Walmart of the Web or the Next Evil Empire?

September 28, 2011 at 9:04 am | Posted in Books, Opinion | Leave a comment
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An intriguing article by Julianne Pepitone revealed the threat that Amazon poses to the publishing industry, and now the tech industry as well. Amazon turned the screws to the publishing industry by offering books cheaper than anyone else. With the recent trend in self-publishing and the ease of creating eBooks, Amazon has used its name recognition as a powerful marketing device that rivals the abilities of the largest publishing houses. Now Amazon is going a step further by offering publishing services to authors. But that’s not all because the unveiling of the Kindle Fire today could be the first glimpse of a rather sneaky ulterior motive.

Many will point to the death of Borders as being a result of their inability to stay competitive in the marketplace. Furthermore, many would state that Border’s downfall was a direct result of their inability to compete with Amazon. Think about that for a moment. A company that exists only in the constant streams of 1’s and 0’s that forms the internet was able to kill a goliath bookselling franchise that had over 500 real life, physical stores that people could drive by everyday. The key to success for Amazon is that they simply offer the same products cheaper. In today’s economy, people live on deals.

With their popularity, Amazon has embraced the digital age and is leading the way in eBook marketing. Their Kindle eReader device took a strong, early lead in the marketplace and helped start a serious demand for eBooks. Amazon followed up by offering eBooks at a price lower than anyone else. Though they have raised the prices on their eBook since then, they have maintained their edge by offering a place where it’s easy to sell your own self-published eBooks. This is the real kicker because self-publishing is the nemesis of the big publishing houses. Self-publishing offers books to the consumer faster and cheaper. It’s also cheaper for the author and often offers them a larger profit on their books sales. The digital age is giving self-publishers enough incentives that the big publishing houses no longer make sense. Why trade profit per each sale of your book for up front money? Why entangle yourself in ownership clauses and endless contract requirements? Why delay the release of your book to suit some company’s needs?

“A half a million dollars is attractive, but it always comes with caveats, [Traditional] publishers are going to set the prices and the release date. They want to control the cover art and even the title.” -author Barry Eisler

If self-publishing sounds like too much work, Amazon has decided to sweeten the deal even further by offering it’s own publishing services. According to Pepitone, Amazon gave author Barry Eisler “creative freedom similar to that of self-publishing, plus the benefit of a strong distribution and marketing channel.” When he went to traditional publishers and asked that his book come out digitally before the print release, they told him “no.” When he asked Amazon, they said “yes.”

“Legacy publishing is about maintaining the position of paper and slowing down digital. They don’t want readers switching to digital because they can get the books earlier or cheaper. And then readers lose out.” -Eisler

It’s no secret that traditional publishing wants to slow down the market for digital books in order to prop up print sales. However, with Amazon now offering it’s own publishing house, will traditional publishing be able to maintain their die hard stance?

“Amazon treats its authors like partners, not like necessary evils. With my previous publishers, I had zero say in important decisions. Amazon respects my [creative] decisions, [and] its marketing power is unmatched.” -author Joe Konrath

Yet there’s more to Amazon’s titanic offensive on the market. According to American Booksellers Association head Oren Teicher, Amazon is “using the book industry as a loss leader to get people to buy TVs.” The strategy isn’t far fetched. Amazon drastically discounted eBooks at a personal loss in order to get people to buy Kindle eReaders. They routinely sell their print books at a loss in order to attract buyers to their site. If consumers go to Amazon to buy a book, it’s very convenient for them to shop around and see what other deals are available there.

And now there’s the Kindle Fire, a product in direct competition with Apple’s iPad.

As you might easily have guessed, Amazon plans on selling the Kindle Fire at a price cheaper than the iPad. With a company that sells just about everything and a marketing strategy that aims toward lower prices, Amazon is without a doubt the Walmart of the web. As Pepitone so eloquently put it, those who wish to compete with Amazon need to “innovate or die.” But there is still one last question that needs to be raised. Amazon has become a massive entity. They are more or less a business empire. But are they an evil empire?

The size and scope of Amazon’s business has people wondering if they are a monopoly. Plus the speed at which they are able to inject new books into the market doesn’t necessarily go hand-in-hand with quality as there are incidences of simple editing mistakes with their hastily released books. And if the claims are true that Amazon is selling certain products at drastically reduced prices in an attempt to sell other, more expensive products (like high end electronics) regardless of the affect this has on other businesses, one has to wonder about the ethics of the issue. Too big to fail is a scary situation, however, too big to stop could be even worse. As consumers, people have to weigh the benefits of cheap products versus the outcome of a narrow playing field. If Amazon becomes so big that no one can compete, those cheap prices might not stay cheap any longer.

Be sure to check out Julianne Pepitone’s article for more quotes and details on the state of Amazon and its future.

Posted By: Skuldren for Roqoo Depot.

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