Thursday, June 17, 2010

Digital rights management and international travel – a reason not to buy a Kindle – but maybe a reason to buy Amazon stock…

I purchased a Kindle in the US.  I wasn’t an early adopter – but it was an early Kindle DX.  I loved it.  I get almost any book I want and the font size is whatever I want.  A Kindle is the obvious gift for a reader getting on in years or slack in eyesight…

My Kindle screen has failed – or “distorted” to use the language in the Amazon emails.  This appears to be a frequent problem and Amazon has a policy of replacing screen-defunct devices on a no-questions asked basis.  Or so I thought…

This is critical.  I have purchased about 40 books on my Kindle – and in a few years I suspect it would be 400 books.  And they can only be read on a Kindle because the Kindle is not an open-standard.  I can’t go read them on a competitors reader.  And if my reader fails to read my books I have to get ANOTHER KINDLE.  I am stuck in the land-of-Amazon for all eternity – unable to move my library to any competitor format.

That is the glue that binds Amazon’s business strategy – its as anti-competitive as Microsoft’s glue with operating systems.  It is a reason I might consider buying Amazon stock despite its lofty price – customer lock of that sort is hard to obtain. 

This “glue” however relies on everyone having goodwill towards Amazon because you would not buy a Kindle if you expected Amazon to rip you off in the future.  Amazon can’t make their business strategy work if people think that Kindles are fragile and that you will be forced to fork out $400 every couple of years to replace the reader.  They really can’t make this strategy work if the screens fail and the customer service sucks.  Goodwill is critical.

Alas my goodwill towards Amazon is evaporating.  My Kindle is a US model – and was purchased in the US.  I need it replaced and Amazon will not send the replacement to me in Australia (though they say they will send it to the US).  I offered to pay additional postage even – but no dice.  My entire library is useless.

If I could take the library to another reader.  I would – but it is digital rights locked.  If I could have my time again and buy another reader – any other reader – I would.  But alas I am stuck because my library is stuck.

So – in desperation – and because I cannot live without my books I just purchased another Kindle which I hope they will send to me and which I hope will not prove as fragile as the last.

And I have almost no recourse.  I can’t find jurisdiction to sue them in Australia – and so hey – I might have to learn my way around the Washington State petty claims court.  Maybe I will just write the whole thing off as a bad experience.  (But if any reader has ever filed anything in small-claims in Washington State send me an email…)

But I have a recommendation.  If you travel a lot – and if you worry about digital rights and electronic readers DO NOT BUY A KINDLE.  If you buy one you will be forced to buy another and another and another.  This is like heroin for readers – fun when you get the first hit – but after a while it is a drag and eventually it will leave you a washed-out Amazon victim. 

 

John

PS.  This is an investment blog and my complaint does not preclude owning Amazon shares – dealing heroin with legal protection can be highly profitable.  And that is I suspect where Amazon is going…

20 comments:

Anonymous said...

AS far as I know, you could also buy an iPad or any other hardware (including computers)for which a kindle app is available. All the books you bought from Amazon can be transferred to that device once you register it to your account on their "Manage your Kindle" page.

Andy said...

I don't own a Kindle, but I have kindle ebooks. I read them on my iPod Touch using the ap provided by Amazon. My Sony ebook reader has never been used since I got the iPod. You don't need a large reader like the Kindle or Sony Reader, when you can vary the font size. And, you can hold an iPod in one hand and flip the pages with your thumb while you're eating or having a drink. And, you can carry your whole library in your shirt pocket.
You can also download your kindle book to your netbook, laptop, iPad or any other computer you have. It may be a proprietary format, but it does the best job of copyright protection and flexibility.

John Hempton said...

I could buy an ipad - but I like the reflective screen...

and i could not take the books to another reflective screen reader...

the lesson though is even if you buy an ipad avoid shopping at the Amazon store...

jb said...

Oh, but why could you not get it delivered to a friend in the US? Or, perhaps use a mail forwarding service, something like bongo perhaps:

http://bongous.com/mail_forwarding_individuals.php

Phil said...

You could cut your losses and get a different reader. How often do you re-read books anyway?

This is one reason I didn't buy a kindle but instead went for a sony ebook reader and get only open format books.

John Hempton said...

I did not know of the forwarding service - but the question is why could they not have delivered it.

I even offered to pay the extra postage...

But multiple steps is delay. I need my Kindle... it is heroin... I need my fix...

The Amazon crack dealer has me hooked.

Anonymous said...

Maybe I be the first one to smugly post this:

http://xkcd.com/743/

Sorry...

East Side & Proud said...

Try filing a complaint with the AG of Washington State (Rob McKenna). He's pretty good at following up on consumer complaints. Also, if you want to complain to Amazon's legal department, perhaps I can hook you up with the deputy GC.

mckenzieg1 said...

My personal opinion is that the iPad viewed solely as a Kindle e-book reader is vastly superior to Amazon's hardware. The screen is clearer and has a back-light, page turns and navigation are much faster and smoother, and you can see color content in color. I admit that I do a lot more reading in dark rooms and subway cars than I do on the beach, but I have used my iPhone and iPad to read in direct sun with decent results. Getting all the other things an iPad can do for an extra $10 (U.S. list prices, Kindle DX vs. iPad WiFi 16 Gb) makes the comparison almost ludicrous. I suspect that Kindle DX sales have pretty much dropped off a cliff since the iPad came out - has anyone seen any figures?

