I just got my kindle and already bought several books. I hear from most people who bought it that they do in fact buy a lot of books once they get it. It's a simple as buying music in the iTunes store.
So this got me thinking. Would it make any sense for the publishing industry and their related outlets to subsidize the readers?
In other words should they follow the mobile phone model where you give people the hardware and cash in on the book purchase.
Anyone know of any calculations done around this?
The model that the phone companies work with is a subscription model. The hardware enables the service so they can make money on text messages, phone calls and Internet access. If publishers wanted to adopt this model, they would have to get a monthly subscription fee in order to give away the hardware.
It's an interesting model to think about. The downside is that the service (e.g. the book content) is up to the subjective tastes of the user. This means that getting a user to sign up for plan would require coordination across the entire industry. I don't think a publisher could do that but maybe someone like Amazon could since they are a reseller for all publishers.
The calculations would probably go similar to the phone company plans. Some sort of contract duration that would pay for the hardware in like 2 years. I do think the problem with this type of model is that the phone company has you captive, to a certain extent, on it's network. That might be a bad thing for an eBook reader in terms of adoption.
According to this, it is actually working the other way around. One of the reasons is the greed and idiocy of the entrenched publishers...
"Amazon’s goal has been strategic: it aims to establish a low price for e-books that will have the ancillary benefit of helping it sell more Kindle devices."
The article also points out that in some cases amazon loses money on the ebook sales - in hopes that it will drive up sales and market share for the kindle.
You're looking at it from a, "Give them a razor and sell them the blades." approach, but unlike developing an electronic reader with wireless connection, razors are pretty cheap. And another problem is the market for electronic books has not grown enough and there are few players in the game (Sony, eReader, Kindle, Google and soon Apple). The competition is going to pick up with Apple and the iPad.
Amazon is trying to expand the market and gain control by offering as many book titles as possible. They do not want a public perception that there are popular titles that are unavailable, so they pay the publisher in order to sell a book for $10. Why buy a Kindle if you run the risk of not being able to get the next best seller?
Now if you can get a Kindle for next to nothing (Like the Kindle on PC which is free) you may not be as concerned with trying to recoup your upfront investment in the device by getting all titles at a discount compared to the paper version.
I use the eReader (free software) on a Windows Pocket PC phone. These phones, like the iPhone are not cheap even if you get the 2 yr data plan contract.
I have no clue where this market is going, Amazon is trying like hell to be there.