Amazon, Kindle, and the iPad threat

The New York Times reports that Amazon are threatening to stop selling publishers’ titles online if they don’t agree to a list of demands:

E-book editions of most newly released adult general fiction and nonfiction will cost $12.99 to $14.99 [in Apple’s iBooks store].

Amazon has agreed in principle that the major publishers would be able to set prices in its Kindle store as well. But it is also demanding that they lock into three-year contracts and guarantee that no other competitor will get lower prices or better terms.

Kindle, of course, was Amazon’s early entry into the ebook reader market, and it makes sense that they would be worried about Apple’s imminently-released iPad. In a twist on the usual state of affairs, however, Apple is coming across as the more open competitor in the market:

1. Whereas Kindle depends on its own proprietary format, Apple’s iPad uses the open ePub standard (meaning you can use books from any compatible store)
2. Amazon are competing by attempting to lock publishers in to the Kindle as a platform

Amazon have a lot of leverage: their online bookstore can easily make or break a title. It’s global, ubiquitous, and part of the web in a way that no other vendor has managed. The Amazon store is a platform rather than just a website: businesses may leverage their infrastructure in a number of ways, for example delegating payments and/or shipping, and the sales platform may be deeply integrated into third parties’ websites and applications.

However, at the same time, their Kindle strategy seems to be anything but open. Prior to the iPad announcement, they were taking 70% of newspaper subscription revenue on the platform, for example. They’re now following Apple’s lead and giving 70% to content owners – albeit only if they agree to specific criteria.

The iPad is essentially a portable content reader for the 21st century (it handles websites, applications, movies and books equally elegantly), and the enormous success of the iTunes App Store to draw on. Kindle has Amazon’s existing bookstore to leverage, which has never had as wide-reaching a competitor. On their own, both companies tend towards onerous terms and lack of choice. In competition, the result should be a much better deal for publishers – as long as they ignore the current pressure to lock themselves in.