Amazon setting itself up to lose

[leebase]

Right now Amazon is clearly the 900lb gorilla in book selling. Amazon has taken it's huge influence in selling books to launch the latest and finally effective ebook market. With their $9.99 subsidized pricing of ebooks, they were able to create and dominate the ebook market. The publishers, worried to see so much power concentrated in only one of their distributors, and seeing their pricing power for books being eroded....stepped in and took pricing control away from Amazon. Still...Amazon has already established near 80% control of the ebook market (or so we hear).

But consider what is going to happen when ebooks become the majority of book selling. 5 years, ten years out at the most and the vast majority of money made in publishing will be made selling ebooks. There is nothing on the horizon to suggest that Amazon's hold on the ebook market is going to be shaken.

Or is there?

Once physical books take enough of a back seat to ebooks....when the lionshare of profits come from ebooks...then what incentive will the big six publishers have to continue selling through Amazon? Overnight they could cease working with Amazon and open their own, combined, ebook website. They won't have to worry about losing sales as anyone who wants to buy books can be directly accommodated by them via their own website. They could disintermediate Amazon the way that Amazon has disintermediated the local book store.

The publishers need a good many stores and distributors for selling their physical books. They don't need anybody to sell ebooks. They haven't been thrilled with ebooks because Amazon used predatory pricing to establish the ebook market at the expense of publisher hardback revenue. But once that transition is over, once the "big money" is no longer via the sales of physical books at all -- then the publishers will have no fear of dumping Amazon and going direct to the customer themselves.

Lee

[abookreader]

One hole in you supposition is the idea that there is a limited supply of content that can only be provided by the "Publishers." Who are the Publishers? The Big 6? The smaller houses? Isn't Amazon itself a Publisher (and a bigger one every month). A large portion of these places will not have the resources to create their own retail platform and they'll continue to happily pay Amazon and other places to provide it for them as well as gain access to their customer basis. And customers will continue to have their "favorite" places to shop, and it will likely be the places where they can find large catalogs.

The other problem is your idea that Amazon is solely dependent upon eBooks for their existence. If you believe that, then it is true for every other bookseller as well. Barnes, Borders, Kobo, Books on Board. The difference between Amazon and those other places is that eBooks is only one part of the Amazon revenue stream Amazon will be in a better position than most because they have the entire Amazon universe from movies to groceries to clothing to electronics in order to keep the doors open.

[leebase]

Ok...I'll grant you I left open the interpretation that Amazon would go out of business or not be selling books at all.

Amazon is indeed going into the publishing business...and that, all by itself, isn't something the big six publishers are happy with. At this point they can't take their ball and go home because Amazon is so important to them for selling paper books.

However, Amazon being a publisher is just one more reason the big six have good reason to stop doing business with Amazon. I am assuming that the big six publishers have the vast majority of the books that folks want to buy. I think I'm fairly safe _at this point_ in saying so.

Amazon without the bix six is little different than Smashwords or Fictionwise. The more successful Amazon becomes in signing up the desirable authors, the quicker they hasten the day when publishers cut them off.

If "BestBooks.com" came into existence with all the content from the big six -- and was the sole place for that content on the web....it would devastate Amazon's marketshare overnight.

Amazon, of course, would still be selling electronics and everything else they do.

Lee

[Giggleton]

Let's just focus on books, yes Amazon sells other things but we are interested in books.

The way that Amazon will continue to exist in the ebook distribution realm is by offering better incentives for authors to upload their books onto Amazon's servers. Amazon is a machine(I haven't read it yet but I might), maybe that means they will be more efficient at distributing books and will be able to exist on smaller profit margins, it is expected that all profit margins will approach zero as we move into the new era.

But Amazon has also recently tried to lure authors into its inner machinations with the promise of large advances, to me this implies a conflicting ideology and will probably need to be reconciled in the future.

The publishers and Amazon are doing the same thing, marketing books. It just makes sense to cut one of them out.

[Giggleton]

Originally Posted by leebase

If "BestBooks.com" came into existence with all the content from the big six -- and was the sole place for that content on the web....it would devastate Amazon's marketshare overnight.

We won't need the web to acquire ebooks in a few years.

[abookreader]

Ok - but let me go you one better. If you're going to talk about dis-intermediation, let's not forget that the Publishers themselves are an intermediary in that path from author to book reader. In a nearly 100% eBook environment, what value does a Publisher provide that cannot easily be consumed by another party in the chain? After all, we don't need them anymore to get the books printed, shipped off to Borders, and make sure they're placed on that front table right as the customer walks into the store. And yet, they continue to demand over half of the revenue from the sales price of a book as theirs.

Let's say there is an Author Agent house out there that is a really big name in the business and a huge stable of New York Time Bestselling authors.

What is going to prevent them from hiring a crew of editors and cover artists and making their own retail website to sell their customers books with a great big banner over the top "Home of Authors XXXXX, XXXXXX, and YYYYY!

