02 November 2011

Amazon's Business Model - Eternal Debt

What is the realistic business model for the e-Book market? Let's say I pay $10 to Amazon for a book for my Kindle. For that price, I can read it on all my Kindle-devices: a Mac, a PC, an iPhone, an iPad, and so on. I can remove it from those devices and download it again a few months later. Or a few years later. Or a few decades later. Or a few centuries later. Or millennia.

Clearly there is no time when we customers expect to be cut off from books we paid for. That means that we expect Amazon to provide a server for all future, with all our books downloadable to all Kindle-enabled devices we or our descendants may have available. And that without having to pay another cent. Ever.

How does Amazon's balance sheet handle this eternal debt? Let's say that it costs them 0.001 cent to keep a book available on their servers for one hundred years. Then the cost to keep that book available for eternity is 0.001 time infinity, which is... Let's see... It is an infinity cents, which means roughly one infinity dollars, or if you are European, converted to Euro: one infinity Euro in debt for all eternity.

It does not seem like a great business to me.

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