Amazon Kindle: It Isn’t The Future Of Reading, Yet | Newsweek Voices - Daniel Gross

The publishing conspiracy that's blocking an electronic version of Sarah Palin's memoir.

Oct 1, 2009 | Updated: 1:26 p.m. ET Oct 1, 2009

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If electronic books are the future—literary volumes optimized for the Kindle, the Sony Reader, the iPhone—how come two of this fall's hottest books won't be available in digital form anytime soon? Sen. Ted Kennedy's memoir, True Compass, had a dead-tree print run of 1.5 million but a pixel-version print run of zero. (It's currently No. 1 on the New York Times best-seller list.) Now comes word that Sarah Palin's memoir, Going Rogue, which will debut in November with a print run of 1.5 million copies, will not be available as an e-book until Dec. 26.

What gives? After all, other blockbusters, such as Dan Brown's The Lost Symbol or Mitch Albom's Have a Little Faith (or, as I refer to it, Sundays with Schmaltzie) don't discriminate among readers. Jonathan Karp, editor of the Kennedy memoir, cited the difficulty of translating photos into the new format as a reason not to do an e-version. But such concerns didn't stand in the way of publishing an audio version of True Compass. Why shut out a group of buyers from purchasing the product? And why isn't Amazon.com, which possesses immense leverage over publishers as a big purveyor of plain old books and the dominant seller of e-books, making more of a stink?

The answer lies in the types of books these are and in the not-always-rational price difference between e-books and hardcovers.

The Kennedy and Palin autobiographies are big, event books that appeal to passionate supporters. The Daily Kos crowd won't go rogue in big numbers, and the National Review gang has no interest in finding its true compass. As a result, the books offer an increasingly rare opportunity for publishers to help out struggling bricks-and-mortar booksellers. In the most recent quarter, same-store sales at Borders fell 18 percent. Same-store sales at Barnes & Noble were off 6 percent in the second quarter. (Here are the two-year stock charts of Borders and Barnes & Noble.) Books like these are a godsend for retailers—especially when hardcover books are the only available format. For highly motivated buyers who don't frequent bookstores, an electronic version is the best option, since it offers instant gratification. The next-best thing is to show up at a store and purchase it. Buying the actual book online from Amazon means you still have to wait a couple of days. So, the theory goes, a Sarah Barracuda fan who needs Going Rogue badly will drive over to the B. Dalton (owned by Barnes & Noble) in the Karcher Mall in Nampa, Idaho, and, while there, also pick up a copy of Glenn Beck's latest. Meanwhile, a Camelot nostalgist in need of a fix will take the T to the Borders on Boylston Street in Boston and buy True Compass—and perhaps a coffee and sandwich.

Then there's the matter of price, which is a bone of contention between publishers and the Kindle portion of Amazon's business. The Kennedy ($35 retail) and Palin ($29 retail) memoirs are expensive books. Most hardcovers these days have sticker prices in the mid-$20s. But Amazon prices most Kindle offerings at $9.99. As my colleague and former editor Marion Maneker notes, book editors believe that over time, the existence of low-priced new books on Kindle will make it difficult for them to charge premium prices for books in stores. And so, out of anger or as part of an attempt to preserve the higher price points of hot books, publishers withhold e-versions for certain books they know will sell huge numbers in print. (Adam Clymer's biography of Kennedy isn't available on the Kindle, either.)

Why isn't Amazon.com livid about this? After all, this technology firm is providing the beleaguered publishing industry a more efficient way to reach readers, and it's being stiffed on some big sellers. It may be that Amazon is losing money on many sales it makes of Kindle-ready books. With the Kindle, Amazon has inverted the old business model of giving away the shaver and selling the blades. Amazon is using the blades (cheap books, in this case) as a loss leader to induce people to pay up for the shaver (the $299 Kindle). As I understand it, Amazon pays the same wholesale price for Kindle books as it does for real books—generally 50 percent of the list price. For a typical hardback that retails for $26—say, E.L. Doctorow's Homer & Langley—Amazon pays $13 and then sells it for $9.99 on the Kindle, taking a $3 loss on each sale. (The longer-term strategy, publishers fear, is that once the Kindle gains significant market share, Amazon will negotiate lower wholesale prices for digital versions.) In the short term, though, this means that Amazon is likely to lose more money on more expensive books sold on the Kindle. It would have to pay $17.50 per "copy" of the digital version of True Compass, and $14.50 per copy for Going Rogue, but would sell them for significantly less. It may seem perverse, but once Amazon has sold a Kindle to a customer, it doesn't have all that much incentive to sell expensive books to the Kindle owner—unless it's willing to boost the prices of electronic books significantly.

