Fear the Kindle
Amazon's amazing e-book reader is bad news for the publishing industry.Posted Thursday, Feb. 26, 2009, at 5:14 PM ET
It's hard not to love Amazon's new e-book reader. For starters, it's gorgeous. Unlike its bulky predecessor, the redesigned $359 Kindle, which came out this week, is light, thin, and disappears in your hands. If you think there's no way you could ever get used to curling up with an electronic reader, you haven't given the Kindle a chance. Load up a good book and you'll soon forget you're reading plastic rather than paper. You'll also wonder how you ever did without it. The Kindle makes buying, storing, and organizing your favorite books and magazines effortless. You can take your entire library with you wherever you go and switch from reading the latest New Yorker to the latest best-seller without rolling out of bed. In my few days using it, I was won over: The Kindle is the future of publishing.
And that's what scares me. Amazon's reader is a brilliant device that shanghais book buyers and the book industry into accepting a radically diminished marketplace for published works. If the Kindle succeeds on its current terms, and all signs suggest it'll be a blockbuster (thanks Oprah!), Amazon will make a bundle. But everyone else with a stake in a vibrant book industry—authors, publishers, libraries, chain bookstores, indie bookstores, and, not least, readers—stands to lose out.
To understand why, consider how simple it is to buy books on your Kindle. You press a button to take you to Amazon's store, type in a title or author, and press Buy. In 10 seconds, the book's yours. Everything is automated: When you buy the Kindle, Amazon pre-syncs your reader with your account info, so there's no need to type in a credit card number or billing address. There's no need to connect the Kindle to your computer, either—it comes with free, built-in cellular Internet access that lets you buy books from just about anywhere. In addition, Kindle books are cheap, the majority selling for $9.99 or less. Consequently, as Amazon CEO Jeff Bezos told investors last month, Kindle owners are voracious book buyers. According to the company's stats, when people get a Kindle, they keep buying the same number of physical books as they did before—and they buy nearly twice as many e-books as paper books.
In exchange for this convenience, though, the Kindle locks you down with more rules than the Army Field Manual. The Kindle won't let you resell or share your books. Anything you buy through the reader is fixed to your Amazon account, readable only on the Kindle or other devices that Amazon may one day deem appropriate. (The company has hinted that it'll build an iPhone app that can read Kindle books.) Even worse, you can buy books for your Kindle only from Amazon's store. Indeed, the device makes it difficult to read anything that's not somehow routed through Amazon first—you can surf the Web on the Kindle, and you can convert some of your personal Microsoft Word or text files to the device's format, but doing so is slow and not very reliable. In order to read blogs, magazines, newspapers, and books, you've really got to go through Amazon's store first.
You can see where this is going: Kindle owners buy a lot of stuff, and the more stuff they buy, the more likely they are to stick with the Kindle in the future, even when/if someone else invents a better, more open e-book service. This restriction makes Amazon the prime market for book publishers. How can they resist giving over their entire catalog to a store that attracts so many eager, captive shoppers? Publishers' acquiescence in turn increases the Kindle's appeal to new buyers. If you're in the market for an e-book reader, you'll probably choose the one that offers the most books, and that means Kindle. (At the moment, there are about 240,000 titles available for the Kindle; the Sony Reader, its closest rival, has fewer than 100,000.) Taken together, these trends all point in one direction—Amazon will come to rule the market for e-books. And as the master of the e-book universe, Amazon will eventually call the shots on pricing, marketing, and everything else associated with the new medium.
The Kindle isn't the first electronic device to impose unpalatable restrictions on users. Until recently, if you wanted to (legally) download a broad range of major-label music for your iPod, you had to buy it from Apple.* (Ironically, it was Amazon that launched the first big online store that sold music without restrictions.) The same goes for video games. You can't play just any game on your Xbox. You can play only the games that have been approved and licensed by Microsoft. Then there's the iPhone, a veritable electronic Attica. The iPhone lets you buy music wirelessly—as long as you buy it from Apple. The iPhone lets you add new programs to your device—though only the programs that Apple approves of. Other than that, you're free to do what you like!
