There are a lot of theories regarding what Publishers can do to reduce the massive and constantly increasing influence of Amazon and other Platforms in Books and Publishing.
Perhaps the most effective move would be removing DRM and making their own eReaders. This would allow them to create their own pipeline and also to weaken the pipelines of the existing Platforms. Without DRM there’s no lock-in any more.
The Digital Reader discusses the success of the Tolino eReader in Germany. It’s an eReader made by a group of book retailers, which can access books from any of the stores. Apparently, it’s selling well.
Why don’t Publishers make an eReader of their own?
There’s literally nothing stopping them. Amazon doesn’t own the screen technology, eInk does. The various parts are easy to make. Foxconn, Pegatron, and a few other manufacturers would gladly make eReaders for Publishers.
It would take very little effort and comparatively little money. Publishers could even take preorders and figure out demand.
Why do Publishers need DRM?
People who pirate books aren’t stopping because of DRM. It’s trivial to remove DRM. The only thing DRM is doing, is allowing Amazon to create lock-in and gain more and more power. If Publishers remove DRM then Amazon’s lock-in disappears.
Amazon’s lock-in is the Big thing allowing Amazon to dominate the ebook market. If readers were able to buy books from any store and read on their Kindle, they would. It would allow hungry new startups to emerge that would offer Publishers and Readers better terms. It would allow Publishers to Divide and Conquer – shift the balance of power away from the Platforms and back to the Content Providers.
It’s all about the Books right now. Publishers need to wake up and realize that if they don’t do something it’ll shift to being all about the Platforms.
Publishers need to leverage what they have – 50% of Content and 75% of the Books people want to read
Remove DRM, release your own eReader, and make it easier and more convenient for readers to read books on the Publishers’ eReader or any eReader.
There are only two points of power – the store, the device.
There are only two sources for books – The Big 5 Publishers, Smaller Publishers and Indie Authors.
The longer Publishers wait, the less power and leverage they have. If they move quickly, they can build up their own ecosystem (jointly owned by the Big 5 Publishers), their own eReader base, their own customers. Then they aren’t at the mercy of B&N and Amazon and Kobo and Apple.
They have their own pipeline and their own Platform.
Publishers must leverage what they have BEFORE they no longer have it. Because Publishers’ share of ‘Books People Want to Read’ and ‘Authors People Want to Read’ is gradually declining. Once it falls below 49%, they are toast.
Stores are weakening Publishers by building up Smaller Publishers and Indie Authors
Publishers need to look at what Google did to newspapers. It distributed traffic between blogs, smaller newspapers, and larger newspapers. Soon, people stopped going as much to the larger newspapers. Revenues fell and the newspapers started dying. While Google prospered by running ads against all the searches.
The same thing is happening in books. In 2007 you would have 80% of the Top 100 covered by Big 6 Publisher books. Perhaps a bit less.
Now, in 2013, we are seeing Indie Authors take up 25%, Amazon Publishing take up 10%, smaller Publishers take up 15%. That’s means the Big 5 have just 50% of the Top 100. This process is going to continue until the Big 5 Publishers have been weakened so much that they are at the mercy of the Platforms (Amazon, Apple, B&N, Kobo).
The Big 5 Publishers still have 75% of the ‘Books People Want to Read’. But they only have 50% of the Top 100 Spots. What’s wrong with this picture?
The Big 5 Publishers have to be delusional if they -
- Don’t see what the stores are doing i.e. weakening the Big 5 Publishers.
- Think that they have some great ‘Quality’ or ‘Branding’ advantage. People can only buy your books if they can see and find your books.
The store gets Brand X Ketchup and Brand Y Ketchup. People flock to the store. The Store introduces its own Ketchup. It puts its own Ketchup on the easy-to-get middle shelf, and the other ones on the hard-to-reach top shelf. After a few years, it puts them in the last aisle where only 25% of shoppers shop. Then soon it has 55% market share and it dictates terms to Brand X and Brand Y.
That’s EXACTLY what Amazon and the stores are doing. Publishers seem to be in some sort of Reality Distortion Field where they think they are still the Gatekeepers and that no one else can write and publish good books.
Good $1 Books will beat Great $13 Books – Every Single Time
Publishers seem to be completely oblivious to the fact that Good is the Enemy of Great. Good $1 and $3 books will, sooner or later, destroy Great $13 Books.
