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How to beat Amazon

Richard Curtis reposted an old column over on e-reads. When he posted it last time, he was arguing that a publisher should buy Borders because  that would raise the publisher to the same footing as Amazon. In the repost he replaces Borders with B&N because he thinks the argument is still valid.

The problem with his idea is that it shows he doesn’t understand why Amazon is a powerhouse.

Amazon started as a retailer but has become a publisher too. It started with its Encore program aimed at identifying overlooked books and authors. That was followed by the creation of a service called CreateSpace aimed at self-published authors. And now Amazon has begun publishing mainstream authors.

Amazon didn’t start as a retailer; they started as a tech company. At heart, that’s what they are. That website you buy things from is just one of the businesses started by Amazon Technologies Inc.They also do cloud storage. They also developed the Kindle in house at Lab126. I don’t have a list at hand of all the things Amazon do, but if you gathered that list you’d be surprised at its length.

BTW, the company’s actual name really is Amazon Technologies Inc. I suspect that they refer to the company as to distract you from the reality that they have more in common with Google than with Walmart. (If you’re surprised by anything I’ve written, then it worked.)

TBH, I think it’s the mindset of Amazon that makes them strong. They have the drive to come up with new and better solutions to problems, and that’s why Amazon is a retail giant.

If a publisher bought either Borders or B&N, they would be buying a dysfunctional mindset. I’m not yet convinced that the big box store is dead (Books a Million turned a profit last year), but I do think there is something wrong in how they are being run. Both major chains have been losing money for some time now; obviously they must be doing something wrong.

Also, if a publisher bought one of the chains, that publisher would face a lot of resistance. "That’s not how we do things here" would be heard a lot. Absent a radical restructuring, my bet is that resistance would doom the effort.

If you really want to compete with Amazon, you need to stop thinking like publisher and retailer and start thinking like a tech company.

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Richard Curtis October 1, 2010 um 11:22 am

Thanks for the interesting analysis of my posting. Publishers are being squeezed to death between Amazon and Barnes & Noble. Here’s a chance not just to eliminate one of them but to stand up to Amazon.

Amazon may be a tech company (and it’s a great one) but to everyone in publishing its a behemoth that is now competing with publishers. Don’t be surprised if Amazon buys a major one. That’s why I think that, in self-defense, a major one should buy Barnes & Noble.
Richard Curtis

Nate the great October 1, 2010 um 11:33 am

How are publishers being squeezed? I’m not disagreeing; I don’t understand.

Stefano October 1, 2010 um 12:11 pm

Well, I think you’re mixing up retailers with books distributors: they’re different subjects and they do different things.
Secondly, the point with Amazon is that they’re both retailers and distributors (in fact, there’s no distributor anymore).
Thirdly, your statements always refer to US book market. It looks like no other country does exist.
Finally, your statements imply that Amazon is a threat. I don’t agree

fjtorres October 1, 2010 um 1:55 pm

Everytime I hear a new proposal for how to save the BPHs from "evil Amazon" I’m reminded about the joke about physicists:
Q- How do you teach an old physicist new tricks?
A- You don’t. You take him out back and shoot him. Then you hire a young physicist. It’s quicker, cheaper, and it will actually work.

Which is to say, instead of wasting time and effort trying to save the brain-dead BPHs and their 19th century business model, we shoud simply turn our attention to fostering and supporting those small and mid-sized publishers who do "get" that a world with ebooks needs new content-acquisition strategies, new distribution channels, new revenue-sharing models: a whole new business model, in fact, and one not based on batch-printing treeware.

Let the BPHs die a natural death if they can’t adapt; just don’t let them drag the entire industry with them. The good news, so far, is that they aren’t; the more they struggle against the emerging new age, the less relevant they become. Either they wake-up and adapt or they’ll fade away.

I’m betting the idiots that thought Price-fixing would hurt Amazon (instead of helping it cement its dominance) are beyond redemption and will fade into irreleance within a decade at the most.

Simple test: let’s see how many authors start pulling back book rights and marketting their backlist ebook rights to channels other than the BPHs…

Doug October 1, 2010 um 5:40 pm

I’m not sure how you can say that both Borders and B&N "have been losing money for some time now". B&N’s profit results for the past five fiscal years are (in millions): $146.7, $150.8, $135.8, $75.9, $36.7.

Yes, B&N’s profits are obviously declining, in part because B&N has been making huge investments in its Digital Initiative (online sales, e-books, and NOOK). And B&N’s been showing losses for the past few quarters and expects an annual result for the current year somewhere between break-even and a small loss.

That said, I can’t imagine what a publisher would do with a bookstore chain. Only carry its own books???

Nate the great October 1, 2010 um 5:59 pm

I thought their losses went back further than that. My mistake.

Stefano October 2, 2010 um 7:15 am

Doug, a publisher who owns a bookstore chain is normal in Europe. The same economic subjects are the biggest publishers, the biggest bookstore chains and the biggest books distributors at the same time. This is the reason why there are no ebooks in German, Italian, French, etc.: they simply don’t care! You just have to kick them! 😉

A Tale of 2 App Stores – Amazon and B&N – The Digital Reader September 12, 2011 um 10:45 pm

[…] there are times where my foresight amaze me. Last October I posted a response to an editorial by Richard Curtis. He proposed that the publishers buy a bookstore chain as a way […]

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