If the Kindle fails so will ebooks

I don’t get why anti-Amazon people get up in arms whenever they find an author who links to the Amazon pages for their books. Or whenever a publisher out there seems to favour the Seattle Behemoth over the ‘honourable’ opposition.

I get why people don’t like Amazon. They are a big, competitive, ruthless, anti-union tax avoider that treats low level staff (like, say, warehouse employees) like slave labour. There’s a lot not to like.

What I don’t understand is what do people expect us to do?

Even if every publisher, every author, and every editor out there studiously avoided sending traffic to Amazon in any way, that wouldn’t even cause a measurable dent in Amazon’s book or ebook revenue.

People go to Amazon, they aren’t sent there.

Pointing people anywhere else will only result in lower affiliate fees for the author or publisher as people follow the link, close the tab, and then go to Amazon directly to buy it there anyway.

The only thing the publishing industry can do to harm Amazon is not to sell their titles there, and even then, unless they are colluding illegally to withdraw their products from Amazon all at the same time, that action is more likely to harm the publisher than Amazon.

Hoping for Amazon to collapse or fail is equally self-destructive. There are few things more dangerous to a publisher than having a big retailer or distributor go bust on them. It locks up inventory and money for a long time and usually result in the market shrinking in the short term.

Moreover, I’m pretty sure the fate of ebooks is intertwined with the fate of the Kindle.

The only ways Amazon can be beaten by a ebook competitor is if a competitor:

  • Focuses on a genre and on being the best store for that genre. Take the niche not the market.
  • Consistently outperforms Amazon and slowly takes market share over, say, a decade. This will take years and the ebook market will probably be disrupted by something else by the time they’re done, anyway.
  • Be the first. This is Kobo’s tactic and it isn’t wrong. Amazon hasn’t rolled out in all territories yet so there is potential for being there first in a lot of countries and be the incumbent once Amazon arrives. The only downside is that Amazon is in all of the lucrative territories already.
  • Collude and manipulate the market illegally. That’s what publishers have basically been doing so far, managing to push Amazon down a bit but they haven’t made much of a headway lately.
  • Finally, you can hope that Amazon makes some sort of misstep that leads to a collapse or deterioration in performance leaving space for others to step in.

This last possibility, at first glance, seems like it would be the ideal scenario for Amazon’s competitors.

The problem is that ebooks are the Kindle and Amazon as far as most buyers are concerned. Most of those buyers have non-book alternatives competing for their entertainment dollars as well. If Amazon had a major misstep, that would be more likely to result in the ebook market contracting than in somebody else taking over.

Here’s a thought exercise. Let’s imagine that we could magically retcon the ebook market so that it was now evenly split between all five major aspirants (Amazon, Kobo, B&N, Apple, Google).

You might haggle about who the runners up should be but most would go with those five.

What do you think would happen tomorrow? What would happen the day after the retcon when our magical reality-bending powers faded and the personalities and capabilities of those employed at each retailer took over again?

Over the next couple of years Amazon would retake its marketshare until it owned at least 60% of the ebook market again. Why? Because it would build on its ecommerce expertise in general (they don’t just do ebooks), because it has better customer service than the others, and because it would have lower prices. Amazon will always have lower prices because it is willing to aggressively give up revenue to do so and its executives passionately believe that it’s the right tactic for them. Other companies don’t have the guts to match it completely.

No two ways about it. Amazon has earned its marketshare.

That doesn’t mean that, taken as a whole, Amazon isn’t manipulative and utterly ruthless. They are. And they have a frightening amount of resources. That’s why they’d retake the market in record time.

So, how do you beat Amazon? You don’t. You can’t beat a tiger at being a tiger. If you are afraid of a tiger, the only sensible strategy is to avoid it.

Stop selling books through Amazon. Raise your prices and sell direct, making sure to provide a world class service. But you’d have to make damn sure that your books are interesting because otherwise none of your readers will bother.

5 thoughts on “If the Kindle fails so will ebooks

  1. This is not a viable strategy for beating Amazon.
    “Focuses on a genre and is the best store for that genre. Take the niche not the market.”

    There are already online retailers that have done this. Guess what? Amazon bought them.

    • Ah, yeah. That’s a good point. And even if you don’t get bought by Amazon, winning a niche won’t do much to weaken the behemoth anyway.

    • Or did deals with them, in the case of Baen.

      Baen’s kind of a telling example, really. Spent over ten years using cheap and free e-books as marketing for print books, but they still wanted to get into Amazon, and were willing to make major changes to their e-book sales program to do it. Why? Because as many e-book fans as they had already, they knew far more of them weren’t willing to put up with having to (or able to figure out how to) buy their e-books from a non-Amazon store, even DRM-free.

  2. The thing that gets me is, if the publishers were so sure Amazon was being predatory in its pricing, why didn’t they complain to the proper authorities? (The way Amazon did when they colluded.) Seems like the publishers talked a fine game, but when it comes to putting their money where their mouth is, they weren’t so sure they really had the legal high ground.

  3. What about Walmart? Nobody seems to consider them a possible entry into the realm, and if they ever do they certainly have the resources to disrupt in a major way.

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