While I was wrong the other day about Google’s AppEngine being a lock-in play (see the comments on that post), I don’t think I’m wrong that Amazon has serious plans for vertical integration of the publishing industry. Having got retailers on the ropes, they now are aiming at publishers. From a Publisher’s Weekly article entitled As Amazon soars, bookstores creep:
With Amazon’s growing power in book sales, it’s understandable that publishers may be a bit anxious on learning that in Amazon’s 10-k filing with the Securities and Exchange Commission, the company lists among its many competitors not just bookstores but also publishers.
Amazon has seemingly embarked on a number of strategies to lock-in both consumers and publishers.
It is a free-market economy, and competition is the name of the game. But as Amazon’s market power increases, it needs to be mindful of whether its moves, even those that may be good for the company in the short term, are ultimately destructive of the ecosystem on which they depend. I believe that they are heading in that direction, and if they succeed with some of their initiatives, they will wake up one day to discover that they’ve sown the seeds of their own destruction, just as Microsoft did in the 1990s.
At O’Reilly, we have a motto: “Create more value than you capture.” It’s a wise motto for companies far bigger than we are to adopt. If you do that, you ensure a healthy ecosystem. If you capture more value than you create, watch out, because stagnation is on the way.
Amazon has, so far, created huge value for the publishing ecosystem. Now, as they become more powerful, they need to be especially watchful that they don’t irreparably damage an industry on which they too depend.