Amazon vs. Google: Seth Godin Wins

Amazon Kindle
There’s a lot of hubbub right now about Google eBooks finally launching, with pundits o’plenty lining up to declare it the latest Kindle Killer, this time with the added bonus of it being the savior of Independent Bookstores!

Except, yeah, not so much. Not really. On either front.

Google makes a big deal in a promotional video that their new initiative offers something unique: choice. From syncing your books across devices to purchasing from a variety of retail partners, it’s a pretty compelling proposition for relatively uninformed book lovers who’ve not yet made the switch to ebooks and have presumably not heard of a little company called Amazon and their newfangled Kindle ereader and related apps.

While this is quite likely going to be an Ereader Christmas and there will surely be records set for ebook downloads and sales on December 25th as people rush to load up their new toys, I suspect there’s not as much  long-term upside as conventional wisdom seems to believe.

Considering the relatively small percentage of people who read more than 12 books/year, ebooks’ primary selling points — portability and space-saving — aren’t all that compelling outside of the conference circuit. And as long as pricing remains out of sync with their value — especially licensing vs. owning, and the limitations that implies — the reported “widespread inability to calculate return on investment (ROI)” will handicap the flow of content into digital sales channels from established publishers.

I’ve long believed that there’s a pretty firm ceiling on ebook growth at around 30%, at least for trade publishers approaching them as  just another format for the same old books. While most comparisons to the music industry don’t stand up to scrutiny, one data point that I find particularly notable is that, as of May 2010, digital downloads still haven’t crossed the 50% mark:

Based on NPD’s latest music industry research, sales of digital tracks and albums accounted for 40 percent of overall music market share in the first quarter (Q1) of 2010, which is a 5 percentage point gain since Q1 2009. NPD’s data is based on a combined music-retailer ranking that reflects the combined sales of CDs and digital music downloads (i.e., 12 digital music track downloads are equivalent to one CD).

“Unfortunately the decline in U.S. CD sales means that selection and merchandising of the physical CDs is suffering, which is one of the primary reasons consumers say they purchased CDs less frequently,” said Crupnick. “Online shopping offers consumers who still want CDs more variety than they would get in a brick-and-mortar store; plus, recommendations, and other interactive features that raise the overall value proposition for music buyers. ”

Amazon Ties Walmart as Second-Ranked U.S. Music Retailer, Behind Industry-Leader iTunes

That final bit is interesting in relation to Google’s indie bookseller angle, — a very savvy  PR move on their part, partnering with the likes of mega-independent Powell’s and smaller retailers like WORD via the ABA’s IndieCommerce platform — and the belief that this somehow levels the playing field, as if ebooks have been the issue all along, as opposed to Amazon’s perfecting ecommerce while Jeff Bezos ignored the pundits who focused only on his quarterly earnings in the early years.

(And, of course, the sweet deal they get on taxes.)

Of course, Amazon doesn’t sit back quietly when competitors launch new initiatives, they usually respond pretty quickly. Google promotes choice, and launches a web-based reader as part of their “everywhere” platform? Amazon announces Kindle for the Web will soon allow for reading “the full text of Kindle books in your web browser. No download or installation required.” Anyone paying attention when it first launched KNEW that was coming.

And where does Seth Godin come in?

After announcing he was done with traditional publishing (again) back in August, the other shoe dropped today, sporting an Amazon logo, as he announced the launch of The Domino Project.

“Powered by Amazon” is part of our name—it describes the unique nature of the venture… I get to figure out the next neat idea, and Amazon can handle printing, logistics and the platform for connection.

It’s long frustrated me that a blog post can reach 100 times as many people as a book, but can’t deliver the nuance a book can. The Domino Project is organized around a fundamentally different model of virality, one that allows authors to directly reach people who can use the ideas we’re writing about.

I’ve had a love/hate relationship with Godin over the past year  or so as he’s been prone to what I call #bloggingtoohard, drifting too far into punditry at times and putting his foot in his mouth. But I really like this new initiative because it’s not talk, it’s action, and it’s a pretty compelling approach to a new model of publishing that goes way beyond simply converting books into electronic form and, maybe, adding a few bells and whistles.

