(Editor’s Note: This is the second entry in a three-part series on the topic of how digital players in the consumer space — especially Amazon — may factor into the future of STM publishers.)
A recent article in Fast Company explores the power of Amazon‘s position in the book market. Entitled “Amazon Taps Its Inner Apple,” the author does a good job outlining how Amazon has used the Kindle, its storefront, print-on-demand, and hardball dealings with publishers to threaten publishers with a major form of dominance in the industry:
. . . book publishers would have more to fear than just being squeezed. Amazon could phase them out completely, treating them as the ultimate middlemen orphaned by a new technology.
The scenario described seems plausible, and should be keeping book publishers up at night from now on, if it hasn’t been for the past few years. In fact, when you combine Amazon’s print-on-demand facilities through BookSurge, the reliance book publishers have on a few authors, and how the rising costs of warehousing and shipping books is eating into royalties, a feeling of inevitability steals over the scene.
Then the author of the Fast Company piece says something totally bewildering, in what appears to be an effort to sustain the drama of the article:
But in a plot twist worthy of the latest Dan Brown novel, there’s one man who could save [publishers]. And that man is Steve Jobs.
After this empty rhetorical flourish and a little Jobs worship, the author expands into the business model Jobs has foisted on the music industry through his innovations:
Apple famously forced its flat 99-cents-per-song pricing on the music industry. . . . Jobs . . . established a virtual monopoly over digital distribution of music online, and to this day, maintains an 87% share in downloads.
The article then details how Apple might make a color touchscreen tablet to rival and undercut the Kindle, beating Amazon in the e-book space.
And where does this leave our poor publisher? Not with Apple arriving as a White Knight, but rather with Apple and Amazon battling one another to own the market they’ve wrested away from publishers.
With the convergence of distribution improvements, device accessibility, pricing advantages, and content disposibility, that feeling of inevitability only grows stronger — as Apple and Amazon both attack the inefficiencies and hubris of modern publishers. And what do these two bring to the battle? Multi-billion-dollar warchests, incredible technical and design capabilities, clear and contemporary strategies, and smooth, well-established e-commerce systems — much of the firepower today’s publishers lack.
Publishers used to think they would drift slowly and naturally into a digital future, slowly adapting to a new medium of distribution. What they might not have realized is that large, well-funded, and highly skilled digital invaders would lie on the outskirts of their kingdoms, ready to storm their castles and plunder their lands.