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Amazon Ups the Ante on Platform Lock-in

Andrew Savikas

Note de l’éditeur

Version originale disponible sur TOC Tools of Change for Publishing.
http://toc.oreilly.com/2008/03/amazon-ups-the-ante-on-platform-lock-in.html

Texte intégral

1We often hold up Amazon as an example of one of the original Web 2.0 companies1. Their survival amid the tech meltdown was driven largely by the value of the data they had acquired through thousands of reader reviews, recommendations, and “people who bought this bought that” collaborative filtering. Amazon was a system that grew more valuable with more users: a network-effect-driven data lock-in.

2That kind of lock-in is implicit: publishers were free to sell their books elsewhere, and readers were free to buy them elsewhere. Such implicit lock-in is characteristic of other Web 2.0 success stories, like eBay and craigslist. These sites relied on the value of the unique data/marketplace they were building to implicitly raise enormous barriers of entry. Not much fun if you are a newspaper2, but a boon for buyers and sellers.

  • 3 Jeffrey A. Trachtenberg, « Amazon Tightens Grip on Printing », The Wall Street Journal, 28/08/08, [ (...)
  • 4 O’Reilly Media, « The Amazon Patent Controversy », O’Reilly, 28/02/2000, http://oreilly.com/news/pa (...)
  • 5 [Anonyme], « Amazon.com Telling Publishers – Let BookSurge Print Your Books, or Else », WritersWeek (...)

3But today’s news from Amazon about Print-on-Demand (POD) is the latest move from Amazon revealing a trend toward much more aggressive explicit lock-in attempts3. (Not that it’s an entirely new strategy from the folks that brought you the “one-click” patent4). Amazon has effectively told publishers that if they wish to sell POD books on Amazon, they must use Amazon as the POD printer. Small/self publishers are unsurprisingly feeling bullied5.

4Let’s look at four levels of lock-in at play here:

51. Data-driven lock-in. This is the core “Web 2.0” piece. Reviews and recommendations (and now data on S3 and EC2 usage). Again, this implicit, and in general is good for consumers.

62. Format lock-in. Now things start to get explicit. Much like Apple/iTunes, the Kindle is built around a proprietary data format, and if you want to sell your title on the Kindle, it has to be in their format. This one is bad for consumers (who can not read their Kindle books on another device – oh, the irony!), but is not immediately much of a problem for publishers – at least until it leads to ...

  • 6 Warren Cohen, « Wal-Mart Wants $10 CDs », Rolling Stone, 12/10/04, |en ligne], http://tinyurl.com/3 (...)
  • 7 Joe Wikert, « The “Price” of a K-book: New $20 + Richard Price novel in Kindle format cut to $9.95 (...)
  • 8 Charles Fishman, The Wal-Mart Effect, http://www.walmarteffectbook.com/

73. Pricing power lock-in. Just as Apple reset the price of music (Wal-Mart just got the memo6), Amazon is resetting the price of a book7. For customers who feel they should not have to pay as much for something that never needed to be printed or shipped, this makes sense. It is good for consumers, but bad for publishers. Then again, the reason it is bad for publishers means it may wind up bad for consumers too. When there are only three major retail outlets for a computer book publisher like O’Reilly, our publishing decisions are heavily influenced by three very powerful industry buyers. If they don’t want it in retail, we can either pass on publishing it, or try just going direct – but the smaller volumes resulting from going direct mean the price must be higher; consumers will either have less choice (because we don’t publish titles that those three buyers don’t want) or higher prices for some titles (since we have to make up for the reduced volume). The upshot here is that lower prices in the short term can have expensive long-term consequences8.

  • 9 http://tinyurl.com/lxpuv8, consulté le 22 juillet 2009.
  • 10 http://www.lulu.com/
  • 11 [Anonyme], « Amazon.com Telling Publishers – Let BookSurge Print Your Bodks, or Else », op. cit.
  • 12 Sheena S. Iyengar, Mark R. Lepper, « When Choice is Demotivating: Can One Desire Too Much of a Good (...)

