Amazon won’t be earth’s biggest bookstore – Facebook will

By 

The Amazon-Hachette battle is over, to what seems like relief for publishers. Hachette seems to have gotten its most important demand: Keeping Amazon from sending prices of all its books down to $9.99. Hachette’s victory looked to be in the cards for a while. Amazon.com had a corporate blog making its case. Hachette had its writers. Wars of words are pretty much the only conflicts in which writers shine.

The conventional take on this war is that publishers are fighting for their lives in the face of Amazon’s relentless drive to cut prices. First, the thinking goes, Amazon cuts the prices. Then it cuts the publishers’ share. Next it cuts the publisher.

Only problem here: It doesn’t look so certain now that the publisher gets cut out of the equation. Consider whether, not immediately but five or 10 years from now, the one who gets cut out is … Amazon.

When Amazon launched the Kindle in late 2007 “e-books” basically equaled“Kindle.” Everybody could see immediately that reading was going electronic, and there was only one commercially meaningful maker of electronic readers. Things looked incredibly grim for publishers. Two years later Barnes & Noble came out with the Nook reader. That made things a little better but not much. Betting on the Nook was a little like betting on the raccoon in a fight with a steamroller.

Then came Apple with the iPad and the iBooks app. Obviously publishers were thrilled to have a competing e-book vendor, especially one who would let them set the cover price and not try to ratchet down their price and royalty every year. Publishers could overlook little niceties like the fact that iBooks was available only on Apple devices, a modus operandi that would likely make fire rain down from heaven if Amazon or Google tried it.

Now one anti-trust lawsuit and several knock-down battles with publishers later, we have a market with many e-reader apps in which Amazon still controls what most folks seem to think is 65 percent or so of e-book sales (that number is very widely repeated, but I couldn’t find an original source; Amazon’s share may actually be greater).

Now the number of e-books sold is up while the total revenue has stayed flat — exactly the price squeeze scenario that folks worried about. So the old book business is well and truly disrupted as they say in Silicon Valley, and Apple still sits atop the heap as a hugely dominant player.

So what’s left to disrupt here? Oh, right: The e-book business. In seven years e-books have gone from essentially zero to a $3 billion business. In that time we’ve gone from dedicated reading devices, to iPad, to reading apps on every phone. And now we are moving to a multiplication of business models, like read-what-you-want pricing from companies like Oyster.

Meanwhile the media business is now getting turned upside down by social media. News sites used to think they were competing to be your morning first-read front page. That competition is largely over. The Internet’s front-page, at least for a huge number of people is Facebook. That’s where information and entertainment gets advertised, talked about, and passed around.

The natural evolution of this is that Facebook and any social platforms that succeed it are where books ultimately will be sold. All the barriers to that are quickly falling down. At the beginning of the e-book era, e-books were tied to a specific device, your Kindle. Now they are tied to a retailer, Amazon. It’s become more and more clear that neither of those is really necessary. Lots of companies now can easily create the infrastructure to store, sell and deliver books to your app.

Is that a business that will always demand that publishers pay 30 percent of their net to an Apple or an Amazon? Or can you imagine it as a service that publisher’s buy for a flat 50 cents a book as they publicize their books on Facebook and sell them directly? Doesn’t take much of a mental workout to imagine that.

It’s somewhat surprising that the book world hasn’t gone in this direction already. Publishers are now terrified of anything that smacks of collaboration, so they can’t exactly get together and create their own reader platform to market books via Facebook. Someone will. That’s the natural progress of the process that Amazon started. Amazon proved more than a decade you don’t need a physical storefront. Soon enough you won’t need a virtual storefront either and the Amazon-Hachette conflict will feel as distant as the last great charge of the cavalry.

This article was originally published on Bloomberg.com