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It took a week, but Amazon CEO Jeff Bezos finally did the right thing - and in the end, what Amazon did to create a controversy about its popular Kindle device, and how it handled the fallout, offer valuable lessons for companies on the cutting edge of the digital media economy.

It all started with an old book, ironically George Orwell' s 1984, which tells the story of a totalitarian dictatorship overseen by a mysterious tyrant called Big Brother. Some editions of Orwell' s book are still covered by copyright. Others are in the public domain overseas, but are not legal to sell in the United States. Because of a glitch in Amazon' s system, some of those illegal editions of 1984 showed up for sale on Amazon' s Kindle Store and a number of Kindle owners downloaded them, not knowing or caring whether they were covered by copyright.

Meanwhile, although most Kindle owners don' t know it, the Amazon system allows the company to reach out to any Kindle device and erase a downloaded book even after a customer has bought and paid for it. And that' s exactly what Amazon did when it discovered that it had accidentally sold those illegal copies of 1984.

When customers suddenly discovered that the book had mysteriously disappeared from their Kindles, it didn' t take long for their complaints to spread like wildfire across the Internet. The average Kindle owner understandably assumes that when they buy a Kindle book it is theirs to keep, just the same as if they had bought it at a brick and mortar bookstore. They certainly didn' t expect that some Big Brother from Amazon would always be looking over their shoulder, ready to yank a book from their electronic library whenever he felt like it.

At first, Amazon responded by explaining why it was illegal to sell the book. The company made it clear that it had immediately given every customer a full refund. But it quickly discovered that those explanations, while reasonable and accurate as far as they went, completely missed the point as far as angry customers were concerned.

Finally, after a week of steadily building controversy, Amazon CEO Jeff Bezos came out with a long overdue apology, calling the way the company handled the problem "stupid." But he still didn' t promise that Amazon would never use the wireless technology that makes the Kindle so convenient to invade a customer' s digital library.

With the Kindle now being challenged by a number of other electronic readers coming into the market, this is a very bad time to be annoying current customers and possibly scaring new ones. If Amazon had been listening more closely to its customers when the story first broke, it would have realized that the issue was not about taking illegal copies of 1984 off the electronic shelves of the Kindle store. In fact, it was about the electronic invasion of individual Kindle devices and the need to immediately reassure Kindle users that their libraries were safe from an unannounced electronic break-in.

Amazon could have limited the damage by immediately apologizing for the misunderstanding, putting the books in question back on the devices of customers who innocently bought them, and promising never again to use its wireless connections to invade the privacy of a customer' s personal library. But now the damage is done, and it is likely to take Amazon some time to regain the trust of its customers.

David Bartlett is a Senior Vice President at Levick Strategic Communications, an expert communications strategist and crisis manager, and a contributing author to Bulletproof Blog.