We’ve spilled a lot of E Ink projecting that 2012 will be the year that Amazon starts giving away the Kindle as they realize that there’s more money to be made from the content than from the gadget it’s read on. (See Kindle Wants to Be Free) We took our eye off Kindle’s rival, Barnes & Noble’s Nook, but it looks like the younger warrior has stolen a march on Goliath. The Nook is being given away, at least in one instance. But if there’s one instance, more are probably more on the way.

“When customers subscribe to The New York Times ($19.99 per month), they get a Nook Simple Touch for free,’ writes Dara Kerr on CNET.

Can B&N, Amazon, or any other e-reader manufacturer afford to give away its hardware?  Sure.  Because as time goes by, the value of the gadget declines and the value of the content bundled on it rises.  And in the case of the free Nook Simple Touch, it’s a way of giving away an e-reader that may be a bit of a drug on the market anyway.  Sales of black and white dedicated reading devices like the Simple Touch or the original Kindle are sagging as consumers opt for the color and hyperactivity of tablets.  This was confirmed early in January when E Ink holdings reported an 84% drop in sales. E Ink is the print technology that powers black and white reading devices.

Read Barnes & Noble offers free Nook with NYT or People subscription

As all frequenters of online bookstores know, read-inside-the-book features entitle e-tailers to publish a certain percentage of your book at no charge to encourage readers to sample the goods.

Content providers are given a choice ranging from a minimum of 20% to a maximum of 100%.  It’s a good policy, as it helps readers to browse.  In one case, however, readers were inadvertently given a window to get an author’s book free.

You probably don’t pore over the terms of your agreement with Kindle Direct Publishing, but if you did you would learn that one of KDP’s policies is that they have the right to lower the price of your e-book to match that of its competitors. This is an age-old marketing retail practice and far from extraordinary. However, the activation of this policy in the case of author James Crawford caused him serious inconvenience and potential losses in the thousands of dollars.

The problem occurred when KDP, believing that rival Barnes & Noble had dropped the price of Crawford’s book to free, changed its own price to zero as well. In point of fact, writes the author, B&N had not gone to zero.  It had merely offered the first three chapters at no charge as a come-on to customers.

Before he could straighten it out with Amazon he had lost revenues on more than 5100 copies given away at 100% discount.  We say “straighten out” but now that his book Blood Soaked and Contagious has been restored at his requested list price, Amazon has informed him it will not not refund revenues lost.  “We’re sorry, we’re unable to pay royalties for your sales when your title was listed at $0 on our website,” he was told in writing.  In writing because, as KDP users have discovered, “KDP does not have telephone contact with the outside world,” laments Crawford.

The complete cautionary tale may be read here. Two things you need to see for the following saga to make sense

Richard Curtis

Play nice!

When Amazon selected Laurence Kirshbaum to head its New York-based book publishing initiative, many publishing people greeted the news with unalloyed enthusiasm.The former CEO of the Time Warner Book Group is one of the few truly branded personages traditional publishing and it was hard to imagine a better choice to amalgamate the two cultures of pre- and post-Kindle. It still is, and with the spring 2012 debut of Kirshbaum’s first list we’re ready to welcome it with a cheer.

Not everyone else is, however. Articles describing Amazon’s move from retail partner of publishers and bookstores to feared rival have become a genre of their own, and journalists are vying with each other for purple prose awards. Hide your children. Amazon is coming to get you was the subheadline of an Atlantic Monthly editorial on the subject by Rebecca J. Rosen. Rosen’s remarks typify the terror expressed by fellow pundits: “Amazon’s conquest of every step of a book’s journey into existence is nearing its final stages. First, it pushed out the brick-and-mortar bookstores, shuttering even the giant Borders. Next, with its Kindle it began to step on the toes of book publishers. But now, it is going right for publishers’ hearts: their authors.”

