Home » Big Publishing, Mike Shatzkin, PG's Thoughts (such as they are) » Ten Years Ago Amazon Started A Revolution and It Just Gave Me a Very Good Month

Ten Years Ago Amazon Started A Revolution and It Just Gave Me a Very Good Month

30 November 2017

From veteran publishing consultant Mike Shatzkin:

Ten years ago, Amazon released the first Kindle device. There had been electronic book reading devices before the Kindle and, indeed, the Sony ereader was actively in the market when Kindle arrived. (Others, like Rocketbook and Softbook, had perished for lack of interest.)

Kindle and Amazon succeeded where others failed for several reasons. First and foremost was the power of Amazon, which already had the attention of a very large segment of the book-reading and book-buying public. But Amazon helped themselves with three big breakthroughs — one technological and two commercial — which made what they were doing different from what had been done before.

The technological breakthrough was integrating the purchasing into the device, eliminating the two step “download and synch” process that previous ebook readers had required. Since wifi didn’t exist yet, executing on that required Amazon to take the risk on dial-up connection charges that MIGHT have been used by Kindle owners to do things other than make ebook purchases.

. . . .

The other commercial breakthrough was pricing. Amazon was willing to take real financial risks to present ebooks as a money-saving alternative to print. They wanted to establish a maximum ebook price of $9.99, so that’s what they charged even if the publisher’s price to them was higher and they had to take a loss on the sale.

. . . .

Back near the beginning of ebook time, a friend at Kobo put together a collection of the first two years of Shatzkin Files blogs into an ebook. Then, about a year ago, a British digital publishing operative named Simon Collinson felt the blogs were worth collecting into annual “books”. He did an extraordinary amount of work to arrange the blogs by subject and to give me the drafts of annual summaries. This turns out to be a pretty decent history of the ebook revolution since its dawning.

And now those ebooks are available in all the ebook formats for 20112012201320142015, and 2016.

Link to the rest at The Shatzkin Files and thanks to Nate at The Digital Reader for the tip.

“Since wifi didn’t exist yet” in 2007, ten years ago when Amazon introduced its first Kindle, is an example of both MikeSpeak and MikeWorld.

The first version of the 802.11 wifi protocol was released in 1997. This was updated in 1999 with 802.11b to permit 11 Mbit/s link speeds which really got things going.

Within five years, wifi exploded to about 100 million users, tens of millions of wifi devices being sold, etc. PG can’t remember when he first installed wifi in Casa PG, but recalls regularly using hotel wifi in the early 2000’s.

PG suggests that wifi may not have existed in New York publishing circles in 2007 (MikeWorld), but it was in common use at airports, restaurants, homes, etc., at that time. For example, in 2004, Slate published an article entitled, How to Steal Wi-Fi and How to Keep Your Neighbors from Stealing Yours.

PG has always viewed Shatzkin’s thoughts as reflective of the current thinking in traditional publishing.

Unfortunately, that thinking is consistently out of date and seems unable to draw any lessons from other businesses that have been diminished or destroyed by disruptive technology. The ebookstore, the ebook and the ease of self-publishing an ebook together constitute a hugely disruptive technology.

Traditional publishers are accustomed to paying only a small percentage of the revenue generated from book sales and licensing to the author. Of course, Amazon pays a much higher percentage to authors who self-publish via KDP. Depending on the pricing the author chooses, the majority of the price a reader pays for an ebook will flow through to the author.

Publishers are fond of talking about all the things they do that an indie author can’t do, chiefly getting printed books into traditional bookstores. From the publishers’ viewpoint, this sales channel is very important. From the author’s viewpoint, looking at the money the author actually receives from the physical bookstore channel, it’s less important.

Simply put, an author can often generate a higher income from a given book by self-publishing ebook and POD paperback editions only and selling exclusively through online bookstores than the author can generate by paying a much higher percentage of each book sold to a traditional publisher and accessing the physical bookstore channel. The publisher captures the lion’s share of income from physical book sales, so from the author’s viewpoint, that channel is much less important to his/her financial well-being than it is to the publisher’s.

