Thursday, July 22, 2010

Amazon Bright and Beautiful

The area of e-content has much yet to be defined, but Amazon has a clever strategy, as I knew they would.

In the swirling e-content maelstrom, as publishers and aggregators see their old profit models implode and device manufacturers rush to meet consumer e-reading demand, Amazon is in the calm eye of the storm. Stephen Windwalker, Editor of Kindle Nation, blogged yesterday about Amazon's economic imperative to move into e-content, but notes that the company's strategy was born of vision, not desperation:

If Amazon hadn't gone the ebook route, but we were still somehow on the way to Mike Shatzkin's prediction, quoted in yesterday's New York Times that within a decade, fewer than 25 percent of all books sold will be print versions, then Amazon would be a company whose core business was dying.
It seems clear...that (1) Amazon did see that future…(2) neither the company nor CEO Jeff Bezos panicked…(3)…Amazon was hard at work turning the nightmare of the declining print-book future into…a Kindle content ecosystem that is either enormously attractive...or too powerful to ignore…
Amazon's strategy is working. Since the Apple iPad and its corresponding Kindle app were launched, Amazon's sales units of paid Kindle books has trended upwards, with last month's unit sales outpacing hardcover sales by 80%. As Windwalker humorously illustrates:
Apple (AAPL) put out a press release Tuesday to announce that they shipped over 12 million more Kindle-compatible devices during the fiscal quarter that ended in June, bring the worldwide total of Kindle-compatible devices to over 2 billion…that's not exactly the way Apple spun its quarterly earnings news, but that may be the way that Amazon's Jeff Bezos and his Kindle team heard it.
When Amazon announced last month that Almost Every Non E-Paper Kindle Getting Audio and Video Embeds, Gizmodo summarized:
Amazon's own e-book reader won't be able to play back video or audio embedded in e-books the way the iPod touch, iPhone and iPad will… it probably doesn't matter too much to Amazon, who stands to make a killing on the books themselves…
Those of us working for consumer goods companies understand the wisdom of Amazon's "blades" approach to e-content. (Give away the device; make money on the refills. See: The Economics of Kindle: Why e-readers are looking like razors and razor blades by Lee Gomes, Amazon created the market to its own specifications with the Kindle e-reader, and when the market reached critical mass, reverted to its core competency of content distribution. Well done, Amazon.

Especially resonant with me (see #6 here) is Amazon's approach of coopetition. Per Windwalker:
When Amazon opened its "big tent" in 1999 to launch…Amazon Marketplace, the company took the rest of the online and brick-and-mortar economy to school on the unlikely but surprisingly elegant notion that every competitor is a potential partner.

Strategy is about knowing your field, recognizing momentum, and finding a way to harness—or propel—it to everyone's benefit.

When I have my library hat on, I know that there is still a lot to figure out about e-content, especially lending (so many current barriers), digital copies of print works already owned (not economical in current models), and technical literature (not available or not formatted well across various devices).

Still, how different (read: cool) content lending will look in 5 years! We have many opportunities to merge devices with e-content answers (proprietary and external literature), and to develop interesting new gateways to e-content resources for internal customers. We're gonna ride that momentum!

BTW, I believe that the entire worldwide web eventually will consolidate under 3 key sites: Amazon (commerce), Wikipedia (content), and Facebook (networks) ;)

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