“What happens if your biggest customer is also your worst nightmare?” asks the Financial Times.
While the question is reductive (for many publishers, Amazon has been far from a “worst nightmare,” giving purchase to previously “out of print” books, reviving authors’ careers, creating a digital revenue stream without destroying the print one, driving innovation in the industry…the list goes on), it allows the FT to explore some ways in which publishers, feeling pressure from their biggest trading partner, can maintain or grow their businesses.
Here’s a rundown, with commentary:
1. Prevent the “everything store” from having everything. This is a strategy that has been suggested to publishers in negotiating with Amazon: pull your books. The problem with this strategy is two-fold: It will kill revenue, anger authors and agents and likely do more harm to the publisher than to Amazon; second, Amazon will find other ways to get the books. Amazon can always get the titles from major distributors or even other stores, as it did in its early days, according to Brad Stone’s book on the retailer The Everything Store. Sterling Publishing, the publishing subsidiary owned by Barnes & Noble, does not seem to distribute directly to Amazon and its books are still available on sale there. I asked Barnes & Noble to confirm this and was told that, “Sterling has a number of distribution channels beyond B&N. We would not disclose who they would do business with.” Amazon has not replied to request for comment on this.
2. Get bigger to have a bigger negotiating advantage. While this strategy might work for Penguin Random House or perhaps the other largest publishers, it likely won’t be as successful for any medium-sized or small publisher. And it certainly won’t work for indie authors, who are themselves small publishers. Even if scale does offer some advantages, Amazon has shown little hesitation in tangling with much bigger and more powerful companies than even Penguin Random House. This weekend, it reportedly started using some of the same tactics it has with Hachette on Disney.
3. Sell books and ebooks direct to readers. Publishers are trying this and some have had great success with it. There are several issues with this strategy, though. First, it’s hard to execute. Building a smoothly functioning e-commerce operation is difficult — what Amazon has done, building arguably the best one in the world, is extremely difficult. Second, publishers won’t just be competing with Amazon, they’ll also be competing with Barnes & Noble, small bookstores, Walmart and anyone else who carries their books. That isn’t likely to make those trading partners happy. Third, as was pointed out in the article, unless they carry other publishers’ titles, they won’t have a complete catalog and won’t be able to offer the same level of selection and service that Amazon can. All that said, unlike some of the other strategies proposed, this one is something every publisher can try, many are, and some are finding success with.
4. Create a better discovery engine than Amazon has. Better book discovery solves a problem for book publishers and certain kinds of authors that most readers just don’t have. The article mentions the many book discovery start-ups that have failed but fails to mention the one that succeeded: Goodreads. It’s so much more than a discovery start-up, of course, and now it’s owned by Amazon. Besides, book discovery only really makes a big difference to consumers of subscription content.
5. Catch Amazon doing something illegal. Antitrust authorities are unlikely to target Amazon for now because the company has so far shown no willingness to raise prices on consumers. This is a strategy that the big publishers are likely already employing. Amazon has been very good about pushing the boundaries of legality without actually getting sued by regulators. It has also cut deals with state governments to stay on the right side of the law, as in California, where it cut a deal to defer collecting sales tax.
Of course, this isn’t the first time that observers have suggested to publishers what they can do to survive and thrive in the ebook era. And it won’t be the last.