Amazon’s new line of Kindles shifts the balance of power across several media industries. But Amazon isn’t approaching every kind of media in the same way. Even as Amazon is locking books down, its approaches to video and magazines could help to open those markets up.
All three old-school Kindles are disruptive on price. At between $79 and $149, the new E Ink Kindles bring dedicated e-readers to their iPod Shuffle moment. There’s really no longer a reason for anyone with a little bit of disposable income who reads e-books not to have one, unless they already own a device they’re happy with. At $149, the Kindle Touch 3G can bring not only books and newspapers but email and web browsing to anyone who doesn’t already have it. Nobody else is likely to match those prices or features any time soon.
If you sell e-books, you could see this as good news. The addressable market just got a lot bigger. But it also means the market is increasingly dominated by just one company. Nook, iBooks and even retail bookstores and Google Books’ toes-in-the-water efforts were all brakes on Amazon’s ambitions. Now the brake lines have been cut.
This is why the inexpensive E Ink Kindles are arguably more disruptive to the book publishing industry than the Kindle Fire: an ultraportable appliance designed for purchasing and consuming almost every kind of digital media.
Kindle Fire extends Amazon’s e-book reach into tablets, undercutting Nook Color and heavy readers who might be tempted by the iPad’s extra functionality. In books, Kindle Fire continues to squeeze. But its video and magazine offerings are trying to do something quite different.
For television and movies, in addition to downloads, Amazon’s offering a free month of Prime to new Kindle Fire owners. The idea is that this will 1) help raise the profile of Amazon’s streaming video library, so users will see it as something more than a junior Netflix, and 2) make users who haven’t bought into Prime fall in love with fast shipping and re-up their Prime subscription at the end of the month.
Now, Amazon could shut Netflix out of its Appstore, keeping it off the Fire to steer customers towards Amazon Prime. That’s what Apple does when another company tries to offer an identical/duplicate service. It’s what Amazon would do if Netflix tried to sell books.
Instead, Amazon is happy to welcome Netflix aboard. At the launch event, Amazon representatives went out of their way to mention Netflix by name: “We’ve had talks with Netflix and Pandora [about developing apps for Kindle Fire], and they’re both very interested,” one told me. “We haven’t spoken with Hulu yet, but I’m sure we will; we have no philosophical objections to having these services on our devices.”
By contrast, when I asked a similar question about other bookstores and support for EPUB and other formats in particular, the same representative said, “we sell our e-books in our format. And the Kindle Fire has great PDF support.”
So why yes to Netflix and no (almost definitely) to Nook? It’s just good business. Amazon dominates books (electronic and otherwise) and has no reason to let a serious competitor get a foot in the door. It’s an underdog in streaming video.
Getting Netflix on board with Fire is a little like Apple supporting dual-booting into Windows after switching to Intel chips. Subscribing to Netflix doesn’t mean those users won’t also buy into Prime, especially since Prime offers fast delivery on top of its streaming library. Customers can transition to the new device and start using the new service without feeling like they’re abandoning what they already use.
And who knows? After a few months, Amazon Prime’s catalog might improve and/or subscribers might look around and say, “Amazon’s streaming library is great; it’s free; and while these other guys want me to go to a different site to mail me a video, Amazon will let me download it right away and let me keep it in their cloud forever? Why am I still giving Netflix my money?” With video, Amazon can afford to take the long view.
Digital magazines will also be crucial for the Kindle Fire. It’s a reading device, but sports a touchable interactive display. Magazines are a natural in this format. And Amazon already does a fair business in magazine sales, both of print subscriptions through its websites and Kindle-formatted editions for its e-readers.
Amazon’s overhauling its approach with Newsstand. It’ll be a portal on the Kindle Fire and a discovery tool for magazines and newspapers on Amazon.com.
Apple’s and Barnes & Noble’s different approaches to digital magazines suit both companies’ device capabilities and retail models. Apple supports highly interactive, immersive apps with multimedia elements, where each brand stands largely on its own; Barnes & Noble leans towards faithful reproductions of the print magazines, sold through a specific magazine portal and sporting a unified interface, adding a few augmentations like Article View to make it easier to quickly flip through stories.
Amazon’s Newsstand splits the difference between Apple’s interactive applications and Barnes & Noble’s magazine and periodicals portal for Nook Color. Amazon launch partner Condé Nast, for example — which owns Wired and Wired.com — is offering seven of its titles (The New Yorker, Wired, Vanity Fair, GQ, Golf, Self and Glamour) as digital editions at launch, with Vogue following in early 2012. These will be similar to the Android versions of Wired and The New Yorker on the seven-inch Galaxy Tab. Besides these eight, the rest of Condé Nast’s catalog will be available in replica PDF editions at launch.
All of Condé Nast’s titles will be available with three months of issues free — again, following the Amazon’s theory that readers will discover they can’t live without them. Digital subscriptions run at $20 annually, or $2 for individual copies. The one exception is the flagship 47-issues-a-year New Yorker, which will run $60 per year or $70 for print and digital together. Current print subscribers to all other Condé Nast magazines get the digital editions free.
“We believe strongly in Amazon’s buy-once, read everywhere model, too,” Condé Nast’s Monica Ray told me. At the same time, she said, the $199 price point potentially opens up digital magazines to a much wider market, and the separate Newsstand portal offers its high-volume digital titles additional visibility and discovery.
Amazon’s cloud backup also solves the iPad’s infamous problem of having to download a gigantic magazine application every month and needing to free up disk space for new issues by deleting old copies or other content. WhisperSync delivers the newest issue locally, but in the background, and unlimited cloud storage for Amazon-purchased content gives readers continuous access to as many issues as they want. It’s really quite clever.
At the same time, publishers who don’t feel like going through Amazon’s Newsstand can trade that visibility, local offline storage and cloud backup — and the 30% cut of sales to Amazon that partly pays for all of those things — with HTML5 webapps. We’ve already seen many publishers and retailers (including Amazon) take this route to sidestep Apple but still reach customers on iThings. If Kindle Fire becomes a big hit, you may see development for HTML5 to reach both iPad and Fire take off at least as much as for Amazon’s Newsstand or Appstore.
It’s all a question of balance. Book publishers are right to be concerned about Amazon’s increased power, just as magazine publishers are right to be concerned about Apple’s, and TV and movie studios or channels about Netflix’s. But the other hazard is depending too closely on any platform controlled by another company whose power can consolidate and whose interests can run counter to yours.