Thursday, April 26, 2012
The publishing industry's efforts to compete with Amazon have not been helped by a failure to get on board with technology. From @guardian
The debate about Amazon v the publishing industry is getting so heated and so polarised that quite soon it's going to need its own version of Godwin's law. The passion is almost religious. On the one hand, you have those who say Amazon is a kind of new publishing messiah, casting out the old gatekeepers and ushering in a democratised, consumer-centric book trade. On the other, you have those who see the company as a digital devil destroying all it touches. It's neither. It's just big, strong, and ornery.
Amazon makes money differently from a conventional publisher. It is an infrastructure player. It pays low tax by canny placement – for example, by selling ebooks into the UK from Luxembourg, where VAT is 3.5% instead of 20% – and by having a largely automated warehouse and delivery system, without bricks-and-mortar stores to pay for. It buys in huge bulk for additional savings, and uses its colossal market share to secure concessions from suppliers. It's the Tesco of the book trade, and of course sells much more than books.
It's perfectly true that Amazon's approach is, for the moment, mostly cheaper for the consumer than the now-endangered agency model favoured by publishers. But the agency model's chief advantage to publishers is that it curtails Amazon's control of the market. As a matter of practicality, they wouldn't have had to collude to adopt it: the situation was plain to a blind hedgehog (which, alas, is not to say that they did not).
Before agency was introduced, Amazon boasted of controlling 90% of the ebook market. Barnes & Noble's Nook now has a share in the mid-20s, with Apple down around perhaps half that and assorted others making up a few more percentage points. Whatever agency's sins may be, it opened the way for something like competition, which is why it seems on the face of it painfully odd that publishers should face legal action for anti-competitive practices in adopting it.