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How to Counter Amazon: Create a One World E-Book Alliance

The aeronautical industry, once dominated by Boeing, managed to develop Airbus. The publishing industry should aspire to create its own “cultural Airbus.”

Editorial by Javier Celaya
binary digital globe
During my presentation earlier this month at the If Book Then conference in Milan, I proposed that European publishers create a joint platform to compete against Amazon. Although I admire Amazon for its culture of innovation and superb customer service, I do not consider it beneficial either for society (readers) or any of the entities involved in the book industry (publishers, bookstores, libraries, etc.) to allow one company to take on such a leading position in the cultural world and be able to determine its future at its own whim. A diverse variety of online bookstores would guarantee more competition, resulting in better services and a broader range of content for all readers.

Although the creation of a joint venture is not an easy task, I am pleased to see that my suggestion was not taken as entirely ludicrous. Last week, the main Spanish financial daily – Expansión – published an article announcing that Grupo Planeta, Telefónica and Bertelsmann are planning to create a common platform to counteract Amazon’s growing leadership position. In the event of any potential criticism by those who tend to disapprove of risky ventures, I take this opportunity to express my support for this strategic decision since these three companies will undoubtedly be confronted with a remarkable challenge.

Amazon is an excellent company with almost 20 years’ experience in electronic business, an admirable customer service policy, and an enviable corporate ethos of persistent innovation. Offering a competitive alternative to Amazon will not be easy, although it will not be an impossible one either. Other industries, such as the aeronautical industry, which was once dominated by Boeing, managed to develop the Airbus consortium. The publishing industry can also aspire to create its own “cultural Airbus.”

To achieve this ambitious goal, European publishers and international online retailers should consider the following key factors:

Aggregating content, financial and human resources offers a competitive advantage

In the analog era, companies reached the top singly; in the new era of social participation, leadership is achieved through business collaboration. As I mentioned during the conference in Milan, aggregating content, financial and human resources on the Internet is essential in order to compete in the new digital economy. The sum of content and services of an Airbus type consortium will prompt economies of scale which will become their main competitive weapon.


Although it may sound surprising, neither Amazon nor Apple are 2.0 oriented companies. And this is their weakest point. Both were born at the end of the analog era and although their corporate cultures may be highly innovative, their strategic focus is still very traditional. Both have created totally restricted ecosystems that only permit limited co-operation with other companies. The future success of any venture in the new digital era will depend on its ability to create an ecosystem which may be entirely open to all kinds of companies that may wish to collaborate in the development of the project with an agnostic viewpoint vis à vis formats and devices.

Initial multi-million euro investments may only offer modest ROI

The financial resources required to create a serious alternative to Amazon cannot be taken on by one company alone, however strong its line of business. Any companies wishing to compete against Amazon will have to realize that they will be running a long-distance race involving annual investments of several million euros in technology. This will deliver only low profits in the mid-term. Various sources believe that 5 to 8 million dollars would be required each year to maintain and update an electronic business platform with new applications and services aspiring to achieve the same level of sophistication and innovation offered by Amazon to its clients. I take this opportunity to recommend the book One Click by Richard L. Brandt, to understand how Jeff Bezos has managed to make his company the biggest and best online store in the world.

Amazon, Google or Apple have been announcing new applications or launching new services on a monthly, and recently, weekly basis, with a view to retaining customers. Any venture seeking to compete against Amazon cannot afford to fail to offer alternatives to its competitor’s future strategies since its platform could become obsolete in a matter of months.

It should also be borne in mind that European and Latin American users are becoming more and more familiar with online shopping. The sophistication of the average user will require the promoters of any consortium to permanently update their platforms to add new, online applications and services to meet the increasing familiarity of users on the Net. In this context of continuous functionality renewal, the promoters of the venture will have to be prepared to make large investments to permanently enrich the platform and compete against Amazon’s 20 years of experience.

Need to cross-sell cultural content beyond books

Another suggestion I shared at the conference in Milan was the need for platforms to cross-sell cultural content (books, music, newspapers, magazines, TV series, etc.)

Cross-selling attracts diverse consumers with different preferences. In any Internet based business, a larger public equals more traffic, leading to a greater potential increase in profits per transaction. This is nothing new in economics, it is just simplified and amplified in a digital format.

From a user point of view, it also makes a lot of sense to cross-sell cultural content and entertainment options on the Internet. People consume different cultural content throughout the day: we listen to music, browse through a newspaper or magazine, watch a TV series or movie, or read a book. Offering all this content via one, sole platform simplifies the purchasing process for users, consequently increasing consumption.

