This is the first in a series of articles I’ve been thinking about for a while. What prompted me to go ahead and write it now was Amazon’s announcement yesterday with their new product lines, including a consumption-based tablet (I’m contrasting this with the more creation/consumption hybrid use iPad tablet) and two Kindles under the magical $100 threshold of mass affordability.
What Amazon is doing is accelerating the proliferation of the ebook, their streaming subscriptions, and their cloud. Will any of this hasten the further erosion of the print book market, or at some point will that stabilize and the increase in ebook sales come from people who were not reading and buying print books? That remains to be seen. I’ll get around (and possibly back around as the market shifts yet again in a few months) to the various angles—all the ins and the outs, if you will—of the digital revolution. But I’m going to start with the most basic of tenants: examining the digital publishing revolution as a grand capitalist moment.
I have seen a lot of articles discussing what a great opportunity there is in epublishing for those besides the large publishers. Many self-published ebook authors refer to what they are doing as being entrepreneurs or creating a business. I’ve seen a lot of whinging from the publishing establishment about how Amazon ruined their business model and how terrible a flow of material unfiltered by “gatekeepers” will be for the reading public. Yet most writers and articles are dancing around the simple point that the ebook revolution is pure, unfettered capitalism, and it is as brutal as it is glorious.
Why is no one discussing it in such terms? Is it so obvious that no one seems to think it’s necessary to name the force driving the change? Or is it that “laissez faire capitalism” and “free market” are dirty words to most people?
I am a free market believer. Let me be up front about that. I am not insensible of the fact that some businesses—and the people who work for them and own them—are hurt by this kind of market upheaval. But that is what business is. Being an entrepreneur is believing in your idea and investing your money into that idea because you think you will be able to make money at it. There is risk there. Embedded in the notion of success is its opposite, failure. You might lose that money you invested. That’s the gamble. You have no way to guarantee that your idea will resonate with other people, and you may not be able to predict an innovation that will sweep society and make the good or service you offer suddenly obsolete. That’s the danger of the marketplace.
If you read business and market articles from free market advocates, the phrase you will hear repeated ad infinitum is “Competition is good for consumers and bad for business.”
I think the ebook revolution illustrates this truth quite perfectly.
Who is benefiting and who is hurting from the rise of ebooks and the attendant fall of print books? Readers are benefitting, because they have more choices and lower prices than ever before. Single authors are benefitting, because they have a way to reach their audience directly rather than having to survive the vetting process of the traditional publishing world, and because they can take a much higher percentage of their sales (35-100% depending on what they’re doing) rather than selling distribution rights to a publisher at a return of under 20%. Online retailers and digital content distributors are benefitting from digital sales and subscriptions. Tech companies are benefitting as consumers adopt these new devices as part of their lives en masse.
Publishers are hurting, because they failed to see the change coming in the market and failed to adapt quickly to it—and, in my opinion, also because they tried to stop the change from happening and spent two years in which they could have been adapting the way they have been forced to now (with digital-only and digital-first imprints, viewing ebook sales as an important part of their business, etc.) digging themselves deeper into the trench of irrelevance, angering consumers who had moved to digital with too-high prices and games like delayed ebook release dates, and leaving that void of content, affordability, and ready access wide open to the competition of authors themselves. Agents are hurting, because they always had a rather undynamic business model that was built on the assumption that publishing as we knew it would never change. Oops. Bookstores are hurting, because people buy from online retailers and buy digital content. They are perhaps the most innocent of incompetence (at least at the services offered level), especially since both Borders and Barnes Noble jumped into the ereader device market long before publishers stopped fighting the digital future–but, again, that is the danger of the market. Adapt or die. Offer something people want at the price they think it is worth, or lose your customers to someone who does.
Before you shed too many tears for the traditional publishing world, think of it this way: if the old publishing model was actually so fucking awesome for everyone involved, why did the digital revolution and self epublishing take off like this? Blame Amazon all they want, the publishers are the ones who failed themselves and their customers.
They could have created a digital format the way they created the book format(s). They didn’t see the writing on the wall when music went digital, only to get left by the wayside when Amazon—bright visionaries that they are—decided to literally form a new marketplace in this new media rather than continue to play the game by the same rules as the established business players. Once that happened, publishers could have looked at epublishing and digital editions as an amazing sales tool to go hand in glove with print. Instead they tried to marginalize ebooks by overpricing them and delaying distribution, and now they are scrambling to figure out how to actually turn a profit off ebooks in a changed market where they no longer compete just with each other and the small presses but also with authors themselves.
For a very long time the physical constraints of production and distribution allowed the big publishers the luxury of resting on their laurels, content with their six-way monopoly on the marketplace. They got to set the rules, and there was little need to compete.
It is not Amazon’s fault that these companies were lazy and complacent. It is to Amazon’s credit as a business that they saw a need in the market and jumped to fill it before someone else did. Someone else could have created the first ereader. Amazon did. They could have failed and lost all the money they put into research and production and marketing of their Kindle. If their digital marketplace was not attracting customers, it would have closed down. But that isn’t what happened. They provided something people wanted, maybe even something people didn’t know they wanted until it was put in front of them. Amazon out-competed the other book distributors, period.
But they are not immune from competition. That is the beauty of the marketplace. Right now, Amazon is hungry, expansive, visionary. Perhaps one day they will be fat and bloated, despotic king of a paper court, and some young upstart will challenge them and revolutionize the world until they are no longer relevant. That is the free market. Good for consumers, bad for businesses. If a business can’t compete, it will fail.
And businesses must be allowed to fail. That is the point. The market chooses. The market corrects. Investing in a business is not without risks. That’s why entrepreneurs are called risk-takers. They put something of their own, something that was hard-earned and valuable to them, into a dream because they believe they can create something even more valuable. Some of them do. Some of them do not. The ones who do not must be allowed to suffer the consequences of their failure. Competition is ugly. It is not a modern youth soccer game where no score is kept and everyone gets a trophy at the end of the game; the market is hard, and there are winners and losers. But just because some fail, does not mean that all will fail. And if none are allowed to fail then what does it mean to succeed?
Personally, I think the digital revolution is elegant in its brutality. There will be winners and losers, and the upheaval is far from over. But what will emerge on the other side will be, I think, a much more dynamic marketplace that allows for more people to succeed than what we had before. And that will be better for everyone.
This is the first in a series of articles about the digital revolution in publishing. I welcome any comments, links, dissension, and, of course, if you liked the perspective please check back for future installments! I plan to blog about this at least once a week for the next couple months. Thanks for stopping by! ~Lily