The following message from Amazon CEO Jeff Bezos introducing a third generation of Kindle was posted on Amazon.com’s home page  today. PC World described the device as “the most enticing Kindle yet.” Click here for PC World’s review.

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Dear Customers, I believe in the transformative power of reading—the ability of an author to transport you to new worlds, introduce you to new people, and even alter your perspective. Reading is important. Reading is why we build Kindles. Reading is why millions of people use Kindles.

Today, we’re excited to introduce a new, third generation of Kindle. We kept everything readers love about Kindle and made it even better.

Here are some of the highlights:

• Books in 60 Seconds: Think of a book and start reading it in 60 seconds. Kindle uses the same 3G wireless technology as advanced cell phones. But unlike cell phones, there are no monthly bills and no annual contracts
• All-New, High-Contrast E-Ink Screen: 50% better contrast than any other e-reader
• Read Even in Bright Sunlight: No glare
• New Sleek Design: 21% smaller body with same 6” size reading area
• 15% Lighter: Only 8.7 ounces, read comfortably for hours with just one hand
• Battery Life of One Month: A single charge lasts up to one month
• Double the Storage: Carry up to 3,500 books wherever you go
• Buy Once, Read Everywhere: Read your Kindle books on all your devices
• Worry-Free Archive: Delete with abandon. We automatically keep an archival copy of your Kindle books—re-download for free, anytime
• Global 3G Wireless: At home or abroad, wireless works in over 100 countries
• Built-In Wi-Fi: In addition to the 3G wireless, you can connect to Wi-Fi hotspots

This latest generation Kindle is $189—you can pre-order now, and it will ship on August 27.

That’s half the news. We’re also excited to introduce a new Kindle family member—Kindle with Wi-Fi only. Kindle Wi-Fi is only $139. Kindle Wi-Fi is identical to our new $189 Kindle, except it doesn’t have our go-anywhere 3G wireless. If you’re going to use your Kindle primarily in locations where you have access to a Wi-Fi hotspot–like at home–then Kindle Wi-Fi is a good choice. At $139, we expect many people will buy multiple Kindles for the home and family.

You can pre-order the $139 Kindle Wi-Fi now, and it will ship on August 27.

Both new generation Kindles have access to the same Kindle Store with the largest selection of books people want to read—over 630,000 titles including 109 of 112 New York Times Best Sellers, plus top newspapers and magazines. Over 510,000 of these books are $9.99 or less, including 80 of the New York Times Best Sellers. Our vision is to have every book, ever written, in any language, all available in under 60 seconds.

Readers have made Kindle the #1 bestselling, most-gifted, most-wished-for product on Amazon for two years running. Kindle also has the most five-star reviews of any product on Amazon. We’re excited and energized by this reception. We hope you enjoy our most advanced Kindles yet.

Thank you for being a customer.

(signed) Jeff Bezos Founder & CEO

This is the text of an Authors Guild release posted on July 26 2010. For background see Will Random House Chicken Out Again?

We don’t know the details of the Odyssey-Amazon agreement, but we can make some informed guesses. The agreement is most likely under the agency model, with Amazon paying Odyssey 70% of the retail price of the books. Wylie and Odyssey are together taking a typical agent’s commission as compensation: 10 or 15% of the 70% received from Amazon. In round figures, this means that the author receives 60 to 63% of the retail price of the book.

For comparison, a typical contract with a traditional publisher pays e-book royalties of 25% of net proceeds. If the e-book is sold under the agency model, the author’s share is 25% of 70%, or 17.5% of the retail price of the book. After the agent’s commission, the author receives roughly 15 to 16% of the retail price of the book.

For a $9.99 book under the Odyssey-Amazon agreement, the author would receive royalties of $5.94 to $6.29 per book, net of all commissions. For a $9.99 e-book under a typical contract with a traditional publisher sold under the agency model, the author would receive royalties of $1.49 to $1.57, net of all commissions. The difference is about $4.50 per unit, a 300% increase in author income.

iPad is good for a lot of things but it could really screw up your sleep. The head of the UCLA Sleep Disorders Center says that the luminescence inhibits the production of melatonin in the brain.  Melatonin is a key chemical in sending you drifting off to beddy-bye.

