What amazes me more is that Netflix began in 1997 and had the foresight to name themselves Netflix and not Mail-flix, yet they didn't begin streaming until 11 years later.
I wonder how long they were working on streaming before it was released. A lot of planning must have gone into something that beat the company's traditional model in just two years.
Personally, I don't think the 'Net' in NetFlix is about streaming. It's about the InterNET. Yes, the delivery mechanism was based on physical mail, but everything else was done on Internet [Browsing/Selection/Recommendations]. This is in contrast to B&M stores like Blockbuster.
[I don't want to take anything away from Netflix, I have completely stopped using DVDs since they started streaming movies. They completely rule the online streaming market.]
I talked to NetFlix about streaming in 2004 and I got the impression that they'd been working on it for some time. (Thinking about streaming is no big deal - there were pre-99 startups working on streaming and Hastings surely knew about them.)
To be clear... there were pre-99 startups that DID streaming. I was invested in one. But B-movies from the 50s apparently have a smaller market than one might think -- and you probably already think it has a really small market.
While that is true, notice Amazon didn't mention the revenue from Kindle books, just the units sold. The majority of those Kindle sales could be from $0.99 bargain books. In a way that would be even better for Amazon because it means the Kindle is complimenting rather than cannibalizing its dead tree sales. Either way, it's a little early to believe Amazon is getting more revenue or profit from Kindle books than from dead tree books.
Also, running the Kindle store has placed a burden on Amazon it didn't have with dead tree sales. If the Kindle Store is anything like the iOS App Store, free books outsell paid books by 6-to-1 or more. So Amazon has to pay the digital distribution costs for a lot of books that bring in zero revenue. That adds up and can chip away the profit it makes on non-free books.
Consider that Netflix is making a profit providing hour(s) long HD videos for $8 per month.
Let's assume that Amazon isn't less competent in that area, with their AWS expertise and operating large-scale websites since 1995.
Given than I watch much more than 8 hours of video, it's safe to say that the cost of delivering an hour worth of video is less than $1. In fact, I remember reading (can't find a reference) than it's around 5 cents.
Let's assume that hour of video is 1GB and an eBook is 100kB.
Delivering more than 10 thousand ebooks (which is way more than most everyone will ever buy in their lifetime) probably costs Amazon about 5 cents and certainly well below $1 (even if you choose to nitpick and adjust my numbers).
That means that they need to sell three 99 cent books (at 30% profit) to cover their lifetime costs per customer.
Let's stop this talk about costs of delivering digital goods, and especially ebooks. Ebooks are a fraction of the size of music or video files and people download few ebooks once while they stream audio and video for hours and in case of music repeatedly and radio and video streaming services still manage to make a profit after paying huge royalties.
I could probably personally fund the cost of bandwidth to deliver ebooks for the entire population of the US and still afford a latte.
Delivering the goods is not the only thing that costs them money, and, likely, only a tiny fraction of the costs. Without further arguments one must assume that that DVD more or less has a similar size web page advertising it as a 99c book, that page gets the same number of views for every sale, help desk and accounting costs of a DVD are about equal to those of a 99c ebook, etc.
I do not know how large those costs are, but it might be possible to get an idea from Netflix data, if it is publicly available. How much profit do they make per $8 customer? I bet it isn't $7.95.
Does it make a difference that Amazon delivers e-books over a cellular connection I get for free, while Netflix delivers them over a cable internet connection I pay $100/month for?
I wrote some notes about the economics of delivering ebooks last year at http://lists.canonical.org/pipermail/kragen-tol/2010-October.... The short version is that yes, you can deliver a million ebooks for seven bucks, so you probably could underwrite the cost of everybody downloading ebooks — if they only downloaded the ones they read, at least.
Another important book vs film distinction: digital films/tv shows will increase in quality, so the files will get larger over time. However ebook files are not getting longer, since books (similar to movies) are not getting longer to read/watch. Bandwidth gets cheaper as the years go on.
Not just anyone can PUT a book on the Kindle Store for free. You either need to be a big publisher that has a deal with amazon, or they have to CHOOSE to price match free from somewhere else like smashwords. They recently did this with ~300 indie books, but in general the number of freebies is controlled and limited by Amazon
edit: I'd just like to say, getting down voted when stating facts amuses me to no end.
Considering Kindle books are probably hosted over s3, those costs are relatively marginal. Amazon charges third party S3 usage for storage/transfer in cents/gigabyte, presumably at some appreciable margin. Their revenue from a single 0.99c purchase can probably cover costs related to a copy of that one book, plus another four or five free ones, for a year or more. Even better if they have a single "canonical" copy that is encrypted for your device on the fly at download time.
