Amazon surprised the publishing world this week by announcing the free download of books on Kindle devices for Amazon Prime members. That’s free, as in check it out from the library free, for books that are normally for pay offerings, with the added advantage that there are no due dates. It is a genius piece of marketing. In this post I’ll describe how it works and why I think this strategy is ingenious.
First, you have to understand that this offer is good only on physical Kindle devices, not the Kindle software running on your computer, iPad or any other non-Kindle device. It works on all legacy Kindle devices. Realize also that you can only check-out “up to” one book per month, and cannot check out the next one until the first is returned, but there are no due dates. Check out one now and keep it forever, just never check out another, is it. And finally, for all you schemers, you do not get a check-out-a-month credit that will accumulate or roll over. It’s one book out at a time, only one a month max, you can’t get the next one until the previous one is returned, and no points or rollover nonsense. Simple, clean and clear.
The “Kindle Lending Library” can be accessed by selecting Menu from your Kindle Home screen, selecting Shop in Kindle Store, selecting “See all…” from the Kindle Storefront (column 2 under Browse), and then selecting Kindle Owners’ Lending Library from the menu.
You will be presented with a list, in bestseller order, of 5,159 items, as of this writing. Don’t despair. You can see a categorized list by selecting “View Subcategories within Owners’ Lending Library” at the upper right of this screen. Here are the categories, and note the search box at the bottom.
(By the way, be careful with that search box. It searches all of Amazon.com, not just the lending library.) The non-fiction/fiction split represents the norm for the publishing business: 75%/25%. I find it depressing that there are so many more offerings in Lifestyle & Home and so few in Science, but that’s a personal matter.
When one takes a look at the QUALITY of the science offering one gets really depressed. The first five bestselling entries in the science category are all by “Vook,” which is a publishing platform, not a person (though the fictitious Dr. Vook is supposedly the author). Vooks are like books, only with integrated video and social networking. Having examined but one of these, I hesitate to make a pronouncement, but if the one I examined on the iPad platform is an indicator (and I paid $4.99 to find out) they are enormously disappointing. I looked at the TextVook “American Revolution 101″ and found it to be 8 very brief “chapters” in length, each headed by a cheesy cartoon, with some text pitched at about the junior high-school level. The material presented was too basic to be useful to me, but perhaps it could speak to a youngish novice on this topic. I did not download a vook on my Kindle, because I could not imagine how the video might play and I had already had a bad experience with my first vook and didn’t want to repeat it.
I noticed a couple of public domain books among the “best selling” science offerings too, Darwin’s The Origin of Species and Muir’s The Mountains of California. There were also a number of Kaplan study guides, which might be good news for students studying for state exams, but precious little, at least in the science category, that I would call really desirable assets.
The history category fares better. I had actually already read (and paid for, argh) 3 of the top five best sellers there, What it is Like to Go To War, by Karl Marlantes, Guns, Germs and Steel by Jared Diamond, and The Worst Hard Time by Timothy Egan. All quality books by recognized authors. Unfortunately, number 6 in the best seller list is Tokyo: A Brief History by, yes, Dr. Vook.
The Amazon lending library is not all fluff, but a disappointing amount of it is. In the end it really doesn’t matter—and this is part of the genius of Amazon’s approach—because it is all “free.”
Is it really free? Yes, it is. It is a value added to a service I already pay for, Amazon prime, which is like gold to me. If I didn’t get the free streaming video (the instant streaming video catalog has just as many dogs in it as the lending library does) or the free Kindle lending I would still pay for the Prime service. I buy enough physical things from Amazon to make it worthwhile, as I suspect most Amazon customers do. Amazon is only making Prime more valuable, and thus insuring my ongoing subscription.
So why is this such a great idea on Amazon’s part?
First, it motivates non-Prime subscribers to become subscribers. At $79 a year, 2-day free shipping, with the value added streaming video and books included, its a steal. Every sensible adult in America will subscribe.
Second, it motivates current subscribers to remain subscribers. $79 per year for the rest of all of our lives adds up to significant earnings for Amazon.
Third, it sells Kindles. When the $79 add-“enhanced” Kindle was announced sales really took off. This will seal the deal. Amazon has invested a lot in their Fire product, and want to make sure it goes on selling like hotcakes after the initial enthusiasm wears off. This will help accomplish that goal also.
Fourth, it sells eBooks. For those looking for reasons to join the eText revolution, this is just one more prod. For those who sample books this way and decide they want more from the same author, or more in the series, it guarantees sales of related properties. Amazon believes this so much that they actually will be paying some publishers the wholesale cost of certain titles as they are checked out. Publisher makes sale to Amazon, Amazon gives it to customer to read on customer’s Kindle, customer likes Amazon and buys more from the same.
Fifth, and furthermore, it gives added impetus to the adoption of eTexts over physical books. This is where the long view kicks in. Amazon, I believe, is preparing for the timely demise of the physical book. What they want is to own the platform on which eTexts are consumed, and also, by the way, to be the one who sells you the eTexts. This offer will seal the deal for many people. Amazon’s long term goal is to create a Netflix of books, or rather, eTexts, where eTexts become a service, not a property. They are making efforts with publishers and at the same time circumventing publishers to achieve this goal. Like it or not, ingenious marketing efforts like this, in concert with their marketing muscle, almost guarantees they will be the winner of this contest long before publishers become aware there is even a contest to be won.
Investors often complain that Amazon doesn’t pay much in dividends because they are always investing profits to build the business. With strategies like this, I wouldn’t worry too much about their long-term profitability.