Posted by Adam Gordon on Apr 14, 2009 in all, forecast filtering, Future Savvy, lifestyles & values, scenario planning, strategic foresight | 3 comments
There’s been a storm in the past few days over Amazon.com excluding “adult” books from its sales rankings. Among the almost 60,000 books affected was not just Erotica. Feminist books, Gay & Lesbian titles, and books in Health, Mind & Body, and Reproductive & Sexual Medicine also disappeared from the rankings
Amazon the new Wal-Mart? pic:Huffington Post
According to yesterday’s LA Times Amazon says the whole thing was a cataloging error. But when author Mark Probst had previously contacted Amazon for an explanation, he got this: “In consideration of our entire customer base, we exclude “adult” material from appearing in some searches and best seller lists.”
Aside: Everyone is trying to figure out what Twitter is good for, or how it will be used, and it has become clear that one application is to quickly aggregate mass protest, evidenced in the anti-Amazon outrage, see Twitter “Amazonfail.”
Author Maya Reynolds has been connecting the dots in the future of publishing, watching Amazon move via acquisitions such as Abe Books, Audible, BookFinder, BookSurge, Brilliance Audio, FillZ, GoJaba, Library Thing, Mobipocket and Shelfari.
She is among various industry watchers who claim, with fair evidence, that Amazon is following a “Wal-Mart” strategy – the well-documented essence of which is to gain enough retailer power to be able to pressure suppliers (telling them what to make or what to charge, or exacting special discounts) to achieve better retail prices and get more retailer power, in a reinforcing spiral which, inter alia, squeezes all the healthy mom-’n-pop-shop diversity and other balances of power out of the industry.
In a post of July 08 she paints the full dystopia scenario:
“1. First, the smaller presses, POD presses and e-publishers will disappear as Amazon’s margins squeeze them out of business. Amazon will help the process along by offering better terms to authors if they will use BookSurge’s POD press and Kindle’s e-book to publish. Even if authors don’t embrace Amazon initially, as their publishers go out of business, they will be forced to do so.
“2. Brick-and-mortar stores have two constraints which Amazon does not: (1) limited shelf space and (2) a limited geographic range. Bookstores carry books “on spec,” filling their shelves with stock they hope readers will seek. Amazon, on the other hand, has unlimited virtual shelf space and unlimited geographic reach. Amazon does not have to warehouse stock. They can wait until a book is actually ordered and the money is in hand before using a digital file and BookSurge to print the book. Because they cannot match the deep discounts Amazon offers, bricks-and-mortar bookstores–already under siege–will be squeezed out of existence.
“3. Like Wal-Mart, Amazon will continue to apply pressure on publishers to give more favorable terms. Wal-Mart’s suppliers used cheaper materials and out-sourced to cheaper overseas labor. As the publishing houses’ profit margins are squeezed, their cost-cutting efforts will take three directions: (1) Focus even more attention on signing best-selling authors whose work is guaranteed to sell; (2) Begin to pressure their mid-list authors to accept lower advances and lower royalty percentages; and (3) Sign fewer and fewer new authors because of the uncertainty and the expense of growing a new writer.
Where will they go?
“4. Mid-list authors and new authors, unable to either find a publisher or unwilling to accept the low royalties, will seek to self-publish. Where will they go? Since, by that time, most of the self-publishing houses will have gone out of business, they will go to Amazon’s BookSurge or to Amazon’s e-book division, Kindle. Amazon will welcome them.
“5. The next death on the food chain will be the publishers and agents themselves. First the mid-level publishers will die. Well-known agents and the larger houses will be protected for a period of time by their best-selling authors who are loyal to them. However, as those cash cows die off, so will the agents and larger houses. A new paradigm will emerge: Amazon as both publisher and retailer.
“6. Eventually Amazon will have so much power, they will be able to decide WHAT is worthy of being published. Welcome to the future of publishing.”
Is this the future of publishing? The logic of unregulated industry power suggests it is. But Future Savvy says response – regulation – is also likely. As with Microsoft and many before them, when Amazon gets too powerful, anti-trust regulators should be in business. But only if their hand is pushed. Articulate and persuasive dystopias such as Reynolds’ are the single most powerful mechanism by which the word is spread (spread it! forward it, tweet it!) so that enough consumers get to see and believe threatening future outcomes early enough, and pressure regulators to act.
But how does the future savvy of the dystopian doom-mongers get listened to in time? To see the future – even correctly – seems to be no protection against its arrival. The twittering classes v the free market? I don’t think so. Regulators, yes:but always and everywhere too late. More rightly call them stable-door locksmiths.
Here’s a “biggest invention since…” touted as the antidote: http://www.guardian.co.uk/books/2009/apr/24/espresso-book-machine-launches
One factor that has been overlooked here is the large national bookstore chains. If anyone has the resources to push back against Amazon, they do; and they are not likely to go quietly into the night. This will be a battle of the elephants, and of course, the ants who get trampled as collateral damage will be whatever is left of local generalist book stores and small independent publishing houses. Some undoubtedly will continue to discover or carve out niches secure from the ongoing overhead battles but their ranks will get another Darwinian thinning.
There is little that was new in this essay. The national chains already are committing many of the “sins” cited here, e.g., dictating terms to publishers and authors and controlling how books are marketed and sold. Amazon will just “take that to the next level.” The only major unresolved question is whether Amazon can sweep the board, or the market resolves into a continually shifting balance of power between Amazon, the book store chains, and whoever else is still in the game. (See “1984″ and its dystopian commerce equivalent, “The Space Merchants” for examples of why stable balances of power need at least a triad of players.)
While I leave predictions to those who dare wear the title of futurist, one scenario does come to mind: Amazon decides it’s easier to buy and co-opt your enemy than to kill him. Don’t be surprised if Amazon makes an offer for Borders or Waldenbooks or Barnes & Noble or Books-a-Million. I can see the Amazon press release now: “The acquisition of X is a strategic move to leverage our considerable marketing experience and assets into the bricks-and-mortar segment of the books market. Expanding Amazon’s reach to the local point-of-sale level will allow consumers to enjoy the Amazon experience in person as well as on-line.”
This would be followed by consolidation of one or more of the remaining chains to position themselves to resist the Amazon juggernaut. Expect more moaning and bitching in the media about how all this parallels the loss of independent watchdog voices in newspapers and magazines. But unless there is an (unlikely) overwhelming public outcry that the acquisition harms competition, this will be followed by more deafening silence (or at most, politically correct lip service) from politicians and the various regulatory bodies.
At that point, the only remaining step toward complete vertical integration will be for Amazon to start directly commissioning a substantial portion of all the new titles that come to the mainstream market.