I wonder how much this is true. I'm not doubting it, per se, but this is always argued when digital vs. analog comes up and I think it's a little presumptuous to say so. Let's consider this example:
1) It takes a big infrastructure to manage an eBook store. Amazon has to be able to deliver books at near instantaneous speeds. They have to deliver magazines and newspapers at a scheduled time (time is critical).
2) Amazon provides 3G delivery to (many of) its customers for free. It's not free for Amazon.
3) Amazon already has built up warehousing/delivery infrastructure and must maintain it because their retail business isn't going away. The cost of delivering a single book is not the same as for Barnes & Noble.
1) Bigger than having a bunch of warehouses spread all over the world, fully staffed, with logistics and inventories to worry about? It seems unlikely this is smaller than the infrastructure for digital deliveries.
2) "free" in the same way your coffee might be "free" with the purchase of a bagel...
3) True, but let's taked away all the fixed costs (and presume the warehouses would have existed anyways, which may or may not be true). There are still plenty of variable costs - storage space costs money, handling costs labour, and shipping cannot be escaped (and is expensive!)...
> Amazon already has built up warehousing/delivery infrastructure and must maintain it because their retail business isn't going away.
Amazon's retail business is expanding, and is currently building new facilities. Storing and shipping fewer books means less new warehouse space they must build.
|It takes a big infrastructure to manage an eBook store.
It also takes as big infrastructure to manage selling physical books. and the size of a book(900kb) is pretty close to the size of it's amazon product page.
|Amazon already has built up warehousing/delivery infrastructure and must maintain it
Amazon's retail business shows nice year-on-year growth, and probably can eat the extra capacity left by the book business.
Why not? Given that you don't need a big publishing house, there's still room in the business for folks who are experts in taking a written piece and putting it into the ebook retailers, plus promoting it. A lot of authors want to write, not deal with selling. An agent could do this for a few dozen authors and have a perfectly valid business, with happy customers.
Because they are offering little real value (the vast majority of value publishers really offered was the advance, which I haven't heard of these guys offering, and distribution which you can do as well yourself thanks to Kindle + Nook stores).
The one MAJOR cost left to self publishing if you are truly serious is editing, unless you are in a genre where stock image covers won't cut it. Giving up a % of sales revenue for the rest of time for a book considering the limited help they really offer these days is just silly. Dean Wesley Smith has been discussing this on his blog at length over time.
I don't think it's a matter of the cost of self publishing. It's the benefit of having someone whose full-time job is to distribute and promote your book. Having every single author become an expert in that is hugely inefficient, and it's probably not what your average writer wants to be doing.
Just because you can do your own dental work doesn't suddenly make it a good idea, much less an economic one. For work that's somewhat specialized and very intermittent in nature (like promoting a new book) it's often better to aggregate the labor.
Promotion and connecting writers and editors is not an insignificant value. I don't know what cut they're trying to arrange for themselves, but these are services that the writer is going to pay for one way or the other.
Outside of to Editors/publishers agents aren't currently set up for promotion. Their place has, for a good while, been primarily as taking over the slush pile from publishers plus getting better contracts WITH those publishers for the author. Good agents increase the advance and/or royalties such that the contract is for more than the 15% they take as a cut so you get more money.
Editors they MIGHT have connections with, but so do a lot of indie authors these days, so if you join those communities you can get good recommendations from fellow writers.
Again, "one way or the other".
If a writer doesn't have an agent who provides these services well, writers will have to spend their own time and energy on those endeavors, even if only to cultivate and manage direct relationships to other (editing/marketing) professionals. Many writers don't care to do any of that and can be well-served by hiring on someone else to do it.
Surely, some, or even many, agents aren't doing particularly great. But that's no different than any other provider of a service. Most may suck, but that doesn't mean the whole category is of questionable benefit.
It's actually a huge positive sign that they're at least recognizing the deficiency and trying to reposition themselves. It means they'll be eager to become even better at the things that writers most-need in the new landscape.
I'm starting to get really annoyed that the price of some ebooks is actually more than the price of the printed book. That is just ridiculous and publishers better check their greed quickly if they want people to keep paying for books.
For me this is a testament to intangible media. Items that you own but that require no space or attention (physical items need to be rearranged on occasion, dusted, etc...)
I often find myself buying books I want to read in the future simply because it's only $10-$25 and I don't want to forget about them (I never liked the wish lists for whatever reason). Which is easy to do since there's no penalty in space (either disk or physical)
I also find myself buying more from Amazon because I don't have to wait for shipping (and Kindle delivery actually makes getting the book faster than if I drove to the local Barnes and Noble)
So for me the Kindle has shifted my book purchasing to e-books but it has also dramatically increased the amount I spend on books from Amazon.