Bill Ray, reporting on the effects of e-reading on vision (Don’t try to sleep with your iPad, doctor warns), says that e-ink screens like Kindle, Sony and Nook do not have that melatonin-inhibiting glare, but users may develop another problem. “Apparently the limited contrast of e-ink screens can cause eye-strain, but at least those with strained eyes are well rested.”

Ray also reminds us that if you do doze off while reading, it’s cheaper to drop a printed book on the floor than a device you paid hundreds of dollars for.

Richard Curtis

Hard to read e-books on this cooler

Damn! The Cool-er may die before we  learn how to pronounce its name. Martin Daniels on the Bookseller Association blog says the “Cooler reader looks to be another casualty of the squeeze that is inevitable in the ‘lookie likie’ E Ink reader market. They follow iRex in what may be a growing queue of dead technology failures.” Don’t forget Skiff, which dropped out of the e-device market a few weeks ago.

What’s going on?  The front-running e-readers – Kindle, Nook and Sony – all sit on large bodies of content, whereas many of the upstart gadgets have been counting on succeeding strictly on the merits of such competitive qualities as thinner, cheaper, lighter, brighter, more colorful etc. But they also have to beg, borrow or scrounge content. The only outsider holding its own is Apple’s iPad, and one good reason why is that it aggregated a lot of content soon after launching.

So – what went wrong with the Cool-er? Daniels says that it “entered the market in full color with a spectrum of cases, but forgot to make the screen color too. They also misjudged their launch with a stand and presentation more geared to a car show than a book show and their one trick pony was just a color case.”

And of course there was the dumb name. Daniels calls it the “Cooler” but it was introduced as the “Cool-er”.  “Aren’t consumers going to be confused by a b&w reader that sounds like “Col-or”?” we asked (See Another E-Book Reader with a Dumb Name)  “Or is it supposed to suggest the device is cool. Do you pronounce the word like the refrigerated water dispenser commonly found in business offices? Or do you come to a full glottal stop, thus: Cool. Er. No matter how you say it, it’s awkward, cacophonous and meaningless.”

Now it looks like we may never know. Same goes for the Plastic Logic device which, after tormenting us endlessly by withholding the name, finally announced the “Que”.  Is that pronounced “Cue?” “Kwee”? Or is it “Que” as in “Que pasa?”  However you say it, the Que’s release is seriously delayed and it too could be an also-ran in the e-reader sweepstakes. In fact Daniels says “We doubt we will see E Ink readers as we know them today in 2012…The only stay of execution will be a drop to $99 a unit.”

Richard Curtis

Cover design by Nathan Fernald

As books pass from the Tangible to the Digital Age the value of cover design is being called into question.  At least by Ben East, blogging on TheNational.ae in an article called Cover story.

Riffing on the cliche “You can’t tell a book by its cover,” East wonders whether cover design means anything any more. His conclusion? “The future of good book design looks decidedly bleak.”

East likens the state of book jackets to record albums. “Not long ago, a good looking album cover was a vital part of the image of a band and its fans; unsubtly leaving beautiful, sought-after records around your living room was like a window into your cooler-than-thou world. Now, such designs are hidden away in hard drives.”

Cover design by Nathan Fernald

If you no longer display your books in your library or living room, or even on a bus or park bench (see Can You Tell a Book Reader From its Cover?), is there any point for publishers to labor over designing striking covers? It’s tempting to say no, especially because all e-book covers show in black, white and grayscale on the E Ink screens of Kindle, Sony, Nook and their lesser kin.

But remember that that was the first generation of e-book reading devices. The next one, led by Apple’s iPad, sports full color screens.  Your e-book’s text will still be black and white but the cover will be fully saturated color, and it will definitely make a difference when you’re deciding whether to buy that e-book. Obviously e-book covers won’t employ foil and embossing but any publisher that believe consumers don’t choose e-books by what’s displayed on the screen is probably losing business.