If publishers were willing to enter into hardcopy only publishing agreements with authors, permitting authors to retain ebook rights for self-publication, business-savvy authors would be happy to sign such agreements. Even with low royalty rates, the hardcopy only agreement would generate net income to the author that the author would not otherwise receive while the author would benefit from the much higher percentage available from independently publishing his/her ebook editions.

One last and obvious point – twenty years ago publishers generated all of their income from print-only operations. If, as the traditional publishing press keeps saying, readers are returning to printed books and physical bookstores, a return to an earlier era of print-only publishing would seem to be a viable business proposition.

Big Publishing, Mike Shatzkin, PG's Thoughts (such as they are)

28 Comments to “Ten Years Ago Amazon Started A Revolution and It Just Gave Me a Very Good Month”

  1. Thanks for making it clear that Amazon was just being stupid when they put dial-up they had to pay for in the Kindle in 2007. To read you, one would think they could have just done wifi then and been done with it and taken no risk.

    But Amazon wasn’t being stupid and I wasn’t being wrong. Wifi didn’t “exist” as in most people in the world didn’t have devices that used it or a way to access it. That’s why Amazon had to provide dial-up in their device to execute on direct-to-device delivery.

    So maybe you’re “right”, but really you’re WRONG.Your desire for snark is so intense that reality goes out the window. If wifi had been available to most people in 2007, Amazon would have provided it in the first Kindle instead of a cost-risky dial-up. To trash me, you insult them. I know that isn’t your intention. You’re usually a reliable fanboy. Too bad. You’ve always been able to trash me in the past without insulting them. Maybe you’re slipping.

    • When you say wi-fi didn’t exist, what do you mean? And by most people, who are you referring to? That line tripped me up and I stopped reading there, because I distinctly remember using wi-fi to patch updates to Half-Life 2 for my brother, particularly the epside 1 and 2 DLCs that came out in 2006/2007. I was not then, nor have I ever been, an early adapter of tech.

      In 2007 I purposely bought a router that complied with the 802.11 b/g standard PG mentions. According to Newegg the particular model, Linksys WRT54GL, was very popular at that time, a top seller (thousands of reviews on that site alone). When I set up the home network I saw that several neighbors already had wi-fi (so I knew to lock mine down). And this was in a semi-rural podunk town with cornfields and deer and foxes and such. There’s literally a barn at one end of the main thoroughfare. I’m sorry, but if people living near dirt roads and cornfields have “it” then “it” is a thing. Wi-fi qualified in 2007.

      On the other hand, broadband penetration was (and likely still is) craptastic back then. I was following that issue closely back then, because I was annoyed (and still am) that Comcast was the only option in my area and I wondered why.

      The FCC had (has?) strange standards defining whether or not a community has broadband. For one thing, they didn’t define the speed properly (it was something slow, like kb/s and not mb/s. Basically, not something usable for downloading media). For the other thing, they considered it sufficient if just one person in a given area could access broadband. Offering dial-up was a kindness, and not so crazy as you might think.

    • Mike, you’re the one throwing insults around. PG didn’t call Amazon stupid. And you’ve been fact checked on a pretty basic error that is pretty easily fixed, since Wi-Fi routers were more expensive and less common in 2007. But they were by no means rare unicorns. It’s just that the 802.11b and 802.11g war was shaking out and people had the usual compatibility concerns and so on, and that delayed purchases from anyone who was still on the fence about a new wireless router when they had an old wired-only one.

      I’m going to point out another baffling error in your article.

      But Amazon wasn’t being stupid and I wasn’t being wrong. Wifi didn’t “exist” as in most people in the world didn’t have devices that used it or a way to access it. That’s why Amazon had to provide dial-up in their device to execute on direct-to-device delivery.

      Amazon did nothing of the sort. You’re talking about a modem that would need an RJ-11 phone port, a phone cord, be plugged into the wall, and then dial up to the Internet on Amazon’s dime. Plus the customer’s dime for whatever phone number it was programmed to use. That’d have to be set manually by the customer against a chart of local numbers.

