Amazon blinks


Amazon doesn't get to be the only path between publishers and readers
Of course, I can't cover the iPad without mentioning the Amazon-Macmillion dustup.

Now I'll admit my bias upfront. Amazon has been messing with the publishers, especially the small niche publishers, for years. But at the same time, Amazon is a godsend to someone like me in a rural area without a decent bookstore.

Still, it's been fun to watch.

Charles Stross has one of the better writeups.

From the point of view of the public, to whom they sell, Amazon is a bookstore.

From the point of view of the publishers, from whom they buy, Amazon is a wholesaler.

From the point of view of Jeff Bezos' bank account, Amazon is the entire supply chain and should take that share of the cake that formerly went to both wholesalers and booksellers. They do this by buying wholesale and selling retail, taking up to a 70% discount from the publishers and selling for whatever they can get. Their stalking horse for this is the Kindle publishing platform; they're trying to in-source the publisher by asserting contractual terms that mean the publisher isn't merely selling them books wholesale, but is sublicencing the works to be republished via the Kindle publishing platform. Publishers sublicensing rights is SOP in the industry, but not normally handled this way -- and it allows Amazon to grab another chunk of the supply chain if they get away with it, turning the traditional publishers into vestigial editing/marketing appendages.

The agency model Apple proposed -- and that publishers like Macmillan enthusiastically endorse -- collapses the supply chain in a different direction, so it looks like: author -> publisher -> fixed-price distributor -> reader. In this model Amazon is shoved back into the box labelled 'fixed-price distributor' and get to take the retail cut only. Meanwhile: fewer supply chain links mean lower overheads and, ultimately, cheaper books without cutting into the authors or publishers profits.

Go, read, it makes sense.

And of course we know what happened next.

It wouldn't have happened if Apple didn't offer an alternative. Gotta love that competition thing.

— NeoWayland

Posted: Mon - February 1, 2010 at 02:50 PM  Tag


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