Bringing to Fruition ePub Dominance

Laporte!!! Bezos is still my Kasparov!

Leo Laporte, whom I admire greatly, is simply flat wrong with the assertion Jeff Bezos (CEO of Amazon.com) made a mistake with Macmillan.  Laporte wrongly surmises Bezos is moving to salvage/save the Kindle from the iPad.  But look closer and one can see Bezos is not positioning himself against Apple.  Even with the moves made with Microsoft.  These are opening moves; they are mere tactics to a longer strategy.  Bezos is positioning Amazon to be the leader in ePublishing.  Bezos is maneuvering Amazon to become a challenger to the big six publishers.  (Apple and Microsoft will be the bishop and knight on the Bezos chess board.)

For those unfamiliar with the story; quickly after the iPad announcement Apple stated they will use an “agent” model with their soon to be released iBookstore.  The agent model allows the publisher to set the price of the book.  Apple then receives 30% and the publisher 70% of the sale of the book.  At Amazon the format is different for sales to be used on the Amazon Kindle.  On the Kindle all books are $9.99 and Amazon sets the percentage split with the publisher.  So the controversy started when Macmillan told Amazon they wanted to adopt the Apple structure.  Amazon’s response to the proposed price increase was to pull all Macmillan books for sale on both the Kindle and Amazon.com site.  However, this was of course an impracticable response; and Amazon put the Macmillan books back up on their sites a few days latter.  I say impracticable because this move really only hindered consumers from having access to Macmillan books. Macmillan is a huge publisher with a huge number of best selling authors.  (There are really on six big publishers controlling almost all published works today.)

Laporte contends this was a blunder by Bezos.  But anyone that has followed Bezos and his stellar rise of Amazon.com knows Bezos is not apt to make a mistake.  In fact, most view him as a very very strategic business player.  Bezos is always eight or ten moves ahead and very likely so in this chess game.  

For the everyday Internet consumer, Amazon is the trusted online store.  It is the Sears or Macys of our generation.  Bezos understands Amazon must never be perceived by the consumer as doing anything, which is not in the best interest of his customers.  So a quick capitulation by Amazon to allow a price increase, by the book publishers would have been considered a breach of faith and trust.  And our much beloved Laporte would have likely been on the front end of a statement that Amazon just rolled over to the detriment of the consumer.

Listening to Laporte on TWiG (episode 28), Laporte questions, “Does the consumer really mind paying $15 for that book?”  The short answer to Laporte’s question is YES they do!  Especially when they have enjoyed for a long period of time books at $9.99 per. Laporte and his panelist simply forget that we, the consumer, go out of our way to buy gas to save a few pennies a gallon.  We use grocery store club cards and we buy in bulk to save a few pennies.  And for an Internet business, like Amazon, Bezos understands his business is just a mouse click away from losing the sale.

So how does Bezos turn Amazon into the lead of ePublishing!?

In every company I’ve worked with there remains an invariable and unwavering truth: the younger the company, the younger the average age of the staff, the quicker and easier it is to adopt change.  The older the company, the greater the average age of the entrenched employees the harder and more difficult it is to implement change.  Bezos is going to take advantage of this truth; the big publishers simply do not have enough vision or internal willpower to properly plan for the coming paradigm shift brought to the industry under the ePub (electronic publishing); the big six publishers are firmly grounded in an 18^th century archetype and thus less likely to fully understand the paradigm shift; this will be to their detriment.

Bezos has already made small gambits with authors.  (An author can self publish and sell on Amazon today.)  What I see being Bezos next steps (and reasoning behind the Microsoft move) is a focus on ePub editors and programmers.  With ePub there is a need for a different kind of editor.  The ePub format is so rife with audio and visual support very few authors will not have the skill set or understanding to take full advantage of the ePub format.  The editors of the future (and as I predict in Amazon’s future) will provide a wide range of support with access to the advanced skill sets needed to complete an ePub book that’s more than just a book.  

This game with Amazon, Apple and the book publishers is yet one move of a pawn by Bezos.  It’s all opening moves right now; the middle game has not yet started.  And I suspect, as often happens; we are all in for a surprise.  And Bezos will again be likened as a Kasparov when we get to the end game.