Publishing For Profit 2.1
posted: May 26, 2009
The Kindle DX E-Reader from Amazon...
At the certain risk of over-extending my welcome with the publishing for profit theme,  I want to report with a certain sense of excitement mixed with an undercurrent of frustration that the Kindle DX E-Reader (to be released this summer) has been announced just 3 months after the Kindle 2 arrived at market. The DX E-Reader is 10.4" x 7.2" x 0.38", with a display size of 9.7" high. That's 250% bigger than the Kindle 2 device. Sticker shock: $489 a pop as opposed to the Kindle 2 at $349 (same price as the original Kindle). Aren't electronics supposed to get cheaper every year?
"We knew for more than a decade that one day an e-reader would be a significant platform for distribution for our content," is what Arthur Sulzberger Jr (chairman of the New York Times) said at the release party of the DX E-Reader in NYC last Wednesday. "The Kindle DX is an important milestone in the convergence between digital and print," so said Sulzberger, "It significantly enhances our ability to reach millions of readers."

The New York Times, The Boston Globe and The Washington Post, will apparently act as resellers for the device, offering a reduced price on the Kindle DX in exchange for a long-term subscription as long as you don't live where their paper editions are available (which seems to imply that nobody will actually get this deal unless they live at some remote outpost on the frozen tundra). As with most things Kindle, specifics were in short supply.

Amazon never reveals how many Kindles have been sold. You get precious little hard data from the publishers either, except to hear chest-thumping sound-bites like "sales of E-Books are up 400% since last year!!!", which translates into: maybe they sold ten ebooks last year and fourty ebooks this year.  Why all the secrecy surrounding Kindle sales and E-Reader sales in general? After rumaging around through the available data, I think I may have at least part of the answer.

Mac vision by Isamu Sanada (who else?)...
The facts are that the Kindle and other E-Readers remain elite products and are in no way promoted as mass market consumer items - partly because of their steep price, which may in fact be largely intentional. The bottom line for right now is that printed books make 5 to 10% higher margins than their digital counterparts, so a cheap E-Reader on the market may in fact be currently viewed as too disruptive. Jeffrey Lindsay,  of  Sanford C. Bernstein says "They (Amazon) don't want to antagonize the book publishers and they don't want to cannibalize their own book sales". What this means is that Amazon can't risk lowering the price on the Kindle, simply because it might take an unhealthy chunk out of their current profit margin in books made of good ol' paper.

In spite of the bizarre economic forces at work the rumor mill seems unanimous at this point that Apple is poised to launch a tablet next year. Back in March, Rueters reported that Apple had ordered ten inch touch screens from Wintex, which is the same company that currently makes the screens for iphones. Apple arrived late to the game with both the ipod and the iphone but have created enormous success stories with both. There's no reason to doubt they can do the same with a tablet capable of delivering books as well as other rich media, but don't expect it to be cheap. The upside is that at least Apple doesn't sell books made of paper and doesn't need to concern itself with profit margins from that revenue stream.

Mockup of an OLPC Tablet...
The future has not arrived yet and the present kinda just actually sucks
The implication of the Apple rumor is that they seem to be betting on their existing touch screen technology as opposed to the Kindle, Sony and upcoming PaperLogic solutions which all rely on E-Paper. The touch screen we're all familar with has the advantage of color and speed, but the readability isn't nearly as sharp as E-Paper, which is currently limited to black and white. Recent advances at the Novel Devices Laboratory at the University of Cincinnati have proven that color is coming to E-Paper soon. GammaDynamics is the commercial arm of that project, and it's pretty cool stuff. Another strong contender in the display race might be Pixel Qi which was started up by Mary Lou Jepsen. The Pixel Qi (pronounced Pixel Chee) solution is multi-purpose with a full-color LCD mode, a low-power reflective e-paper mode and a low-power basic color transflective mode. Another contender for hearts and minds of display might be Philips. For years, Philips has been promising color e-papers and so far, none of them have arrived. Last week, they did it again with an entirely different approach to the problem that looks just a bit more promising than all their other promises.

