By Jane Porter, contributing writer
FORTUNE -- Jeff Bezos may be tight-lipped when it comes to talking numbers, but the Amazon (AMZN) chief executive made it clear where the real value of the Kindle lies for his company: "We want to make money when people use our devices -- not when people buy our devices," he wrote to shareholders in April.
And buy they do. Given that Kindle owners spend $443 more a year than their non-Kindle-owning counterparts, according to data released last week by Consumer Intelligence Research Partners, it makes a lot of business sense for Amazon to focus on increasing their value to Kindle users.
That's where MatchBook comes in. The service beefs up Kindle offerings by bundling print and e-book purchases at a discount. Since Oct. 29, customers can download Kindle versions of print books they bought on Amazon dating all the way back to 1995 for $2.99 or less -- in some cases even getting them for free.
MatchBook is part of Amazon's larger strategy to rope in loyal customers by adding perks to existing purchases. "They keep the price the same and add a lot more services to your subscription," says Oliver Wintermantel, an analyst for ISI Group. Matchbook is similar to AutoRip, launched by Amazon at the start of the year, which lets customers stream free MP3 versions of vinyls or CDs they've purchased. Amazon Prime also follows this give-them-more-than-they-signed-up-for strategy, offering perks like free movie streaming to members who originally signed up for only free shipping. "It creates loyalty to the retailer," Wintermantel says.
Amazon isn't breaking new ground here. The concept of bundling print and e-books has been around since e-books came on the market. O'Reilly Media, which focuses on technology books, has been offering such bundles for years. But when a big player like Amazon jumps in the game, it's a different story. A recent MatchBook search on Amazon brought up more than 96,000 results -- a tiny fraction of its total listed titles, yet far more than any other bookseller out there.
But why would customers want the e-book version of a book they already own, and vice-versa?
"Data has suggested that people don't do a complete switch over. People who read e-books also read print books," says Mike Shatzkin, founder and CEO of The Idea Logical Company, a publishing consulting firm. "There's a market for people who want the print and e-book, but aren't willing to pay the full price for both."
According to Amazon, bundling print and digital books has been one of the most frequently requested features by customers.
From a business perspective, the move gives Amazon a clear competitive advantage. Let's say you bought Barbara Kingsolver's novel The Poisonwood Bible on Amazon as a gift for your mom four years ago, and now you want to read it on your tablet. You could buy the book on iTunes for $11.99, but because you already purchased a print copy, you can download a Kindle version for $2.99. For $1.23 more than the iTunes price, you can get both the print and e-book on Amazon.
AutoRip increased Amazon's vinyl sales by 66 percent since it launched at the start of the year. For Matchbook, however, the limited selection of titles offered and relatively low number of readers interested in both print and e-books likely won't move the needle much on sales, Shatzkin says.
Though publishers and booksellers tend to get into a huff anytime Amazon does something to change the direction of the book selling industry, the new service may be good for print book sales, encouraging customers who might not have considered buying a print book to get one along with the electronic version. It is still unclear how authors will fare in terms of royalties.
Many publishers are hesitant to join, but the service could help them sell more books, says David Wilk, owner of book marketing and consulting firm Booktrix. For example, publishers could give new life to a backlist title by offering an e-book version for a lower price. "Why not support the retailer who is going to increase your business?" Wilk asks.
Publishers and authors can think of quite a few reasons. Some worry they could devalue their product by having it sold at a lower price on Amazon. There's also a hesitancy to give Amazon too much control over titles, which is what Mark Coker, founder of the e-book publishing and distribution platform Smashwords, refers to as a "crush, kill, control strategy."
Bezos maintains that Amazon's energy "comes from the desire to impress customers, rather than the zeal to best competitors," as he told shareholders in April. But if you're every other bookseller out there, it's hard not to feel bested.
The e-commerce giant's latest quarter was more of the same in some respects -- not necessarily a bad thing.
FORTUNE -- Amazon (AMZN) has long focused on heavy investments into expansion, even at the expense of its bottom line, and the company's latest quarter proved no different.