Cover design by Andy Ross

E-Reads’ designers put a lot of creative thought into producing selling covers.  Embedded in this posting are a few recent ones. We’re revisiting our early covers and plan to replace them in due time.

So – who cares if you can’t tell a book by its cover?

We do.

By the way, did you figure out where .ae is?  Uh-uh – no fair googling!*

Richard Curtis

* .ae is The Arab Emirates

Qu'est-ce que c'est? C'est Amazon Patent No. 7,748,634 B1

Okay, e-reader mavens, it’s time to play Name That Device. Here’s a description of a popular one:

A handheld electronic device comprising: a housing; an electronic paper display disposed in the housing and having a first surface area; and a liquid crystal display (LCD) disposed in the housing proximate the electronic paper display, the LCD having a second surface area that is smaller than the first surface area of the electronic paper display.

Sounds like Barnes & Noble’s Nook, right?

Wrong. It’s a description of a patent applied for by Amazon in 2006, a patent that Amazon never published – until now. And the United States Patent and Trademark Office has just granted the patent to Amazon!

Nilay Patel writing in Engadget calls the revelation “Juicy.”  It could be a lot more than that if Amazon decides to file an infringement claim against B&N.

Patel reminds us that “Barnes & Noble is already involved in a trade secret dispute over the Nook with Spring Design, which claims that B&N saw its Alex reader under NDA [Non-Disclosure Agreement] and then copied it for the Nook.” That case is still pending. (See Who is Alex and Why Is He Suing the Nook People?)

B&N’s patent attorneys are going to have their hands full in the coming months.

Richard Curtis

Amazon has announced that it will pay a 70% royalty to content providers who use the Kindle Digital Text Platform (DTP) to upload e-books.

Up to now the Kindle  royalty has been pegged at approximately 50% of the publisher’s list price, but Amazon may be responding to the pressure generated by its major rivals Apple and Google, which have publicly stated royalties of 70% and 63% respectively. The move also appears to be tied to speculation that Amazon is withdrawing support for its wholly owned e-book platform Mobipocket (see Is Mobi a Dying Whale?). For years Mobi has served as the go-to place for publishers to upload files destined for the Kindle, but with the Kindle DTP program Amazon is clearly going in another direction.

Royalty? 70%.  But…of What?

At first glance the new 70% royalty would appear to be a no-brainer for  publishers and authors, 70% being more than 50%, right?  Well… not so fast.

For one thing, you are prohibited from charging more than $9.99 for your e-book. Commitment to Kindle’s DTP price structure will preclude content providers – such as the five major publishers that signed agreements with Apple – from selling their e-books on the iPad at Apple’s suggested retail prices of $12.99 to $14.99.

For another thing, the 70% royalty is calculated not on the publisher’s list price but on the actual price charged by Amazon.  If your book’s list price is $9.99 and Amazon charges customers $9.99, then yes, you’ll make out well with a royalty of $6.99.  However, if Amazon offers your book at $4.99 your 70% royalty will be $3.49. And the deeper that Amazon discounts the book’s price the lower your royalty goes.

How deeply could Amazon discount your book?  If there were a price war the list price could go very low indeed.  Could there be an e-book price war? Recently Barnes & Noble discounted the list prices of many books to as low as $3.21.  If Amazon matched that price, your 70% royalty would be $2.25. And with new retailers coming into the business, the prospects for price-cutting are not insignificant.

Playing It Safe with 35% of List Price

If you don’t have the stomach for that kind of roller coaster ride or have better things to do than track your book’s list price on the Kindle Store daily – and if you’re a publisher you could be tracking hundreds or thousands of them – Amazon offers you an alternative: a straight and unvarying 35% royalty based on the list price of your book.  For a $9.99 book that means a $3.50 royalty. No matter how low the Kindle price for your book goes, you’ll still get that $3.50.