And so this arrangement seems to work for all parties—except for Kindle owners. Publishers land a blow in the fight to maintain the integrity of their pricing scheme. Booksellers find that eager buyers have a reason to visit their stores. And Amazon is racking up big profits selling the books the old-fashioned way. As I write, the hardcover editions of True Compass and Going Rogue are No. 5 and No. 3 on Amazon's best-seller list.

Daniel Gross is also the author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation and Pop!: Why Bubbles Are Great For The Economy .

I have been a reader as long as I can remember. Our house was always full of books. As a child, my room had so many books in it that I was forced to stack them on the floor. There simply wasn't enough wall space.

With that said, I love dead tree books, but I have converted to eBooks. I now have both a Kindle and Sony eReader. I no longer buy dead tree books. I wait patiently for them to come out as eBooks. I do this for a simple reason: space. Dead tree books take up a great deal of space and I can't afford a 10,000 sq. ft. house. I now have almost a thousand books in the same space that used to be taken up by 2 dead tree books. Yes, that's right, 2.

Many people have many reasons for switching to eBooks. At some point publishers are going to have to face the same Waterloo faced by the Music and Movie industries. Digital media. You can fight it, but you'll just lose market share.

And for any publishers who are reading this (I hope), may I say that I and many others are becoming rather *irritated* (to put it nicely) that so many series of books are only partially published as eBooks? There are millions of older books that could be given new life (and make money for all involved) if they were published and marketed for eReaders. I realize that the older books do not come with already negotiated digital rights, but please, get off your collective duffs and make some progress here!

And for any author who is reading this, I understand your concern about piracy. Yes, it happens. I don't agree with it and I don't practice it but it is clear that many do. But here's the thing: those people would have never paid for your book in any format. They would have borrowed it from a friend or a library. By refusing to go the digital route you "irritate" those legitimate customers like myself who do pay for books.

I believe that the future of dead tree books, will be as art pieces. I believe we will start seeing more *illuminated* books, being sold for much higher prices. Only the wealthy have have enough money to afford enough room for a dead tree library. i could be wrong. But art work comes as posters, lithos, reprints, and actual artist created canvas. The artist created canvas didn't disappear when posters and reprints could be mass produced cheaply. This is my basis for thinking books will also become works of art. Publishers will simply have to accept that at some point they will have to embrace the digital world.

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Posted By: zenza @ 10/02/2009 3:37:23 PM

first of all - to petuniabug - reading on a Kindle (or Sony e reader) is nothing like reading on a computer screen - no backlighting - very restful on the eyes and the ability to increase the font at will is a lifesaver for ageing eyes!
as to the two of these political memoirs - when it's not available on Kindle -I place it on hold at my library - so the publishers are LOSING a sale, And... why should an e book cost the same as a hard copy? LOTS cheaper to produce and sell. Publishers can either move on with the times or lose sales - their choice! I "win" either way,
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Posted By: distantsmoke @ 10/02/2009 9:35:46 AM
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Posted By: distantsmoke @ 10/02/2009 9:08:22 AM

I have been a reader as long as I can remember. Our house was always full of books. As a child, my room had so many books in it that I was forced to stack them on the floor. There simply wasn't enough wall space.

With that said, I love dead tree books, but I have converted to eBooks. I now have both a Kindle and Sony eReader. I no longer buy dead tree books. I wait patiently for them to come out as eBooks. I do this for a simple reason: space. Dead tree books take up a great deal of space and I can't afford a 10,000 sq. ft. house. I now have almost a thousand books in the same space that used to be taken up by 2 dead tree books. Yes, that's right, 2.

Many people have many reasons for switching to eBooks. At some point publishers are going to have to face the same Waterloo faced by the Music and Movie industries. Digital media. You can fight it, but you'll just lose market share.

And for any publishers who are reading this (I hope), may I say that I and many others are becoming rather *irritated* (to put it nicely) that so many series of books are only partially published as eBooks? There are millions of older books that could be given new life (and make money for all involved) if they were published and marketed for eReaders. I realize that the older books do not come with already negotiated digital rights, but please, get off your collective duffs and make some progress here!

And for any author who is reading this, I understand your concern about piracy. Yes, it happens. I don't agree with it and I don't practice it but it is clear that many do. But here's the thing: those people would have never paid for your book in any format. They would have borrowed it from a friend or a library. By refusing to go the digital route you "irritate" those legitimate customers like myself who do pay for books.

I believe that the future of dead tree books, will be as art pieces. I believe we will start seeing more *illuminated* books, being sold for much higher prices. Only the wealthy have have enough money to afford enough room for a dead tree library. i could be wrong. But art work comes as posters, lithos, reprints, and actual artist created canvas. The artist created canvas didn't disappear when posters and reprints could be mass produced cheaply. This is my basis for thinking books will also become works of art. Publishers will simply have to accept that at some point they will have to embrace the digital world.