Friday, May 6, 2011

Amazon’s New Imprint: Publishers Should be Scared. Very Scared.

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The publishing industry was shaken this week by news that Amazon is using it's enviable market power to launch another new publishing imprint.

Traditionally, book selling was separated from publishing, with booksellers (including Amazon) realizing the benefit of combining the wares of many publishers. Now that Amazon has the ability to perform all of the activities that take place between delivery of an edited manuscript and delivery of finished books to readers, the publishing industry needs to take a long hard look at its current business model, and, start boning up on antitrust law.

As early as 2008, Amazon was actively going after new product and readers. However, at that time, it was self-published authors via what was then called Createspace, not Andrew Wylie's franchise authors.  It was clear in 2008, that if you coveted virtual shelf space at Amazon, they could lock you out if they adopted a strategy of favoring their books over your books.  

Once a Bully Always a Bully?

On May 8, 2008, in response to Amazon's threat to disable a book’s “Buy Now” button if that book’s publisher did not subscribe to Book Surge Print --Amazon's print on demand service-- I wrote an cautionary article for the NYCIP, in which I posed the following question:

"What if Amazon determines that it is profoundly profitable to publish their own books?"

Amazon's Book Surge gambit showed their hand, and, in an instant, the digital publishing landscape changed forever.   As chair of the Center for Independent Publishing, I mused that "If Amazon does not use its great size and ability to bring its own books to the attention of readers, we will be very surprised."

We Don't Sell Books, We Aggregate Customer Data

It's no surprise that Amazon is not afraid to use its market power.  In the recent past we saw Amazon remove thousands of "buy" buttons from books published by Macmillan over a dust up on ebook prices.  Placing excessive control of content and distribution in the hands of one company -- whether Amazon or Google --- does nothing to promote the marketplace of ideas.   Unlike trade publishers, Amazon is data driven.  Like Google, they have the ability to monetize readers' information.  Amazon reads its customers like a book.   The key takeaway is that there is a real tension between the interests of Amazon and book publishers in general.   If Amazon strays from its core business of selling books, and offers free content to readers in exchange for advertising or subscription revenue the value of literature will be devalued.

As I wrote in an earlier post, keep your eyes on the Amazon Cloud Player, it's so-called music locker, as well as the advertising supported version of the Kindle.  Both are new platforms designed  to collect revenue by monetizing consumers - NOT just selling books.

If you are a stakeholder in the sale of physical books, you have to be concerned about what Amazon is doing in the clouds.  Is music a false analogy?   Perhaps, but the profound changes in the music business, has led them, and perhaps Amazon, too, that uploading music to a secure server (rather than digital downloads) is that industry's panacea .  Ten year into the digital transition, 50% of music sales are physical, and 50%digital.  It took fiction publishers only two years to get to where the music industry got in a decade.  Ebook sales are increasing geometrically - not arithmetically.   Technology is about access.  Copyright is about ownership and control.  Faster and cheaper trumps bricks and mortar.     

Keep the customer happy (a cloud book service allows readers to read digitally on multiple devices -- it's device agnostic) is Amazon's mantra.   They make selecting and  purchasing books convenient.  All good from a reader's perspective.  However, they have been complicit in devaluing literature, which could (if books were their core business), be a real concern for Amazon.  I suspect it isn't.                 

Legacy publishers need to look to the law and policies surrounding the delivery of digital content.  Perhaps, hire publicists and lobbyists to play the antitrust and reader privacy cards.

Imagine.  If Amazon's business model shifts from selling books to  monetizing readers, what is the real cost readers will pay for free (or low cost) content?   Answer:   Reader privacy.   A chilling thought worthy of a bumper sticker subsidized by the AAP.   The "P" in "pbook" Stands for Privacy."      

Reports from the field are that bookstores are becoming book showrooms, with customers browsing the shelves in person, but, buying online.  If Amazon owns the customer data, and favors their own books over your books, they are your competitor, not your partner.  So, what do you do about it?  Discuss among yourselves.

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