84. Channel lock-in. This one raises the stakes considerably. There are implicit ways of working this one, as Amazon has done with their Prime9 program: if you want that free two-day shipping, you go to buy it from Amazon. But today’s news means that for publishers (and I use that term loosely10) who want to sell a Print on Demand book in Amazon, Amazon is demanding they be the ones that print it. This is very bad for publishers, particularly because it’s really a 1-2 punch of pricing-power lock in as well11. When a book intended for POD has only one route to customers, the company controlling that route is free to add whatever tolls it would like. But it is also bad for consumers, who will soon have fewer places to find POD – only titles, and less choice is rarely a good thing12.

  • 13 Kathleen Ryan O’Connor, « EBay fee hike sparks seller rebellion », CNNMoney.com, 09/02/08, http://m (...)

9Lock-in per se is almost always good for businesses, at least initially, and that is certainly the case here. But rather than building or improving a system that is built to implicitly add another brick into the barriers of entry every time someone uses it, Amazon is taking the shortcut of using market dominance to dictate favorable terms. Of course, Amazon is not a charity, and if Jeff & Co. believe this is the best way to create a sustainable competitive advantage, that is their choice – but publishers will defensively respond to this by treating Amazon more like an adversary than a partner (eBay has some experience on that front13), which in the long run isn’t good for anybody isn’t good for anybody.

More coverage from around the web:

  • 14 Jim Milliot, « Amazon to Force POD Publishers to Use BookSurge », Publishers Weekly, 28/03/08, [en (...)

10Publishers Weekly14: “I feel like the flea between two giants elephants’, said the head of one pod publisher about the upcoming battle between Lightning Source and BookSurge/Amazon.”

11PersonaNonData15: “As a practical matter, it is becoming harder (and may be financially impossible for many small POD publishers) to maintain separate relationships with Amazon and all the rest of the publishing community.”

12LibaryThing16: “Amazon’s move should concern all publishers, and indeed readers. Amazon has always had a lot of leverage, but they haven’t used it. That’s clearly changing.”

  • 17 David Rothman, « Of oil lamps, Print on Demand, and e-book machines: Amazon’s Bezos as a would –be (...)

13TeleRead17: “I’m not saying that Amazon can achieve as complete a control of e-books as Rockefeller did of oil, but if you go by WritersWeekly’s account of the BookSurge move, Amazon comes across as a bully who can be predatory with both E and P.”

  • 18 [Anonyme], « Amazing Forcing POD Publishers to Make a Hard Decision », Virtualbookworm, 27/03/08, h (...)

14VirtualBookWorm18: “This move would also force publishers to increase the retail price of books, since Booksurge/Amazon is going to charge for the printing of the book AND take 48 % of the net (although some have been told 48 % of the retail)!”

  • 19 Kassia Krozser, « Amazon Changes POD Tactics, Removes Velvet Gloves », Booksquare, 28/03/08, http:/ (...)

15Booksquare19: “While the publishing industry worries about Google (and I am still convinced that working with search engines to optimize access to your content is in the best interest of everyone) and watches while Barnes & Noble moves further into traditional publisher territory, Amazon is amassing what is essentially a secret army.”

  • 20 Morris Rosenthal, « A New Amazon Mandate ? Say it ain’t so, Jeff », Self Publishing, 27/03/08, http (...)

16Self Publishing20: “But Amazon is a huge corporation with plenty of room for mistakes, and I’d like to believe that some rogue operators in their publishing division have been overstepping their responsibilities. Otherwise, it bodes ill for the future of the publishing industry to see the new retailing behemoth so rudely throwing its weight around. I just hope that we’re seeing the behemoth’s grafted on tail wagging its body, and the head at Amazon will find out what’s going on and put the tail back in its place.”

Notes

1 Cf. Tim O’Reilly, « What Is Web 2.0 », O’Reilly, 09/30/05, http://oreilly.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html, consulté le 22 juillet 2009.

