How Amazon Snuck Up On Mainstream Publishing In Plain Sight: Part 1, 2005-2007

The publishing world has been continuously startled by the announcements of Amazon’s new print publishing imprints, and this has been going on for a good year.  It’s quite funny that Amazon was able to sneak up on everyone, since this has been part of a chain of events dating back to at least 2005 and probably earlier than that.  I frequently used Amazon’s journey from store to publisher as the opening lecture for a college eBusiness course I taught from 2005 to 2010.  It literally has been that predictable since the ball started rolling.  Let’s go back in time and see how Amazon expanded from a bookseller to a publisher in methodically staged steps, and then let’s talk about what the obvious next step is.

The year Amazon start publicly moving in the direction of publisher was 2005.  It’s entirely possible the planning was done in 2004 or 2003 and we’re entering the latter stages of a 10-year plan, but let’s start with 2005.

2005

In 2005, acquired three businesses: Mobipocket, BookSurge and CustomFlix.

Mobipocket was a French firm whose claim to fame was the .mobi format for eBooks.   eBooks have always been a little bit of a wild west frontier, in terms of formats.  At various times you’ve had the Adobe pushing their format, Sony pushing their format, Amazon having their own format they’ve pushed for the Kindle and the open source ePub format.  Shortly after acquiring Mobipocket, Amazon slightly tweaked and repurposed .mobi to create .AWZ, the eBook format for Kindle.

The Mobipocket acquisition was the first sign that Amazon was going to bet heavily on eBooks.  VHS vs. Betamax, BlueRay vs. HD DVD, you know the story here – the company with the patent on the winning format gets licensing fees from all the content providers.  This was Amazon’s play to own the eBook format, and it quickly became the only format they would sell eBooks in.  By 2011, even mighty Sony has backed down and the two formats competing for dominance are Amazon’s .AWZ and the open source ePub.  We’ll see if Amazon ultimately wins this one, but they’ve had more staying power than any other corporate interest.

BookSurge was a Print On Demand (POD) printing company.  While POD technology is widely used by traditional book publishers today, and self-publishing is increasingly emerging as a viable thing (though eBooks have more to do with that, than POD), back in 2005 this sort of thing was openly ridiculed by mainstream publishing as vanity press and it didn’t matter who the author in question was.  Indeed, as Amazon was folding BookSurge into their corporate structure, they made a play to stop selling POD books from the more vanity-centric publishers.  And so, mainstream publishing giggled that Amazon was concerning themselves with those petty little vanity presses and ignored that Amazon was now printing their own books.  Today, we know BookSurge as the print wing of CreateSpace.

CustomFlix was a company that made Print On Demand DVDs.  Again, nothing big publishing was going to pay any attention to.  Amazon, on the other hand has always been an expansionist entity and some of their earliest expansions were into music and movies (VHS and DVD).  Today we’re concerned with Amazon’s print book publishing, but as CreateSpace was integrated, Amazon’s DVD (and quickly expanded to music and CD) publishing ambitions surfaced with the acquisitions.

At the end of 2005, Amazon started another experiment that was completely misinterpreted.  They launched the original Amazon Shorts.  This is not the recent relaunch of short stories for the Kindle platform.  Back in 2005, Amazon went out of their way to solicit short stories from established authors, occasionally getting bestselling authors in various fields, as well as having an open call for new and underexposed authors.  Big publishing didn’t pay much attention to this.  It’s just short stories, or short article for non-fiction.  It wasn’t perceived as a threat.

The thing is, Amazon has always been much more concerned with data and targeted marketing than mainstream print publishers.  What you really had here was two things going on:


  1. How will original eBook-type material sell?

  2. Can we market this eBook-type material to people who have bought the author in print?


That is to say, Amazon has enough data to make an educated and accurate guess of how many books they’ll sell from an established author.  They can send e-mails to customers who’ve previously purchased print books that the short story eBook is there.  This was a low public expectations experiment to see how this would work in practice.  And yet, here we are with Amazon demonstrating their ability to acquire content and print books.  Both were there in 2005, they just hadn’t been integrated yet.

2007

Skip ahead to 2007 and Amazon’s been busy crunching data and having their engineers build an eReader.  Yes, this is the year the Kindle debuts and Amazon makes their first big (and wildly successful) play to corner the eBook market.  The Kindle initially only sells books from established publishera, but in Q4 they launch the beta of the “Digital Text Platform,” (DTP) which will be eventually come to be called Kindle Direct Publishing (KDP).

DTP/KDP is the program that allows independent authors to upload their own books and sell them on Amazon’s website and/or the Kindle.  While this was not an instant hit, its use steadily grew and strange things started to happen.  Well, strange to the publishing industry, at least.

You saw the emergence of a class of previously unpublished authors achieving great popularity.  This phenomenon was largely dismissed by big publishing as authors riding fads like paranormal romance and time would be spent dismissing the quality of the writing.  (Although it should be pointed out that Amanda Hocking, perhaps the most famous writer to emerge from original eBooks, did sign a 7 figure print book deal.)

You also saw authors previously published in print migrating over.   First they’d dip a toe in the water and publish an eBook of an old print novel for which the rights had reverted.  And the market for these out of print novels was good for a lot of people.  Particularly if it involved out of print volumes from an ongoing series.  Big publishing didn’t pay attention to this because it was books they’d let lapse, although digital rights were starting to be a bigger part of contract discussions.

As things progressed, the print market got squeezed and some of the mid-list authors started losing their contracts and resorting to putting their new, previously unpublished work on Kindle.  Again, in many cases this went very well.  And big publishing wasn’t paying much attention because it was people they’d effectively fired.

All this time, Amazon is gathering more data on eBook sales.  In many cases, these authors were also using CreateSpace to sell print editions and Amazon was collecting data on that, too.

The trap was sprung and big publishing still didn't have a clue what was about to happen next.

Next Up: Money Starts Flowing, 2009 Into the Future

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Todd Allen writes for Startup Grind, among other things