[Giggleton]

Originally Posted by abookreader

What is going to prevent them from hiring a crew of editors and cover artists and making their own retail website to sell their customers books with a great big banner over the top "Home of Authors XXXXX, XXXXXX, and YYYYY!

Nothing is going to prevent them from doing that, when we abandon copyright, nothing will prevent anyone from doing the same. The institutions that make it through that gauntlet will be extremely streamlined and efficient.

[leebase]

Originally Posted by abookreader

Ok - but let me go you one better. If you're going to talk about dis-intermediation, let's not forget that the Publishers themselves are an intermediary in that path from author to book reader. ...
What is going to prevent them from hiring a crew of editors and cover artists and making their own retail website to sell their customers books with a great big banner over the top "Home of Authors XXXXX, XXXXXX, and YYYYY!

That's pretty much the role the publishers already play. Getting a publisher is, in effect, hiring editors, cover artists, marketers, advertisers and the like.

I agree that Amazon can play the role of the publisher for authors. Compete with the Bix 6. I think the content the Big 6 already have locked up would be a huge lure for folks to go to their website. Just like Amazon is the place to be now, Big6Books.com would be THE place to be then.

Amazon is trying to forge relationships with authors. The big 6 already excel at that activity.

Amazon is biting the hand that feeds it. Agency pricing was just the first reaction. Others are to follow.

Lee

[leebase]

Originally Posted by Giggleton

Nothing is going to prevent them from doing that, when we abandon copyright, nothing will prevent anyone from doing the same. The institutions that make it through that gauntlet will be extremely streamlined and efficient.

We have several ongoing threads on abandoning copyright. Let's not turn this and every other discussion into that one.

Lee

[abookreader]

Well, I'd say publishers excel at their relationships with some authors. The big names who get tons of attention and marketing and other perks. John Grisham probably isn't looking to leave Random House and Hatchette has James Patterson under lock and key.

The thousands upon thousands of mid-listers? Not so much. Most of them are happy to get their phone calls returned and they'd jump ship the second somebody offered them a better contract.

But on the other hand, the relationship with authors is only 1/2 of the battle. What Amazon (and Barnes and Kobo and all the others) provide is customers. Right now the publishers are beyond terrible at establishing and nurturing a relationship with customers. If they want to consume the retailer role in the food chain, they are going to have to first get out one of their own dictionaries and look up the meaning of "Customer Service."

[RainingLemur]

Originally Posted by abookreader

But on the other hand, the relationship with authors is only 1/2 of the battle. What Amazon (and Barnes and Kobo and all the others) provide is customers. Right now the publishers are beyond terrible at establishing and nurturing a relationship with customers.

Bingo.

[taustin]

Puslishers colluding on a single point of sale they and only they control would be a pretty serious anti-trust violation in the US (where all these major publishers are located). And rather obviously so. I doubt they'd be that stupid.

Plus, as has been noted, there are already authors making scads of money by selling through Amazon direct for .99 a copy. And it only takes one rogue publisher, still selling through reputable web sites like Amazon or Barnes & Noble, to break the cartel anyway.

[leebase]

Originally Posted by abookreader

Well, I'd say publishers excel at their relationships with some authors. The big names who get tons of attention and marketing and other perks. John Grisham probably isn't looking to leave Random House and Hatchette has James Patterson under lock and key.

Big name is the same as "what most folks are looking for". It's the combination of ability to write for the mass market and the ability to market for the mass market. If you don't have the NYT BestSellers on your website, you are going to be hurting for attention.

Originally Posted by abookreader

But on the other hand, the relationship with authors is only 1/2 of the battle. What Amazon (and Barnes and Kobo and all the others) provide is customers. Right now the publishers are beyond terrible at establishing and nurturing a relationship with customers. If they want to consume the retailer role in the food chain, they are going to have to first get out one of their own dictionaries and look up the meaning of "Customer Service."

The customers for the publishers have never been the reader. WalMart, Barnes and Noble -- these are the traditional customers for publishers. What the publishers have done that seems "customer unfriendly" have largely been because the people we think are the customers are not actually the customers.

I think it will be a whole lot easier for Big6.com to offer what Amazon does to the customer than it will be for Amazon to replace the relationships the publishers have with the most desired authors.

It will be a battle. Right now, Amazon is having it's cake and eating it too.

Lee

[leebase]

Originally Posted by taustin

Puslishers colluding on a single point of sale they and only they control would be a pretty serious anti-trust violation in the US (where all these major publishers are located). And rather obviously so. I doubt they'd be that stupid.

They need not actually pull their books from Amazon -- just lop off the 30% "agency fee" that Amazon, Apple et. al. charge and offer the "direct to customer price". This, of course, would p#ss off Apple and Amazon but the publishers wouldn't NEED them anymore.

Harlequinn doesn't need these folks. Baen doesn't need these folks. You can buy direct from the publishers if you want to. For that matter, the publishers could create a jointly owned but independent company.

Lee

[carld]

Searching for Harlequin turns up 5,852 results at the Kindle store. My guess is Harlequin is perfectly happy selling their books through Amazon.