It’s Hard to Compete With the Economics of Amazon (Video)

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Barnes & Noble, Apple and others aside, publishers are going to have to focus on Amazon this year, according to James McQuivey, Ph.D., vice president and principal analyst at Forrester Research.

Amazon’s focus on doing business with customers who buy everything from books to food to home goods from the online retailer puts those solely concerned with selling books at an economic disadvantage, said McQuivey at the Digital Book World Conference in an exclusive video interview.

Amazon…wants to aggregate everything…. They want to bring books together with movies…they want to centralize it all in this very inexpensive and elegant device called the Kindle Fire.

 

That portal to a customer relationship is more powerful than anyone else’s, even Apple’s, because Amazon has the ability to sell you whatever you want. You want to buy a book? Sure, they can help you do that. You want to buy who knows what else…you can get all of it on Amazon.

 

Amazon, in the long run, only cares whether or not they make money from you, the customer. They don’t care as much whether they make money from you, the book-buyer, and that changes the economics for everyone who is principally concerned with you, the book-buyer, because how do you compete with the economics of aggregating all of those profit margins into one single customer relationship? No one else has the power to do that…not google, not Microsoft, not apple…not even Facebook.

 

Related: Digital Changing the Very Nature of the Book Itself (Video)

More Insights From McQuivey and Forrester Research:

Publishers Optimistic But See Hard Work Ahead in 2012

Will More People Read Books Because of E-Books? Publishers Not So Optimistic

Publishers’ Love Affair With Apps Is Over

Publishers to Increase Investments in Acquiring Customer Data in 2012

Publishers Seeing Steady Print Declines Should Ready for Steep Drop

Publishers Sour on Tablet as Reading Platform

A joint production of Digital Book World and Astral Road Media: http://www.astralroad.com/. Founded by Rich Fahle, Astral Road Media is a full-service digital media agency, providing content strategy, design, video production, and other creative forms of social outreach for authors and content creators of all types.

Rich Fahle

About Rich Fahle

Rich Fahle is Founder & CEO of Astral Road Media, an innovative marketing services agency for authors, artists, and other content creators. He is also the founder of Bibliostar.TV, a new video portal for authors and books. At Astral Road, he oversees the implementation of author marketing strategies that fully capitalize on the emerging digital marketplace, including platform and content strategy development, streaming video and audio production, website development, and digital publishing guidance. Prior to Astral Road, Fahle was Vice President, Digital Content, E-Commerce and Entertainment for Borders, Chief Spokesman and Media Relations Manager for the cable TV network, C-SPAN and a manager at Kramerbooks, in Washington, DC.

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3 thoughts on “It’s Hard to Compete With the Economics of Amazon (Video)

  1. My thoughts exactly. I’ve been saying pretty much the same thing for a while now. Books are merely a gateway device to get customers in the door. If you need margin/profit on books, it’s really hard to compete against someone who doesn’t. For better or worse, Amazon is changing the publishing landscape, plowing through it with their own behemoth money machine, and I don’t think they care too much about how that landscape changes in their wake.

  2. Yes on everything… Except the ‘middle space’ between self-publishers and mainstream publishers. Now that self-publishers have a taste of freedom, they aren’t going to see value in giving away a percentage of their royalties for editorial, covers, and marketing. I can hire an editor or cover artist for a flat rate and then I’m done paying for them. I don’t want to keep paying every month. I won’t give away a percentage of my royalties for formatting and eBook conversion. Only for distribution. Distribution is what self-publishers need.

    Self-publishers reject the middle space McQuivey talks about. Amazon’s publishing arm is getting authors because of advances and royalty rates that are higher than traditional publishers. If they stop doing advances, there isn’t that much difference between them and the kinds of digital-only contracts that mainstream publishers are offering right now, and that authors are rejecting in favor of self-publishing.

    If Amazon moves into the middle space of no advance and little editorial, the only advantage to an Amazon contract would be the mighty power of their email blasts. That might be worth it, though.

  3. Over 20 years ago I was asked to address a book fair conference discussion entitled something like… new competition for books. The organizers had in mind new types of stores selling books, non-traditional outlets like Costco. I addressed the room and asked the book shop owners present to raise their hands if they had a competitor within 100 yards of their store. Two out of perhaps 200 people there raised their hands. I then asked if no one had a shoe store next door, or a travel agency, or a stationery store nearby. I pointed out that as retailers their job was to convince buyers to part with cash in their pockets for a book instead of a new pair of shoes, etc.
    The fact that you can write, 20 years or more later \That portal to a customer relationship is more powerful than anyone else’s, even Apple’s, because Amazon has the ability to sell you whatever you want. You want to buy a book? Sure, they can help you do that. You want to buy who knows what else…you can get all of it on Amazon.\ well, it demonstrates to me that the myopia of sales in general is still either being ignored by retailers or that one has to keep drumming the message home.
    Book stores have a great advantage they rarely capitalize on… they can pull sales (ie develop a one-on-one relationship and become a trusted purveyor) whereas Amazon can only become a trusted servant who tries to have what you want. Amazon’s \if you bought this you might want that\ is, currently, unsophisticated and cannot match the pull a book store CAN have. Not that many do or seem to give a damn.
    The best book store I ever knew of was on the lower level in Grand Central station. Rows of paperbacks, one man, he knew them all. He would listen to your tastes, suggest new authors and regularly supply a new book once a week or for some once a day (commuters) for YEARS. When he got sick, the store closed and disappeared. People always want to create a business that has equity beyond the ability of staff’s relationship with customers. And a bookstore can do that with extensive customer relations training, time for staff to read the books they sell, etc. It doesn’t happen. Amazon does a terrific job of supplying the needs of readers and consumers simply because it is a purveyor of everything (and soon groceries as well). They cannot pull customers, only push (until their customer relational database works better). They are at a disadvantage in some areas, but book shop owners rarely take advantage of their pull relationship with customers.

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