These concerns are far from groundless, but what we have lacked so far is an objective evaluation of Amazon’s performance to date as a publisher.  Given Amazon’s notable secrecy, there’s little point in looking to the company for help.  But Laura Hazard Owen, writing for PaidContent.org, has rendered a masterful analysis drawn from a variety of sources, plus inference, intuition, educated guesswork and good old journalistic shoe leather.

Owen’s conclusion? “Amazon Publishing hasn’t killed print yet.” Like its legacy publishing competitors, Amazon has won some, lost some, and broken even on some others.

In order to play on the same stage as Knopf or Farrar, Straus, there is one major obstacle for Amazon to clear away. It will have to reach out to bookstores and chains, who have been so traumatized by Amazon’s steamroller approach that many, including Barnes & Noble, refuse to buy anything with the Amazon imprint. B&N insists that Amazon retail its titles on the Nook, the same as other trade publishers like HarperCollins or Simon & Schuster are permitted to do.  Amazon needs to woo some major authors away from their traditional homes, says Owen.  But if those writers fear that their books will not be distributed in stores, or that their e-books will not be sold on the Nook, it may be that no amount of money will lure them into Amazon’s camp.

If anyone can successfully navigate these rapids it’s Larry Kirshbaum. But he and his team have their work cut out for them.

The Truth About Amazon Publishing

Richard Curtis

Amazon and Barnes & Noble collided recently in a fearful clash. A lot of damage was inflicted but predictably the biggest victim was the customer.

The first shot was fired when Amazon acquired e-book rights to a trove of superhero graphic novels from DC Comics. Some one hundred volumes featuring Superman, Batman, Green Lantern, Watchmen and Neil Gaiman’s Sandman were secured to promote Amazon’s newly released tablet, the Kindle Fire.

All well and good – except that Amazon’s e-book rights were exclusive. Meaning that rival Barnes & Noble would be deprived of the right to carry the titles on its Nook e-reader.  B&N could still sell the print editions, however. But that’s a big however. B&N told DC that if they couldn’t have e-book rights they didn’t want anything. Whereupon they pulled the print editions of those DC graphic novels from 1300 stores.

The result was a lose-lose-lose-lose-win situation.  DC lost sales – as well as face for “placing greed over its fans.” in the words of New York Times‘s David Streitfeld. Barnes & Noble lost bookstore and Nook sales too, plus the nose it lost to spite its face.  Customers and fans lost access to the books in Nook (and Sony and Kobo and Apple iPad). And at least one author is unhappy – Neil Gaiman, who was blindsided by Amazon’s ploy. ““I was very excited when I heard that Sandman was coming out as an e-book, but was heartbroken when it was announced that I and my kids won’t have it on our readers.”

It will come as no surprise that the lone winner was Amazon, which nailed the exclusive and got a boost from B&N’s abandonment of the print edition.

This is just the first of many such battles. Says Streitfeld: “As Amazon seeks over the next few years to expand its tablet line, these collisions over content are likely to become routine.”

Details in In a Battle of the E-Readers, Booksellers Spurn Superheroes

Richard Curtis

Graph by Silicon Alley Insider

Years ago it became clear to us that we were heading for a Gillette Event.  That day may be only months away.

The Gillette Event is the day that the price of e-readers drops to $0.00.  The above chart shows that since 2007 the price of a Kindle has slid sharply from $399 to its current $79 (at least for one model). The slope is so steep it’s hard to avoid any other conclusion than that Free is inevitable.

The Gillette Event is named after King Gillette, the inventor of the safety razor and marketing genius who conceived the scheme of giving away the razor and selling the blades.  The analogy to e-readers is clear: give away the device and sell the content.

I’ve never believed that information wants to be free but it looks like the devices that provide it are just begging for gratis status.

Does it make sense for Amazon to go on charging anything at all for the Kindle?  There are compelling arguments in favor of taking the ball across the Zero goal line.

The first is that Amazon has never been afraid to sell the Kindle at a loss in order to undercut the competition. Some observers say that low-end models of the device are breaking even.  So, going into deficit to gain a competitive advantage would not plunge the company into trouble by any means. A million Kindles at $79 per is $79 million – hardly a ding in Amazon’s revenue armor. A free Kindle would give Amazon a decisive lead in the e-reader arms race from which rivals might never recover.

