Tuesday, February 9, 2010

VERITAS: FUMBLE - AMAZON TOO FOCUSED ON ITS OWN PLAYBOOK

This week's perspective from TD&F Special Teams: com.motion

Amazon is facing some very public backlash from the publishing industry of late. Seemingly unprepared for the launch of Apple's iPad, Amazon has waged a very public battle with publishers. With hopes of positioning the Kindle as the de facto ebook standard, Amazon has been buying publications for between $10-14 wholesale and selling them at a loss for $9.99 for use on the Kindle. Unsurprisingly, publishers are publicly concerned that Amazon is undervaluing their publications with hopes of gaining market traction and developing a better negotiating position to push for a lower wholesale cost per publication. Confidently (as usual), Steve Jobs announced that publications would be sold to iBook users for the iPad for $14.99, going so far as to say publishers weren't happy with Amazon's tactics and that in the end, prices would be the same across the board. Given the success of Apple's iPhone, App Store and iTunes, its not surprising that most people believe Jobs. In a refute of Amazon, Macmillan, one of the largest publishers in the world, took out a full page ad in Publishers to voice their side of the spat with Amazon. The iPad and its implications have been widely discussed for months, ad nauseum. It's hard to believe that Amazon wasn't more prepared for this eventuality, having discussed and prepared with business partners, most especially publishers. In the end, Amazon is put in a position where it looks as though they are holding publications hostage to justify their Kindle device. The iPad has taken away their leverage and put them in a position where they need to communicate and negotiate. For Amazon's sake, the sooner the better.

No comments: