Henry Blodget Aims to "Save the Book Publishing Industry"
For the record, although I don't think we need to be "saved", Blodget makes some excellent points but glosses over one critical fact: eBook devices remain prohibitively expensive for the masses, at least for now. While it's easy to pick apart Blodget's P&L, and you'll see several follow-up comments do just that, there's no doubt that widespread adoption of e-readers would enable some very interesting scenarios.
I tried to take things in that direction with this post over the weekend, for example. But until we can come up with a cellphone model where the bulk of the device's cost is buried somewhere else in the transaction I don't think we'll get to the adoption level that's required to make Blodget's model work.
Then there's the question of "cheapening the brand" or "under-pricing the intellectual property." After all, if publishers have been able to sell a print book for $25 in the past, why should they "give it away for $5?" The answer, of course, is that they'll more than "make it up in volume", which is mostly true...again, as long as the device base exists.
So it's a bit of a chicken-and-egg problem. Publishers are wary until there's an enormous device base and the base probably won't get huge until the device/e-book prices drop. Amazon is trying to help supply the data though: The Kindle bestseller list is full of sub-$10 products and you can bet Amazon is collecting data to show publishers how $10 and $5 are important pricing thresholds in the e-book world.
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