The second argument for free Kindles is that the amount of paid content carried on the e-reader has soared to the point where critical mass sustained by media sales is within reach. As an inducement to consumers the device would come pre-loaded with a starter set of rich content. No charge for your first set of razor blades.

These speculations were prompted by an interesting article by Pascal-Emmanuel Gobry in Business Insider Research, How Amazon Makes Money From The Kindle.

The author discusses the larger Kindle environment he calls the Kindle Ecosystem. At the headwaters of that ecosystem is the device itself.  A free Kindle could create a flood of business that would dominate the marketplace for the foreseeable future.

By the way, the Gillette strategy isn’t limited to Amazon.  Are you listening, Barnes & Noble?

Richard Curtis

Alfred Knopf coined the classic bon mot about returns in the book business: “Gone today, here tomorrow.” Having expended some of the best years of my career railing – in vain – against the ruinous practice of returnability in the book industry (See A World Without Inventory, Part 1 and Part 2), I greeted the advent of e-books with the ecstasy of a pilgrim beholding the shrine he has sought all his life.

But after extolling the zero returnability of e-books I am slightly abashed to report that -  at one venue at least -  e-books are indeed returnable for full refund, no questions asked.

How abashed am I? 1.15330021291%  That happens to be the rate of returns viewed on the retailer record of one publisher’s  sales database over a one month period.  The retailer was Amazon Kindle.

A 1+% return rate is infinitesimal compared to that of the conventional trade book industry, where returns of 50% are not uncommon and even 75% is not unheard of. So we are definitely not complaining.  But we’re curious to know how e-book returnability works and who besides Amazon offers it.

To answer the second question first, it is not easy to ascertain the returns policy of Amazon’s rivals, but from what I have been able to ascertain, Barnes & Noble, Random House, Wiley and Simon & Schuster explicitly prohibit return of e-books. The policies of Kobo, Sony and Apple are not clear.

Amazon’s policy is stated clearly on its website:

Content you purchase from the Kindle Store is eligible for return and refund if we receive your request within 7 days of the date of purchase. Once a refund is issued, you will no longer have access to the item. To request a refund and return, click the Customer Service button in the Contact Us box in the right-hand column of this page to reach us via phone or e-mail. Please make sure to include the title of the item you wish to return in your request.

No strings seem to be attached to Amazon’s policy,  But I wondered why anyone would return an e-book.  Fantasy author Lindsay Buroker speculates that customers simply order the wrong book. “It’s very easy to buy ebooks (one-click) straight from your device,” she writes. “The Kindle also promptly asks you if it was a mistake and you want to return the ebook. My guess, based on the fact that my returns usually pop up simultaneously with corresponding new sales, is this is what happens most of the time.”

Other reasons include excessive typos, formatting issues, and the old standby: someone just didn’t like the book. The latter may not be as prevalent as you would imagine because of look-inside-the-book sampling that helps consumers judge a book before clicking the Buy button.

And of course, some people may download the book, read it before the seven day deadline expires, and return it.  The low returns rate suggests either that only a tiny percentage of Amazon customers are moochers, or more of them would be if they could only read faster.

However negligible Kindle returns may be, accepting them is good policy and another example of Amazon’s customer-friendly approach to retailing.

Richard Curtis

Apple’s new CEO Tim Cook was just welcomed with a goody bag filled with 1 million shares of his company’s stock. That was the easy part. Now he’s going to have to earn it.

But as much as he would like to focus on developing products envisioned by the retiring founder Steve Jobs (who will remain active in the company for as long as he is able), he may first have to shore up the iPad as it comes under fire from rivals seeking a share of Apple’s commanding market for the tablet computer.

In particular Cook will have to deal with Amazon, which is not only developing a tablet of its own but planning to offer it to consumers dirt-cheap.  Amazon has not concealed its strategy of selling its Android-driven gadget at a loss – hundreds of dollars below iPad’s base price of $499 – just to pull the rug out from its competitor, according to Garrett Sloan of the New York Post.

