Arnold Kling  

Kindle-nomics

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I Like Ike... The Iceberg Groweth...

Joel Johnson writes,


the $400 premium just to get the Kindle reader isn't the last fee you'll pay. I'm not talking about paying for eBooks from Amazon, which are priced typically at $10 or less, but for the additional fees tacked onto the data—the words—that are pushed down to the Kindle automatically. Subscribing to a blog via the Kindle service costs $2 a month. Newspapers run around $15 a month. All for information currently available for free via the web and RSS syndication, not from copyright violators, but straight from the publishers themselves. (Boing Boing is also available via Kindle's blog service. We are also available on the web.)

The reason, I suspect, for the nickel and diming from Amazon is the always-on EVDO connection. While some of the cost that must be paid to the wireless carrier are surely cooked into the initial price of the Kindle, the costs tacked on to content subscriptions are an attempt to recoup charges Amazon will incur from Sprint over the life of an active device.

There's nothing inherently wrong with spreading the cost of the wireless subscription over separate subscriptions. In some ways it's similar to the "cafeteria" plans that some customers have been asking for from cable vendors for ages.


He is referring to an exciting new product from Amazon that is sort of like an iPod for books.

My take: I like the idea of giving away the connectivity and making you pay for hardware and content. With cell phones, they charge you for the connectivity and give away the phone. To me, that simply serves to maximize the amount of billing overhead relative to service provided. I hope that if nothing else Amazon starts a trend in the direction of getting rid of monthly bills from network connection services.

I prefer the "cafeteria" plans of cable to the per-download model of the iPod. I don't want to pay for the Times or the Post. Instead, I would like to see a "news/opinion" channel that lets me get the front section and editorial section of top newspapers. I don't need the sports sections--they can be aggregated into a sports channel. Of course, I have been arguing for this sort of re-bundling of newspapers on line for close to ten years, and it still has not happened.

I also would prefer a "cafeteria" plan for book downloads. Having to pay separately for each book creates a disparity between price and marginal cost, not to mention a lot of mental transaction costs.

A basic plan would let me download, say, 10 best-sellers a month for a fee of, say, $15 a month. I can pay more for a higher download rate. Actually, I would not even want the basic plan--I read relatively few mass-market books. Which gets to why I have not ordered a Kindle.

The show-stopper for me on the Kindle is the limited selection. None of the books that made a splash on this blog in 2007 seem to be available. No Myth of the Rational Voter, no Farewell to Alms, no The Forgotten Man, no Discover Your Inner Economist, no Radicals for Capitalism...If there were a "premium channel" for political economy that included these sorts of books, then I might be willing to pay $50 a month for a subscription. But I would actually have a hard time finding books I want to read if I were limited to the mass-market fare offered with the Kindle.



COMMENTS (7 to date)
Dr. T writes:

Bizarre. Amazon.com, a company that exists only because we can buy and sell goods via computer, creates an expensive electronic book reader whose main selling point is that you don't need a computer to add content. I cannot imagine how they came up with such a device. I predict poor sales, then drastic price cuts, and then death at a young age.

Brad Hutchings writes:

I'm with Dr. T I think. The PC isn't dead. It's even more the center of our digital worlds than ever before. I disagree with Arnold on connectivity. It will continue to sell stand-alone because people will pay a premium for high speed and low latency up and down. For example, the high end consumer cable service I now buy is 2 Mbs up, 10 Mbs down, and worth the extra $20/month after the first morning of uploading largish content.

But I'm also bullish on appliances that do specific tasks better than PCs. So I love my cell phone, my iPod, my Wii, my Palm TX, etc. And I think I'd love the Kindle as a book reader. I'll wait for the second generation after customers have revolted enough to make the non-book premium content a slight distant annoyance rather than a constant temptation.

8 writes:

I like the idea of digital ownership. Once you buy a book, you have the right to download it whenever you want, over and over again if you delete it. It's kind of how Netflix works, in a way. Although I can't keep the movies, I can always access any file in the library at a fixed monthly rate.

Music doesn't work that way. If you delete a song, you're SOL.

David Friedman writes:

"A basic plan would let me download, say, 10 best-sellers a month for a fee of, say, $15 a month. "

I believe Baen, an sf publisher that has been a leader in treating the internet as an opportunity rather than a threat, has something similar. You pay them a fixed sum for which you get to download all of the new books they publish that month.

Ajay writes:

And the final problem Arnold notes is precisely the problem with bundling: now that the internet opens up a world of disparate content, nobody is going to be able to bundle exactly what you want from that smorgasbord any longer. The only solution is to pay for individual pieces of content quickly and automatically, using micropayments. Of course, the state of online payments is pretty backward: you have to spend too much time even when you buy paper copies of books on a website. What's even more laughable is people writing stuff online and then bundling it all together into a book and selling it because it's the only way they'll ever make money off of that content, probably padding it out in the process as many writers do to make it seem more worthwhile (though this happens all the time with books, even more so when it's not originally online content). This will all change once a workable micropayments system is deployed, and much more too, but until that happens there's just going to be a lot of people running around blindly.

Shawn writes:

...this is a prime candidate for RockBox.

Once this thing gets hacked, and gets some more open firmware, it will actually be useful.

ross Levatter writes:

I'd guess most of us like the fact that books are portable. The Kindle is portable. But it does not fit into one's pocket, like an iPod or iPhone.

Sometimes, when I'm at a restaurant or business office, carrying a book with me, I leave and forget the book. Sometimes I remember it in time and go back. Sometimes I don't. In the worst scenario, I'm out a $5 paperback.

I don't want to be out a $399 computer. (And I suspect, unlike a book that might stay on the table after I leave for many minutes, a Kindle might be snapped up quickly.)

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