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Neutralizing Amazon

Open platforms and services will lead to ebook marketplace disruption

What would you think of a start-up who offers the following?:

    • Selling ebooks in a model where one simple transaction gives you access to all formats (e.g., PDF, mobi and EPUB).
    • All those ebooks are available in a completely DRM-free manner. There’s no social DRM applied either.
    • Every ebook can be quickly and easily side-loaded to the device of your choice. Got a Kindle? No problem. All purchases will be sent right to it. Same goes for Nooks, Kobos, etc. No more awkward installations with USB cables.
    • No restrictions on reselling your content or loaning it to someone else. Are you finished with that ebook and have no plans to ever open it again? Why not resell it or pass it along to a friend like you’d do with a print book?
    • Enabling and, more importantly, encouraging publishers to have a direct relationship with their customers through this retailing platform.

Sounds too good to be true? I don’t think so. Here’s why…

One of the benefits of working at O’Reilly and being chair of our TOC conference is that I cross paths with countless industry start-ups throughout the year. I’m seeing evidence that many of today’s publishing industry challenges, particularly the closed, proprietary systems that are forming all around us will soon be met with some very cool and disruptive open alternatives.

What would that mean for a platform like the Kindle? Nobody’s knocking Amazon off the mountaintop anytime soon but these open-minded start-ups are going to make things very interesting. I wouldn’t be surprised if all the elements of the start-up outlined above are in place before the end of 2013. Then it’s just a question of tying them all together.

P.S. — If you’re attending TOC Frankfurt on October 9 you’ll get a first-hand look at some of this. I can’t share the details just yet but in a few short weeks you’ll see what I’m talking about. If you haven’t registered yet do so now with this code and you’ll save 20%: TOCPartner20TSpeaker

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Comments: 8

  1. Interesting piece. It seems like all this turns on the question of what the benefit is to publishers in going DRM-free. Right now, the downsides outweigh the upsides, clearly in their estimation at least and I might agree.  

    • You’re right that most publishers still tend to strongly favor the use of DRM but I disagree with you about whether that’s the best decision. We’ve always been DRM-free here at O’Reilly and we’re very pleased with the results. There’s definitely goodwill to be had when you actually trust your customers. 🙂

  2. I’m building a startup to do all of that (and more), but neutralizing Amazon isn’t part of the strategy at all. In fact, I suspect that doing all this successfully will have zero impact on Amazon. I’m in it to destroy tradtitional publishing companies. Taking on Amazon is the dumbest possible move for a startup. I think that’s a meme by now. The smart startup strategy is always to look for the industry players with the highest cost structure and most ossified bureaucracy. You know, the least nimble players. If you look at the ebook marketplace, who does that describe? It sure ain’t Amazon.

    Amazon does what it does exceptionally well. I plan to take advantage of that. The mistake I see everyone making is letting Amazon own the customer relationship. That is costing the traditional publishing companies far more than they could ever lose from piracy. They don’t see this because (with very few exceptions) they’ve never had a direct customer relationship and, let’s be honest, no reader wants to have a relationship with a worldwide media conglomerate.

    Publishers* need tools to connect to fans. You can create a fandom for writers, series, genres, or some other “brand”.  My working definition of a reader-fan is someone who will pre-order a book. Having a base of fans who will prime the pump of the Amazon sales machine can lift an ebook from obscurity to success (see Grey, Fifty Shades of). Having a fanbase protects one from being dependent on Amazon or any other retailer.

    Is there anyone in the world who will pre-order the next Little, Brown book? I think not. Fans are the key to long-term success in storytelling. Count the number of imprints that have fans. Now, count them number of writers or series with fans.Who should startups want to work with? Should we build tools and pitch them to an industry segment that doesn’t understand anything at all about fandom and, in the worst cases, actively tries to destroy it? Or should we build tools for the natural object of the fans’ affections. I know what my choice is.

    *”Publisher” is not a company, it is a job title. A publisher is the one who decides what and when to publish. Whether that is the writer or someone who works for the writer is irrelevant to me.

    • Great points. William. I particularly love this statement: “The mistake I see everyone making is letting Amazon own the customer relationship.” It’s amazing how fearful publishers are of creating that direct relationship, especially when they say they don’t want to risk alienating their retail channel partners.

  3. Joe, 

    We had a great discussion about this at our conference yesterday, although it was not directed specifically at any retailer.  And this may be relevant for any startup… DRM may be one component of the solution, but in order for the playing field to be leveled in any way, the only way it will happen is consumers find more value in going to another site to make their purchases.

    As long as a few retailers hold that value in the eyes of the consumers, DRM is irrelevant. Our consensus was that price was a more motivating element for the general consumer than platform.

    • Hi Fran. What concerns me most about this is that you’re describing some of the characteristics of a commodity market. You’re absolutely right that anyone who wants to become a significant player in the ebook space will first have to build a better mousetrap that lures customers away from Amazon. That won’t be easy but I hope it doesn’t happen only because of lower prices. After all, I think we can safely assume that Amazon will always be able to underprice anyone who dares enter this market.

      • Hi Joe,

        I didn’t mean to imply that price was the only thing that mattered. My point is that customers will only be lured away from a comfortable place by someone that offers more value. Price is a significant – and for many the primary – element in the value equation. Being connected with the products you are interested in is another, and ease of doing business is also a strong motivator for customers. DRM is somewhere way further down the list. 

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