It’s exactly the kind of experimentation I called for back in January that completely rethinks what publishing can be, and he’s doing it with Amazon instead of his traditional publisher presumably because of the one  extra thing they add to the mix: “the platform for connection.”

In the old days, that platform was the physical bookshelf in a brick-and-mortar retailer. Today, it’s a combination of email and ecommerce.

On that note, Amazon wins. And by extension, so does Godin and authors like him who have successfully established platforms of their own.

If you thought 2010 was a crazy year in publishing, you ain’t seen nothing yet!

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8 thoughts on “Amazon vs. Google: Seth Godin Wins

  1. Guy,
    I was with you the entire time on this wonderful post, until the Godin/Domino thing. He said

    “I get to figure out the next neat idea, and Amazon can handle printing, logistics and the platform for connection.”

    I’m not sure how this is any different than the traditional publishing model. As you point out, the platform has changed from brick and mortar to online, but I don’t see that as a huge differential from legacy publishing. In this case, it simply seems that Amazon is the publisher.

    What am I missing that makes this so different?

    1. GODIN: “The difficult part of publishing has nothing to do with printing and everything to do with creating a platform that enables ideas to spread.”

      The difference in what Amazon is doing is they’ve effectively built the platform first and are now using it to publish books (print, ebooks and audio) targeted to specific audiences in ways traditional publishers can’t because intermediaries are still their primary customers. If Portfolio had built up a database and DTC platform over the many books and years they published Godin’s work, maybe he would have stayed with them.

  2. Comparison with CDs and mp3s is not useful. If you buy a CD you can rip it to mp3s and put it in your mp3 player; if you buy mp3s you can burn them to a CD. In minutes. With no additional cost.

    Physical books and e-books don’t offer that same free and easy conversion. Unless you want to buy both, you have to choose. The eventual uptake of e-books depends on how many people acquire devices to read them and how comfortable they are doing so.

    Analogizing books to music to predict a “pretty firm ceiling on e-book growth at around 30%” is another example of the “widespread inability to calculate return on investment” it seems to me.

    1. You missed my point, I think, though possibly because it’s one I’ve made often in the past and wasn’t as explicit about the connection I was making here.

      Music’s shift to digital was far more seamless than it will be for books BECAUSE of the “free and easy conversion” of the former. The iTunes store launched 10 years ago, 1.5 years after the first iPod, and yet digital still hasn’t overtaken CDs. That’s the connection I was making in suggesting a lower ceiling for ebooks.

  3. I thought this James McQuivey post was the best comparison to the music industry I’ve seen, precisely because he points out how the physical product model (CDs) fell apart *even though* digital sales seem to have topped out under 40%. I’m not as pessimistic about bookstores as either of you, but it’s worrying to contemplate how the economics of it all might shake out.

    1. Yes, McQuivey’s post is great, nicely expanding upon Crupnick’s point in the NPD release. I think most bookstores’ future prospects lie in diversification, moving beyond books and offering other products and/or services of specific interest to their local communities, including publishing services.

  4. Maybe we’re talking past each other but let me take another run at it. Because of the near seamless transformation between CD and mp3, the formats support each other. 50/50 split between the two? That could be perfect balance– half buy CDs and rip to mp3, half buy mp3s and burn to CD. Seamless also means rapid uptake of mp3 players, but speed wasn’t at issue here, but ceiling.

    E-book and print book are more than different formats, they are different devices. Since they cannot be converted one to the other they do not support each other.

    Certainly the uptake of the e-book is/will be slower than the mp3. E-readers have been around for more than ten years and e-books twice that long. But a ceiling at 30%? Could be but your analogy is not persuasive to that end.

    1. We’re completely on the same page here, but the disconnect might be coming because you seem to think my 30% ceiling is directly connected to the music analogy, which it isn’t at all. That was more of a side note which I prefaced as such.

      Ebooks are primarily going to be driven by hardcore readers, not casual readers — aka those who only read 2-3 books/year and drive sales of blockbusters — thus the lower ceiling. I’m also only talking about trade books, not textbooks or comics, both of which have higher upsides.

      Of course, this is purely speculation and I could be completely wrong. Only time will tell.

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