Amazon: The Book Industry “In a Box”?

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While most thought the biggest news out of Amazon’s e-book business this week was the revelation that e-books now eclipse print books, it was actually the launch of the company’s second genre imprint in the span of two weeks (and fifth imprint overall) that’s the bigger deal.

Why? Because by creating its own imprints, Amazon is essentially collapsing the entire industry into one company; everything that happens after a book is written — editing, marketing, storefront, the book itself — could conceivably be handled by Amazon.

In other words, for some authors, Amazon is book publishing “in a box.” Of course, this term is more often used (many times with disdain) in the technology industry to mean a turnkey solution, technology that, at least in the old world of off-the-shelf software, gave you everything you needed in a physical box at retail. But now, with what Amazon is offering authors through its imprints and all the services associated with Kindle, isn’t publishing a book essentially as turnkey as it gets?

Here’s another way of looking at it: With the advent of its own imprints, Amazon is finally completing its vertical integration of the book industry. In many ways this is reminiscent of old Hollywood, where the big five movie studios realized they could maximize their take by collapsing the entire life cycle of movies under their control, including production, distribution and exhibition. While antitrust regulators had a lot to do with the breakup of the vertically integrated movie industry, the strategy itself eventually fell out of favor with studios, who grew to believe it wasn’t necessary to own every part of the life cycle.

Books, however, have never seen that level of industry vertical integration, at least until now. The arrival of digital has made production, distribution and sales of books much lower cost, and for an early mover like Amazon (with all of its other built-in advantages from being so strong in online book sales), consolidation of these different stages is finally possible. The downstream services — distribution, storefront, reader — are what Amazon integrated first, and only now is it building out the up-front editorial pieces.

And while it made sense for movie studios to eventually get out of distribution and exhibition, it makes as much sense for Amazon to do the opposite, particularly since in many ways it already dominates the “exhibition business” with Kindle. By moving further upstream to act as a publisher, it can have more control over the business terms as well as the revenue split.

But what about the authors themselves? Should they worry about putting this much control in the hands of one company? Chances are that some will be just fine with it, as Joe Konrath’s many posts touting Amazon illustrate. For others, however, this is just another in an exploding number of options. Using Amazon as your publisher doesn’t mean you can’t self-publish other works across different e-book platforms (let’s not forget Nook, Kobo, Smashwords, iBookstore and so on), or you could choose to go old-school — like early e-book star Amanda Hocking — and sign a deal with one of the big five publishers.

It is, however, the big 5 publishers who should worry. While it hasn’t happened yet, eventually some of the old world’s biggest-name authors might sign a deal with Amazon to be their publisher. If they do, it would likely benefit the publishers to start considering some vertical consolidation themselves.

For more on Amazon’s new imprint, see my weekly update at GigaOM Pro.

Image courtesy of flickr user tecasorg

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