      What Amazon did (and this is why it was such a gutsy move) was they included 2G cellular radios (not dial-up modems) and then entered into a contract with AT&T to provide free cellular data service to all early generation Kindles (now it’s an expensive option–and probably LTE data).

      There are several reasons they might have done this, but the most noteworthy is that you can buy one, put in your Amazon account info, and then immediately get all of your books without even leaving the store. If you’re on the train and you finish your book, you can instantly buy the next in the series. Plus, you don’t have to have Wi-Fi at home and you don’t even have to configure your Kindle to use it, either.

      This had to be pretty expensive at the time, although they almost certainly negotiated a deal. Welcoming users to browse Wikipedia for free over the connection was the bit that sounded crazy to me. But Wikipedia is mostly text (so not too bandwidth-intensive) and that turned a really compelling feature into a bright, shining benefit for end users.

      But claiming Amazon incorporated dial-up technology (this is 1962 technology) into a Kindle as “risky” and “expensive” (it wouldn’t have been either) invalidates every conclusion you draw from the article.

      You’ve always been able to trash me in the past without insulting them. Maybe you’re slipping.

      PG’s commentary is pointed but not snarky. And really pretty on point if you’re just going to attack him instead of realizing “oh, I used the wrong term” and fixing the article. Because if you swap out the term “dial-up” with “cellular” then you really do have an interesting article (although again, Wi-Fi was very common in 2007, just not ubiquitous as it is today, so the article still isn’t directly on point).

      I mean, I can just as easily swap it out in my head, but I’m the reader. It’s not my job.

    • So maybe you’re “right”, but really you’re WRONG.

      Schodinger’s Cat has compiled his blog entries into six convenient volumes, currently available on Amazon.

  2. I left Dell on 2003. One of the many things I had to pack up were several wifi boxes (one of the many ways we were using them was sharing internet access with a couple of needy neighbors, including using wifi ‘access ports’ as relays between the houses.)

    Sorry Mikey, I think your wifi is still stuck in 1997 …

  3. You didn’t post a link to Mike’s books!!

    https://www.amazon.com/s/ref=dp_byline_sr_ebooks_1?ie=UTF8&field-author=Mike+Shatzkin&search-alias=digital-text&text=Mike+Shatzkin&sort=relevancerank

    (we’ll see how well they do over time…)

    One other thing to note – the links to his books from his blog don’t go directly to Amazon, instead they go to this service – https://www.books2read.com/

    • Books2Read allows an author to create “global” links, so that the link gives a browsing reader access to many stores (Kobo, B&N, Smashwords, Amazon, and more), not just one.

      Draft2Digital gives an indie automatic access to Books2Read, but even someone not using D2D can set up an account with Books2Read.

  4. Every computer that I’ve had since at least 2001 had wi-fi in it as part of the default configuration.
    I traveled extensively for business starting in 2003 and deployments were spotty but you could find one if you needed it. By 2006 outside of areas with problematic broadband supply, it was effectively everywhere business people were regularly moving through (e.g. airports, hotels, coffee shops, client locations, etc.).

  5. Mr. Shatzkin expressed himself incompetently in his post and then went ballistic when his mistake was pointed out.

    I purchased a Fujitsu laptop with an integrated wi-fi card in 2003 and got wi-fi DSL service shortly thereafter, and I am neither a millionaire nor a Steve Jobsian tech visionary.

    By 2007, millions of people had wi-fi broadband service.

  6. The problem with PG’s nitpicking on Wifi is that Mike was 95% correct on the point.

    Wifi wasn’t a practical technology for the original Kindle. Users would have had exactly the same connectivity problem with a Wifi Kindle that they had with any other ereader at that time.

    Yes, I had a bunch of Wifi-equipped mobile devices before the Kindle. I could get Wifi in an SD card, or on a PCMCIA card, or as a PCI board for my PC.

