Monday, October 17, 2011

Creative Destruction in Publishing Industry

In my view, it is in the decade after the Internet bubble ended that it is becoming clear that there are solid businesses ideas that can be based on the Internet and digital capabilities today. Amazon is one of the few corporations that seems to be particularly savvy at taking on old businesses using the Internet as a plank of the strategy. David Streitfeld writes that publishing firms are watching in disbelief as Amazon is cutting down the number of people in the transactions chain and contracting authors directly before publishing their work.

This bears a number of advantages for the author in terms of time saved and a chance to publish book. On the other hand, authors are sure that there income will be entirely dependent on the recorded sales as there is no upfront bonus payment. because a number of authors are taking up this offer with alacrity, I am certain  that in spite of the complaints, it seems that this approach is a useful alternative to the vertically integrated structure that traditional book publishers prefer.

There's no guarantee that the publishers will be wiped out but I think that as I have stated here and here before, publishers should not defend a flooded shore. They must move to higher ground and ensure that Amazon does not wipe them out. A book publishing and author payment model based on sending papers to physical book stores will not suffice. This is an industry that i would watch and while I do not advise on stocks, I would downgrade and keep downgraded the stocks for most publishers until it is clear that they have real understanding why they are losing readers first and now authors. Is this creative destruction at work?  

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