Playing the Royalty Game

For gamblers who like playing the ends against the middle, Kindle permits content providers to switch from the 70% net royalty to the 35% list price royalty, something you might want to do if your books are caught in a price war. The new royalty will kick in within 48 hours from the time you issue the command, according to Amazon’s pricing page. How easy it will be for large publishers to switch over from one mode to another, we can’t say. If it means manually clicking on hundreds and hundreds of titles, that will be a problem. If e-book prices go back up again you can switch back to 70%, and switch back and forth as often as you want. On the other hand, if you want to speculate in futures it might be easier to day-trade pork bellies.

Another thing you need to know is that the 70% royalty applies only to US sales.  Royalties for non-US sales such as the UK are calculated at 35% of list price with no other option.

Mega-Bite Out of Your Royalties

But there’s more:  Amazon will now charge content providers for delivering e-books to customers, a little like airlines charging fliers for luggage. The charge is fifteen cents per megabyte but no less than one penny. We at E-Reads have measured the file size of our e-books and determined that a typical book is about 2 megabytes: a large one might be 3 MB. That translates to $.30 and $.45 respectively and it comes off the top. On a $9.99 title sold at 70% discount, that’s a levy of somewhere between 3% and 4 1/2% for a book of average length.  But if the list price is heavily discounted, as in the example above where your royalty is $2.25, Amazon’s bite on your pay check will be roughly between 7% and 11%.

We’re not aware of other retailers charging for delivery of content, but the prospect of Amazon’s rivals picking up on the practice should be of concern to all content providers.

There are some other significant restrictions and conditions which you can – and should – read here.

If you’re a gambler who likes action and want to play the odds, the new Kindle royalty structure is your game.  If you’re an author or publisher, you could make out very well if list prices stay high. But you could also take a bath if there’s a price war.  You may decide to opt for the safe, straight 35% of list price. But bear in mind that that’s 30% less than the 50% that Amazon was paying you before The Great Change. If you add the delivery charge the net proceeds to you are even smaller.

To read Amazon’s announcement in its entirety, click here.

Richard Curtis

Pricing Page

1. Royalty Options. Subject to the limitations set forth in this Pricing Page, for each Digital Book, you may choose, in accordance with our then-current procedures, either the 35% Royalty Option or the 70% Royalty Option, each described below.

a. 35% Royalty Option.

i. The Royalty for the Digital Book will be equal to 35% of the applicable List Price for the Digital Book.

ii. For any Digital Book for which you select the 35% Royalty Option, at all times that the Digital Book is available for sale through the Program, you must adjust the List Price as required to ensure that the List Price, plus any applicable VAT, does not exceed the lowest of: (a) the lowest suggested retail price or equivalent price for any digital or physical edition of the Digital Book; (b) the lowest price at which you list or offer any digital or physical edition of the Digital Book on any website or other sales channel; and (c) any maximum List Price we provide from time to time in the Program Policies.

b. 70% Royalty Option.

i. The 70% Royalty Option is only applicable to sales to United States customers, so if you choose this option, the Royalty on sales to non-United States customers will be as provided under the 35% Royalty Option.

ii. The Royalty will be equal to 70% of the amount equal to the applicable List Price for the Digital Book less the Delivery Costs (as defined below) for the Digital Book. But if we sell the Digital Book at a price below the List Price to match the price at which a third party sells any digital or physical edition of the Digital Book or to match the price at which we sell any physical edition of the Digital Book, the Royalty will be equal to 70% of the amount equal to the price at which we sell the Digital Book less the Delivery Costs for the Digital Book. Our determinations regarding price-matching are final and non-reviewable. If you object to our price-matching determination with regard to one of your books, your sole and exclusive remedy is to switch your Royalty option for future sales of the Digital Book to the 35% Royalty Option as described below.

