So here’s another dense-but-informative Mike Shatzkin post, this one on the economics of book (and ebook) retailing. This passage in particular caught my eye:
In fact, the mobi format that Kindle uses today was developed at the time as a bridging format, able to be read on both Microsoft and Palm devices. This was before the creation of the epub format used by everybody except Kindle today. When Amazon bought Mobi, it was apparently to prevent any other retailer from building a real ebook business selling to what was then the “entire” ebook market. B&N’s one-time exit from ebooks was because they could sell only to Microsoft and not to Palm devices, which meant they had the smaller piece of what was a very small market. Amazon apparently figured then that they’d enter the market when they were ready, but they wanted to prevent B&N from building a foothold in it before then.
This is what’s called vendor lock-in, and it’s the sort of vendor lock-in only a tech company could have leveraged. Pretty much everyone can get at least some utility out of a physical book, even if it’s only as a doorstop or display item. “Lock-in”, such as it exists, in the physical book market happens at the supply end, i.e. in the relationship between authors and publishers, and between publishers and distributors. I honestly can’t even imagine how it would work on the demand end (i.e. between readers and distributors), and, I assume, neither could booksellers, which is why they suck so hard at trying it.
Tech companies, on other other hand, are very good at leveraging lock-in; the entire tech industry is built on this, and if you think it’s not, try running an iOS app on your Windows machine then come back to me.1
Amazon is a tech company, not a bookseller or a publisher or a retailer. It learnt the lessons of its forebears, investing in both the tech and the content it would need grab customers and shut out competitors. Which it did, with massive success.
But there’s a side-effect. Bear with me for a moment while I rant… (more…)