/ 22 July 2010

Kindling the bonfire

On July 19 a collective shudder of horror swept through the global book-printing industry. The reason? Amazon, the world’s biggest online bookstore, announced that in the last quarter it had sold more copies of its electronic books (or e-books) than physical hardcovers. And a lot more — 143 e-books for every 100 hardcovers.

All the e-books were sold on Amazon’s own Kindle platform: a clever package of hardware (the physical Kindle reader), software (the purchasing and reading interface) and connectivity (its Whispernet delivery system, which works over both 3G and WiFi).

Given how much derision Amazon suffered at the hands of the tech press back in 2007 when it launched the Kindle, it must feel thoroughly vindicated. At the time it seemed almost insanely risky — an online retailer branching out into designing consumer electronics — but many of us misunderstood Amazon’s real aim: to kick-start a mass market for electronic books.

Yes, a market for e-books was there before Amazon arrived, but it was woefully underdeveloped. Most e-books were niche titles, like educational books or technical guides, and most were sold (or more commonly given away) in Adobe’s ubiquitous but limited Acrobat format to be read on computers.

The genius in Amazon’s approach was to realise that it already had the all important relationships with the publishers — all it needed was the right platform with which to enter the market. Frustrated with the decades-long bickering about formats, and the poor choice of hardware, Amazon took the plunge and it has paid off handsomely.

What’s more, Amazon isn’t precious about who uses its software. You can read Kindle books on Apple’s mobile devices like the iPhone and iPad, as well as on Android phones, Blackberry phones and virtually any kind of personal computer. It’s only aim is to sell more books.

Many people assumed that the arrival of Apple’s iPad on the scene earlier this year would spell doom for the physical Kindle reader. In fact, Amazon is selling the devices faster than ever, helped along by a tactical price decrease from $259 to $189.

The iPad and Kindle are also very different devices. The Kindle is a specialised long-format text-reading device with a much longer battery life. The iPad is an expensive portable multimedia and computing device. It’s like comparing a space-age, grinds-its-own beans espresso machine to a good old plunger and saying the plunger’s days are numbered.

Critical difference
In many ways Amazon’s success with Kindle mirrors Apple’s market-defining launch of the iTunes online music store. There’s one critical difference though — the music publishers had to be goaded and coerced into joining (some still haven’t) whereas in Amazon’s case they came willingly (and with some gusto).

Why? Because book publishers are not as wedded to the physical printing process as the music industry is to its beloved CD-printing plants. Rather than seeing Kindle as a threat, the publishers saw it as a way to make similar (or even better) profits per book without all the hassle of moving tons of flattened dead tree around the world.

In fact, the Amazon deal lets it get on with what it is really good at — and what it is still needed for: good old-fashioned disciplines like developing new writers, editing great books and marketing their authors.

For all its brilliance Amazon’s move was essentially defensive. It realised that, given a decade, a viable e-book standard would emerge. Since a huge portion of its revenues come from books, it needed to get into the market early. This is exactly what Netflix, the revolutionary DVD rental company, is doing with its web downloads strategy — joining the wave before it swamps them.

And that’s what separates the Amazons and the Netflixes of the world from the CD and book printers — an ability to learn and adapt to change. That trait is ultimately more important than any amount of money or history.