iii. The Delivery Costs for a Digital Book will be equal to $0.15 multiplied by our determination of the number of megabytes your Digital Book file contains, once uploaded by you and converted by us into our then-current Digital Book format. One megabyte equals 1024 kilobytes. One kilobyte equals 1024 bytes. We will round file sizes up to the nearest kilobyte. The minimum Delivery Cost for a Digital Book will be $0.01 regardless of file size.

iv. Example: If your book has a file size of 0.400 megabytes and a List Price of $8.99, the Delivery Cost will be $0.06 (0.400 MB x $0.15 = $0.06), and your Royalty will be $6.25 (($8.99 – $0.06) x 70% = $6.25).

v. For any Digital Book for which you select the 70% Royalty Option, at all times that the Digital Book is available for sale through the Program, you must adjust the List Price as required to ensure that the List Price does not exceed the lowest of: (a) the lowest suggested retail price or equivalent price for any digital edition of the Digital Book; (b) the lowest price at which you list or offer any digital edition of the Digital Book on any website or other sales channel; (c) 20% below the lowest suggested retail price or equivalent price for any physical edition of the Digital Book; (d) 20% below the lowest price at which you list or offer any physical edition of the Digital Book on any website or other sales channel; and (e) any maximum List Price we provide from time to time in the Program Policies.

vi. The 70% Royalty Option is not available for Digital Books that consist primarily of public domain content, and by selecting the 70% Royalty Option for a Digital Book, you confirm that it does not consist primarily of public domain content. If you select the 70% Royalty Option for a Digital Book that we determine consists primarily of public domain content, we will be entitled to change the Digital Book to the 35% Royalty Option retroactively and to pay you Royalties and adjust your previously reported or paid Royalties based on the 35% Royalty Option.

vii. If you select the 70% Royalty Option for a Digital Book, you must make it available to us for distribution in each territory for which you have appropriate distribution rights, and you must comply with any other restrictions or requirements we may provide from time to time for the 70% Royalty Option in the Program Policies.

viii. If at any time your Digital Book does not meet the requirements for the 70% Royalty Option, the Royalty for the Digital Book will be as provided in the 35% Royalty Option.

ix. Any new feature incorporated into the Program will apply to all Digital Books distributed under the 70% Option even if we make the feature optional for other Digital Books.

2. Changing your Royalty Option. You may change your choice of Royalty option for future sales of a Digital Book at any time through our then-current procedures. It may take up to 48 hours for your change to be effective.

3. List Price Requirements. To be accepted in the Program, your Digital Book’s List Price must meet the List Price requirements.

SEATTLE, Jun 30, 2010 (BUSINESS WIRE) –

Amazon.com, Inc. (NASDAQ: AMZN) today announced that the 70 percent royalty option that enables authors and publishers who use the Kindle Digital Text Platform (DTP) to earn a larger share of revenue from each Kindle book they sell is now available. For each book sold from the Kindle Store for Kindle, Kindle DX, or one of the Kindle apps for iPad, iPhone, iPod Touch, BlackBerry, PC, Mac and Android phones, authors and publishers who choose the new 70 percent royalty option will receive 70 percent of the list price, net of delivery costs.

Delivery costs are based on file size, and pricing is set at $0.15/MB. At today’s median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold. For example, on an $8.99 book an author would make $3.15 with the standard option and $6.25 with the new 70 percent option. This new option, first announced in January 2010, will be in addition to and will not replace the existing DTP standard royalty option.

In addition to the 70 percent royalty option, Amazon also announced improvements in DTP such as a more intuitive “Bookshelf” feature and a simplified two-step process for publishing. These features make it more convenient for authors and publishers to publish using DTP.

“We’re excited about the launch of the 70 percent royalty option and user experience enhancements in DTP because they enable authors and publishers to conveniently offer more content to Kindle customers and to make more money from the books they sell,” said Russ Grandinetti, Vice President of Kindle Content.

