Should Publishers Allow Kindle Text-To-Speech

With Amazon Kindle there is a feature that has not been available before, Text-To-Speech. Publishers are not happy about this feature.One of the Kindle eBook publisher, Random House, has turned off Text-To-Speech for all its eBooks. Opinions on this are divided. Kindle readers are most likely to think that they had already paid for the book and hence they should get the Text-To-Speech feature. Amazon would like this as well as a value added feature for its $300 device. Should Kindle Text-To-Speech be allowed? Are publishers just being unreasonable? For these we should look at what we pay for a book.

Suppose you bought a hardcover book from a local bookstore. You pay just the price of the book and  read it when and where you want and as many times as you want. You can annotate, bookmark, refer back or even tear off pages you like and archive it.

It just happened you were not able to read it yourself, so you hire someone to read it to you. (Hold on to your question “why did this person not buy audio book?”).Everyday for an hour this person comes to your place and reads the book until it is done.When something was not clear or you wanted to listen again you ask them to go back and re-read the those sections. Anytime you like a section you ask them to bookmark it and also add a Post-It note with your comments on it. You also ask them to flip back to previous chapters and selectively re-read. When this person is done they leave the book with you, which you can thumb through to refer bookmarked sections. You pay about  $X/hour for this service.

One day this person says she cannot come in person to read for next few sessions but can read it over phone to you. You get all the benefits of the previous case except that you do not have the book with you, have to take your own notes and it is done over phone. You would expect to pay less than $X/hour for telephone reading.

Sometime later the same person says that they cannot make the appointed time but will record their reading and send it to you. You can tell this person beforehand your specific needs, reading speed, annotations etc. You lose many of the benefits of previous cases but gain the convenience of hearing it anytime and anywhere you want.

On the other hand you simply can buy the audio book, that is mass produced and lose personalization and customizations you had with your own reader. But you do not pay a separate fee for someone else to read the book, you pay one price for the audio format.

This brings us to what I call the three C’s of  what you pay for the book:

Price of a book  = Content   + Consumption  + Convenience

Content: Is the information content of the book, be it ideas or the story. These days even the most popular books are discounted heavily. Unless you are buying an esoteric topic or a college text book, the price paid for content is almost the same and negligible for most books.

Consumption: This is how you consume the book and what you pay for the method of consumption. This is determined by the formats the book is sold, for example, printed book, eBook, audio book. The price component for consumption varies by the format.

Convenience: This is the trade-offs between benefits and deficiencies of the different methods of consumption. With each format you gain some and lose some.

You can see that Consumption and Convenience are interrelated and we can simply call these two as Convenience.

Since content is all normalized  we can say that what you pay for a book is  for convenience.That is each format has a different value proposition and it is different for each customer segment. If all  a reader pays for is convenience then the publisher should be able to charge you separately for each method of consumption. This is the reason you see hardcovers, soft covers, eBooks and audio books all sold separately.

Coming back to Kindle’s Text-To-Speech, this offers the ability to add a new method of consumption that offers some of the benefits of the new method but without paying  it.  This is the root of the conflict between Amazon and publishers. To me it makes perfect business sense that the publishers do not like what they see as value destruction (by giving it away for free). Actually the additional value is all captured by Amazon in the price of the device.

A better reslolution for this argument is that this Text-To-Speech feature must be unbundled and  priced separately so that the publishers can capture some of the value they add. Amazon can either pass on this additional charge to its customers or decide to eat the cost since they capture considerable value by selling the device.

How Does Kindle Fit In Amazon’s Strategy sells its Kindle books below costs, at a flat $9.99 even though the publishers charge the same price for their hardcover books.  While the devices are still not priced for the mass market, probably due to high costs, is trying to encourage higher adoption for its eBooks. It is my theory that Amazon may not want to be in the Kindle business. There are several reasons:

  1. It is a low margin business except for Apple which found a way to sell at premium price
  2. The customers are fickle minded and hard to satisfy with designs, many a hits like Palm and iPaq have lost their traction now.
  3. The current design,  despite being a very well crafted one, is still rudimentary. There are many possibilities. This is just a start. This is a carefully chosen strategy by, no one know how the most popular eBook reader is going to look like.
  4. is subsidizing the Kindle books for two reasons. One to reduce total cost of ownership of Kindle devices to customers, second to increase the footprint for the Kindle format.
In the value chain of authors, publishers, distributers (, and customers the power is shifting and the medium used for books is changing., as it had always done,  is shaping its own future and not waiting for it. It is driving the new format, reduce the value captured by publishers and position itself to be the distribution medium of choice. The goal is to capture the format market and control the value chain and not the devices market. Since no one else s making such devices took this on itself.  
If the above thesis is correct, then the logical next step is for license the reading format and publish the reference design to have others compete in the devices market. Kindle proved the point, now it is time for it to become the “Kindle Inside”.