Friday, May 6, 2011

Amazon’s New Imprint: Publishers Should be Scared.

The publishing industry was shaken the week of May 1, 2011, by news that Amazon intends to use its enviable market power to launch another new publishing imprint.

Traditionally, bookselling was separated from publishing, with booksellers (including Amazon)
realizing the benefit of combining the wares of many publishers. Now that Amazon can perform all of the activities that take place between the delivery of an edited manuscript and the 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 its publisher did not subscribe to Book Surge Print, Amazon's print-on-demand service, I wrote a cautionary article for the New York Center for Independent Publishing. In it, I posed the following question: What if Amazon determines that it is profoundly profitable to publish its own books?
Amazon's Book Surge gambit showed its hand, and instantly, the digital publishing landscape changed forever. As chair of the Center for Independent Publishing, I mused, "If Amazon does not use its great size and ability to bring its own books to readers' attention, 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.  Recently, 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 can 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 traditional book publishers. 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, its so-called music locker, and 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 selling physical books, you must be concerned about what Amazon is doing in the clouds.  Is music a false analogy? The profound changes in the music business have led them, and perhaps Amazon, too, that uploading music to a secure server (rather than digital downloads) is that industry's panacea.  Ten years 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.     

Keeping 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 examine the laws and policies surrounding the delivery of digital content. They could 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 suggest that bookstores are becoming book showrooms, with customers browsing the shelves in person but buying online. If Amazon owns the customer data and favors its own books over your books, it is your competitor, not your partner. So, what do you do about it? Discuss among yourselves.
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