Why Amazon lending worries me

Source: Fortune
Coverage Type: analysis
Amazon, 1200 12th Avenue South, Seattle, WA, 98144, United States

[Commentary] The Kindle Owners Lending Library will let Kindle and Kindle Fire owners who are also Amazon Prime subscribers check out a book from a limited selection of 5,000 titles, far shy of the one million-plus available in the Kindle Store. There are a few other catches right now, too. Users can take out a book for however long they like, but they'll only be able to check out one title at a time, and then only one title a month.

I've waited for a big digital book lending push like this, but it also got me thinking about what the program signifies. Like Netflix Instant, Spotify, and Amazon's own movie streaming service before it, we're seeing Internet companies inch towards an "all-you-can-eat" business model where users pay a flat fee for digital content. The benefits for consumers are obvious. Netflix Instant and Spotify subscribers are exposed to more content this way than if they paid for media a la carte. Why pay $1 a song on Apple's iTunes when you can pay $10 a month to listen to as many songs as you want? For users, there's a drawback that isn't nearly as obvious yet, largely because it's still early days. By subscribing to one of these services, they're relinquishing ownership over the content they consume. In Amazon's case, you pay a flat fee for Amazon Prime, but you don't actually own the digital books you are lent. It's renting versus owning in its most basic form. In one scenario, that money is going towards something that's yours. In the other, you're paying for temporary use of a good, service or property. Depending on how much media you consume, "renting" may actually be more cost-effective than "owning" in the short-term. In the long run however, your money arguably gets you less of a return.


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