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Amazonian eWarfare

Jan 31, 2012 • 216 Views

By Mira Korber, guest blogger.

The Amazon rainforest may be shrinking, but Amazon.com certainly isn’t.

The superpower “e-tailer” has all but taken over, and it’s selling just about anything, but Amazon.com threatens one industry just as much as climate change threatens its arboreal counterpart.

The publishing industry is in danger. By cutting out publishers — essentially the middlemen — in book sales, Amazon can pay authors a higher percentage of profits, and charge consumers lower prices to acquire books.

Barnes and Noble is faced with potential extinction. Even with Borders gone, it’s still struggling to survive. This NY Times article discusses the complex conundrum B&N must confront. It also cites that in the past 8 years, about one in five independent bookstores have disappeared from the market

The question is largely whether Barnes and Noble will be able to sell enough of its eReaders, “The Nook,” to keep the company (and by extension its dependent publishers) alive. Therefore, in some kind of plot twist, the very publishers threatened by the Amazon Kindle’s explosive growth are clinging to a different eReader’s future success just to stay in business.

Interestingly, this past December, small-bookstores called for an Amazon.com shopping boycott based on the company’s practices to divert their business.

Now, where does Apple fit in? With the ever-developing iBooks store, the iPad is another competitor at odds with the Kindle and the Nook. Committing to the new iBooks store prohibits publishers from selling rights to any other companies, thereby barring  content from Amazon and the Nook. But then again, it is unlikely that large publishers will want to transfer exclusive selling rights to Apple.

We’re all reading within a changing market for books. And soon, it seems that we all may be flicking touch screens instead of flipping pages. 

The Economic Lesson

Again, the rise of Amazon.com attests to economist Joseph Schumpeter’s theory of creative destruction. As new industries emerge, old ones die off as part of an ever-changing marketplace.

Side note: A monopoly exists when one firm dominates in a market and is a “price maker;” with no competition, the monopoly is free to set any price for its goods and services

…A related economic question: Do you see a monopolistic power developing a.k.a. Amazon.com? And if you buy from Amazon, do you see yourself as a participant in this emergence?

 

 

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