Jun 4, 2009

Incentivizing the Kindle

I, like most bibliophiles, have a lot of money invested in my physical book collection. I purchase a lot of books in hardcover, display them proudly on my shelf, and take great care of them. I even manage to read paperbacks without breaking the spine, much to the amazement of my friends and family. I love my bookcases filled with books. Taking this into account, the potential e-book revolution scares me.

I like the concept of the Kindle. A portable library that doesn't take up suitcase space? Sign me up! Getting books almost instantaneously? Heck Yes! $360 for the device (480 for the deluxe) plus $10 electronic books that I can't put on a shelf? Uh...what?

I get most of my books from Amazon, HCs around 15-19 (let's call it 18), PBs around 6-8 (let's call it 7). Assuming I buy as many PBs as HCs that's $25 for 2 books plus free shipping. For $360 dollars I can get 29 more books. If I wanted the Kindle and the 28 books, it would cost me around $650, and thats assuming that all of the books are available in Kindle format. That's 52 more books.

Even if you save $2.00 per Kindle book, it will still take 200 books before the Kindle has paid for itself. If you read 40 books a year, 200 books would take 5 years, more than enough time for Amazon to release Kindle 3,4, and 5.0. And that's for e-books, which have no physical form, no pages, no shelfability. What happens when the Apple iReader comes out and the Kindle books are non-transferable? Where does that leave my library?

Even if I was willing to shell out the money, there is also no assurance I will enjoy reading on the Kindle. I've downloaded the Kindle app for my iPod and read some sample chapters. That wasn't for me. I understand the Kindle is bigger with a different screen but until I sit down and read a couple of BFFs (Big Fat Fantasy), I don't know whether it would be for me or not.

So, in my mind it's going to take some incentive to get me to shell out a good chunk of change AND give up my comfort with the physical books. The Kindle is not an iPod; I can't buy one and fill it with the books that line my shelves. It's not as simple as buring your CDs to MP3s and dumping them to your iPod. But what if you could?

Amazon is in a unique situation as they are both the #1 internet book seller and the producer/seller of the newest big name e-Book reader. The Kindle is linked to a specific Amazon.com account. I know this because you can send samples of books from Amazon.com to your Kindle/Kindle app while you are browsing. If the Kindle knows what sample books your Amazon account requests, why can't it also know what physical books have been purchased by your Account? If I could buy a Kindle and it would come with free/low-cost (.$25-$1.00) electronic copies off all of the books I've bought off Amazon in the past 6 months/1 year/since Kindle go-live, I would definitely reconsider. Then you are getting about as close as you can get to an eBook iPod, short of including CDs inside every cover.

I'm thinking there are at least 3 business models that Amazon is in the unique position to take advantage of.

Option 1 (Conservative): Buy a Kindle and get the option to purchase a Kindle
Copy of any physical book already purchased on your linked account for a low
cost. You've already bought the hard-copy, chances are you won't pay another
$5-10 for the Kindle copy but you might be tempted to get one for a quarter or
two.

Option 2 (Decent): Buy a Kindle and get the option to download a
Kindle Copy of X number of physical book already purchased on your linked
account. If I can put 10/20 free books on my Kindle, I'm much more likely to try
one.

Option 3 (Awesome): Buy a Kindle and you get free Kindle copies of
all the physical books you've purchased/will purchase from Amazon.com on the
linked account. It's the equivalent of burning your library (or at least the
Amazon.com purchased portion of it) on to your Kindle. If I could do this, I
would buy a Kindle today. I could have my physical books and have the
portability/instantaneous delivery of the Kindle.


The worst case scenario I can see is 2 people sharing the account, one person getting the physical copies and the other getting the physical ones. You are still selling Kindles and it's no different than people simply passing the physical copy off to their friends when they are done with it.

The best case scenario on the other hand would have a number of benefits.

  • People buying more Kindles (I would get one)
  • People getting used to reading on the Kindle
  • People potentially switching to Kindle full-time (which is more profitable due to no shipping, warehousing, or physical paper cost),
  • Added incentive to purchase books from Amazon rather than other retailers.
  • Satisfying the bibliophile technogeeks that love both tech and books and don't want to choose.
I think that this would be a brilliant move for Amazon. What do you think?

P.S. If anyone from Amazon reads this and likes it, a Kindle (and some stock options) would be appreciated.

