Whalespeak

Seth Godin points out in a post about the Kindle that the costs for paper and inventory disappear for Amazon when supplying books. So why do those books cost the same as their physical versions? Actually for someone who buys second-hand, they’re more expensive.

For economists the short answer is always “because that’s what people are prepared to pay”. But I wonder if Amazon have a smarter idea.

The proprietary format that Amazon uses creates a kind of scarcity. If you want to read a book on the Kindle, you have to get it from Amazon. So you’re stuck with the price they charge. This all changes when someone starts to provide an alternative service which seems like a pot of gold waiting to be plundered. Or so it would be, except customers wouldn’t be able to read your downloads on a Kindle. So anyone who wants to go into competition has to create their own hardware or rely on the existing offerings. Which are kind of underwhelming.

In a way it makes sense to take advantage of this, but what irks me is that if I was a Kindle user, I’d feel kind of cheated every time I downloaded a book. As a long-term strategy you could do better.