A strong focus on discovery eases purchases and sharing of culture

Just as the Internet has changed the way we access information and our management of knowledge as well as how we acquire various cultural products (cinema or theatre tickets, books, music etc.), the new technologies for recommending books is changing the way we discover, purchase and even read books.

Any ventures wishing to compete in the new digital economy will have to offer their users an exceptional discovery, purchasing and reading experience on the Internet, as well as allow the possibility of sharing any reading experience – which is not the same as sharing the product itself – with other people with the same cultural preferences. In the new era of participation, the ways of discovering, purchasing and reading books will become truly social activities.

Amazon must have viable competition in US market

Various sources indicate that Amazon’s current global market share of e-book sales is close to 30%. If this market share were to exceed 50%, Amazon’s dominant position would have serious repercussions on the global book industry. The only way of suppressing this incredible growth is to create stronger alternatives in its own territory. In the context of collaboration as a way of competing against Amazon, apart from thinking of creating a “cultural Airbus” to defend our natural territories (Europe and Latin America), we should also contemplate the possibility of creating an international alliance of e-book stores, i.e. One World E-Book Alliance, as a way of competing within its own territory.

Any venture that may seek to seriously compete against Amazon would sooner or later have to compete on its home turf in the United States. The Internet has no boundaries and we therefore need to have a global business vision. Starting from scratch in this market would be an unaffordable option. As an alternative, publishers should opt to reinforce existing retailer’s offerings as a counterbalance to Amazon.

As I mentioned in the first part of this article, the successful outcome of a collective venture will depend on its capacity to create a platform entirely open to all kinds of companies wishing to collaborate in the development of the project, with an agnostic point of view vis à vis formats and devices. There are several key online platforms in the U.S. whose position in the market would be strongly reinforced with the support of European and Latin American allies.

All of us who are part of the book world (readers, authors, booksellers, publishers, librarians, etc.) would benefit if we managed to create an e-book market without a single dominant player.

Javier Celaya, a frequent contributor to Publishing Perspectives, is CEO and founder of Dosdoce, an online portal analyzes the use of the new technologies in the cultural sector and publishes annual studies related to trends in the Spanish publishing sector.

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18 Comments

  1. Posted February 29, 2012 at 4:13 am | Permalink

    I tweeted along these lines yesterday, saying Publishers (who moan about the threat but have not, except piecemeal, had the foresight to uniting globally or at least in the English-speaking markets at first, to look for their alternative) had missed a great opportunity in not getting together to outbid Amazon for TheBookDepository – the fastest-growing internet book-retailing business offering free delivery of paper books worldwide as well as e-books and with the whole infrastructure already in place.

  2. Posted February 29, 2012 at 4:35 am | Permalink

    Very interesting perspective, but I think: could this challenge be limited to the media and cultural products? Amazon’s sales are increasing in all categories (electronics, home, clothing, toys, etc.).

  3. Iain Burns
    Posted February 29, 2012 at 6:07 am | Permalink

    Competing with Amazon in the ebook space we already have Kobo, Barnes & Noble and Apple, all of whom have built slick customer focused ecosystems and competitive (some would say much superior) devices. How many suppliers (ie booksellers) does a reader need? These four already cover the full range effectively, each with some apparent competitive advantage.

    Where there is serious opportunity is in the vertical niches (crime, romance, sci fi, etc.) but that frankly is largely a marketing need – we still need to crack browsing for good books online, creating the bookshop experience. No one does it well enough yet and that’s where online creativity is required, not in building yet another superstore to ‘break’ Amazon’s dominance.

    I dread to think what the book industry would be like today were it not for Amazon’s innovation and unashamed focus on delivering value to its customers . We readers have benefited hugely, and so too have publishers, but few are honest enough to admit it.

  4. Posted February 29, 2012 at 7:06 am | Permalink

    I certainly support the idea that Europeans and Latin Americans should react to Amazon’s empire building in their own territory, and it makes alot of sense to build a “cultural Airbus” to counter Amazon’s Boeing.

    This said, the barriers to entry are incredibly steep, as Mr. Celaya justly reminds us, but the biggest one is not mentioned in his otherwise excellent analysis: the e-reader! So far, everyone who has sucessfully competed against Amazon in the US (Barnes & Noble, Apple etc, as mentioned above by Iain Burns) came up with their own e-reader. And that e-reader, as it turns out, is often in some ways better than Amazon’s Kindle – to the extent that Amazon had to react and come up with its own improved version, the Kindle Fire (which doesn’t sound like it’s quite yet up to scratch: it’s still not available in Europe several months after coming out in the US).