43 comments:

  1. This is a great idea. I too am very, very hesitant about the Kindle because I like my books in physical form--but as someone with truly heinous back problems, the lure of carrying around a virtually weightless book with me (while still having the real one back home) is huge.

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  2. A pretty neat idea, but what would you do about royalties to the author on the free copies? I don't know that Amazon would be willing to eat it.

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  3. People break the spines on their paperbacks? Barbarians!

    I have no interest in the Kindle. Not for that initial investment. And I still can't put the ebooks on my bookshelf.

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  4. I don't really see the Kindle being that good in the long term until they make it available and functional outside the US.

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  5. For the most part, I believe, publishers charge Amazon (and other distributors) the same amount for e-book copies as they do for the physical books. This means that for some of the e-books Amazon is selling for $10, they are already taking a loss. It's hard for Amazon to do much about pricing when the publishers are the ones not willing to drop prices on e-book copies, even though said e-books cost far less to store and move around.

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  6. Actually, a hybrid of two and three. What if you could download an electronic copy to your kindle if you by the hard copy (isn't this happening with DVD's now?) and perhaps apply 80% price of the electronic copy to the purchase of a hard copy, if you choose? This is somewhat akin to how Apple allows you to "upgrade" to a DRM free version of a song you've bought for your iPod.

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  7. Well, as a Kindle owner, I can say that the true value comes from having more time to read because you always have your library with you (assuming you carry it everywhere, like I do). I do like your idea, but since publishers are mad as heck at Amazon as it is (someone called $9.99 a paltry amount to pay for a book!) I don't think Amazon could get it to fly right now. ... which is not to say they might not adopt something similar in the future.

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  8. Wil Wheaton just tweeted about this post - you might get a call from Amazon soon!

    I'd also like to see an option for a low-cost book ($2-5) in exchange for a receipt showing that you donated the SAME book to a charity. The Book Thing in Baltimore takes all books, and other charities can use books for fundraisers and the like. I'd actually be fine with replacing my physical copies with digital ones if I could get them cheaper.

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  9. To Harfner - "what would you do about royalties to the author on the free copies" - how is that any different than the royalties that don't get paid for a book that gets loaned out?

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  10. This is *EXACTLY* what I said when the Kindle was released. Which makes me kind of dumb for not doing a blog post about it at the time, I guess, so kudos to you for that. ;)

    If they would let me download my prior Amazon purchases for free (or for a trivial cost), I too would purchase a Kindle immediately with no hesitation. And it seems like a thing that, for them, has very little downside.

    It's a little pie-in-the-sky to think that they'll take a step like that when apparently they're selling them just fine without it, but here's hoping. ;)

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  11. The only problem with this is that each suggestion starts with: "Buy a Kindle".
    Damn. I don't know about you, but I WISH I rolled like that.
    I'd love, dearly, to have a Kindle.
    I'm hoping one day they'll offer refurbished ones like Apple does its iPods.
    (You hear that Amazon? REFURBISHED.) Then I might consider getting one. Might.

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  12. You seem to think that Amazon can do anything it wants with any book it sells. Wrong. Amazon is just a retailer. The rights to the books are controlled by the authors and publishers (whom you don't even mention in your proposal). You would have to convince them to go along with your idea. Why would they?

    Also, you assume that everyone buys all their books from Amazon just because you do. I assure you that isn't the case. Most of my books came from other sources, so your proposal would be worthless to me.

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  13. A good idea, but it could be made better by the offer to get steep discounts on future book purchases if you get both formats. The physical and electronic copies would sell separately for the same, but combined would be one and a quarter the price of the physical book. The extra quarter would go to the author. Amazon would still get the profits off the physical book and the Kindle.

    This would nullify the disadvantage for those of us who still frequent local bookstores over Amazon, while driving business to Amazon and giving valuable stats on the kinds of books people read on the Kindle. Amazon can use those stats to drive other business ventures and improve the Kindle. If the option is popular, publishers and authors would see that and push to be on the platform, increasing the Kindle's market pull.

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  14. I doubt that will fly, though. Having a physical copy of a book and a digital copy of a book is no different than having a VHS of a movie and a DVD of a movie. We all had to buy DVDs to replace our VHS tapes when we wanted to move on to the new technology. This is no different. You now have *two* copies of the book. I'm not disagreeing with you in principle. You have described the exact problem I have with the Kindle. But from a business perspective of authors and book houses, I doubt that would ever fly for royalty reasons. I appreciate the ripping analogy, but book industry folks view it much more like the VHS/DVD scenario. (I have an author friend, and we had this very same discussion just a couple of months ago.)

