Whenever there is a new way to do things, people and companies in the status quo begin to get upset. This is not a new development and has been going on since the covered wagon manufacturers were confronted with Henry Ford’s new transportation vehicle. I’m sure there was a spate of gnashing teeth and hand wringing as the model A’s and model T’s came off the production line. The buggy whip manufacturers were probably not very happy as well. Such is corporate life when a new model rolls around and upsets the status quo. Amazon is the new Ford Motor Company.
Amazon Corporate Model
I recently read the article in Forbes magazine by Jeff Bercovici: Amazon Versus Book Publishers By the Numbers, and was struck by the lack of historical perspective that people have towards this love/hate relationship. To fundamentally understand the relationship between publishers and Amazon you must first realize that Amazon is not trying to be a book publisher or distributor based on the normal models. Amazon is building a business whereby books are almost a marketing device to grab customer share for purchases of everything else that Amazon sells on their website. Keeping this in mind is a difficult part of the overall Amazon/Publisher picture. There was a time a few years ago when Amazon was actually contemplating giving Kindles away to ensure market capture even though they would suffer a loss on their ROI. Any company that will give away a new electronic reading device to ensure consumer capture does not really consider themselves a book-selling company.
Some of the comments that were under this article on the Forbes website were instrumental in giving a bird’s eye-view of how the public views this spat. Most people believe that publishing companies have been in control of the situation in dealing with authors for far too long. Now with the dual realities of distribution points like Amazon being able to call the shots, and also being pushed to provide more and more bestsellers while competing with a vibrant and upstart self-publishing/independent publishing author base, the publishers are back on their heels. This may be the change in the publishing atmosphere that is necessary to even the playing field to a more author-friendly environment.
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The Electronic/Digital Revolution in Book Publishing: History, Industry Perspective (Print and E-book) and “How To” Publish Your E-book for Amazon Kindle
Some of the numbers from the article were very surprising to me and here are a few examples:
$5.25 billion: Amazon’s current annual revenue from book sales, according to one of Packer’s sources. That means books account for 7% of the company’s $75 billion in total yearly revenue.
19.5%: The proportion of all books sold in the U.S. that are Kindle titles. E-books now make up around 30% of all book sales, and Amazon has a 65% share within that category, with Apple AAPL -1.11% and Barnes & Noble NE -0.38% accounting for most of the balance.*
14: The number of workers Amazon employs for every $10 million in revenue it generates. For brick-and-mortar retailers, the average is 47 employees per $10 million of revenue.
1 million: The total number of copies — print, e-book and audio — sold by author Helen Bryan, whose two historical novels, “War Brides” and “The Sisterhood,” were put out by Amazon Publishing. Amazon announced this morning that Bryan is its second author, following Oliver Pötzsch, to reach the million-copy mark.
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Some may find these numbers droll and uninteresting, but I think they tell the story of a complete change in the publishing/bookselling mindset. Amazon will not be going away anytime soon, and with any uncomfortable situation the basis for the irritation will become the norm as time moves on. This is all new and could easily be instrumental in changing the publishing landscape over the next 5 to 10 years.
And in the Future?
Whether Amazon being a major player in the book distribution model will adversely impact the publishing community, as a whole, remains to be seen. Rather than lament the fact that Amazon is in the race, publishers should be looking for new and innovative ways to sell and market their products. Only through continued innovations and new processes can the publishing community survive and thrive in the era of Amazon.
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