Letter Never Sent

I’m a big fan in general of ebooks as a concept and to a lesser degree a fan of Amazon and its Kindle ebook reader. I trust Amazon to deliver a good user experience, but I think open standards and a diverse marketplace are the best way to move forward. With that said, I follow the ebook business with interest as it such a newly vital market. We can credit Amazon and the Kindle with much of the recent vitality.

With the acquisition of Lexcycle, the producer of the iPhone ebook app Stanza, Amazon is consolidating its lead in ebooks. They are also signaling that it’s less about the device you use to read ebooks and more about distribution. Distribution is where the real profits lie. People buy a Kindle once, but they may purchase thousands of dollars worth of ebooks and e-periodicalsover their lifespan as a consumer. This is where Amazon wants to be. Not in making hardware, but in selling digital goods and controlling a large portion of the marketplace. The only reason Amazon really needed the Kindle was to create the marketplace. Once people are accustomed to buying their ebooks from Amazon, the device becomes irrelevant.

So, it is natural that Amazon wants to insert itself wherever people are actually reading. Although Amazon may want people to read on a Kindle, if they’re reading on their iPhones they will want to be in front of them there, too.

Amazon is also very aware of how successfully Apple cornered the market on digital music early on with iTunes. It was not until the record labels relented and agreed to sell music in open formats such as MP3 that other competitors such as Amazon were able to emerge to compete with iTunes. If Amazon can dominate ebooks as they have ecommerce in general, they will be in a similar position.

As an aside:

With the success of Amazon’s MP3 store, both iTunes and Amazon have raised their prices, which probably pleases the record industry. In this sense, competition can be bad for consumers and for merchants but better for content creators as they can play merchants off against one another.

While Amazon would prefer to sell digital music rather than not, they would most prefer to be the biggest seller of digital music. By extending their lead in ebooks, they are building their leverage with publishers and a wall against competition. Ultimately, this may be a good thing for consumers as Amazon will seek to sell as much as they can.

This entry was posted on Monday, April 27th, 2009 at 5:23 pm and is filed under Software / Internet, Technology. You can follow any comments to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.