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  15. I could totally go for that and if it was the case I'd buy ALL my books from Amazon.

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  16. Ron Burgundy: I'm very important. I have many leather-bound books and my apartment smells of rich mahogany.

    Just had to throw that quote in there.

    Obviously, I think the benefit of the e-book for the publisher is that they have no printing cost associated with it. After paying the royalty, they save the amount that would have gone to printing. If you sell the book and the ebook download, ala DVDs, you don't save that cost.
    I think they can do it with DVDs because those little disks cost next to nothing compared to what a 400 page hardcover book would cost.

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  17. A lovely idea, but it's not gonna fly.

    First because, as others here have commented, many publishers are stupid and evidently think that e-books are an opportunity to get bigger profit margins by eliminating printing and distribution costs but selling at the same price.

    Second because Amazon and many publishers would fear a flood of used books from Kindle owners entering the market, driving out sales of new books.

    The music industry made a fortune from people buying their vinyl albums again on CD, and the book industry will be slow to understand that e-books do not represent an opportunity to do something similar.

    I strongly suspect that Amazon is wiser than that, but it doesn't help. They have to deal with publishers, and they aren't trying to make money by selling Kindles, they're just trying to establish a platform well enough that when e-books become a major market they will have a head start on controlling the dominant platform.

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  18. I just got my kindle less than a week ago and so far I love it. Like you, I take extremely good care of my books, even down to not breaking the spine of paper backs. But honestly, I was running out of room in my little condo for all my books. They are in shelves, in drawers and in tote boxes in closets. My place is bursting at the seams.

    As to whether or not you will like it, you realize that Amazon will let you try it for 30 days right? I'm pretty sure you can just return it if you don't like it. I believe they also pay for shipping.

    But so far, I'm very impressed with the e-ink technology. I've read for 4 hrs straight with no eye strain. It is a bit heavier than I would like, but I'm getting use to that.

    I actually sold an unused home gym to pay for it, so it really didn't cost me very much. I guess not everyone has that option.

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  19. I keep hearing about how you can carry so many books around in your pocket, but I only read one at a time. This means that the Kindle advantage becomes the size difference between a Kindle and ONE book which isn't all that great.

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  20. When you consider that a paperback book sells for $8 now and most of the books Amazon sells are paper (compared to hardbound), selling a title for a mere $10 is still $2 more than a paperback copy... and wonder of wonders, once the Kindle fills up, you've got to dump something to add more! In other words, you end up wasting not only the money to buy the Kindle, but also all the money you spent to fill it! There is no means currently available to store or back up your electronic copies in any other device.
    In other words, the Kindle is a complete and utter waste of money if you are a heavy reader (bibliophile.)

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  21. I'm a barbarian and I think they should take it a step further: tear off the covers of all your existing dead-tree versions and send them in. Every book you send in, you get the kindle version for 99 cents. The title is added to your account so if you lose/break/buy a new kindle, you can re-download them.

    Haven't you ever seen that blurb in books (penguin paperbacks I think) that says if you bought this book without it's cover, it was an illegal copy? I seem to recall when I was 13 and working at a pharmacy sweeping up that they would cut the covers off of books and magazines and send THOSE back to the publisher for credit and then bin/recycle the rest of the book/magazine.

    Personally, I'd like to get rid of shelves altogether: books ,CDs, DVDs (VHS were all pitched years ago) but that's just my own anti-clutter OCD effect :)

    My main concern with eBooks is like in the OP: what happens to my library if I switch to other hardware? at least with MP3s they'll play on anything, Kindle format books will only play on your Kindle.

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  22. I'll weigh in since I actually own a Kindle - got in 4/2008.
    Any one of your suggestions would be a nice bonus, but you'd be surprised how many people re-purchase books already. I re-purchased many DTBs so saw no barrier to getting a Kindle copy when I was ready for a re-read. Thats what I did with the LOTR and The Hobbit when they were released for Kindle. I have purchased the DTB version at least twice, so no biggie on paying for a Kindle version.
    I don't want to step too far out on a limb to defend Amazon, but from most accounts they're losing money on the NYT versions that they offer for $9.99.
    I'm not a bibliophile, just an avid reader, I don't need a shelf full of books, just their content. I didn't ask Apple for free albums when I dished out $230 for an iPod, so I never would have thought about asking Amazon either. Especially when there is SO much free content out there.

