DÉJÀ VU ALL OVER AGAIN
The front page of The Wall Street Journal’s Thursday March 8, 2012 edition had with the following headline: U.S. Warns Apple, Publishers; Justice Department Threatens Lawsuits, Alleging Collusion over E-Book Pricing.
I wrote about this mishigas last fall. For an overview of what it’s all about, check out “The Fox, the Hawk, and the Keepers of the Chicken Coop” and “At What Price Control?”
So now that the jig is up what does all of this really mean? Here’s what I think will eventually shake out:
1. Like the music business (with the bankruptcy of EMI, now just three majors), big publishing will consolidate.
Instead of the Big Six, we’ll get down to a Core Four or even a Titanic Three. Book publishing is not a primary business for News Corporation or Viacom. Expect HarperCollins or S&S, or both, to be acquired by one of the members of the core four—Random House, Penguin, MacMillan and Hachette. My gut is that at least one sale will happen within 2 years, maybe sooner.
2. Amazon’s power will grow.
Amazon is positioned to become an even bigger colossus, all because it has direct access to consumers. Direct access requires no middleman to sell merchandise. Thus it has sliced out the most expensive element in book publishing—the preparations to sell-in and ship to retail outlets and then the warehousing necessary to process retailer returns.
When the agency model is gone (not if, when), Amazon will not only go back to aggressively discounting the competitions’ books and eBooks, it will have its own professionally vetted and edited books to sell too.
This is because after the agency model went into effect, Amazon threw down the gauntlet and started up several in-house publishing operations. It’s important to note that many of them are genre imprints. They’re publishing the midlist long tail books that the bigs don’t want to and can’t afford to anymore. The margin Amazon makes on their own books will eventually justify the loss they’ll take deep discounting the Big Six’s books.
And no I don’t think Amazon will buy one of the Big Six…they don’t need to. Imagine combining the two cultures…what a headache.
3. Physical book retailing (bookstore selling) is in deep trouble.
No matter what anyone says, there is a price point that will convert a Luddite into reading an eBook. And Amazon will find it. Or Google… (read: “Google Sells Jonathan Safran Foer Novel for 25 Cents“)
Does anyone remember when the microwave was introduced? All it did was cook things faster… People swore they’d never get one. The stove is just fine thank you. And then the price of microwaves plummeted. Today, how many kitchens have you been in without a microwave?
If price can make people buy something they don’t really need, imagine what it can do for something they want.
4. Physical books will become beautiful again.
Craft and beauty will drive a select market of book lovers to invest in personal physical libraries…just like audiophiles today insist on record albums. Bookshelves filled with leather bound beauties will make a come back.
This is not a business that the Big Six or Amazon will have any interest in entering…
5. Amazon’s power will level off.
Amazon’s power will be challenged in the same way it has taken on the Big Six—an assault on the supply chain. It will slowly lose its position as a middleman between self selected writers and their tribe of readers.
Amazon built their business on connecting readers with books quickly and easily. No schlepping to the bookstore required. But the ultimate connection isn’t reader and book; it’s reader and writer. That’s because it’s a human interaction.
No matter what Amazon does, even with a dynamic leader like Jeff Bezos, it will always be a corporation. Quick…name the head of publishing at Amazon… What about the head of Random House? Or Penguin? What’s the last book you read that they recommended to you?
What about your favorite writer…do you know her name? Do you have a pretty good idea about what kind of person she is just by reading her books? If she came to your door with a copy of her new book and asked if you’d like to buy it, would you? Or would you say “no thanks, I’ll get it at Amazon,” and shut the door?
While the shopping experience at Amazon is absolutely astounding, it can’t beat a personal transaction. You get things for a good price and fast, which is great, but you get no positive juju or Karma buying something at Amazon. It’s a candy bar instant gratification kind of rush, sure, but you don’t get warm and fuzzy one clicking. At least I don’t.
The purest form of commerce is personal. I make something you like. You buy it from me. We both benefit. We don’t need or want a corporation to pay me pennies for what I made, and then hand it to you after a proper mark up margin to satisfy Wall Street. We’d rather hand our hard earned money to a person who has worked just as hard to earn our business.
In the one-on-one human transaction, the Maker wants the appreciative Buyer to like what she made and the appreciative Buyer wants to help the Maker support herself and make more. Not fast and cheap mass market stuff, but methodical and deliberate, singular art. This is why Etsy is so popular and why Kickstarter works.
We now have the technology for appreciative readers to reward writers directly, no brick and mortar or virtual mega-store needed. Not only that, the writer and the reader can have a satisfying conversation. What was the last satisfying conversation you’ve had with a corporation?
6. Corporate Book Publishing will become Hollywood-ized
Big publishing isn’t going away. It will just be in the blockbuster business, like Warner Brothers Studios or the Sony Music Group. It kind of already is. They’ll continue to publish big commercial books targeted at multiple tribes.
The Steve Jobs biography is in enough demand to make margins work for a big publisher. The demand for a long tail book like How to Invest in Derivative Tranches of Depressed Mortgages? Not so much. But that doesn’t mean there isn’t a big enough market for the author of that investment book to make a living. It just means that the author has to find his tribe and speak directly to them. Then offer them something of value at a fair price.
Agency Model/Schmagency Model…make your work human and delightful. It matters more and more each day.
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