DTP authors and publishers are now able to select the royalty option that best meets their needs. Books from authors and publishers who choose the 70 percent royalty option will have access to all the same features and be subject to all the same requirements as books receiving the standard royalty rate. In addition, to qualify for the 70 percent royalty option, books must satisfy the following set of requirements:

* The author or publisher-supplied list price must be between $2.99 and $9.99.
* The list price must be at least 20 percent below the lowest list price for the physical book.
* The title is made available for sale in all geographies for which the author or publisher has rights.
* The title will be included in a broad set of features in the Kindle Store, such as text-to-speech. This list of features will grow over time as Amazon continues to add more functionality to Kindle and the Kindle Store.
* Under this royalty option, books must be offered at or below price parity with competition, including physical book prices.

The 70 percent royalty option is for in-copyright works and is unavailable for works published before 1923 (a.k.a. public domain books). The 70 percent royalty option is currently only available for books sold to United States customers.

DTP is a fast and easy self-publishing tool that lets anyone upload and format their books for sale in the Kindle Store (www.amazon.com/kindlestore). To learn more about the Kindle Digital Text Platform, visit http://dtp.amazon.com or e-mail dtp-support@amazon.com.

Kindle is in stock and available for immediate shipment today at http://www.amazon.com/kindle.

About Amazon.com

Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth’s Biggest Selection. Amazon.com, Inc. seeks to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Electronics & Computers; Home & Garden; Toys, Kids & Baby; Grocery; Apparel, Shoes & Jewelry; Health & Beauty; Sports & Outdoors; and Tools, Auto & Industrial. Amazon Web Services provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform, which developers can use to enable virtually any type of business. Kindle and Kindle DX are the revolutionary portable readers that wirelessly download books, magazines, newspapers, blogs and personal documents to a crisp, high-resolution electronic ink display that looks and reads like real paper. Kindle and Kindle DX utilize the same 3G wireless technology as advanced cell phones, so users never need to hunt for a Wi-Fi hotspot. Kindle is the #1 bestselling product across the millions of items sold on Amazon.

Amazon and its affiliates operate websites, including www.amazon.com, www.amazon.co.uk, www.amazon.deb,www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.amazon.cn. As used herein, “Amazon.com,” “we,” “our” and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.

Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ significantly from management’s expectations. These forward-looking statements involve risks and uncertainties that include, among others, risks related to competition, management of growth, new products, services and technologies, potential fluctuations in operating results, international expansion, outcomes of legal proceedings and claims, fulfillment center optimization, seasonality, commercial agreements, acquisitions and strategic transactions, foreign exchange rates, system interruption, inventory, government regulation and taxation, payments and fraud. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent filings.

SOURCE: Amazon.com, Inc.

Amazon.com, Inc.

Amazon.com Press Release:

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Amazon today announced a new update to Kindle for iPad and Kindle for iPhone and iPod touch, which allows readers to enjoy the benefits of embedded video and audio clips in Kindle books. The first books to take advantage of this new technology, including Rick Steves’ London by Rick Steves and Together We Cannot Fail by Terry Golway, are available in the Kindle Store at this URL.

“We are excited to add this functionality to Kindle for iPad and Kindle for iPhone and iPod touch,” said Dorothy Nicholls, director, Amazon Kindle. “Readers will already find some Kindle Editions with audio/video clips in the Kindle Store today–from Rose’s Heavenly Cakes with video tips on preparing the perfect cake to Bird Songs with audio clips that relate the songs and calls to the birds’ appearances. This is just the beginning–we look forward to seeing what authors and publishers create for Kindle customers using the new functionality of the Kindle apps.”

“We are truly excited to have collaborated with Amazon to launch Kindle Editions with audio/video,” said Peter Balis, Director, Digital Content Sales, Wiley. “Innovations like these represent the advantages that digital can offer. Advancing our content in this manner is important for our authors and our readers and it will raise the bar on what digital reading can offer for years to come.”

“In the new Kindle Edition with audio/video of Rick Steves’ London, the embedded walking tours allow customers to listen to Rick as they explore the sites of London,” said Bill Newlin, publisher, Avalon Travel. “Rick’s narration adds depth to the reader’s experience, while listeners can follow the routes more easily with the text.”