This post, by Mike Shatzkin, originally appeared on The Shatzkin Files blog on the Idea Logical Company site on 2/28/12.
A lot of people in publishing would pay a lot of money to get a reliable answer to these two questions:
When will the growth in Amazon’s share of the consumer book business stop?
Who will be left standing when it does?
I won’t attempt to answer those two questions in this post. In fact, the purpose here is to begin to generate agreement that those are, indeed, the way the industry’s existential strategic questions should be framed going forward. In my consulting work, it is often my role to provide “synthesis and articulation.” This post will begin to document the synthesis that led to articulating the questions, which are actually implicit statements, above. The catalyst for these ruminations was the news last week about Amazon’s dust-up with Independent Publishers Group (IPG), a demonstration of its power and willingness to exercise it that recalls an incident almost exactly two years ago when they were unsuccessful at bullying Macmillan (or the other big publishers) into giving up their notion of implementing agency pricing.
Amazon was not the first online bookseller. But they appear to have had several distinctions from all others from the beginning. One is that they always saw bookselling as a springboard to a much larger business. That meant that bookselling was, perhaps primarily, a customer acquisition tool, not an end in itself. A second is that they saw, long before it was accepted general wisdom, that perfecting the “customer experience” online was the core requirement for success. And the combination of those two things, in concert with the ubiquitious availability of capital for promising Internet propositions that characterized the late 1990s, fueled growth powered by aggressive pricing that has had their trading partners and competitors agape for nearly two decades.
Any discussion of Amazon’s success must acknowledge that the other key component, aside from the strategic components of long-term vision, smart use of capitalization, and customer-centricity, has been the quality of their execution. This has been true from the beginning and it is still true today. Some of this is subjective, but it still looks to me like they offer a better print searching-and-buying experience than BN.com and a better overall ebook ecosystem than Nook or Kobo. I read on an iPhone and use all the ebook purchasing systems from time to time, but I use Kindle the most because it is the best. I am close to somebody who prefers to buy from BN.com because (she says; I don’t do this research…) they give money to Democrats and Amazon gives money to Republicans, but she still does her searching at Amazon because it works better before she hops over to BN.com to make her purchase.
[An update on that last point since the original posting of this piece. I was challenged on the "Amazon is red" statement by a couple of people whose opinions I trust, so I asked my favorite Democrat for citations and I got two. You’ll see (if you care and if you look) that both of the analyses that delivered this characterization are squarely within the Bush presidency, so they could constitute a company hedging bets rather than expressing political conviction. On the other hand, B&N was blue throughout the Bush Administration. And the point about the search engines, which was the one germane to this piece, remains true.]