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Why Kindle Will Change the World

I've been one of Kindle's biggest critics. When (Nasdaq: AMZN  ) rolled out its electronic reader last week, I described it as a $399 paperweight.

Who would pay up for a juice-sapping device that's too chunky to pocket and too tempting to steal to leave out in the open? I let my cynicism rip even deeper, suggesting that the company was trying to orchestrate demand in an attempt to turn its Kindle into the next Wii or Tickle Me Elmo.

Then I saw the light.

No, it wasn't CEO Jeff Bezos waving a flashlight in my face with waterboarding threats -- it was an email with a link from Amazon to established publishers, inquiring about turning their existing paper tomes into Kindle-ready electronic books.

Published in 12 hours or less
Amazon's Digital Text Platform is in beta, but it's an open beta. Anyone can sign up. Anyone can be published. In fact, the only requirements to get an item listed on Kindle are a title, an author's name, and of course, content.

I wrote a cheesy coming-of-age novel called The Last Perfect Father's Day during my undergraduate days. It's not my best work. It might be my worst. I've let two people read it. OK, I've suckered two people into reading it. I had it lying around on my hard drive in MS Word, so I figured I'd serve it to Amazon's service as a guinea pig.

In seconds, Amazon chewed it up and spit it back out in Kindle's HTML-coded format. All that was left was to price the puppy, from $0.25 to $200. I chose the low end of that scale and clicked the Publish button.

Several hours later, it was up on the site, complete with an Amazon-assigned ASIN code. That was too easy.

Over the holiday weekend, I decided to peck out a Kindle-specific non-financial read. "Why the Kindle Will Fail" is short (2,300 words, unlike the 70,000-word novel) and starts as an incendiary piece before coming around, as I have since last week, to embrace Kindle's potential.  

"How does it feel to be cradling a dinosaur?" it begins. This time, Amazon wouldn't let me price it at a quarter. The minimum listing price went up to $0.99 (perhaps in fear of processing way too many $0.25 micropayments).

What's in it for Amazon? Plenty. The company collects 65% of the list price. In a time when Amazon is working off reasonably thin margins as it subsidizes shipping costs on many orders, the bandwidth to deliver a digital text file costs far less than packaging and delivery for physical shipments. Inventory is never a problem, either.

All roads lead to Amazon
Self-publishing is a pretty powerful tool. Websites like CafePress, Lulu, and Zazzle thrive on content creators' craving for digital resources to market their wares. Amazon has more clout than all of those companies combined.

I may have been one of the first to stumble on Amazon's open-door policy, but you can rest assured that the cottage-industry mind-set will creep in. What's to stop you from uploading your college thesis? How about your grandmother's recipes? Drat! Someone will beat you in launching a Kindle-based stock-picking newsletter.

Quality control will be a problem, but Amazon has never stopped self-published writers from selling their books through itself. And now it's made that process even easier.

In the near term, there'll be a glut of product and not enough early adopters with $399 Kindles. Then things will get viral. Won't these freshly published writers and newsletter writers publicize their Kindled works? Before long, I'll bet you'll see enough Kindle-exclusive content to cave in and buy one. By then, it will probably be marked down to a more reasonable mainstream price.

Don't dismiss the power of word of mouth. What do you think made PayPal, Photobucket, and YouTube so niche-defining they were acquired by the titans they threatened -- eBay (Nasdaq: EBAY  ) , News Corp. (NYSE: NWS  ) , and Google (Nasdaq: GOOG  ) , respectively?

The answer is viral. PayPal offered $5 bounties for new signups, so eBay sellers began nudging buyers to pay through PayPal, instead of eBay's own Billpoint platform. Photobucket and YouTube encouraged users to embed their snapshots and video clips everywhere, ultimately exposing even more viewers to their sites.

Kindle's open publishing platform has that kind of potential. Amazon has added 3,000 publications to the 88,000 it launched with last week. I'm guessing that number will explode as word spreads of the entrepreneurship opportunities it offers.

A decade ago, Amazon was considered little more than a virtual version of Barnes & Noble (NYSE: BKS  ) or Borders (NYSE: BGP  ) . Now that it's arming writers with the tools to put their work on those virtual shelves, it's about more than just stocking a virtual superstore with best-sellers.

If I can get my cheesy coming-of-age novel on, just imagine what a person with talent -- like you -- can accomplish? Kindle owners aren't cradling dinosaurs. They're cradling tigers. 

A look at the best of Bezos:

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 06, 2009, at 7:11 PM, Romaster wrote:

    You know how millions of apps are made for the iPhone and the large majority of them are garbage that no one downloads or buys? Well that is exactly what will happen here.

    Want to read newspapers online? You can do that already on the iphone. Don't want to pay for that? iPod touch is a lighter, cheaper solution with the ability to download and read newspaper apps on a train ride or whatever. Bloomberg, NY Times, Associated Press, WSJ, etc.... all of that is already on it.

    The only advantage over the ipod touch is that there's a bigger screen. Fine. Whoopideedoo. Is a bigger screen worth paying $400 to lug this extra piece of electronic around? I say the only people who could possibly lug this thing around in its enormity are women with big prada bags, students who actually have serious dough and read on a train (give me a break.. that is a small market), and a few office drones.

    Small market... big hype. Short Amazon.

  • Report this Comment On May 06, 2009, at 7:15 PM, Romaster wrote:

    And as far as the idea of replacing textbooks... no.....

    At home: Students like to have a firm paperback where they can insert post-its, write stuff in the margins, or put pens and other holders when going back and forth between pages.

    In the class: It would be interesting for a professor to say "ok everyone, turn to page 240 on your kindle for chapter 11 of Open Market Operations" but the fact of the matter is:

    1. Not everyone can or should have to buy it.

    2. Professors substitute this use already by using powerpoint or handing out notes or putting stuff on blackboard/online for printing.

    So again, this is a useless product.

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