Tuesday, July 20, 2010

When will Amazon start being more transparent about the Kindle and their ebook sales?

Amazon announced yesterday that for the last three months, sales of books for its e-reader, the Kindle, outnumbered sales of hardcover books.

Amazon's release didn't provide a clear picture on their e-book and Kindle sales, but nevertheless created of course a lot of buzz and there was almost no media outlet that didn't report about it.

BUT, is the information Amazon released really significant and why can't they just be fully transparent once and for all??

First, the significance of the information: Amazon said that in the past three months, it has sold 143 Kindle books for every 100 hardcover books. In July, sales of e-books accelerated to 180 sold for every 100 hardcover versions. Also, Amazon said Kindle device sales accelerated each month in the second quarter—both on a sequential month-over-month basis and on a year-over-year basis.

Jeff Bezos tried of course to build a positive momentum from these figures, saying in a statement that the shift at Amazon is “astonishing when you consider that we’ve been selling hardcover books for 15 years, and Kindle books for 33 months".
According to the Wall Street Journal, he also said that "the growth rate of Kindle device sales had "reached a tipping point," having tripled since the company lowered its price to $189 from $259 last month, following a similar move by competitor Barnes & Noble Inc. to cut the price on its Nook e-reader."

Some analysts also got excited from this data. The WSJ quoted Citigroup analyst Mark Mahaney who said "That is dramatic evidence of how powerful the e-book is now. What the iPad and other book reading devices have done is just raise the overall e-book market—and Amazon is extremely well positioned to take advantage of it." The New York Times quoted Youssef H. Squali, managing director at Jefferies & Company in charge of Internet and new media research, who said that "Amazon’s latest sales figures are “clearly an indication that the iPad is complementary to the Kindle, not a replacement.""

But what these figures really mean? Is the e-book market growing? Definitely. Is the whole book market growing or people are just buying e-books instead of hardcovers? It's not clear, although Amazon said its hardcover sales continued to grow. And What about paperbacks? Nada. Amazon says nothing about this segment.

So even though this information is another clear indicator of the e-book market growth, is it really a "tipping point" as Bezos calls it, or a " dramatic evidence of how powerful the e-book is now" as Citigroup analyst Mark Mahaney describes it? I'm not so sure. As the WSJ pointed out it, Amazon still attracts an online audience that is more inclined to be early adopters of new reading technology. This is still not the mainstream. And it certainly goes hand in hand with the forecast of
Gina Centrello, President and Publisher of The Random House Publishing Group that eBooks which represented 3% of the market will increase this year to about 10%. Impressive? Yes. e-Revolution? Not yet..

We have to remember that Amazon wants to paint a picture of accelerating growth in sales of e-books, which should serve it to outweigh a negative sentiment because of the iPad launch and concern that Amazon would lose market share to the iPad and other competitors. You could see it, as the
NYT reports, on Amazon’s stock price that is down about 16% in the last three months, in part because of those fears.

It was very clear that Amazon is not presenting the whole picture, but only bits of information that can help generating the right sentiment. For some reason, there wasn't almost any criticism about it on the media. Only few media outlets and bloggers such as
David Rothman on TeleRead wrote about it (at least that's what I managed to see online..).

That brings me to the second question - why Amazon is not more transparent? Rothman on TeleRead titled his post "Amazon needs to reveal actual Kindle unit sales numbers and stop misleading investors." No matter if you agree or disagree if Amazon is misleading its investors or not, I'm sure you'll agree that their practice of revealing only few pieces of the puzzle is certainly annoying. For example, although Amazon is a public company and sell the Kindle since 2007, the company has never said how many Kindle devices or e-books it has sold (

And it doesn't stop there. As we mentioned here in the past, the company does not make environmental data available. Amazon also ignored requests for providing such information. Here are two examples:

- When
Joe Hutsko of the New York Times tried to learn more about the Kindle, he reported that “phone calls and e-mail messages to Amazon inquiring about the materials in the popular Kindle device have thus far gone unanswered.”

- Emma Ritch of Cleantech Group who wrote the report “The Environmental Impact of Amazon's Kindle” wrote that “Amazon declined to provide information about its manufacturing process or carbon footprint.”

I believe that transparency is not just something Amazon owe to its investors and stakeholders, but also a powerful tool that can actually become beneficial for Amazon. I totally agree here with Jeffrey Hollender, Co-Founder and Executive Chairman of Seventh Generation, who wrote on GreenBiz the following:

Information technologies now let the public keep an eye on everything we do, and we invite this scrutiny. Publicly sharing all our activities preempts our critics, and more eyes on our behavior means more advocates and friends. Radical transparency also creates new partnerships and in this way becomes the first step towards overcoming the deficiencies that ultimately harm our profitability.

Will Amazon do it? I think eventually they won't have a choice, especially when competing with companies like Apple and Google that take a different approach towards information sharing and transparency. How much time? well, it depends on Amazon and even more on their stakeholders and the pressure they're willing to put on the company.

Raz @ Eco-Libris

Eco-Libris: Promoting sustainable reading!