Amazon's "Kindle MatchBook" Will Accelerate E-Book Adoption

Like it or not, given the rapid rise of e-readers and tablets, it's no mystery traditional paper books are rapidly falling into obsolescence.

And Amazon.com  (NASDAQ: AMZN  ) would know, especially considering the online retail behemoth largely made its name nearly two decades ago as the Internet's preferred destination for college textbooks. 

Now, Amazon just introduced a new twist to hasten consumers' pending mass migration to e-books, aptly dubbed "Kindle MatchBook." 

Image source: Amazon.

Hang on to the old, and bring in the new?
So how's it work?

In short, if you've ever purchased a print book from Amazon.com -- even if that purchase was made when Amazon's online bookstore was launched in 1995 -- and if your book's publisher has enrolled the title in the Kindle MatchBook program, you'll be eligible to purchase the electronic version of your book from Amazon's Kindle store for prices ranging from $2.99, $1.99, $0.99, or free.

To start, Amazon says there will be more than 10,000 e-books available when Kindle MatchBook officially launches in October, including books from Ray Bradbury, Michael Crichton, Blake Crouch, James Rollins, Jodi Picoult, Neil Gaiman, Marcus Sakey, Wally Lamb, Jo Nesbo, Neal Stephenson, and J.A. Jance. 

What's more, Kindle MatchBook will include all print titles already published through Kindle Direct Publishing, and Amazon promises there will be plenty of additional books available down the road.

Here's why this is a win-win
As Amazon's press release also points out, customers have long requested the bundling of paper and electronic texts.

After all, many readers simply aren't ready to give up their beloved physical copies of their favorite books, but you must admit it's typically more convenient to bring along a digital copy on your Kindle for traveling purposes.

Then again, this also raises the question of whether Kindle MatchBook might potentially cannibalize duplicate sales that publishers and authors might have otherwise enjoyed. However, Amazon already headed that objection off with a quote from best-selling author Marcus Sakey, who said, "It's ridiculous to ask readers to pay full retail twice for the same book."

Besides, this program may also be able to spur many complacent consumers into buying additional electronic copies of books, pulling in new purchases they otherwise wouldn't have considered.

What's in it for them?
Of course, while this fulfills an oft-requested consumer want and provides a potentially significant additional revenue stream for existing publishers and authors, the folks at Amazon aren't doing this entirely out of the good of their hearts, either.

Remember, a few weeks ago, competing bookseller Barnes & Noble  (NYSE: BKS  ) said its traditional retail business revenue not only fell 9.9%, but its digital content sales also fell a dismal 15.8% year-over-year in Q2.

Meanwhile, Amazon last quarter boasted total sales growth of 22%, a performance largely driven by digital products, which represented the 10 top selling items across all of Amazon.com during the quarter. Kindle MatchBook, then, should effectively serve to run up the score and accelerate the migration away from Barnes & Noble's digital and core bricks-and-mortar operations, and toward Amazon's already-impressive digital segment. 

Though Amazon's press release didn't specifically outline royalty rates for traditional publishers who've opted to use Kindle MatchBook, we do know writers who've opted to use Kindle Direct Publishing already earn royalties of either 35% or 70% of each book's total sales price (depending on whether the book is made available to borrow through the Kindle Select program).

And, according to the MatchBook FAQ page, those royalty rates will carry over to any sales made through the Kindle MatchBook platform.

When all is said and done, then, Amazon gets to pocket the remainder of that revenue from it's already low overhead medium, further boosting its high-margin digital sales.

Well played, Amazon. Well played.

In the end, as investors we need to remember the retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only the most forward-looking and capable companies will survive, and they'll handsomely reward investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.


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