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Recently, I sat down with Mike Shatzkin, book publishing consultant and Digital Book World 2014 conference chair, to talk about a wide range of topics, including many that will be covered at DBW 2014. Over the next few months, I will be bringing you some of his insights, many of which will be expounded upon and made into practical, applicable takeaways at the conference itself. Learn more on how you can attend.
Amazon is most publishers’ biggest client — and the company they fear most. In the globalized era of digital content businesses, firms likely have to do business with companies that are both partners and potential competitors.
In the following condensed interview, Mike Shatzkin talks about what’s really going on at Amazon, what publishers need to know and how they can use that knowledge to improve their relationship with their most important customer.
Jeremy Greenfield: Amazon is most publishers’ biggest customer. It’s also a feared competitor. How can publishers work with and compete with such a large, successful company?
Mike Shatzkin: One of the reasons that it’s so hard to compete with Amazon is because they’re got their fingers in so many pies. They own Diapers.com, so when they’re doing a childcare book, they’ve got access to people in the marketplace through a completely different means than publishers do. They’re likely to wake up to these opportunities through books they do themselves.
Publishers are now thinking about verticals and when they get into the verticals they think about not just selling content in those verticals but being in business in those verticals and Amazon already is. Understanding the complexity of their businesses gives publishers something when negotiating when working with amazon.
JG: Amazon owns a dominant position in the books and ebooks markets in the U.S. What does that mean for publishers in the future?
MS: There is a lot of reality about Amazon that has not been faced up to. There’s a great danger that Amazon is going to start squeezing publishers for margin and there’s very little that publishers are going to be able to do about it.
JG: Will Amazon always be Amazon? Barnes & Noble no longer represents the dominant market force in the book publishing industry it once did even 10 years ago.
MS: Barnes & Noble is not the Barnes & Noble it was 15 years ago because it experienced disruptive change. The question with Amazon is whether the store that sells everything loses its power because people want more specialized stores. Vertical publishers need to try to figure out how to own the audience so they come to you first.
The other thing that other people are trying to get to is, will Google with universal search replace Amazon? As the world changes and people look for information and not for books and books are just one way information is rendered, will that mean that people will spend more time searching on Google for information rather than for Amazon on books?
For Amazon to not be Amazon, it means that there needs to be some disruptive change to slow Amazon down.
JG: What about working with other retailers? Trying to diversity distribution streams?
MS: I think that every publisher should be doing the best they can to sell as many books outside of Amazon as they possibly can. Depends on who you are how easy that is to do. If you’re F+W Media [disclosure: owner of Digital Book World and publisher of this website] and you publish in enthusiast markets then there are stores that can sell your books that are not part of the book trade where you can get some traction that’s not Amazon. But if you’re Penguin Random House or Simon & Schuster and what you primarily sell is novels and biographies, then you’re pretty challenged to come up with alternate venues that you don’t already know about.
For an English-language publisher, one of the opportunities is to sell more abroad, which digital marketing and distribution would enable you to do.
You’re job is is to reduce the percentage of your business that is Amazon without reducing your overall sales – if you possibly can.
JG: At DBW 2014, you’ve planned nearly half day on Amazon. What will publishers learn about Amazon that they don’t already know?
MS: Brad Stone [author of recent release about the company, The Everything Store, who will be speaking] shows two or three places in their history where they might have sunk — but that’s not like to happen now.
Ben Evans [a consultant at Enders Analysis and Amazon expert, who is also speaking] is going to do is unpack the complex network of businesses that Amazon has. Ben’s view is that looking at Amazon as a business that is breaking even misses the whole point. He thinks Amazon is hundreds of businesses with common resource space; but some of those businesses, like books, are very mature and very profitable, and some of those businesses – and I’m not sure which ones – are brand new and still very much in an investment phase. Not everything amazon does or has done works. But most things do.
Ben Evans is going to improve everyone’s understanding in how to look at Amazon to understand it as a multitude of businesses and not one.
And Joe Esposito [a book publishing consultant who is also speaking] is going to discuss Amazon in the institutional market. Esposito believes that libraries are doing a lot of sourcing directly from Amazon. We know that amazon has bought some educational software companies and there is a further threat they will get in the Kindergarten-12 market. They came up with a way for schools to load content on many kindles and take it off. That suggests they are going to get into that market and be a force in that market.
These guys are going ot be a panel afterwards and I’m going to ask them, “when does Amazon share growth stop?”
Audience members will also be able to ask questions of the panel.
To learn more about Digital Book World 2014, visit the website here.