In this case convenience trumps freedom, it seems. I find Richard Stallman's arguments against what he calls the "Swindle" being defective by design, and taking essential freedoms away from readers, such as the ability to buy a book anonymously using cash, lending a book to friends and keeping it as long as you want.
Would it be that my first statement is true, or are consumers just not aware of this?
That's like trying to compare the freedom of a car vs the freedom of a bicycle.
It's not "taking away freedoms" if you buy The Catcher in the Rye Kindle Edition vs Print Edition
It's purchasing a completely different thing.
They have the same end, a lot of the time. You end up reading The Catcher in the Rye.
One is cheaper and is easier to travel with, the other you can lend to your friends a lot easier. One dies if batteries die, the other gets warped pages. One can be taken into the bathtub with just a zip-loc bag to protect it, the other runs the risk of getting rippled pages.
So it gives the "freedom" of being able to travel with ~500 books instead of 4, gives the freedom of easier bathtub reading, takes away the freedom of lending to friends, etc.
I've had people (generally older, nontechnical types, but who aren't about to just trust that Amazon will be around forever) ask me whether it's possible to strip the DRM off of Amazon books. They may not know the term "DRM", but they understand it functionally and that it's a disadvantage.
Unfortunately the de-DRMing tools are a little too complex and have too many rough edges for this audience, right now. (Although there's a Mac version that wraps most of the de-DRM scripts for Nook/Kindle/Adobe in a drag-and-drop GUI that is pretty clever.) I hope that developers of those sort of tools will keep ease-of-use by nontechnical people in mind in their development.
Once you have the ability to strip the DRM and put the ebook file away in a safe place, you really have a product that is better in nearly all respects.
From a practical perspective it doesn't take away any freedom. I try to avoid buying any ebooks I can't get DRM free copies of in case the DRM scheme they use changes or goes away and requires me to purchase a new license.
Obviously I could just use the free copy to begin with but it wouldn't send any information to the people that make such books that I want more of them. Also the QA on such books can be a little light and format shifting them is a hassle I do if need be but would rather avoid.
Actually, you can lend Kindle books. Paying cash is a "freedom" consumers give up willingly in every area of life. Why can't you keep a Kindle book as long as you want? Bit rot?
I might add that consumers also give up the freedom to cut down trees to make paper, wait for physical delivery, have piles of books clutter up the house and periodically haul them away. I think they actually are aware of these.
I can only speak for myself, but the arguments you list aren't things I would really consider at the time of purchase: I've never yet wanted to buy a book anonymously using cash, though I won't rule out wanting to do so in the future; the lack of/limited lending is a concern, but if the cost of the book is low (e.g. ~£1 like a lot of self-pub books are) then I would be happy to buy a copy instead of borrow one, and if I'm buying a book (of any sort) the lending potential of that book doesn't figure into my decision at all anyway.
Its such a struggle for me deciding if I want print or Kindle. I'm doing research from these books usually so I need to be able to extract the text from them. For a print book, this involves a photography+OCR setup, which isn't that convenient but much quicker than transcribing. For Kindle, I have to transcribe because my OCR software screenshot reader only works on PC (which is 3 lbs heavier, is permanently married to an outlet, and sounds like an airplane taking off compared to my mac air).
On the issue of price, usually kindle is pretty good but so far used books+amazon prime can beat that price.
Did this work for you on the latest versions ? I tried a couple of these programs - but none worked. There was a voodoo trick which involved running the kindle on windows (which I do not have) and snarfing the book from within memory while it is decrypted... It reportedly worked, but I could not check because I do not have Windows.
For myself I found an approach which I might finish sometime: Kindle on wine, a small X application that takes a screenshot of the Kindle window, OCRs it via tesseract, and then sends the emulated "right" keypress. The OCR quality was pretty good, of course I'd lose the formatting, but then no need to worry about Next DRM Format.
Just to clarify: all of the above is for purely being able to search/copy, etc. from the contents. I love the auto-sync capabilities to a point that when I see a pdf of some book that interests me, I go and try to buy a kindle version. But the DRM is the most annoying thing since the nail in the shoe :)
Oh, that's actually a really cool idea! I use kindle for iPhone/PC/Mac though. I googled around for a few pages and didn't seen anyone doing that, but some of my relatives have a kindle so I could try out theirs sometime.
It does have limits, but I haven't hit them yet. I suppose that means the optimal strategy is to try notes first for any given bit of text, then use something else as a fallback.
I own an old version. It's line by line, and accuracy depends on the typeface used, but I have generally loved having mine. (Sorry for the pop-up. It seems the URL will 404 without it.)
