Amazon Is Cutting Publishers Out of the Action By Dealing Directly With the Authors
In business school they teach you to analyze the supply chain in an industry, identify the fat cats making excessive profits, and then look for ways to displace them. Jeff Bezos and Amazon are masters at this disruptive growth strategy. They first did it by displacing book stores and selling direct to the public. (I’m the first to admit that this has had its downside as I have always enjoyed my trips to bookstores. Moreover, you couldn’t really call independent bookstores “fat cats,” but they were vulnerable to displacement.) Next Amazon launched the Kindle creating a new Blue Ocean market for digital books and helping to save a lot trees.
Now Amazon is going to carve out the publishers by dealing directly with authors. I have far less sympathy for publishers than independent book-sellers. The numbers that I have heard from publishing industry insiders over the past decade make you question their value. First off, they force authors to accept about 5% of the retail price of their book. The average published author earns a grand total of $1200 from book sales. That’s it. $1200. Publishers also started placing the burden for marketing onto authors long ago. This means that in most cases the author is contractually obligated to do a book signing circuit around the country on their own dime. When you consider the costs of a multi-week trip offset against the $1200 in total income from book sales, it’s a money losing proposition. So, I’m siding with Amazon on this one.
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