Size Doesn’t Matter in Publishing
The announcement of a proposed merger between Random House and Penguin publishers has generated quite a stir, because it would create the largest publisher in America. Many people believe that this merger is meant to give the two publishers increased leverage to negotiate book prices and financial terms with Amazon. However, in the publishing industry, size doesn’t matter.
I can appreciate a publisher’s desire to minimize Amazon’s influence. But, there is a fundamental flaw with trying to compete against Amazon using a merger strategy. No matter how big a publisher gets, Amazon still controls direct access to the consumer. And, the one who goes direct to the consumer ultimately wins. All of the Big Six publishers could merge into one giant entity, but that wouldn’t prevent Amazon from maintaining leverage.
For example, Amazon actually knows the consumer. They know who purchases their books, where they live, what they’ve read in the past, and what they’re likely to read next. Heck, using its Kindle platform, Amazon can even tell who’s finished a book versus who’s still halfway through a story. In contrast, publishers don’t know any of this critical information.
In order for publishers to compete against Amazon, merging into a large conglomerate won’t work. Instead, publishers must learn to beat Amazon at its own game…master direct-to-consumer marketing. Notice I didn’t say direct-to-consumer “selling.” Selling books directly to readers is a different situation.
Publishers can promote books according to the results they offer, and build their own database of consumer names, reading history, and book preferences. Marketing via a direct-to-consumer approach means offering free resources, exclusive content, unique discounts, and special access to favorite authors. Do things that the retailer can’t do. Give consumers a reason to enter into a direct relationship with the publisher that can be fostered for the long-term. Amazon is laser-focused on connecting with the consumer, and that’s why they’re controlling the industry.
There is nothing preventing publishers from marketing direct-to-consumer…other than their misplaced focus on creating headlines through big mergers. In publishing, though (along with most important areas of life) size doesn’t really matter.
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