What Should Amazon Do Next?

On Monday, during the Apple Worldwide Developer Conference, CEO Steve Jobs previewed the new iPhone 4. Since this blog focusses on publishing, you'll have to go elsewhere to read about the iPhone 4's video and camera innovations. We're going to talk about e-books.

Publishers Marketplace reported that Jobs said, "five of the six biggest publishers in the US tell us that the share of iBooks is up to about 22 percent -- in about 8 weeks."

Of course, the biggest of the Big Six, Random House is not included in that figure.

Even supposing Jobs massaged that figure a wee bit, the news has to be worrying to Amazon. Although Amazon still probably accounts for most of the other 78% of the Agency Five's electronic sales, that's an amazing growth rate for the iPad in just two months.

Jobs also said that users have downloaded five million iBooks over the first 65 days the iBookstore was open. This does not equate to five million iBook sales. Remember that Apple is making free e-books available to users through Project Gutenberg. It is likely that a significant portion of those downloads were free
e-books. Especially since Jobs was not as forthcoming with the iBook sales figures.

Several observers--including Allen Weiner of Gartner and Seth Godin--came to the same conclusion about what Amazon needs to do: drastically cut the price of the Kindle, now selling for $259. The New York Times talked about Mr. Weiner's view here:

People are ... making small sacrifices to read books on a general purpose tablet [like the iPad], putting up with issues like the weight of the device and the brightness of an LCD screen.

That fact, and the undeniable market success of the iPad, may force Amazon’s hand. Mr. Weiner thinks the company must drop the price of the Kindle, to further distinguish it as an economical purchase for dedicated readers, or it must move to more versatile reading-oriented Kindles that do more than display text in black and white.

Seth Godin gave several pieces of advice to Amazon on his blog for Monday here:

The only way to get authors and publishers to embrace this device [the Amazon Kindle] is to sell 20,000,000 of them. You either become the best and only platform for consuming books worth buying or you fail. And the only way to create that footprint in the face of an iPad is to make it so cheap to buy and use it's irresistible.

Godin suggested that Amazon drop the price of the Kindle to $49, or give it away free with the purchase of a certain number of e-books.

The ball is in your court, Amazon.