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I just got my kindle and already bought several books. I hear from most people who bought it that they do in fact buy a lot of books once they get it. It's a simple as buying music in the iTunes store.

So this got me thinking. Would it make any sense for the publishing industry and their related outlets to subsidize the readers?

In other words should they follow the mobile phone model where you give people the hardware and cash in on the book purchase.

Anyone know of any calculations done around this?

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By subsidize do you mean pay the readers for reading e-books vs print books? – StarrEd Jan 27 '10 at 10:32
Tried to make it clearer. I mean pay for the ebook readers so they can be sold much cheaper just like the mobile industry did. – ThomPete Jan 27 '10 at 11:33
Well how much can you buy a cellphone for today? 1 Dollar? I am aware of the tariff laws. But that is besides the point. – ThomPete Jan 27 '10 at 17:01
Either you are missing the point or I am not doing a good job at explaining myself. Whatever it is I think this discussion is fruitless. If you don't buy the idea about lowering the cost of the ebook readers just like the mobile industry did then fair enough. I personally believe that cost both will and should go down on content as the cost of production and distribution trends towards zero. If you make up for it in sales of books whether you make a subscription plan or something else by making it easy to buy then I believe there is an opportunity and that is what I am asking about info on. – ThomPete Jan 27 '10 at 17:31
Of course they lowered the cost. They lowered the cost of entry which is the point here.. If you want to start a market you need there to be people on that market. If you make it cheap for people to get into the market you are increasing the chances of that market to grow. It doesn't matter what the real cost is. Consumers don't buy based on real cost that is why things like loans, leasing and other methods of lowering the cost for entry exist. – ThomPete Jan 27 '10 at 18:03

3 Answers

up vote 1 down vote

The model that the phone companies work with is a subscription model. The hardware enables the service so they can make money on text messages, phone calls and Internet access. If publishers wanted to adopt this model, they would have to get a monthly subscription fee in order to give away the hardware.

It's an interesting model to think about. The downside is that the service (e.g. the book content) is up to the subjective tastes of the user. This means that getting a user to sign up for plan would require coordination across the entire industry. I don't think a publisher could do that but maybe someone like Amazon could since they are a reseller for all publishers.

The calculations would probably go similar to the phone company plans. Some sort of contract duration that would pay for the hardware in like 2 years. I do think the problem with this type of model is that the phone company has you captive, to a certain extent, on it's network. That might be a bad thing for an eBook reader in terms of adoption.

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The only reason I thought about this is because those I know who bought it actually have bought quite a few books. Much more than they would normally. If an ebook costs 10-25 USD and the Kindle cost 259.00 USD That is 26 books at tops not taking into account what you save on selling a digital book instead of a physical one with shipping and everything. – ThomPete Jan 27 '10 at 13:43
It's an interesting model that might have some legs. Look at cable TV and Cellphones. The trick is making the wide array of content easily available. – Jarie Bolander Jan 27 '10 at 20:41
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According to this, it is actually working the other way around. One of the reasons is the greed and idiocy of the entrenched publishers...

"Amazon’s goal has been strategic: it aims to establish a low price for e-books that will have the ancillary benefit of helping it sell more Kindle devices."

The article also points out that in some cases amazon loses money on the ebook sales - in hopes that it will drive up sales and market share for the kindle.

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I have no illusion about altruistic publishers. I was simply saying asking whether it would make more business sense to subsidize the readers so that people would buy more books as I have seen an indication they will when I talk to other kindle users. Debating whether they will was not the point. The question is whether it would be a better business if_they_did in the long run and I believe it will as the iTunes store have shown. – ThomPete Feb 1 '10 at 16:00
They are apparently entrenching themselves. One possibility they are doing this is that they don;t want to make deals with so many vendors. They are products of a CLOSED industry/business model. They are going the way of the dinosaur and I guess circling the wagons. They obviously can't see creative ways to solve the issue and are clinging to the only business model they know: overcharging for a service that is hardly needed any more. – TimJ♦ Feb 1 '10 at 16:27
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You're looking at it from a, "Give them a razor and sell them the blades." approach, but unlike developing an electronic reader with wireless connection, razors are pretty cheap. And another problem is the market for electronic books has not grown enough and there are few players in the game (Sony, eReader, Kindle, Google and soon Apple). The competition is going to pick up with Apple and the iPad.

Amazon is trying to expand the market and gain control by offering as many book titles as possible. They do not want a public perception that there are popular titles that are unavailable, so they pay the publisher in order to sell a book for $10. Why buy a Kindle if you run the risk of not being able to get the next best seller?

Now if you can get a Kindle for next to nothing (Like the Kindle on PC which is free) you may not be as concerned with trying to recoup your upfront investment in the device by getting all titles at a discount compared to the paper version.

I use the eReader (free software) on a Windows Pocket PC phone. These phones, like the iPhone are not cheap even if you get the 2 yr data plan contract.

I have no clue where this market is going, Amazon is trying like hell to be there.

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