Amazon's new book of the month club replacement, the Prime Book Box, got a lot of attention when it was announced on Tuesday, but so far everyone (including me) seems to have missed the important background detail that will decide whether this program succeeds or fails.
While I did make the connection between the new service and book of the month clubs even I missed the fact that Amazon is going up against a well-entrenched competitor who dominates the kids book market (a reader noticed, though - Thanks, Dave!).
The heavyweight in this arena isn't Amazon, and it isn't a retailer. It is a publisher.
I am referring, of course, to Scholastic.
With revenues topping $1.74 billion a year, this publisher is larger than several of the Big Five trade publishers, and yet it is frequently overlooked. In part this is due to Scholastic not participating in the book industry's favorite hobby, publicly whining about Amazon, but the other reason that Scholastic is overlooked is that they don't do a lot of business with the retail book trade. Instead, Scholastic makes most of their money from direct sales.
Scholastic is the king of the school book fair, and between book fairs and its classroom-based mail order operation, Scholastic sells over a billion dollars worth of books a year in schools. That is more business than Simon & Schuster does in a year, and it's more than Hachette US's annual revenues.
This is the business that Amazon is trying to disrupt. Will they succeed?
One could go by Amazon's dominance of the retail book trade and conclude that Scholastic doesn't have a chance, but that could be a mistake.
Scholastic is not Borders or B&N, nor is it one of the Big Five. Scholastic has a direct connection to its customers that the Big Five never had and that B&N lost years ago, giving Scholastic brand recognition that few can match.
Amazon has their work cut out for them.