Why Should Amazon Re-think The Fixed Price Strategy
0I have talked about Amazon moving to a subscription-based business model for Kindle to help push it to the next level. The $359 that Amazon is charging for its eBook reader has been criticized by many folks as the reason behind Kindle’s modest growth over the past year. Kindle was supposed to explode into the market, and while it hasn’t done badly, Amazon is not getting an iPod-like push from Kindle. So I believe it’s time Amazon considered other business models for Kindle.
The subscription model can allow Amazon to offer the Kindle for free. By giving away the Kindle for free, Amazon can increase the adoption rate for its innovative e-book reader. In order to make that work however Amazon should try a monthly or annual subscription business model (which allows folks to access a certain number of books for free during the subscription period). So here is how it could work:
- Design tiers of subscription: Gold, Silver, Bronze, whatever you may want call them. Allow Gold users to access the entire library of books on Amazon for $200 a year. You can limit the number of books available for free for lower tiers. Amazon has taken a similar approach with Amazon Prime, so it wouldn’t surprise me if Amazon went there.
- Provide Premium Service for Kindle: Amazon can also charge folks for additional enhancements to Kindle (some of them can be free though). It can work but I would go for the third option.
- Provide a platform for developers to enhance the Kindle experience: similar to iTunes apps. Amazon doesn’t have to be the provider of premium apps. They just have to have a platform for folks to use to create enhancements for the Kindle.
- Use the affiliate program to create a Viral effect on the platform: let’s say I buy a book on Kindle and I like it so much that I decide to forward it to a friend. If the friend buys that book, I get a percentage of it. That is currently not possible with Kindle, but think about the potential.
There are millions of other things that Amazon can do to improve the Kindle experience (e.g. adding color to Kindle). Will it get done? No one can say for sure. One thing is for certain though. The Kindle will be significantly improved in the next couple of years (just like iPod has during its life-cycle).
