Wednesday, April 3, 2013

Amazon Swallows Goodreads. Amazon: Genius? Evil? Welcome to the Zoo.

I waited a bit before deciding to comment on the recent acquisition of Goodreads by Amazon. Let it digest for a while. In interest of full disclosure, I worked at Amazon for a period of time.

Goodreads started in 2007 (or rather went “live” in 2007). Generally speaking it was one of the more independent social book review sites available. They had good success getting university writing programs to use it.There was some minor controversy that it was getting acrimonious in the Goodreads ecosystem, with some of the same issues Amazon faced vis-à-vis whether some reviewers were indeed creating legit reviews. That is a topic commented on before. It remains an issue and certainly by being “open” to any user, the risk is always there. In general, Goodreads had what I thought were better reviews and more books covered than Amazon. I even went to the trouble to “upload” a partial library list of books I own or have read (partial as the full list is many thousands).

Last year I was further encouraged by Goodreads having the courage to DROP the use of Amazon’s API for data and use Ingram and the Library of Congress.  This was about the same time that Amazon was pushing the use of Shelfari, their competitor to Goodreads. Amazon owned Shelfari since 2008, but really just let it rot until last year, when they then tried to make some tie ins to Author Central and other parts of the Amazon ecosystem.

All that has changed as now Amazon owns Goodreads in addition to Shelfari. Questions posted on Shelfari have received the expected “we’re excited about this here at Shelfari and Amazon remains committed.” Amazon is all about results. That’s its commitment. We’ll see which one lasts. The last real hold out is probably LibraryThing. I certainly hope THEY remain independent!

My real purpose was not to just ruminate on Goodreads, but to toss out a few thoughts on the genius of Amazon. I say this while over the past year lamenting Amazon’s continued growth and monopoly over the entire book industry. The method behind Amazon’s success is both genius and worrisome.

The genius of Amazon is amazingly simple, although complex to execute and a balancing act. The genius is that the end consumer, the individual, is king/queen. If I talk to authors and readers, professors who think about this sort of thing, they all agree that they “love” the independent book store. They “love” small publishers and independent publishers. When you ask these same people, who have skin in the game, where they purchased their last ten books, not to mention any other merchandise, they sheepishly admit most of it was at Amazon.

“It’s so convenient.”

“I love the reviews.”

“It’s the cheapest.”

“I know if there is an issue, Amazon will deal with it.”

It is all true. Amazon treats their customers (only their end consumer customers, the merchant is a completely different story) extremely well. Dare I say it, they are the best ONLINE retailer for customer treatment, all (by the way) without really having any human interaction.

Welcome to the Zoo.

Yes, you are treated so well that you really don’t need to leave. You don’t need to know what goes on outside of the zoo. You get the food, you have “enough” space. You really have everything you should need. You are a animal in the zoo. Why would you want to escape?

The anti-trust laws in the U.S. don’t care IF you are a monopoly, they just care if you “abuse” your monopoly power. Abuse is how you (generally speaking) treat the consumer. The book consumer wants more books, cheap? Time to pull the authors into the ecosystem to help provide cheap food for the zoo animals. Genius. Amazon doesn’t even need to do any of the work, the authors will do it for them, willingly.

Authors tend to be readers. They love Amazon’s cheap prices. Authors also tend to hate publishers—at one level. “Why am I giving up part of my money to the publisher when publishing is so cheap? Amazon makes it easy, press a button and I am published. I get to keep 70%! (Never mind that the 70% was set because of the agency pricing that Apple and publishers worked on and that Amazon fought and got the FTC to initiate proceedings on.) Thus, Amazon must be good, because that nasty publisher keeps 40-75% of that same amount of money.

Do more books get published? YES. Are more authors happy? YES. Is Amazon now more vertically integrated? YES. Are they now no longer dependent on publishers? Getting there!

It is genius. It is part of the “flywheel effect” (from the book Good to Great). They keep adding momentum to the flywheel they have going already. It all fits in.

Zoos are closed ecosystems where the animals are generally treated well and the food is free. They are also important because often times the natural habitat and food source no longer exists. It has been destroyed. Like benign dictatorships, one still feels there is something wrong with the system, but it is hard to point to the “harm” being caused.

So, with Amazon acquiring Goodreads, already owning Shelfari, already having 5-6 publishing imprints, already having two self-publishing and print on demand companies, having 80% of the ebook retail business and about 70% of the hard copy business, having a movie production studio, having IMDB database for movie reviews and you get it all with free shipping and streaming to your device it is hard to show where the consumer “suffers.”  Yet, this animal is starting to pace his cage and wonder.

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