"Thursday’s announcement includes Kindle Singles, which are shorter pieces of writing, like a Fortune magazine article, and “no doubt helped them reach that ratio,” said Michael Norris, a senior analyst for Simba Information."
Interesting, unless I missed it the release doesn't specify how much of this is due to an overall decline in print sales, as opposed to a surge of Kindle ones.
For instance, I've bought no books from Amazon in the past year (very a-typical for me, historically).. but I don't own a Kindle. I've bought some e-books from other outlets for my iPad. So I'm "contributing" to the success Amazon is touting in the release based on the way they're laying it out.
I'd take recent talk of a 'decline in paper book sales' with a very big pinch of salt. Book sales spiked, coincidentally, around 2007-08, however year-on-year sales are still going up. Why the coincidental 2007-08 date for one of the biggest spikes in print publishing? Harry Potter and the Deathly Hallows, it had 500% pre-sale figures of Half-Blood Prince.
Despite being a supporter of ebooks, owning a Kindle and reading a lot, I still take Amazon's announcement with a whole bag of salt, because even a fistfull isn't enough for the inaccuracy allowed in their statement.
Firstly to all those not-in-the-know, ebooks have solely been cannibalizing the sales of mass market paperbacks, which is why most major publishers are pricing them around the same price point. Why? Because mass market books are no longer paying off the editorial costs, which is the biggest Publisher cost in producing a book as your typical book passes through the hands of 3 editors and often multiple proof readers and the hands of an actual copy editor.
By January 2011 figures from the AAP, total book (hardcover, paperback, ebook, audio-books and audio-ebooks) were down 1.9% over January 2010. Adult Hardbacks fell 11.3%, paperback (note these are generally the paperback versions of books by known authors) fell by 19.7% and mass market paperbacks (IE new authors) fell 30.9%. Children's Hardbacks stayed the status quo at a fall of 1.9%. Children's paperbacks sell 17.7%.
However, given eBook's 116% growth it likely helped skew the total book sale decline. Yet this isn't impressive yet as it attributes only 8.6% of total book sales. I'll be impressed when eBook sales hit what MP3 sales hit this year, which received little publicity - in that MP3 sales this year hit $5.7 billion. Physical sales hit $5.7 billion. IE MP3 has 50% sale share.
It may be a sign of what's to come, but I expect another 5 years before eBook sales even hit the same as mass market paper backs, and that will only be through massive declines in MMPB sale figures. I'd say about 8 years for trade paperbacks (Stephen King and all your lovely crime novelists) to be matched. However, this isn't really going to be a huge game changer as the bigger the market gets the more important marketing becomes. This will mean, the same as it does today, that the vast majority of eBook sales will be coming from the same authors it is today, just in a bigger proportion.
This is just a sales spike due to the new user period. When a user gets a ebook reader for the first time they will buy lots of books to fill the device, including books they already own. Once sales to new users drops off the sales rate will also flatten out. I believe digital will ultimately be the bigger platform in future due to convenience of buying a book and getting it instantly (rather than waiting for the post man).
This is the opposite of my experience: when I got my kindle, I bought one book, started reading it, and when I finished I bought the next. Over time, as I've become more confident that I'm going to use the Kindle long-term, I'm more willing to buy a book when I see it and "add it to the queue" rather than only buying when I need a new one.
The nice thing is that there's really no penalty to waiting until the very last second to buy the next book, even if you're traveling (unless you're actually on the plane.)
I went the opposite route - started out with buying nothing (pirated my books) and as I started slamming my way through books, I started buying the titles because they were better formatted and I wanted to support my favourite authors.
Not sure if the Kindle works the same way as an iPhone. I can see iPhone users buying lots of apps to show off their phone's capabilities, but ebooks look pretty much alike. So one is enough to show off the capabilities of the reader.
Congratulations again Amazon. The Guardian already said "Amazon customers bought more e-books than printed books for the first time on Christmas Day" back in 2009.. :-)
Since kindle books are cheaper to create, store and deliver, and the fact that these books cost almost the same as the dead tree version, do the authors get a larger cut of the profits when a kindle book is sold compared to when a paper book is sold?
It probably depends on who the publisher is. I would imagine smaller publishers would probably give better deals as a way to entice talent, whereas larger publishers like Random House would probably have a much bigger paper-publishing business to support and couldn't afford more generous terms.
Any time you're using your new business to "support" the old business, you're doing it wrong. It should be the other way around - your old cash cow business should be used to support the new business that will take you forward.
Amazon:
Kindle release: November 19, 2007
Date surpassed: ~May 2011
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Netflix:
Streaming started: Fall/Winter 2008?
Date surpassed: ~November 2010