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On this blog we will track down the latest Amazon Kindle news. We will keep you up to date with whats hot in the bestsellers section, including books, ebooks and blogs... and we will also bring you great Kindle3 tips and tricks along with reviews for the latest KindleDX accessories.

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September 2016
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Thoughts on Amazon, the Kindle Platform, and the Anti-Amazon Publisher Defense

The ongoing conversation regarding the DOJ suit against five of the Big 6 publishers and Apple has at times been even more interesting than the case itself in what it says about the publishing industry and those who have a stake in it.  I won’t deny for a moment that I’m a fan of the Kindle or that I regularly enjoy many facets of Amazon’s business, so feel free to call me out for being biased, but I think that there are a few strange assumptions being made in some of the more popular Pro-Publisher arguments lately that need to be addressed.

The most popular justification of the Agency Model by far seems to be that without it Amazon would simply have too much control over prices and undermine competition since they could use books as loss-leaders to sell other products.  The underlying assumption here is that there was literally no other option available to prevent Amazon from offhandedly destroying a whole industry.  This ignores the process that allowed the Agency Model to be imposed on the Kindle Store in the first place, of course.

In early 2010, the publishers dictated their terms to Amazon and a brief conflict ensued.  When Amazon resisted raising their prices, Macmillan pulled their titles.  It worked, and Amazon caved.  Publishers are not, in this case, the helpless bystanders trying to scrape by that they make themselves out to be.  They have the choice to leave at any time, and allow Amazon to find their own way to fill Kindles with eBooks.  This is exactly what happened recently when IPG was unwilling to agree to Amazon’s contract renewal terms.

The problem is that publishers don’t want Amazon out of the game.  Amazon does exactly what they want a retailer to do.  The store makes suggestions, up-sells, promotes, and opens the doors to customers anywhere.  The problem wasn’t the potential for anti-competitive control; it was that publishers were unwilling to lose access to the channel.  It is also why the collusion was necessary.  Without that collusion, Amazon could presumably have done without any member of the Big 6 and they would have been left with only comparably inferior vendors to sell their books through.

The other really fun argument is the devaluation of eBooks.  Basically that by selling Kindle Editions cheaply, Amazon is making customers expect affordable books and publishers will make less money.  This is often tied to the idea that Amazon is trying to sell cheaply enough to get a monopoly, after which they will screw their customers and raise prices.  Personally, I see the arguments as contradictory.

If Amazon’s whole Kindle sales model is designed to lower customer expectations in terms of pricing, publishers retail the previously mentioned option of removing their content.  Unlike with paper books, there is no possibility of a secondary market.  To me this is basically an assertion that the content offered by these publishers is less important to customers than the fact that they can get it on a Kindle.  If that is so, then the need for publisher as gatekeeper is a thing of the past anyway.

Let’s assume that Amazon does accomplish lowering expectations, though.  How would raising prices on eBooks after driving out the competition work to their advantage?  We are talking about digital products, presumably now in a publisher-free world since Amazon ruined them all.  In what way would self-publishing authors have trouble selling outside of the Kindle Store?  And if that were an option, why would customers pay Amazon’s presumably higher prices after having been acclimated to cheap eBooks over the course of years?  I’m not one to say that the free market will solve all your problems, but what incentive does Amazon have to dominate a market and immediately destroy their most profitable approach to it?

Basically, I can’t help but feel that redirecting the issue of Agency Model price fixing to make it appear as if the DOJ is out to appoint Amazon king of publishing is a sign that people know something illegal was done and are now out to justify it.  The Kindle may be the best eReading platform out there, but it is far from the only one.  Publishers had other options they could have gone with; they simply couldn’t see a legal way to get the higher profits they wanted without losing access to customers who love their Kindles.

Analyst Says Short-Term Kindle Demand Falling, DOJ Settlements May Upset Those Predictions

According to some recent research by Pacific Crest analyst Chad Bartley, the demand for both Kindle E Ink eReaders and Kindle Fire tablets has fallen noticeably from Q4 2011 to Q1 2012.  There is some fairly compelling argument to be made, however, that changing any predictions based on this would be at best premature.  Regardless of the way things stood a month ago, the Kindle world is about to be turned upside down and interest can’t help but rise as a result.

