eTextbooks

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StudentWithBooks In much recent press coverage, Amazon’s introduction of Kindle DX is seen as marking the beginning of a transition to e-textbooks. That may well be true, but with special emphasis on “beginning”. Regardless of how impressive the DX turns out to be, we expect that publisher caution and market inertia will combine with the DX’s near-$500 price to limit Amazon’s near-term business opportunity in e-textbooks.

US textbook publishing is dominated by a small number of very profitable businesses, and one may expect them to be cautious about initiatives that could impact a lucrative business model. From a publisher’s perspective, a Kindle channel for e-textbooks will reduce costs for printing, shipping, and returns, and perhaps more importantly will support no market for used textbooks and thus could increase unit sales while reducing costs associated with the current practice of rapidly updating textbook editions so as to discount the relevance of used previous editions. However, Amazon’s position as the exclusive sales channel of DRM’ed content for Kindle is problematic for publishers and they may be understandably reluctant to empower Amazon as a critical link in their sales channel.

A recent article in the Wall Street Journal about the announcement of the Kindle DX included this passage about Amazon’s e-textbook initiative:

Amazon also announced partnerships with textbook publishers including Cengage Learning, Pearson PLC and John Wiley & Sons Inc., to sell their textbooks on the Kindle DX.

A spokeswoman for Pearson said its education division, which publishes textbooks for all grade levels, hasn’t yet decided how many titles will be available or how much the Kindle versions will cost.

The emphasis is ours. Largely skeptical views of the near-term prospects for e-textbooks have also recently appeared at Inside Higher Ed and in a posting at ZDNet’s education blog.

Given the surging competition, we expect that the Kindle DX will be followed by the next generation of large-format Kindle in 2010. During its market life, the DX may see more educational use as a reader for scanned handouts, open textbooks and informally pirated textbooks than for published e-textbooks. A new Apple media pad of Kindle-like size may appear very soon and it will likely be popular with college students. Delivery of e-textbooks for use on such non-Kindle devices may emerge as an important element of Amazon’s longer-term strategy.

Our skepticism about near-term volumes for e-textbooks is not intended to discount the brilliance of Amazon’s business plan nor the attractiveness of the Kindle DX. In fact the DX appears to be a well engineered product and we expect that it will open a variety of new opportunities for Amazon and for you, our readers.