    It will be interesting to see whether Planeta, Telefonica and Bertelsmann come up with an e-reader of their own…

  5. David Grant
    Posted February 29, 2012 at 9:22 am | Permalink

    It’s all very interesting, this debate about the danger of Amazon.

    My opinion on Kindle, as opposed to every other device is that it – and Fire and whatever other new technology they launch – will be the only game in town. Why? Well simply because of the content platform Amazon own.

    Big publishere I know are concerned to ‘level the playing field’ and stop Amazon from achieving global dominance. That’s understandable from a business perspective. But what about the smaller publishers?

    I know from bitter experience the problems of trying to sell books into high street stores. An independent house might have one shot at getting their title into say Waterstone’s or Smiths. If the buyer didn’t like it (and usually they didn’t like it because the indie didn’t have the marketing spend) then that was it. The book to all intents and purposes disappeared.
    At least on Amazon, a reader can find an buy a book. And there’s a tremendous democracy happening when books become high profile and best sellers through digital word of mouth. This is especially true of e-books and Kindle.
    You can certainly argue that Amazon as a channel is culturally more open and better for new, interesting books and writers than the old model of the high street book store.

  6. Anon in Publishing
    Posted February 29, 2012 at 2:19 pm | Permalink

    I could be wrong but I think this would be considered collusion.

  7. David Ball
    Posted February 29, 2012 at 3:01 pm | Permalink

    Your suggestion is very similar to what magazine publishers in the United States decided to do when they created Next Issue Media (NIM). This is a consortium put together by Time Inc., Hearst, Meredith, News Corp. and Conde Nast. It was originally set up to combat Apple’s hold over magazine retailing on the iPad and their (Apple’s refusal) to share subscriber information with the publishers. Publishers would be wise to look at NIM before jumping into this arena. My sense is that it is neither a financial nor marketing success. Instead of sinking millions of euros into figuring out how to circumvent the realities of the market, companies would be wiser to use that money to figure out where they fit into the new publishing ecosystem.

  8. Posted February 29, 2012 at 4:21 pm | Permalink

    Well said, Javier, and you can count me in as an indie publisher when this alliance is formed. I am constantly writing about this very topic in several different discussions in many book publishing groups on LinkedIn. This is one of the main reasons why I am not convinced about the viability of the Kindle Select Program — it forces authors and publishers to NOT publish the book digitally anywhere else on the entire Internet, even though the only people who can make sure of this program by borrowing free books are people in the US who are members of Amazon’s $79-a-year Prime program! So that makes no sense at all.

    Plus, having your ebook available in as many markets as possible increases the book’s exposure across the web and thus its relevance in search engine results when someone possibly searches for that book by its title in Google.

    Finally, I wonder if the best business model for an international ebook alliance might be a cooperative. I realize this could be challenging to bring about, but considering 2012 is the Internation Year of Cooperatives, this might be the right time to get the ball rolling.

    http://social.un.org/coopsyear/

    I’m in your corner, Javier. I hear you!

    Janet Angelo :-)
    Publisher
    IndieGo ePublishing

  9. Posted February 29, 2012 at 4:26 pm | Permalink

    As an addendum to what I just wrote, if anyone thinks we will always be limited by various ereaders, that is not true at all. The primary and best format of ebooks is the EPUB, which can be read on any tablet ereader and any iphone running Android. Any ebook that is uploaded to Google’s eBookstore can be read on any tablet ereader or Android device. Most people in the world are walking around with a phone in their hand, not a unique, brand-specific ereading device.

    The future lies in device-agnostic EPUBS and using HTML5 for creating interactive ebooks.

    Janet Angelo :-)

  10. Posted February 29, 2012 at 4:41 pm | Permalink

    Countering concentration in publishing and book selling should not be sought in creating a level playing field where more than one giant tread. The liberating effects of digital technology should be developed to promote worthy literary works and sustain the producers of those works. As things stand now, the tendency is toward dominance, and whether the turf is controlled by one or five global players does not necessarily translate into better works or fairer opportunities for writers.

    Publishers, authors and booksellers do need one other. Priority in reshaping their common enterprise should be placed on finding a balance where there is parity in recompense for the three links in the chain. Increasing the number of supernovae doesn’t do anything to stop the eclipse of more modest, but deserving stars.

  11. Posted February 29, 2012 at 5:53 pm | Permalink

    The point is very relevant.

    As a newbie to self- publishing, authoring and e-commerce and e-promoting I find that the Amazon experience is clunky, tending towards exclusive and it has an “Ebay” edge to it. I appreciate that this is better than with traditional publishers but the deal just isn’t right. There is an open gap for someone(s) to come up with a friendlier and more intelligent solution for both e-readers and e-writers.

