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If Railroads Predict the Death of the Open Web, What Do They Say About eBooks?

5779043691_3da0380b74_bOne of the links in tomorrow’s morning coffee post raises troubling questions about the future of the ebook market. points us to an article in The Atlantic where Ev Williams, co-founder of Blogger, Twitter, and Medium, is interviewed  about the challenges an open internet faces.

Two paragraphs in particular caught my eye:

The open web’s terminal illness is not a story that he alone is telling. It is the common wisdom of the moment, espoused by Times columnists and longtime tech bloggers. The developers who wrote Drupal and WordPress, two important pieces of blogging software, both recently expressedanxiety over the open web’s future. Since so many of these social networks are operated by algorithms, whose machinations are proprietary knowledge, they worry that people are losing any control over what they see when they log on. The once-polyphonic blogosphere, they say, will turn into the web of mass-manufactured schlock.

Something like this has happened before. Tim Wu, a law professor at Columbia University, argues in his book The Master Switch that every major telecommunications technology has followed the same pattern: a brief, thrilling period of openness, followed by a monopolistic and increasingly atrophied closedness. Without government intervention, the same fate will befall the internet, he says. Williams cites Wu frequently. “Railroad, electricity, cable, telephone—all followed this similar pattern toward closedness and monopoly, and government regulated or not, it tends to happen because of the power of network effects and the economies of scale,” he told me.

While that piece focuses on the internet, we can see the same trends in the book industry in the US.

Even before Amazon launched the Kindle, we were already seeing consolidation in the book trade. The several major book store chains were displacing indie bookstores, buying up their competitors, and launching ever larger stores. And on the other end, the Big Six publishers (or book content publishers, as Teleread would say) were buying up smaller publishers (although that trend got started a few years later).

These trends started even before Amazon launched in the mid-1990s. But then Amazon came along, and two things happened.

Amazon acquired Booksurge/Createspace and launched KDP, and disrupted the production side of the book industry. Amazon created all sorts of opportunities for industrious authors to bypass the gatekeepers and reach consumers.

If you look at it one way, Amazon effectively threw open the book market, but at the same time, Amazon established the Kindle Store and started to monopolize the retail side of the book industry (both print in the US and digital globally).

One the one hand, Amazon has fractured the book publishing industry, but on the other hand it has also accelerated the consolidation and monopolization trend.

If the book industry follows the same pattern as previous industries, pretty soon Amazon’s detractors will be right: you’re going to have to go through Amazon (and a handful of other retailers) in order to reach consumers.

And that’s just in the US; some countries may have already reached that point.

Think about your country, and ask yourself just how much of the retail book market is controlled by the four or five largest bookstore chains. If it’s more than 75% then you have my sympathies. You’re already well into the "monopolistic and increasingly atrophied closedness" stage.

Has the US already reached that point, do you think?

image by Hikosaemon

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Fjtorres June 20, 2016 um 8:01 am

They say nothing.
Ebooks aren’t a distribution business, they are a content business. Ebooks are about the conversation between writer and reader.
The value of ebooks is intrinsic to their content and the value-add of middlemen minimal because as digital products distribution is mostly frictionless.

Of course, the publishing establishment is all middlemen and hangers-on so of course they see everything in middlemen terms. And they fret about others doing to them what they did to their precursors. Tough luck, dudes.

If you want to look for a railroad metaphor, consider that as the railroad companies tightened their grip on distribution the producers simply moved to alternate distribution channels and the power of the railroaders faded as a result. The tighter their grip, the more product slipped out of their control.

All middlemen are disposable and become more so the more they get in the way of the flow of product from creator to consumer. Monopolizing distribution simply increases the incentive to do without them.

Nate Hoffelder June 20, 2016 um 9:36 am

Except Amazon’s dominance of the trade ebook market is based on their ability to easily distribute ebooks to happy Kindle users.

Also, by ignoring print you’re missing the bigger picture.

Fjtorres June 20, 2016 um 10:18 am

You asked about ebooks, not print.

And Amazon’s dominance is due to the incompetence and disinterest of their "competitors". They can easily be disrupted. Yes, their ebookstore is the best out there; it is not the best *possible* ebook selling site though. Plenty of room for improvement.

Bill Smith June 20, 2016 um 7:38 pm

I believe there is a lot of wrongheadedness in the article’s premise:

Radio and TV have consolidated due to the assistance of a government monopoly, the FCC, who controls who gets broadcast licenses. Railroads gained enormous power also only with government help — in addition to enormous capital expenditures, they relied on government right-of-way eminent domain grants to get access to land to run the rails.

I think ebooks and the internet are much more open. While Amazon dominates because they are better than most of their competitors, there is nothing stopping a rival from setting up a webpage, publishing an app and on-line webreader and setting up an ecommerce gateway — something that thousands (millions?) of other websites do every day.

There is plenty of potential for a Kobo or Smashwords or Weightless Books or Gumroad to figure out how to compete with Amazon … how successful they will be? Who knows. But there is no monopoly stopping them.

Now, competing with Amazon through selection, price, customer service, etc. — that is a whole other issue.

Sure, Amazon wields enormous power and people flock there because they know they can always get their ebooks there … but there is the potential of a homebrew ebook vendor emerging and competing …

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