    At the time the Kindle launched I had Wifi in my Nokia 770, in my laptop, and in a Palm PDA (via said SD card). But none of that matters because setting up a single device on a single network still sucked in most cases, and that is a problem Amazon wanted to avoid.

    Remember, Amazon was building a device that even the most tech-illiterate person could use. Using Wifi would have sabotaged that goal.

    And one last thing. In your rush to pile on Mike, I think y’all may have forgotten that the Kindle was designed in 2005. According to Statista, only about two-thirds of the USA had internet in 2005 – and that includes dial-up.

    If internet penetration was that low, Wifi use was even lower, which is why Amazon could not possibly have used Wifi in a device for the technically illiterate.

    • Internal corporate decisions are made in the context of an external environment. The more accurate one’s information about the external environment, the greater the probability decisions will lead to success.

      In examining past decisions, it’s also important to have accurate information about that past external environment. I doubt Amazon lacked accurate information about the state of existing WiFi in 2007. We don’t lack that information, either.

    • “The problem with PG’s nitpicking on Wifi is that Mike was 95% correct on the point.”

      I wouldn’t call it nitpicking. Mike wrote:
      “Since wifi didn’t exist yet, executing on that required Amazon to take the risk on dial-up connection charges that MIGHT have been used by Kindle owners to do things other than make ebook purchases.”

      That is a big, factual error. Mike could have swallowed his pride, admitted to it, made an update to his article and moved on. He chose otherwise. He chose vitriol. He shouldn’t be surprised to get some in return then…

      • Exactly so. It was easy to check, and easy to fix, and he opted to go with a rant rather than back up and fix it. Not impressed. A Shatzkin post normally make my eyes glaze over and I skip them. This one caught my attention because Shatzkin wrote something that directly contradicted reality as everyone knows it, and I’m unwilling to take anyone seriously who willfully gets facts wrong.

        So why would I trust him on matters I can’t verify, especially when he rolls around on the floor and throws a temper tantrum like a two year old when he’s corrected on his errors? I don’t put up with that behavior from actual two year olds, and they have a cuteness factor that grown men inherently lack. Grow up.

      • Huge error? Pshaw. I could fix that sentence by changing four or five words without fundamentally changing what Mike said.

        No, y’all screwed up – bad. You nitpicked a small detail and in doing so missed the larger point. You are all acting like fact check Nazis, and you are no more correct than a grammar Nazi would be.

    • I’m no genius, but litteraly ten seconds of Google got me this,

      https://www.ebay.com/itm/Amazon-Kindle-1st-Generation-Model-D00111-250MB-3G-White-Mint-Condition-/292344819470?_trksid=p2385738.m4383.l4275.c10

      A 1st gen Kindle (ugly I know) on ebay with 3g and WIfi. I also remember the night I first read about the Kindle. I remember because I ran out of the room where I played games and to my wife who was on her laptop in the living room (everyone I knew at the time had wifi so I don’t know where this whole ‘no one had wifi’ thing came from) and showed her the Kindle. She immediately said, “I want one.” The 3g was nice, sorta. We’re a bunch of homebodies so their example of being on a train and buying a new one didn’t appeal to me. What made the Kindle great, and still does, is the access behind it. 200 (at the time) books in my pocket… no more massive boxes to move, no more finishing a book and figuring out if I could afford the next one in the series. 3g had little to do with the success. For me, t was the bookstore. Nate, you’re wrong, and Mike is wrong, but that doesn’t mean your morally bad. It just means you’re wrong about the facts. It isn’t the worst thing in the world. Sometimes we’re wrong. Admit it and move on. No one is right all the time. Well… random people on the internet seem to want to be right all the time.

  7. Huge error? Pshaw. I could fix that sentence by changing four or five words without fundamentally changing what Mike said.

    No, y’all screwed up – bad. You nitpicked a small detail and in doing so missed the larger point. You are all acting like fact check Nazis, and you are no more correct than a grammar Nazi would be.

  8. Is it okay if we ‘wrench his head around’ and ‘impose’ our view? Or is that just ‘hostile’?

  9. 1- Yes, WiFi was common in *homes* though not ubiquitous.

