Disruptive Models

By now, at least some of you have read the Forbes article on how Amazon might change the publishing industry. While it is a rather one-sided article, it’s interesting to consider what might happen if a single entity—one now nearly half the size of the total US publishing business—put their mind to changing the model.

Acute readers are probably saying, “Wait, what?” to the italicized statistic above. But, yeah. Do the math. Amazon grossed $15B (yes, as in billion) last year. The total US publishing industry is estimated to be $32B. Not bad for a company that started only a decade ago.

Bottom line: Amazon has the reach, the distribution, and the capital to be an extremely disruptive force if it wants to.

And that’s the gist of the Forbes article. Amazon could singlehandedly legitimatize print-on-demand and cut a upset the current publishing model by giving a larger percentage of revenue to the author. They’ve already made some moves in this space, acquiring BookSurge and CreateSpace.

But . . . well, that’s interesting and all, especially for Forbes ultra-conservative audience, but what happens when you take things a little bit farther? We are science fiction writers, after all.

I think we have to step back and take a look at publishing as a whole. The whole publishing model was built on production and distribution. Good, solid 19th century models. “Ya want your book published, son? Well, over there is the publisher, who invests the money in the printer to make them, and who makes sure your book gets on every supermarket shelf in the country.”

Except, well, now there’s print on demand. I personally know over a dozen people who have written their own business books, sent them to lulu.com or the like, and are using them to market their own knowledge and services, netting more in a month than a midlist author might see in a year. For them, the book itself isn’t important. It’s the cachet of having a book.

And except, well, now, the 25-cent paperbacks in the revolving stand at the store are largely gone. People go to bookstores to buy books. Or Amazon.

Not that there isn’t a value to having a book published by a major house. Not only does it legitimatize the book itself, but it does provide exposure and distribution most works won’t see. It gets the book edited, sharpened, and improved. Sometimes it even gets you a snappy cover.

But when the house does zero marketing around the book, it falls on the author to shill it. Which is exactly the same as if the author had simply gone to a print-on-demand outfit and had the book produced there.

And with Amazon as the largest retailer of books in the world, if the book is available there, and the author is good at shilling it . . . well, hmm . . .

But let’s not stop there. Let’s go a little farther. Let’s step a few years into a future where Amazon has chosen to disrupt the publishing industry. The key value a publisher could provide in this scenario is marketing. They could use a model long-recommended to the (now fallen) music industry: take a good product and apply good marketing principles to it, for a percentage of the revenue. They move from a production and distribution model to a service-based model. They can still pick and choose the books they market, and give them a stamp of legitimacy by doing so. And if this is done well, everyone is happy.

Of course, taking another step out makes the scenario even more interesting. Google has publicly stated that they believe their search engine could grow into the first effective artificial intelligence. But Amazon’s suggestion engine is another strong contender for that title. Consider that a tiny company, Netflix, just spent a million dollars as a prize to crowdsource a better recommendation engine for their titles, and then imagine how much money Amazon is putting into their engine.

So. What if?

What if the recommendation engine becomes so good, it can literally scan the text of an entire book (or watch a movie, or listen to a CD) and have a very good chance of saying, “Yeah, this dood will like this.” And let’s say that the recommendation engine gets bolted onto an automated, predictive, personalized behaviorally-targeted online marketing engine like what Alterian is developing today. A prospective creative can have their work analyzed, revenue predicted, and marketing automated to the point where the publisher might become irrelevant, even as a marketing force.

Of course, that’s a lot of ifs. But hey, we have to wonder.

May 20th, 2008 /