This is not meant to be a criticism of Bartley’s analysis.  Based on the information at hand when he was writing, his report was accurate.  A combination of consumer polls about intended purchasing and inside information about Amazon’s supply chains show a marked decline in interest in Kindles from month to month.  He attributes this to a maturation of the eReader market, an increasingly well covered customer base, and consumer willingness to read on a variety of things besides eReaders.  All good points.

Since we now know that three of the Big 6 publishers have already settled with the US Department of Justice to avoid an ongoing legal defense of their price fixing arrangement, that is all more or less irrelevant.  The beginning of the end of the Agency Model will mean a return to lower prices on popular eBooks and a far more active marketing campaign on Amazon’s part.  There has literally never been a better time to buy a Kindle.

Regardless of where you stand on the state of publishing, it is undeniable that things are about to change in such a way as to allow for lower pricing.  As most of the problem with adopting eReading recently has been the fact that eBooks are commonly priced higher than their paper counterparts, changing the balance of things will open up new markets for the Kindle.  Customers who were previously on the fence about a purchase will now have much more appealing opportunities in front of them and Kindle ownership will be that much simpler to justify as paying for itself in savings over a short period of time for any active reader.

Will there be ongoing and constant increase in interest in the Kindle?  It is probable that sales will plateau at some point.  It is also probable that Amazon’s luck from the DOJ has pushed that point off into the future a bit. Estimates may be down for the moment, but they will be revised soon enough.  If anybody knows how to exploit a major opportunity like this, it is Amazon.

This is a great time to have a Kindle.  If you don’t have one of your own yet, it might be useful to check out the Kindle Keyboard.  Still in many ways the best iteration of the product line to date, it will serve you well in any reading situation. Might as well take advantage of the situation, since the customer benefits more than anybody in all of this.

Kindle Owners Win Big With First DOJ Publisher Settlement

The first major change in eBook pricing to come about since the launch of the iPad is at hand.  The U.S. Department of Justice has already negotiated settlements with three of the six major publishing houses implicated in a DOJ price fixing investigation only shortly after the filing of the lawsuit.  Kindle owners can expect to see an almost immediate drop in many eBook prices, once the court has had a chance to approve the settlement terms.  Amazon has already declared this a big win for consumers and announced plans to drop prices on affected titles.

For those who have not been keeping track, the early days of the Kindle brought significantly lower eBook prices than we are now used to.  This was the result of Amazon being able to buy their stock wholesale and price things as low as they wanted from there.  Publishers were rather unhappy with this arrangement since it meant that customers might well become used to seeing affordable prices on their reading material and cause paper copies of books to lose perceived value.

When Steve Jobs approached the Big 6 publishers with the idea of moving to the Agency Model, wherein publishers would set prices and retailers get a fixed percentage for each unit sold, they jumped on it.  As soon as the iBooks store opened, Kindle Edition prices began to rise.  There was some drama when Amazon attempted to hold out in protest and pull titles from their store, but without those publishers it is hard to operate a major bookstore.

Since then, prices have remained high and those involved in the Agency Model arrangement have come under investigation in both the US and EU.  The biggest being raised by the DOJ, aside from alleged secret meetings and clandestine correspondence between heads of supposedly competing publishers in the days leading up to implementing the Agency Model, is the Most Favored Nation Clause.  Apple managed to get this introduced in their agreement with every publisher.

Typically, a MFN is put in place to prevent favoritism from allowing a wholesaler to sell more cheaply to another retailer at a lower price.  In this case, since publishers were setting the price, the DOJ is arguing that it was meant to “protect Apple from having to compete on price at all, while still maintaining Apple’s 30 percent margin.”

The result of all this has been artificially inflated eBook prices meant to turn customers away from things like the Kindle.  That last point is more fact than opinion, as any look at publisher comments regarding the “troublesome” convenience of eBook borrowing at libraries that has gone along with Penguin dropping out of the library system altogether.

So far we know of settlements with HarperCollins, Hachette, and Simon & Schuster.  These will prevent use of the Agency Model for a number of years and create various other consumer protections.  Apple, Macmillan, and Penguin are all still denying wrongdoing at the moment, but it remains to be seen how well they can hold out.  Even if all three remaining defendents get off somehow, Kindle pricing will be completely altered for the indefinite future.  The Agency Model could only be forced on Amazon through solidarity across every major player in the publishing industry.  With that gone thanks to these settlements, things can’t help but improve.