Amazon Enticement: Too Little, Too Late?

It was all over the Web today (here for example) that Amazon is revising the pricing model for publishers and offering them a better cut of the action (roughly 70% of the price). There are various stipulations but in essence Amazon is trying to get the publishers to offer their books on the Kindle and offer them relatively cheaply. More thoughts on this later. [Day Job Sucks This Week]

With the all but confirmed iTablet set to debut next week, Apple also appears to be entering the eBook market, most likely through their pervasive iTunes Store, which can be access by virtually any computer with an iPod. I don't know the number of iPods vs. the number of Kindles but it's not close.

The timing of this makes it look like a desperate ploy by Amazon to proactively combat what has been dubbed the Kindle Killer. By why so little and so late? Amazon could have become the dominant eBook reader. They had the best device on the market for at least a year and arguably the best marketplace for selling eBooks.

But rather than enticing readers and publishers, they squandered their advantage. Amazon should have taken the long-tail approach and offered Kindle for a drastically low price ($100-$200) and tried to drive prices down as much as they could by offering publishers 70% of the cut much earlier. With a projected $.06 distribution cost (to be paid by the publisher) there is plenty of extra margin to entice the publisher and cut the costs compared to physical books. Video game publishers do this all the time with the intention of making up on the cost on the back end. With basically no cost scaling for additional copies (i.e. limitless supply), eventually you will make back the money.

They also could have aggressively pursued something like my reader enticement program (suggested here) to lower the buy-in for readers. Instead they continued to sell expensive eBooks with a high initial purchase price. I'm interested in eBooks but if I'm going to drop 300+ on an eReader it's going to be something I can dual purpose. That's why I'm waiting to see what Apple brings to the table.

If Amazon had gotten Kindles in the hands of more readers and gotten those readers invested in it, they would be in a much stronger position than where they are now. They would have people used to reading eBooks and with the Amazon DRM being what it is, readers wouldn't be so quick to switch libraries. Even if people did get the iTablet and let's face it, they will a cheap Kindle would have still been picked up by technophiles. If Amazon can still maintain their iTunes App, you could potentially read Amazon purchased books on both devices. With the rumored battery problems of the iTablet, a dedicated reader might be something people are still looking for.

But it's too little too late. The Kindle Killer appears to be looming around the corner with all of the hype and the interest. Hopefully, Amazon will be able to still sell books that are viewable on the iPod. I actually strongly suspect that this is the case, because the only way Amazon's actions make sense is if they were intending on being a third party seller all along and merely used the Kindle as a Beta test for their distribution system all along. At the same time, I think their competing music stores might sour any potential partnership. Ahhhh, who knows? I guess we will see next week.