I was once mildly bothered by Amazon's DRM in principle, but it has never been an issue in practice. (I put my money where my mouth is - my wife and I share a Kindle library that is 138 titles and growing fast. We read them on two iPhones and two iPads.) I am quite happy to pay $10 - $15 as a "reading rights + cloud storage" fee for a book I like. If a book is one that I think will have "permanent value" or that will be re-read and consulted over a long period, I might start with a paper copy or buy one to add to the e-book.

I am happy to reward authors and publishers for producing something I really value, and $10 is probably worth it to me as a one-time convenience fee alone. It takes a good few hours of my time to read my average title - I have always been a sucker for great huge bricks of books - and at an hourly rate the e-book price is pretty negligible. If I were on a tight budget I would haunt the library the way I did when I was a grad student, and read for free, but now that I am more well-heeled I am happy to pay for conveniences and luxuries, and a Kindle e-book strikes me as an excellent value in that regard.

Amazon is clearly committed to making it easy to read their e-books on multiple platforms (Kindle, iPhone-iPad, Windows, Mac OS), so I'm not particularly worried about being "orphaned". Even if I was, I don't think I would care all that much. I rarely read a book more than once - there are too many new ones to get through! If I somehow "lost" an e-book library it wouldn't bother me more than if a freak flood took out one of the book cases in my living room - annoying, but hardly a tragedy.

Bottom line - Amazon for their excellent platform, delivery system and selection, Apple for reader hardware.

Nick Abe said...

Since you brought it up I would love to know how, even with the Kindle (and any ripping off they may be doing), anyone could justify buying Amazon stock.

54x earnings, 3.7% profit margin. To use approximations, they make about $1bn on $25bn in revenue, in an industry that has literally zero barriers to entry (i.e. profit margins will not be higher). So they need to TRIPLE their revenue just to make the stock fairly priced.

Long story short, what am I missing... why do so many people seem to love the AMZN story?

Felix said...

Buy the iPad. You want one anyway. Read a kindle book on it. You'll never go back to the kindle. Trust me.

Dean said...

Gah! I live in Washington State and just put my folks on a plane back to Oz. They would have been happy to courier it back for you, but too late now! As it is, if you still need a forward from a US address, let me know.

Anthony said...

John,

I had the normal (smaller) kindle and also got it replaced under warranty when the screen went all black - interesting they have the same flaw with the DX model - they were quite happy to replace without much verification without hinting it was a very common problem (as a web search confirms) - what don't you just get it forwarded from a US address (let me know i am here)- also get the PC app and the blackberry/iphone kindle app - they come in handy...

babar ganesh said...

fwiw, i like my sony e-reader a lot. i bought it rather than the kindle partially because of lock-in issues, partially because i liked the form factor more, and partially because it was only $200.

dan said...

US retailers that will only ship to US addresses is a common frustration.

there are many companies that will help you get around this by forwarding your mail. this is a good one http://www.shipito.com/

re: kindle bookstore - i dare say that amazon is like gilette - they make most of their their profit from recurring sales of books (razors) - not from the initial sale of hardware - so they really don't care which device you use.

but because they were the first mover in the e-book space the publishers probably bullied them into incorporating strict rights management on their books in a lame attempt to prevent piracy. this happened with apple when they launched the itunes music store.

apple eventually released that their customers hated the rights management and it was hampering their growth. apple now accounts for 28% of all music sales (both digital sales and old-fashioned CD sales) in the USA, so they've got significant market power. they used this power to bully the music publishers and had the rights management removed. now you can download mp3 files from itunes that play on any device. but they are still no.1 because they have the first mover advantage.

i dare say that eventually the same thing will happen with ebooks. but i wouldn't take this as a green light to continue building your library with amazon. when apple finally started selling "DRM free" mp3s they sold them as a seperate product, with higher quality and higher prices. and because it was a new product, they didn't let their customers exchange their old DRM protected mp3s for new DRM free ones. so it might be worth waiting.

carolinefo said...

Try complaining on twitter. I did this a couple of days ago about some newspaper-reading software, simply as an expression of techno-rage, and was amazed to find that the Marketing Director of the company involved contacted me 24 hours later.

Companies HATE people complaining about them on twitter.

Anonymous said...

They're now offering shipping to australia and the price just went down!

http://www.amazon.com/Kindle-Wireless-Reading-Display-Generation/dp/B0015T963C/ref=amb_link_353143162_2?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-1&pf_rd_r=1VAPH4F3M4FHCPQZAE5M&pf_rd_t=101&pf_rd_p=1266768902&pf_rd_i=507846

dawg said...

I think books are a medium that will for centuries, stay on paper, unlike the demise of albums. It's too hard to read digitally, to hard to bootleg (unless digitized by the publisher)...

Anonymous said...

Assuming that this isn't a rhetorical question:

Distribution rights for mass-media tend to get sliced up along national lines for all sorts of sound historical reasons -- translation, import tariffs, local printing, distribution networks, etc. This slicing has been carried over (quite naively) into the digital domain. So Amazon probably pays different rights holders different amounts of money depending on the billing address of the Kindle owner.

Trying to deliver US licensed content to an Australian billing address might be legally problematic for them.

Anonymous said...

Not sure if you already know. The DX price just came down. If you bought the new one within 30 days you can get the difference refunded.

I have a DX too. I love it. It really is the best device for reading.

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.