NEW YORK (TheStreet) — The jury is still out on whether print is dead. Some are convinced e-books are taking over, others are certain that print is as strong as ever. Either way, one thing is sure — Amazon (AMZN – Get Report) doesn’t need to be too worried.
An article in The New York Times this week claimed that "print is far from dead," pointing to a recent study from the Association of American Publishers that showed declining e-book sales. The study, which collected data from 1,200 publishers, found that e-book sales fell by 10% in the first five months of 2015. The implications of the study could be that e-books will not cannibalize print book sales, as was previously believed.
Many argued with The New York Times’ conclusion, explaining that the AAP’s study only looked at the Big Five publishers (Penguin Random House, Macmillan, HarperCollins, Hachette and Simon & Schuster), and failed to consider the other half of the industry. Plus, those Big Five publishers just raised e-book prices by a lot, so it’s not too surprising that sales have slowed a bit.
Amazon itself claims that its e-books sales are anything but declining. "Our U.S. and worldwide Kindle book sales are growing in 2015, in part driven by the growth and success of Kindle Unlimited," Amazon spokesperson Sarah Gelman said in an email. Kindle Unlimited is a service that Amazon introduced last year that lets consumers read an unlimited amount of e-books from a library of over 1 million offerings for $10 a month.
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But whether or not e-book sales are actually in decline, Amazon’s fortunes are unlikely to be changed much.
Sure, Amazon devotes a lot of resources to its Kindle business, but ultimately that business is seen as a secondary facilitator of Amazon’s core business — the selling of physical goods. Over the last few years, Amazon has dramatically increased its investment in Prime, making it more than just a two-day shipping program. E-books, video, and music were folded into the Prime offering, converting possible e-book purchasers to free downloaders.
With that shift in Prime, Amazon essentially decided to "demote media as a business unit and make it loyalty bait," said Peter Hildick-Smith, founder and CEO of research firm Codex. "Media adds stickiness, eyeballs, engagement. If you take it as the glue that holds the loyalty together, media has an incredibly valuable role, but not for revenue as much as loyalty."
It’s abundantly clear that for Amazon, everything points back to Prime, and e-books are simply another avenue to add value to its Prime offering, convince more consumers to sign up for Prime, and convince Prime members to spend more time on Amazon.com. If a Prime member opens a Kindle e-book and then remembers midway through that he forgot to restock on toilet paper, chances are he will make that purchase through Amazon since he’s already in the ecosystem.
Further proof of Amazon’s take on e-books as loyalty-building: Amazon gives some of its e-books away for free to Prime members through its Kindle Owners’ Lending Library, where Prime members can read one e-book for free each month. And then there’s the Kindle Unlimited program.
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