Amazon has a long way to travel to bite into Apple’s 25 million unit lead, but no observer of Amazon would bet against its coming up with a product, a price and a marketing campaign that could close the gap faster than anyone would believe possible. Maybe Jeff Bezos should name the new tablet Orange, to facilitate comparison between Apples and Oranges.

Details in $99 tablets: Price is right

Richard Curtis

The proof of the pudding is in the tasting, and the proof of the e-book reader is in the reading.  Nick Bilton of the New York Times sampled numerous readers including that tried and true gadget called the paperback, and in  Deciding on a Book, and How to Read It presents his conclusions.

Reading one chapter on each device, he reached the following conclusions:

Kindle: “A joy in many respects…It is a dedicated e-reader, so you can’t hop off to the Web to look up facts…Kindle software works on almost every device with a screen and an Internet connection… [The keyboard] seems like a waste of space.”

Mobile phones: “Simple and satisfactory.”

Apple apps: “Big downside for many is that you can read them only on Apple devices…iBooks looks beautiful, with a design that feels more like a traditional book, with sepia-toned paper and stylistic typography, again, it is available only on Apple devices.”

Google eBookstore “Wasn’t quite as satisfactory as I’d had with the Kindle…its design felt a little too rigid and even clunky.”

iPad 1: “Too heavy and feels more like a dumbbell than an e-reader.”

iPad 2: “Lighter and feels snug in your hands… Both iPads offer an immersive reading experience. I found myself jumping back and forth between my book and the Web, looking up old facts and pictures… I also found myself being sucked into the wormhole of the Internet and a few games of Angry Birds rather than reading my book.” [Make up your mind, Bilton. Is iPad immersive or distractive?]

Barnes & Noble Color Nook: “Unlike Amazon’s device it allows you to surf the Web. It is a little slow, though, and that sometimes frustrated me…Like the Kindle software, the Barnes & Noble reading application is downloadable to several devices. It also offers some neat features that separates it from its competitors.”

Print paperback: “It took barely a paragraph for me to feel frustrated. I kept looking up things on my iPhone, and forgetting to earmark my page.” Obviously Bilton wasn’t familiar with the Floppatronic Fleeber, reviewed in these pages a while ago, but it’s my personal favorite way to read.

Notable in its omission from Bilton’s article is the Sony eReader, which may in itself be a statement of where that device stands – or falls – in the pantheon of choices.

Richard Curtis

Where was Lisa Lewis when I, a callow boy, sat in a park reading Dostoyevsky? How that brooding, cow-eyed youth longed for a girl to notice what he was reading! (see Can You Tell a Book Reader by the Cover?)

It would have been ideal, for Lewis, a freelance writer and playwright, nurtures the same kind of romantic notions that I once did. In her New York Times “Complaint Box” piece How E-Readers Destroyed My Love Life, she spins this fantasy: “I noticed his wavy hair, his feline eyes and his lips, which moved slightly as he read. But the first thing I noticed was his book: Philip Roth’s ‘Portnoy’s Complaint,’ one of my favorites, was cradled in his palm. Between Delancey Street and Bryant Park on the uptown F train, I fell for him hard. It wasn’t the first time I’d flirted my way into a Saturday night date with a simple phrase: ‘I love that book.’”

Today Lewis and those of a similarly romantic inclination live in a dreary, coverless e-book world. Nooks and Kindles have struck a fatal blow to one of the most time-honored gambits for amorous men and women to break the conversational ice. “I had one good pickup line, and e-readers ruined it,” she laments.

Don’t despair, Lisa! There are still hot guys reading books. To find them, visit the Hot Guys Reading Books website. I hope you find that Philip Roth-loving guy with wavy hair and feline eyes. But you’ll look for me in vain: I don’t move my lips when I read.

Richard Curtis

Apropos of our recent posting The Real Kindle Killer…