The Leading Amazon Expert and Analyst

In an earlier post about the publishing jungle, I made it clear that I'm in no position to judge the legality of corporate actions. An argument can certainly be made that in today's global economy, with sovereign wealth funds, public pension funds and private equity firms wielding cash like a weapon, a large corporation that fails to establish a dominant position in its industry can expect to be bulldozed. This weekend's news that the largest publisher in the UK is now pushing back against Amazon's pricing demands is being read by many as a sign that Amazon may have advanced a bridge too far. But I've been following Amazon for ten years, and have probably written as much about their growth and numbers as anybody. So for those who are trying to read the tea leaves for what's in publishing's future, I think I can declare that the leading Amazon expert and analyst is - Jeff Bezos.

I believe in the cowboy movie line, that sometimes, if you just listen carefully to what a man says, he'll tell you exactly what he's going to do. This has certainly been the case with Steve Riggio's drive to vertically integrate Barnes&Noble by publishing a growing share of the books that they sell, and it's always been the case with Jeff Bezos. Jeff has always made clear that Amazon was first and foremost about growth, and he's been prescient, as the growth numbers for Amazon North American Media Sales the last five years show:

2003 +14%
2004 +14%
2005 +18%
2006 +15%
2007 +23%

Jeff has also been saying for years that Amazon is "comfortable being misunderstood" which is another way of saying, he's not afraid to break a few eggs. Lately, Jeff has been talking about the centrality of Kindle to the future of books and Amazon, and I don't think he's kidding. Reading between the lines of both recent Amazon actions and their earlier run of acquisitions, I'm more convinced than ever that they want to become that dominant player in the publishing world whom none can gainsay. That would be a great thing for Amazon shareholders if they can pull it off, but how it would affect the rest of the publishing ecosystem depends on whether or not you think that central electronic storage, reproduction and sales of most trade books is somehow inevitable. I don't think that it's inevitable, but I do think it's probable if Amazon manages to divide and conquer any trade publishing opposition through a misunderstood application of carrots and sticks.

Many small publishers feel their hands are entirely tied by Amazon, which they rely on for the majority of their income. My own publishing business doesn't have that reliance on Amazon, part by plan and part by fortune, and I have as much sympathy for the medium and large trade publishers as for my own peers in this dust up. Publishers that have multi-year leases on buildings, large payrolls, bank debt and even stockholders to whom they must answer, can't make business decisions based on feelings or hunker down in the basement. With a few notable exceptions, like Microsoft, large corporations can't drop a customer that makes up 20% of their business and not immediately cut 20%+ of their employees and operations to compensate. Large companies are all about scale, and loss of scale often means loss of an independent existence. A large publisher who shuns a shotgun marriage with Amazon may disadvantage itself amongst its own peers to the extent that it becomes lunch. Amazon is the world's largest book retailer, and that's saying something in an industry with a limited number of large players. If the large trades want to stand up to Amazon without breaking the law by colluding or forming a cartel, they'll have to do it based on faith in a common goal and the sort of follow-the-leader tactics airlines use to raise seat prices.

The bottom line on this father's day is how the big trades will respond to the question: "Who's your daddy?"

I suspect the answer for most will be "Amazon".