2 Ryan Sholin, « Mercury falling », Invisible Inkling, 05/03/08, http://ryansholin.com/2008/03/05/mercury-falling/, consulté le 22 juillet 2009.

3 Jeffrey A. Trachtenberg, « Amazon Tightens Grip on Printing », The Wall Street Journal, 28/08/08, [en ligne], http://tinyurl.com/55mwr5, consulté le 22 juillet 2009.

4 O’Reilly Media, « The Amazon Patent Controversy », O’Reilly, 28/02/2000, http://oreilly.com/news/patent_archive.html, consulté le 22 juillet 2009.

5 [Anonyme], « Amazon.com Telling Publishers – Let BookSurge Print Your Books, or Else », WritersWeekly, 27/03/08, http://tinyurl.com/3472js, consulté le 22 juillet 2009.

6 Warren Cohen, « Wal-Mart Wants $10 CDs », Rolling Stone, 12/10/04, |en ligne], http://tinyurl.com/3yzvky, consulté le 22 juillet 2009.

7 Joe Wikert, « The “Price” of a K-book: New $20 + Richard Price novel in Kindle format cut to $9.95 after buyers balk », Teleread: Bring the E-Books Home, 25/03/08, http://tinyurl.com/teleread, consulté le 22 juillet 2009.

8 Charles Fishman, The Wal-Mart Effect, http://www.walmarteffectbook.com/

9 http://tinyurl.com/lxpuv8, consulté le 22 juillet 2009.

10 http://www.lulu.com/

11 [Anonyme], « Amazon.com Telling Publishers – Let BookSurge Print Your Bodks, or Else », op. cit.

12 Sheena S. Iyengar, Mark R. Lepper, « When Choice is Demotivating: Can One Desire Too Much of a Good Thing? », Journal of Personality and Social Psychology, 2000, vol. 79, n° 6, pp. 995-1006, [en ligne], http://tinyurl.com/lk7rtu, consulté le 22 juillet 2009.

13 Kathleen Ryan O’Connor, « EBay fee hike sparks seller rebellion », CNNMoney.com, 09/02/08, http://money.cnn.com/2008/01/31/smbusiness/ebay_fee_hike.fsb/, consulté le 22 juillet 2009.

14 Jim Milliot, « Amazon to Force POD Publishers to Use BookSurge », Publishers Weekly, 28/03/08, [en ligne] http://tinyurl.com/publisherweekly, consulté le 22 juillet 2009.

15 [Anonyme], « Amazon The Monopoly », Personanondata, 28/03/08, http://personanondata.blogspot.com/2008/03/amazon-monopoly.html, consutlé le 22 juillet 2009.

16 Tim, « Amazon deletes competition », LibraryThing, 28/03/08, http://www.librarything.com/thingology/2008/03/amazon-deletes-competition.php, consulté le 22 juillet 2009.

17 David Rothman, « Of oil lamps, Print on Demand, and e-book machines: Amazon’s Bezos as a would –be Rockefeller », Teleread, 28/03/08, http://tinyurl.com/lnahby/, consulté le 22 juillet 2009.

18 [Anonyme], « Amazing Forcing POD Publishers to Make a Hard Decision », Virtualbookworm, 27/03/08, http://2pub.com/blog/?p=53, consulté le 22 juillet 2009.

19 Kassia Krozser, « Amazon Changes POD Tactics, Removes Velvet Gloves », Booksquare, 28/03/08, http://booksquare.com/amazon-changes-pod-tactics-removes-velvet-gloves/, consulté le 22 juillet 2009.

20 Morris Rosenthal, « A New Amazon Mandate ? Say it ain’t so, Jeff », Self Publishing, 27/03/08, http://www.fonerbooks.com/2008/03/new-amazon-mandate-say-it-aint-so-jeff.html, consulté le 22 juillet 2009.

Auteur

À la tête du secteur lié à l’édition électronique d’O’Reilly Media, Andrew Savikas bloggue sur toc.oreilly.com et contribue régulièrement au O’Reilly Radar blog. Il siège également au conseil d’administration du Book Industry Study Group.

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