13 times more expensive. There are not very many markets where the high-end is 13 times more expensive than the low-end. There’s definitely no market where the high-end is 13 times more expensive and also sells more.
Perhaps even more dangerous is the possibility of the Rise of Great $1 and $3 Books.
It’s already happening to an extent. What happens when there are lots of Great $1 and $3 Books available?
Publishers seem completely oblivious to this possibility. Perhaps they are assuming that everyone else has their legacy costs.
Why removing DRM is a Smart Move
In any Pipeline, every step-owner in the pipeline tries to outwit every other step-owner. It’s a constant battle to grab 90% of the profits while making the other participants work for peanuts.
In Books we had a good arrangement. Publishers had the books and Distributors had the distribution channels and Stores had the shelves. It worked well – everyone profited.
Now, Amazon and B&N have too much power. They will do Divide and Conquer. Pit Publishers against Smaller Publishers and pit Published Authors against Indie Authors. They will build their in-house teams and publish themselves.
Their goal is to make Publishers redundant. Then to replace Publishers as the gatekeepers. Then to replace all other books by their books. This is crazy out of control ambition. Delusional too. Just as Publishers are under the delusion that only they can publish great and good books, the Platforms are under the delusion that they can train readers to buy only their published books.
Everyone wants to play God. Until they get struck by lightning.
What can Publishers do? Divide and Conquer back.
Equalize the Platforms. If it’s currently 65% Amazon, 15% B&N, 10% Apple, 10% everyone else, then Publishers need to get it to 40% Amazon, 25% Apple, 15% B&N, 20% everyone else.
What’s the best way to do this? Remove DRM. Standardize Prices (which has failed already). Lock out Amazon (a very bold move but worth a shot). Build their own stores. Sell their own eReaders.
Think of the pipeline. Why are Publishers at the mercy of Amazon and B&N and Apple? Because they don’t own the eReader or the Reading App or the eBook store.
When we had Brick & Mortar stores it made sense to not own stores. What’s the excuse now? Same for eReaders – what’s the excuse?
Readers buy eReaders for Books. The Big 5 Publishers have 75% of the books that people want to read. Why do they need stores or eReaders they don’t control?
This is the equivalent of Russia and Saudi Arabia saying – Hey Greece. We have all this oil. Would you build pipelines and ships and carry them to North America for us? We’ll let you control the entire trade if you save us the hassle of building our own ships and pipelines.
What is it all about? The Books.
Who has the Books people want to read? The Big 5 Publishers.
Then why are they letting themselves be turned into pawns in the eReader and eBook Wars? Perhaps they genuinely are that naïve. Perhaps they vastly overestimate the amount of effort required to build an ebook store and reading apps and eReaders. Perhaps they just don’t get it.
All of Books and Publishing is up for grabs. Publishers can either replace stores and distributors and ereader companies OR they can get replaced.
Publishers just have to do two things -
- Build a pipeline to readers and control it 100%.
- Price books at prices that let readers buy and read the books they want to read, without forcing readers into the arms of indie authors.
It’s absolutely unbelievable that Publishers are doing absolutely everything they can to hand over all control to the Platforms. To push readers into the arms of indie authors and smaller publishers.
Perhaps Amazon and B&N planted spies into the Big 5′s Strategy Departments. Perhaps the Big 5 are under the misconception that ‘eBooks will just go away’ and/or ‘eBooks will never go above 25%’. Whatever the reason, it’s painful to watch the Big 5 Publishers be played for fools by the Platforms.
Think about it – The Platforms are using Books published by the Big 5 Publishers to attract readers to their ecosystems and get locked into their pipelines. They are then, gradually, training those users to buy books from other sources. Eventually, they would have used the Big 5 Publishers’ product (books) to replace Big 5 Publishers. It’s absolutely crazy that the Big 5 Publishers still don’t get it. The Platforms are going about the process of REPLACING you. What part of that is not clear?
It’s baffling to me why Publishers are so miserly and mean-spirited when it comes to readers who just want to pay them money to read their books. It’s even more baffling that Publishers are so large-hearted with Platforms that want to weaken them and replace them. Shouldn’t it be the other way around?