Kindle Total Cost of Ownership: Calculating the DRM Tax
I want to buy some technical books before the end of the year. Before I did, I thought I'd investigate the current state of e-reader products.
My primary interest is portability of my technical books library. There are always a couple of books I want to keep beside my desk when I'm working. Unfortunately, the books I want beside me varies, depending on the current context and project.
Further, "my desk" is not a fixed location. It's wherever I happen to be working that day: at home, at a client site, or at a Starbucks. This means I'm often caught without my desired reference material at hand. Or, when I have the books I want, I'm lugging around an extra 10 pounds. An e-reader loaded up with my technical books would be a great solution.
Most commercial e-publishing is done in a proprietary format that uses DRM to lock down the content, and permits access only on specific devices. If you have an Amazon Kindle, then you'll need to acquire your e-books through Amazon. If you have a Sony Reader Touch, then you have to go to the Sony Reader Store. If you have the impressive, open source Foxit eSlick Reader, then you're SOL because the eSlick eBooks store is pretty limited.
(If, however, you want a reader primarily for PDF documents, then the eSlick looks like an excellent choice. I'm thinking of people such as an academic who reads lots of research papers, or a lawyer who reads lots of briefs.)
Amazon offers a larger selection of technical books in electronic form than any other store – by far. I went through my current wishlist of a couple dozen books, and found that about 60% of them are available for the Kindle. Of the 40% not available, most were specialty or small publisher books, and not the kind that would serve as reference material. None of the other bookstores came even close. So a Kindle – and only a Kindle – would meet my functional requirements.
There is one other problem with DRM protected books. When the reading device reaches its end of life, you have to assume all the content you purchased will be lost. If, for instance, I went with a Kindle, all of the content I purchase can be used only on devices supported by Amazon.
When, several years later, it comes time to replace that Kindle I may get a new Kindle – but I can't assume that. Maybe somebody else will have a better device at that time. Or, maybe Amazon went bankrupt or evil or stupid and I need to switch to another vendor. There are any number of reasons I might like to switch my e-reader. If I do, I have to assume I won't be able to use any of the content I purchased for the Kindle.
Thanks to DRM, when my e-reader reaches its end of life, I will have to pay to acquire replacement books for the material that's locked out of the new e-reader. I call the amount of that purchase the "DRM tax" – an added cost imposed by DRM restrictions.
The DRM tax is not the total cost of books purchased over the life of the device – only the cost of the ones you want to replace. You wouldn't necessarily want to replace everything. Technical books have a limited lifetime. When the Kindle reached its end of life I'd just repurchase those that continue to be useful.
I constructed a model to evaluate the total cost of ownership of a Kindle, as compared to buying traditional paper books. Here are my assumptions:
- I purchase about 20 technical books a year.
- The average cost of my books is about $30.
- A Kindle costs $259, with no recurring expense.
- The Kindle versions of books are about 10% cheaper than the paper versions.
- The useful lifetime of Kindle would be about 3 years.
- There is about a 50% chance annually that I'd want to keep a book.
The cost of my traditional book purchases over a 3 year period is:
3 years * 20 books/year * 30 $/book = $1800
The cost of a Kindle has three components: the cost of the device, the cost of the media, and the DRM tax.
The cost of the e-reader media over the same period is:
3 years * 20 books/year * (30 * 0.90) $/book = $1620
Awesome! Switching to a Kindle saves me $1800 - $1620 = $180, which goes a long way to offsetting the $259 cost of the device.
But then there is the DRM tax. According to the assumptions above, of the 20 books that I buy in a year, after one year I'd want to keep 50% of them, which is 10 books. After two years, just 5 of them. After three years, 3 (rounding up). This means that over the three year lifetime of the Kindle, I'd need to repurchase 10 + 5 + 3 = 18 books when the device is retired. This means my DRM tax would be:
18 books * (30 * 0.90) $/book = $486
So, the additional cost imposed on me by the Kindle DRM is $486. That's the last piece we need to calculate the total cost:
$259 + $1620 + $486 = $2365
So, my total cost of ownership for a Kindle would be $2365.
That compares to $1800 for plain paper books. If I switch to a Kindle, the cost would increase $565. That's too much!
Although the Kindle doesn't make sense for me, your situation may be different. For instance, if you use an e-reader primarily for recreational reading, you may want to keep far fewer books than the 50%/year I used. If you read a bestseller a week, that's 52 * $10 = $520 a year. If your retention ratio is 10%/year, then your DRM tax would be about $70, which is a lot less painful.
Or, better yet, maybe someday Amazon (and publishers) will realize how much harm they are doing with DRM. If the DRM tax was removed, not only would more people get e-readers, but also, thanks to the low friction of e-book purchasing, they'd buy more e-content.