By Gadi Shamia, Guest Author
“There is a new SaaS, Something as a Service every month.” This is how I mused a month ago when writing The next SaaS post. Newsweek has the story about the new Amazon reader, Kindle. The device (that looks anything but kindling) will be sold for $399, and will act like an iPod for your books. Kindle will offer more than iPod in one sense: it carries its “iTunes” with it, allowing owners to purchase and download books whenever a wireless network is in sight.
This is new and innovative in the books world but not really new when we think of what Apple did with iTune and iPod. The big difference is that Amazon created a new entry barrier for the avid book reader—buying the Kindle. Different? Yes. For the last 150 years or so, listening to music meant buying a device to play the music. From CD players, Walkmans or MP3 players: we first bought the device, and then bought the content. The music played on our device.
In the book world, the content came bundled with the device. Albeit the device was simple and did not change a lot during the last few hundred years, it was the platform that carried billions of words throughout the years. Now Amazon and Kindle are changing the game: first buy a device, that will cost $400, the cost of about 20-30 books on Amazon, and then pay for the content (books), whenever you want to read.
Seth Godin opposed this approach in his blog. Seth, a bestselling author, suggested “…to use it, at least for a few years, as a promotion device. Give the books for free to anyone who buys the $400 machine.” This thought may be too radical and I am not sure that the book industry can digest it. Nevertheless, I think that Amazon has an amazing opportunity to change the world forever by inventing the RaaS: reading as a service.
RaaS will mean signing up at Amazon.com and paying $29 month for the device and an unlimited number of books. The user will not own the device but rather “rent” it as long as the subscription is active. Amazon can create a revenue pool (say a third of the total monthly fees) that will be paid to the author. Since the device is always connected, authors can be paid in many creative ways (50 cents if your book was downloaded, 1 cent for every page that was actually read, or any other way you can imagine). The user experience will be amazing—every book in the world will be a click away from the reader. You can start a book and throw it away if you don’t like it, get back to a concept you read few years ago in a business book or read about the history of the Paris sewage system while riding the metro on your first day in the city (and no, the smell is not a new feature of Kindle. It is the old train…).
This will make all of us book addicts and the Kindle will be used by virtually anyone. The total readership and the intensity of reading will grow dramatically and the long tail of the books industry will become even longer. From a pure revenue point of view, Amazon will sell much more and make much more on every book ($1000 for 3 years, my estimated lifespan of the Kindle).
The concept is not new, it is merely a mash-up of SaaS and cable TV, where you can watch as much as you want and you pay for the service only. Amazon is the right company to make this sea change in the conservative book world. In my humble opinion the question is not if, but when.