But the Kindle's restrictions are more worrying than those associated with the iPhone, the iPod, and other gizmos. For one thing, if you objected to the iTunes Store's policies, there was always another way to legally buy music for your iPod—you could buy CDs (from Amazon, perhaps) and rip the tracks to MP3. That's not an option for books; there's no easy way to turn dead trees into electrons. Moreover, books are important. As a culture, we've somehow determined that it's OK for a video-game console maker to demand licensing fees and exercise complete control over the titles that get on to their systems. Sure, this restricts creativity and free expression, but if that's the business model that keeps the game business alive, so be it.
But we've come to a different cultural consensus on books. First, we've decided that books should be sharable—when you buy a book, you can pass it along to others freely. In fact, governments and large institutions actively encourage the practice; we build huge, beautiful buildings devoted to lending books to perfect strangers. We've also decided that there should be an aftermarket for books: When you buy a book, you're also buying the right to sell that book when you're done with it. This not only helps people who can't afford new books, it also encourages those who can afford them to buy more—it's much less risky to buy a $30 hardcover if you know you can sell it for $15 in six months. (Amazon is one of the biggest players in the used-book market.) And we'd certainly balk at a world in which your books were somehow locked to the store where you bought them. Say Barnes & Noble signed a deal to sell the next Twilight book at a huge discount. But with a catch—the book would be published in invisible ink, and in order to read it you'd need to buy a special Barnes & Noble black light. This is ludicrous, of course, and no bookstore would ever attempt such a deal. But what's the Kindle other than a fancy digital decoder ring?
Some publishers, wary of the Kindle's restrictions, have declined to make their books available for the device. Tim O'Reilly, the tech book publisher and digital evangelist, wrote in Forbes recently that the Kindle's requirement that all books be bought through Amazon was "a non-starter for us." O'Reilly instead chose to publish e-books using the open ePub format, which can be read on devices like the Sony Reader and the iPhone but not the Kindle.
But many publishers are wary of going the open-standards route. The best way to make e-books sharable and to untether them from proprietary devices like the Kindle would be to sell them without copy protection—but the book industry, like every other content business, is paranoid about piracy. Record labels fell into the same trap: They demanded that Apple impose copy restrictions that forced iPod owners to buy music through the iTunes store. But that ended up making Apple the nation's largest music retailer, with the power to single-handedly determine the price of all recorded music.
"Everyone is worried that Amazon will end up becoming to books what Apple is to music," Paul Aiken, executive director of the Authors Guild, told me. (Aiken's group has criticized the Kindle's text-to-speech feature, which automatically creates a kind of audio book from an e-book; the guild says that Amazon should compensate authors for reading their books aloud. But that's another argument for another time.)
Aiken points out that even if Amazon does create a Kindle app for the iPhone and other devices, the service will still have the same fundamental problems. Your books will still be locked to Amazon—you'll just have two or three places to read them rather than one. At the moment, Aiken notes, Amazon is selling e-books at a loss in order to spur Kindle sales—it sells books for $10, but pays publishers more than $10 per copy. But once Amazon gets control of the market, it will be free to impose price reductions—to force publishers to reduce their e-book rates to less than $9.99. "That would be potentially devastating to the industry," he says.
And even if the publishing industry isn't devastated when a single bookstore takes over the e-book world, the marketplace for books will be diminished. Amazon stands as proof of how innovative retail practices can transform an industry; over the last decade and a half, the company revolutionized the book market with innovations like customer reviews, collaborative filtering, one-click shopping, and unbeatable customer service. It launched all these services to stay ahead of its rivals. But what will happen when it has no rivals?
Correction, Feb. 27, 2009: This article originally stated that Apple's iTunes Store was for many years the only place to legally download music for the iPod. It was the leading online purveyor of music produced by major record labels. (Return to the corrected sentence.)