    2- Kindle’s instant success had little to do with the choice of wireless connectivity. Sony and Pocketbook, among others, were quite successful without wireless for several years. (Until agency and B&N moving to near-cost pricing broke their business model.)

    3- The primary reason for Kindle’s success has long been documented here and elsewhere: the bookstore behind the reader. People bought the ugly, clunky, unwieldy device practically sight unseen because they instantly understood the value of having the *Amazon* bookstore connection. That was the key differentiator.

    David Gaughran recently reflected on this:

    https://davidgaughran.wordpress.com/2017/11/22/the-birth-of-the-kindle/

    And a while back we had a retrospective on the first Kindle:

    http://www.thepassivevoice.com/2014/10/the-story-thus-far-amazons-storefront/

    It’s the store.
    It always has been the store.
    Everything else is plumbing and decor.

    • This

    • And without a drop-dead simple way to deliver the ebooks, that store would have meant little.

      Remember, Amazon did sell ebooks before the Kindle. So did many others, including Fictionwise, which had an awesome store and great deals.

      The biggest difference between the Kindle Store and previous efforts was delivery. It was not the only difference, but it was one of the key ones.

      • The biggest difference was Amazon controlling the whole ecosystem.

        They weren’t doing a generic me-too store selling books with somebody else’s format, access management, and customer service.

        That lowered their costs and allowed them to control their own pricing.

  10. I hate to interrupt a good flame-war, but I’d like to address the topic of publishing having been ALL-print as recently as 20 years ago.

    The trouble is, they were increasing their expenses over the last 20 years, particularly in the area of jobs and overpriced acquisitions. The only way they could make that work was to slice the author’s share to the bone – and, additionally, grab all of the potential merchandising, movie, and other rights they could manage to get their pudgy little paws on.

    Amazon was a gamechanger. The first authors to benefit were the midlisters and those who wanted to publish a small nonfiction book. Later, as more working writers wised up, the avalanche sped up.

    Now, every one-book writer is jumping on board to get their piece of the pie. Not that most sell all that much, but it’s a terrific deal compared to the vanity press industry.

    What many don’t seem to grasp is that the pie is growing. More books are being read, more people are open to the idea of reading – even though they seldom did before, as the cost, and the ease factor, make it relatively simple.

    Heck, they don’t even have to invest in a reader – they can use their computer, or phone (the choice of most young people).

    Wait until the rest of the world gets on board – we’ll be gloriously drowning in books!

    • The slush pile is giving up on trad-pub.

      Trad-pub likes to brag about the sweet deals the 1%ers were getting, but they were lying because they were only counting from the ones they actually published. They didn’t count all the submissions that they sent rejection slips to (or never bothered to reply at all to keep the writer hanging on in the hope they’d make the cut.)

      So those slush pile books (I think they said Harry Potter was rejected over a hundred times?) are getting (different levels of) editing and covers – and coming out as ebooks 1-3 years sooner than the ‘lucky’ writers that managed to get a trad-pub contract.

      I’m a ‘nobody’, but for some crazy reason Amazon is sending me monthly checks for my ebooks, checks no agent or trad-pub is getting a cut of. And even a little is better than the nothing that a rejection slip would have gotten me. 😉

      And there are a lot of ‘nobodies’ out there, with more joining every day. And it seems every one of them is getting a little of what trad-pub ain’t – and it’s adding up. And trad-pub can’t figure out where all the readers have gone …

  11. The facts are the first few Kindles did not have Wi-Fi and the first one to have it was the Kindle Keyboard in 2010.

    The reason for this has been mentioned, which is Wi-Fi was not as widely available in the world as it is today. Kindles could downloads ebooks in over 100 countries.

  12. I’m pretty sure my 1st gen Kindle had both 3G and WiFi

    • My very old kindle (model no. D01100) is asking me to turn on the wireless so it can show me the latest ‘Special Offers’.

      (Why yes, I’m one of those side-loaders – how’d ya guess? 😉 )

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