    I hope you succeed.

  12. Posted February 29, 2012 at 7:07 pm | Permalink

    As a writer I’m interested in only one major change and that is to have as level a playing field as possible and I don’t care how we get to that playing field. I know there’ll always be Sara Palin’s and Miley Cyrus’ getting their “books” published and getting large advances but where is the sense behind that? What does it do to help society except teach young kids that it’s not your actual story that matters but how the publishers will sell it to the public. These publishers have one priority and one priority alone: “prove to me you can make me money and we will publish any garbage you send us.”

  13. Posted March 1, 2012 at 1:00 pm | Permalink

    Competition is good for the consumers. Competition is bad for businesses. Yet, in spite of the fact that all the publishing industry desperados are calling Amazon the Big Bad Wolf, the consumers (readers) benefit.
    What is Javier Celaya smoking when he says that, “I do not consider it beneficial either for society (readers).” This is the reason Amazon exists and thrives because it serves society (readers). It is “any of the entities involved in the book industry (publishers, bookstores, libraries, etc.)” that have forgot how to be beneficial to the consumers. And, they want to ban to compete against Amazon? This bunch would not know how to tie their shoelaces on the Internet.

  14. Posted March 2, 2012 at 4:41 am | Permalink

    As an author my main objective is for my books to be widely available electronically. This means I want my publishers to make sure Kindle stocks them, E-books stock them and any other online providers do too. Of course it is hard to compete with Amazon: they had the ideas and put in the effort and the spadework while others were still sleeping and were just hoping electronic books would go away.

    With time and effort other platforms will inevitably rise. Amazon’s place in the market will dwindle eventually. That is the natural way of things. No one can hold the top spot forever. But I would prefer to see this happening through fair competition rather than through warfare. The way to human progress is to show initiative and creativity in bringing about better ideas and ways of doing things, not by trying to beat down those who have already shown their creativity and initiative. This should not be about beating Amazon, but about learning from them and breaking new ground. There is plenty of room for fresh ideas and creativity. When this is combined with hard slog it will lead to success. As long as it is about just beating the competition it is doomed to failure.

  15. Posted March 3, 2012 at 9:24 am | Permalink

    I am a writer and want to be read. Coming from Bolivia, I am well known and have my fans but I could not make a million yet. I sell my books in amazon.com, one every month. I sell many more by myself. I bet the same situation is well known by 99% of authors, but they hide this fact.
    E-books solve nothing. Why? Because as an e-book author I compete with 15 million other authors. I am one grain in Sahara. I need a million bucks to change that. I don ‘t have them. So, I am lost. I will never sell 200.000 copies, ever.
    On the other hand, I am a GOOD writer. I have 100 reviews that say so. Do they help me? No, because
    Amazon practices a stupid democracy: we are all the same trash, good and bad, so we all go into the same Amazon “bookstore”. How can readers find a GOOD boo0k, a well written book, a decent book? Who cares? These cost US$ 1.99. That’s all this teen market cares about. Culture? What’s culture? Mr. Celaya has never tried to sell anything. That’s why he proposes an Europa Amazon. If it ever happens, which I doubt, the real Amazon will trash them. They cannot save Greece… and dream about going against Amazon? That shows how ignorant, old and out of pace are those “publishers”. They publish a hundred titles for each title that sells more than 2000 copies. They never pay royalties to “small” writers. They are a monopoly trying to control the world. They are the real villains in this story.

  16. Posted March 7, 2012 at 10:10 am | Permalink

    Don’t we have that ‘’e-site’’ publishing in blogs?
    As to publishers printing books for celebrities to make money.
    Publishers are supposed to make money. If the public buys the celebrity ‘crap’, well give them what they want.
    We all think we are great writers and just need a platform.
    Maybe we are.
    But I believe we now, have platforms.
    And if a publisher thinks he can make money, he will print you.

  17. veronica
    Posted April 17, 2012 at 5:56 pm | Permalink

    The “book industry” is irrelevant. The only people who matter are the writers and the readers. Paper publishers, bookstores, agents, and paper distributors have no place in the future of the book trade.

  18. Lauren Coulter
    Posted July 20, 2012 at 10:18 am | Permalink

    http://www.digitalbookworld.com/2012/zola-aims-to-replace-google-books-then-take-on-amazon/

    “A new bookselling start-up funded by authors and other investors is forming partnerships with publishers and independent booksellers and aims to replace the Google eBooks re-seller program as the go-to platform for indies interested in selling e-books. Oh, and the company plans on taking on Amazon, too.”

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