarterly earnings, the ability to charge a premium for access to content on electronic platforms - or any platform, for that matter - has to be a strong plus.

Yet in doing so many of these publishers continue to invest minimally in developing a more competitive stance in the more competitive markets of online publishing that are able to reach younger and broader audiences far more effectively than Kindles.

Kindle is attractive to newspapers and magazines as a platform that can be used to appeal to older and more affluent audiences who are the targets of their advertisers, a fact that fuels hopes that a larger Kindle will enable them to sell display ads at good rates for this elite group.

Yet where will tomorrow's older and more affluent audiences be congregating? Kindle, we hardly knew ye.

Kindle is an important content delivery platform that has enabled the book industry to begin its slow transition to the online era and that has offered a shelter for premium content sales in the face of an online content industry that largely baffles most publishers.

Yet for the most part it is a transitional proprietary platform, much as Prodigy, Compuserve and America Online were proprietary transitional services for premium online content prior to the emergence of the web as a dominant content delivery network.


Is The Kindle a Transitional Strategy?


Publishers are welcome to continue to build short-term profits on Kindle as part of their transition away from the printed versions of their content, but the rush to Kindle at this very late stage in the online game is ultimately yet another indication that many publishers are ill-prepared to compete in the web world of highly distributed content production and aggregation.

If there were a commitment by publishers to use some significant portion of their revenues from Kindle sales to invest in making a more effective transition to Web revenues, then perhaps there would be reason to think that Kindle will represent an effective transitional strategy.

But with a soft economy making profits in publishing more elusive, it's more likely to turn into a strategy that yet again kicks key decisions about web strategies down the road.

In the meantime billions of people around the world are going to be equipped with very affordable netbooks over the next few years - many of them being about as slim as a magazine, no doubt.

My book royalty checks say "Thank you" to Kindle for the time being, but underinvestment in advanced web strategies is making publishing via traditionally print-oriented publishers an increasingly unattractive option for authors trying to reach both mass audiences and affluent audiences.

The skyscrapers that house major media companies will stand for many years, no doubt, just as Europe's feudal castles still stand today.

But unless those companies start to gear themselves for the reality of a market-driven content economy, instead of a property-driven content economy, we may see those glass buildings as tourist attractions displaying the hubris of a bygone era sooner than one may imagine.

Originally written by John Blossom for Shore and first published on May 7th 2009 as "The Great(er) White Hope of Publishing: Kindle DX Enables Locked-Down Content to Live On. For Now.".

About the author


John Blossom's career spans more than twenty years of marketing, research, product management and development in advanced information and media venues, including major financial publishers and financial services companies, as well as earlier experience in broadcast media. Mr. Blossom founded Shore Communications Inc. in 1997, specializing in research and advisory services and strategic marketing consulting for publishers and consumers of content services.

Photo credits:
Charging Premium Access For Content - artzone
Is The Kindle a Transitional Strategy? - jpsdk

John Blossom -
Reference: Shore [ Read more ]
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posted by Giovanni Panasiti on Friday, June 19 2009, updated on Tuesday, May 5 2015

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