The Life and Death of the E-Reader
When Amazon first announced the Kindle in late 2007, Newsweek boldly announced that the Internet giant was “reinventing the book.” The New York Times was more cautious in their assessment of the then newly-announced product, suggesting it was an “E-Book reader that just may catch on.” Upon the Kindle’s release, economic forecasters and tech bloggers alike predicted the downfall of the paperback and the brick-and-mortar bookstore at Amazon’s hand. For a company that in many ways built its fortune on the sale of printed books, it seemed to many that Amazon was prepared to destroy the very industry that enabled its success.
In reality, though, the Kindle has thus far failed to meet these lofty expectations. Although book retail giant Borders Books shut the last of its doors in 2011, Barnes and Noble and Books-A-Million are surviving, and still opening new stores. Print book sales have risen each year since 2013, and over 687.2 million print books were sold in 2017. Still, the landscape for books has dramatically changed over the past decade; Amazon has made the paperback book cheaper to acquire than ever before, the rise of self-publishing has stolen industry power from novel-publishing titans, and schools and universities across the U.S. are depending more heavily on e-textbooks in order to educate students less expensively.
The Kindles of today can hardly be recognized as descendants of the 2007 model, which retailed for $399 and sported a keyboard, stylus, and bizarrely angled edges meant to simulate the feel of a book in the hand. Deemed “not, ahem, gorgeous” by the New York Times upon its announcement, the original Kindle’s main selling point over its already-extant competitors was the free Wi-Fi for book downloads provided by Amazon for all Kindle devices. Today’s Kindle lineup, which includes three different models, starts at lower price points—$79.99 for the Kindle, $119.99 for the Kindle Paperwhite, and $249.99 for the Kindle Oasis—and offers touchscreens, color choices, and significantly lighter weights. The Oasis in particular is waterproof, has an adaptive light sensor, and can be ordered with up to 32GB of storage.
Though what was once the Kindle Fire is now the Fire Tablet, Amazon’s line of Android-enabled tablets has also played an instrumental role in maintaining Bezos’ stronghold over the e-book market. The 7” Kindle Fire, which made it debut in 2011, sold for $200—then a far cheaper alternative to Apple’s iPad, which had only come out a year earlier—and allowed users access to Amazon’s library of not only books but also games, movies, and selected apps. One element of the original Fire’s production provides a valuable window into the device’s profitability; Amazon sold the first-generation Kindle Fire at a loss, as the profits it generated in digital content sales far outpaced the single-digit dollar losses incurred on the production of each device.
“Content, not hardware, has sustained Amazon’s Kindle empire.”
The notion that content, not hardware, has sustained Amazon’s Kindle empire is reflected in a less-discussed offshoot of the digital book industry. E-books have, to a significant extent, democratized the publishing industry, providing an avenue for small book publishers and independent authors to win their way into homes around the globe. Amazon’s Kindle Direct Publishing (KDP), which was announced alongside the original Kindle eleven years ago, allows private individuals to self-publish books for Kindle download on Amazon’s marketplace. The service is free to use, and publishers can collect up to 70% of total royalties (to compare, print royalties paid to authors are normally under 20%). Anyone who pledges to make their book exclusively available on the KDP platform can enroll in a program called KDP Select, a free option that grants book authors more promotional opportunities on Amazon.com.
That’s not to say that the printed word appears to be going out of vogue anytime soon. According to the American Association of Publishers, as of April of this year hardback book sales were up 11.8% from where they were a year ago, and paperback book sales rose a more modest but still significant 1.4%. E-book sales over that same period, however, dropped 3.8%. This trend is mirrored in the UK, where physical book sales rose 7% in 2016 while e-book sales dropped by 4%. If anything, the e-book market seems to be hurtling toward the demise many predicted for the printed book back in the fall of 2007. It wouldn’t do Amazon well to push too adamantly for the downfall of the printed word, either; as the industry leader in paperback sales, Amazon is best poised to capitalize on the increased demand for physical books.
The e-book market, however, is where the most room for growth exists, both for Amazon and for its competitors. In January 2018, a partnership was announced between Wal-Mart—whose newly revamped online marketplace and free two-day shipping on qualifying orders (without a subscription service like Prime) clearly aim to compete with Amazon—and Rakuten Kobo, the world’s second-largest e-reader manufacturer, that officially launched in August. Wal-Mart eBooks, as the service is called, will offer more than 6 million available books for download and a monthly audiobook subscription service. And although Barnes and Noble NOOK sales sharply fell last fiscal year, the device turned its first ever profit for the company, a sign that perhaps e-books might indeed be the future of reading, even despite recent slowdowns.
“Kindle, like Xerox or Band-Aid, has through its dominance of the e-reader industry become something of a generic trademark.”
Fortunately for Amazon, they are poised to succeed in this hypothetical climate as well. Kindle, like Xerox or Band-Aid, has through its dominance of the e-reader industry become something of a generic trademark. And Amazon is by far the single most prominent retailer of e-books. Through KDP Select, Amazon has curated a vast supply of independent works available for download nowhere else, and the singularity of the platform is likely to perpetuate its popularity. Whether market trends continue and the paperback book continues to reign supreme, or increased capitalization on the vast profitability of e-books shifts consumer demand, Amazon is likely to extend its dominance of the market.
Once upon a time, Amazon dubbed itself “Earth’s Biggest Bookstore.” Though perhaps more notable in 2018 for its two-day shipping and impending HQ2 location announcement, Amazon’s book empire is, in many ways, what has propelled it to its current market position and what promises to keep it firmly in place.