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  23. Not being able to 'copy' my existing book collection and/or having physical copies of my books are only a couple issues I have with the Kindle.

    Two more are:

    1) The price of the eBooks. I don't know if it is the publisher's fault or Amazon's, but with a physical book I see what my money is spent on. I can hold it. With an eBook, it is a file. It seems to me they can charge less for a file. I could be wrong since I'm not an expert at the process of publishing/selling, but that is my gut feel about the prices.

    2) An eBook is non-transferable. An mp3 file can be played on any device while an eBook is tied to the device you bought it for. If you want to switch to a new device, too bad, so sad, you lose your books. If you find a better price for an eBook at another store, can't take advantage of it. Buying a Kindle is like saying you will always by your books from Amazon. Good for them, bad for market competition and the consumer. Until there is a common file format for eBooks, I won't buy any eBook reader device.

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  24. By the way--Did you know that the printing cost of a book is only about $3? There's obviously some cost in making certain the book is as good as it's going to be, but it certainly means that an e-edition should be $3 LESS than the price of a paperback, not $2 more!

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  25. As the owner of an older ebook with a different closed DRM scheme, I've been waiting to see if a better, more generic format appears before I buy new hardware. I don't want to have to buy my books a 3rd time. Having Amazon credit me with books I had bought from them would be a big point in their favor.

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  26. An application I think might be useful for the Kindle deals with college textbooks; I particularly like the idea that a student could buy a Kindle as a freshman and pays a fee for a semester-long lease of the appropriate text for each class (this lower fee would be, one hopes, cheaper than the cost of the physical textbook, of course).

    There are colleges that give students laptops as freshman - it seems that this could be as an equally useful tool in education that can be used throughout the college career.

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  27. I have more books than I can really fit in my small apartment and also take great care of them. As such, I agree with all that you've said. However, being a "bibliophile technogeek", I couldn't hold out any longer and ordered a Kindle2 a few days ago.
    I have the Kindle app for my iPod Touch as well, but don't think I'd care to read an entire book on it. Shorter text pieces are OK , perhaps.
    It would be great if you could get a Kindle version of the books you've already bought at Amazon. Even if Amazon charged a dollar for that copy, and split that fee with the authors (as a royalty), it would seem a fair deal. It really doesn't cost Amazon anything to transmit that electronic book to the owners' Kindle.
    And I agree the Kindle price (I read that it costs Amazon about $185 to manufacture a Kindle) is too high, but as long as sales continue to remain steady, Amazon has no motive to lower the price. Only when sales start to dip will they probably consider lowering the price. Competition from other eBook readers may also force the price lower.
    And you just know, in a few years, there will be a full-color version, so I better start saving my spare change now. :)

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  28. Great idea! I bought a Kindle, but have been let down by the costs of ebooks. Frankly, I can go buy hardcovers from WalMart cheaper oftentimes...

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  29. Oh my goodness yes!! The kindle hasn't interested me at all because:

    a) it costs a lot and I don't gots a lot, and
    b) it's a single-purpose device. I dislike single-purpose devices, especially expensive ones.

    However, I would really like to like the kindle, but I'm not there yet. With your idea, I'd be sold and reasons A & B above would be well overuled but the added value!

    Please Amazon, listen!!

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  30. "You are still selling Kindles and it's no different than people simply passing the physical copy off to their friends when they are done with it."

    This is the killer for me. Publishers taking notes on the movie and music industries' business models is a bad, bad move. Now, if Amazon came up with a way for me to sell my digital copy to another Kindle user for half the price I paid, I'd rethink this. But this is senseless from the standpoint of commerce.

    The thing is, why would Amazon traffic a digital copy of a book they sell for twice the price? They wouldn't. Bits are free and there is no incentive for them. Nevermind the fact that bits aren't physical, and there's no way to "transfer" the ownership of those bits to another individual. But in my head, I should be able to do this, because I can do this with the physical form of a book.

    The real impact for me is in cost. I read, but I buy paperback, and usually only used paperbacks. Which means the most expensive books I purchase are around $10 after shipping, $5-$8 in my local used bookstore. Paying $10 for each digital copy, never mind the $400 for the kindle itself, is ridiculous.

