Do you sell atoms or bytes? Do you think that your answer could change over the next five years? Think about Amazon and the Kindle. Jeff Bezos asked, What is my role going to be if the nature of books changes? He realized that to stay relevant and necessary his company needed to retain control over something tangible and physical. There could have been other options. Amazon could have bet that the reading experience would fully transition to audio, but they ultimately gambled that the act of reading was still integral to the enjoyment of a book. So, how do you stay in control of a physical experience when your product is going from atoms to bytes?
Think about what a profound change this is. What would you do if your physical product—one that has been around, unchanged, for hundreds or thousands of years—suddenly seemed headed toward obsolescence? How do you still keep yourself relevant—an essential part of a transaction or an experience—especially if, like Amazon, you are primarily functioning as the middleman between product and customer? How do you keep that link alive?
For Amazon, that link is providing the medium that brings the printed word to the reader. First that medium was books, and now, for many, it’s the Kindle. Amazon has been smart to keep physical ownership over the process of reading. Even though a reader may have transferred allegiance to digital media, Amazon is still controlling access to the “thing” in a reader’s hand. Granted, there are plenty of competitors springing up, all with their own pros and cons, but none has both the sheer heft of Amazon’s catalogue and the huge advantage of having arrived so early on the market. A Kindle, like the Hoover vacuum cleaner before it, is becoming both the specific name of the product, and a catch-all term for its category—a great place to be.
It will be interesting to see how far Amazon pushes the possibilities of the Kindle, and how its relationships with publishers and authors will develop. Publishers are no longer in the business of selling paper, yet most still act as though they are. The publishing industry is still figuring out exactly how to handle pricing on e-books, and especially how e-book pricing can be aligned with traditional book pricing in a way that makes sense to the consumer. Customers are not happy to pay more for a Kindle edition than a hardcover edition of a bestseller. Yet some books are more expensive as digital downloads than as hardcovers. It doesn’t make sense to consumers, and it’s a downright dangerous situation for all concerned if book piracy takes off in the same way that music piracy did a decade ago. You don’t want to antagonize your customers or make them feel like fools for buying what you are selling. Offering a digital download for more than a hardcover does just that.