Hack mock-up of Hearst E-Reader using the Sony device...
Hearst Publishing has been a long-time investor in E-Paper tech. Perhaps, maybe, who knows yet if their own E-Reader (under tight wraps and a shroud of inscrutable mystery for over a year now) can emerge as a true contender, or Hearst is just another paper profiteer that will release a device no one wants to pay for. CNN Money (Fortune) reported in February that Kenneth Bronfin, head of Hearst Interactive insists that "these devices will be a big part of our future". I honestly hope so. I also seriously doubt it.

I'm one of those people who just take it for granted that we'll read everything one day on some sort of electronic tablet. It's not a matter of "if it will happen", it's just a matter of "how it will happen". Jeffrey Di Leo, editor and publisher of the American Book Review may have summed up the current state of affairs best when he recently said we're "caught between our digital destiny and our printed purgatory".

Zimm May 26, 2009
Hey Gary - if you haven't seen an E-Paper device, you should go out of your way to do so soon. It's not back-lit and is non-reflective. The technology is over ten years old at this point - go catch up. No eye strain at all.
David Flaherty May 26, 2009
A friend of mine just got one. He seems to like it. All downloaded books are $9.99 I think. It's got a limited memory drive so books need to get deleted, but then one can life-time re-download for free.
Harry May 26, 2009
I am so eager to unplug, charge this, charge that, this is obsolete, that needs an upgrade. I do like the fact that I can put my book down on the nightstand, pick it up three days later and see that it doesn't need charging. Technology is good I suppose but I am happy to be left behind. I also tend to drop things like my Blackberry, and on occasion get things wet as I like to be outside. I also have a whirlpool bath and one of my quiet pleasures is to soak and read. I can't imagine the Kindle is waterproof. Now excuse me I have a cabin I'm working on. Oh yah-I love the library.
Dale Stephanos May 26, 2009
Great reporting Zimm, thanks. While I'd be the first to jump on the bandwagon, I'm going to wait until after the black and white era has passed. Here's another big issue that will have to be overcome. At our house we have 3 papers delivered daily. At any given point in the day, there are a couple of us passing papers back and forth, stealing sections while the other isn't looking, or pointing out how one paper didn't get what the other has. It's a nice communal activity hell( I'd even call it family time) that wouldn't happen with an e reader. Also, those beach books? I'd be hesitant to bring my kindle reader type thingy out onto the sand. Still, I'm looking forward to where this train is headed.
Brucie May 26, 2009
We may not like it, but it's coming, so... Thanks for the report. I hope hope hope eā€¢readers will be one bright spot (someday) for content creators.
Adam McCauley May 26, 2009
Great report Zimm, thanks for it. A lot of good comments here too, but I think you're right, it's not a matter of if but when.
Cathleen Toelke May 26, 2009
Thanks for this update, Zimm, and all the links within. I read that publishers claim ebooks account for less than 1% of sales. It's interesting about the higher profit margins for printed books. I wonder why that is? I'm also a bit at odds with how ebooks effect copyright, in that ebooks can be "in print" indefinitely. Keep the publishing posts coming! It's all good.
Christoph Hitz May 26, 2009
Call me old fashioned, I do like the double page OLPC Tablet. The big benefit of e-paper is the reflective paper mode that is a welcome change for tiered computer eyes, the low power consumption lets the Kindle function without a recharge for two weeks. I want a double page Kindle for under 100 bucks. Cool report.
Michael Sloan May 27, 2009
Thanks, Zimm, for the continuing updates, and for your perspective. I greatly appreciate it since my time is limited and I can't go out of my way to do this research myself.
J.D. King May 28, 2009
Speaking of Kindle, Josh Alan Friedman's BRILLIANT and HILARIOUS new book, "Black Cracker," is available on Kindle via Amazon. I don't (and won't) own a Kindle (I love print) but I did have the privilege of reading "Black Cracker" pre-pub. It's thee funniest thing I've ever read. Period. And poignant as well as funny. The man can write. I have a link to it on my page, towards the top.
David Flaherty May 28, 2009
My pal reports that after 1 week he feels the kindle is old technology, should be touch screen. Does not like that it does not open like a book and has to be taken out of a case to be used.