Friday, May 16, 2008

Kindle: A $750 Million Business by 2010?

Mark Mahaney of Citi is projecting the Kindle could represent a $750 million business for Amazon by 2010. There are several great articles and blog posts talking about this. Here are three I liked best, along with my two cents on each one:

Washington Post Gadget Roundup
A range of 10,000 to 30,000 units sold to date is projected in this one. That's pretty broad but I still think based on forum post rates and other highly unscientific metrics the actual number seems closer to the low end than the high end. The 120,000/month projection "by the end of the year" seems wildly optimistic; I can't see that happening unless there's a significant price reduction or new model by then.

Forbes: How Amazon Could Change Publishing
I don't dispute that publishing still tends to be an old-fashioned business. Heck, as long as almost 100% of the total revenues are the products of dead trees, how could anyone argue that point?! What I do take exception to in this article is the constant hammering of publishers and the statement that authors are treated so badly. The thing most people lose sight of is that every book isn't a money-maker. In fact, publishers lose money on a lot of the books they publish every year. When the publisher loses money on a title they don't go back and ask the author to return the royalty advance. It's a risk/reward model. Authors know what they're getting into (or at least they should!) and need to realize that the royalty advance might be all they get paid on the project. That's why I've always marveled at new publishing models that are structured as profit-sharing deals with authors rather than traditional royalties; I wonder how many of those profit-sharing deals paid less (or nothing!) to the author in the end, meaning they would have been better off with a traditional advance/royalty arrangement.

Silicon Alley Insider
A very insightful post. This one and other articles talk a lot about the iPod market comparison. I think it's silly to assume the Kindle will ever reach iPod sales levels. First of all, the number of people who enjoy listening to music is probably several times as large as the number of people who buy books every year. See any one of several recent surveys and articles for more on this sad part of the story. Secondly, a large number of active readers seem extremely satisfied with the physical book model, so they're highly unlikely to jump on the Kindle bandwagon. I don't think the music customer base was ever filled with a large number of CD, record or tape fans who strongly voiced their objections to the MP3-player world. In fact, we were so anxious to move on that we embraced MP3 players by buying two or more of them every year! Have you ever seen someone with more than one Kindle?


Peter Knight said...

I came across the Forbes story: I agree, it's not accurate and also ignores the role of editors in the publishing process. I had already begun another comment on the Kindle on my own web log (Mostly by Knight) and then linked back here at the end - Thanks, as usual you keep us in the picture, unbiased and well balanced.