For the e-commerce giant's third quarter 2013, it reported a loss of 9 cents per share on sales of $17.09 billion. While the loss was expected, the MOREJP Mangalindan, Writer - Oct 24, 2013 6:42 PM ET
Barnes & Noble's tablet experiment is over. Here are the features others should steal (or already have).
FORTUNE -- Unfortunately for Barnes & Noble, its Nook readers and tablets just haven't been the home run the struggling bookseller had hoped, a hard truth that became clear when the company reported a $118.6 million net loss for its fiscal fourth quarter this week.
"It's no secret the HD and HD+ didn't quite meet MOREJP Mangalindan, Writer - Jun 26, 2013 2:32 PM ET
The Kindle-as-service model means that Google and Apple should watch out
By Don Sears, contributor
Last week, Amazon brought it loud and proud.
With a full slew of new tablets, e-readers and consumer-minded features, Amazon (AMZN) is in full WWE-style smack-down mode. The online commerce overlords are screaming for your wallet, pointing directly at the competition and establishing another foothold in a young market.
At its latest product announcements in Santa Monica last MORESep 12, 2012 12:43 PM ET
Meet Darpa's new boss; Facebook's iOS apps get major updates.
Facebook for iOS goes native, waves goodbye to HTML5 [THE VERGE]
In building a native Facebook app for iOS, the company looked at improving three key places, "the app's largest pain points" all relating to speed: launching the app, scrolling through the News Feed, and tapping photos inside the News Feed. "We're twice as fast in all these areas," Johnson
D arpa gets a MOREJP Mangalindan, Writer - Aug 24, 2012 5:30 AM ET
How Amazon could tackle smartphones with one of its own; what it's like to live at a 'hacker hostel'
Amazon's said to plan smartphone to vie with Apple [BLOOMBERG]
Foxconn International Holdings Ltd., the Chinese mobile-phone maker, is working with Amazon on the device, said one of the people, who asked not to be identified because the plans are private. Amazon is seeking to complement the smartphone strategy by acquiring patents that MOREJP Mangalindan, Writer - Jul 6, 2012 9:45 AM ET
The e-reader may be getting ready to take a permanent backseat to the sexier tablet.
FORTUNE -- Are people tiring of black-and-white e-readers? It seems that way.
According to a recent report from Pacific Crest Securities, a Portland, Oregon-based investment bank, orders for components used in Amazon's standard e-readers have fallen 75% from the bank's previous expectations.
We still expect new multi-touch, black-and-white devices to launch in Q3, but we are cutting our MOREJP Mangalindan, Writer - Jun 26, 2012 3:16 PM ET
The latest ChangeWave poll finds Samsung and Amazon stuck in single digits
FORTUNE -- When ChangeWave polled 1,400 early adopter types in March, 86% of those planning to buy a tablet had their eye on Apple's (AAPL) iPad.
The numbers are somewhat lower in a follow-up survey posted Tuesday under the headline Who Poses the Biggest Threat to Apple's iPad?
Still, the answer seems to be none of the above. In a poll MOREPhilip Elmer-DeWitt - Jun 5, 2012 7:20 AM ET
Investors panicked in the third quarter when net income dropped as the company spent lavishly on investments in fulfillment and the Kindle. History is not repeating itself.
FORTUNE -- Can Amazon, which has long relied on low profit margins, prove its long-term strategy will pay off? If its latest quarterly earnings are any indication, there's certainly a good deal of reason to think so.
In the first quarter, revenues were $13.2 billion MOREJP Mangalindan, Writer - Apr 27, 2012 11:04 AM ET
Barnes & Noble is adding a brilliant light to its e-reader. Does it work? And, is it enough to goose sales?
FORTUNE -- Although black-and-white e-readers are generally lighter, cheaper, and snappier than they used to be, they still don't excel in low light. That's an area where tablets and their brightly lit color screens have a clear advantage. With its new $139 Nook, arriving this week, Barnes and Noble (BKS) MOREJP Mangalindan, Writer - Apr 24, 2012 11:11 AM ET
|ID'ing alleged Bitcoin creator leads to L.A. car chase|
|Wal-Mart slashes iPhone prices|
|Albertsons to merge with Safeway|
|Russia already paying price for Ukraine|
|Boeing to end pension plans for non-union employees|