    Probably the only way I'd consider a kindle right now is if it came with 20-30 free books. Sure, Amazon is eating into their profit on the hardware to pay each author their cut, but I bought the device, and presumably I would wind up hooked in the end. I don't particularly care to have copies of the books I already own (unless I have yet to read it, I suppose).

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  31. To touch again on what I mentioned earlier, a great market for e-reading is students--particularly literature students like myself. I had to get surgery this past March for back problems, and every day before going to class I need to look at my large stack of books and decide which ones I can do without for the day because they're just too heavy to carry. If there were a, say, $150 eReader that could only carry academic books requested by the university, I would be all over that (so long as I could scrawl notes on the electronic copy with some sort of pen device like they used to have with old PDAs). If the Kindle can be marketed to specific groups of people like that, it might do better. Right now, it's just too much, for no good reason.

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  32. Another great option would be to allow you to purchase e-books for discounted price books that you have gotten elsewhere.

    This wouldn't be as difficult to do as you might think; mail to Amazon the entire front cover of any paperback, or the jacket of a hardcover, they would process and then make available for say $2 those books onto your kindle.

    This has the 'benefit' of making the original book non-resalable so that the author/publisher does not have a problem.

    Still and all, i don't see the kindle or e-book readers taking significant market share until they figure a way to spread the cost out first. Maybe an 'all-you-can-read' buffet plan that allows you to have up to 3 books "checked out" at any one time, and you pay ~$20 monthly? Maybe newspapers sell you a 2 year subscription to their news on the kindle and absorb some of the profit margin? Lots of ways to make that work.

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  33. we wouldn't be having this conversation if the kindle was $150 or $200. I'd just buy it, download whatever I wanted to read on the go and buy hardbooks when I have favorites I want to keep forever.

    but the $350-500 price is not for me, especially in these financial times. as I reader, I would love to have a great e book device, but as a schoolteacher with a mortgage and two kids, at this price: ha!

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  34. The only way I would get a Kindle is if they do something like this.

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  35. To me it would totally be worth it - as you can get all classic books for free from www.gutenberg.org - so it would easily pay for itself. I do agree though, with your proposals as being a great way to attract buyers.

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  36. This is a great idea! My girlfriend and I were talking about just this thing last fall.

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  37. I'm not seeing the advantage of kindle for READING purposes. What's wrong with books? Kindle makes money for the big guys. It puts books on the same turf as CDs, DVDs, and it's not the author that will benefit, but the publishing company. It will also kill bookcrossing and bookcrossing meet-ups (good karma) bookcrossing dot com, where you release the books you've read into the wild and watch as others make journal entries as the book travels the globe.

    Now we will get into Moby Dick 3.2.0.1

    This is devised by those intellectual property folks, i'll bet. I'm a geek and a technology lover, but books are the greatest. They don't take electricity or batteries, they are portable, you can pass them around to your friends, give them away, or lovingly keep them. First editions excite me. Leave my books alone!

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  38. My Kindle rocks. I fly once or twice a month and hate lugging lots of books around with me. I also like having my whole latest library with me for whatever I feel like reading.
    I bought it with the concept that if I hated it, I could sell it on ebay. Sometimes, you have to try things out. Also, if you see a slightly chubby woman on a plane with a Kindle, she will let you read a few pages on it :)

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  39. And, there are some free books, or books for a penny available for the kindle. Most aren't new, although some are -- some are not good, but, there are some freebies available.

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  40. Eh, do what I'm planning. Forget the Kindle, buy a netbook (8.9", can do more than just read books, and it's $100 cheaper than the Kindle!) and install whatever eReader software you want. That way you aren't tied to Amazon's pricing - I buy eBooks all the time, and I almost never pay as much as Amazon is charging. Mobi, Sony, and a ton of other sites have better prices. (plus you don't have to worry that Amazon doesn't have the book you want!)

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  41. I don't want a Kindle to replace my book collection. BAH! No, I want it for those books I do not intend to read again or keep that I take with me on trips or so that I can carry multiple books with me in my handbag every day instead of several, not knowing what I'm going to want to read. I could also read in the bathtub with the cool waterproof covers they have. (I *always* get my book pages wet.) For convenience, it's worth the price. Or would be if I weren't underemployed... :)

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  42. Nuance has a product called OmniPage Pro that will let you scan to Kindle format.

    http://www.nuance.com/imaging/omnipage/omnipage-professional.asp

    (I have no commercial interest in the product; I just received a brochure for the product in the mail this week & thought I would share.)

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  43. This comment has been removed by the author.

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