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<nettime> FW: Erosion of gatekeepers
michael gurstein on Tue, 2 Apr 2013 23:15:07 +0200 (CEST)

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<nettime> FW: Erosion of gatekeepers


Erosion of gatekeepers

Pratik Kanjilal 

Posted online: Tue Apr 02 2013, 03:36 hrs


Amazon-Goodreads merger unleashes a frisson in the publishing industry 

A merger and an acquisition in the US, both likely to be formalised in the
second quarter, have the capacity to move the goalposts in English language
publishing worldwide. It???s making writers antsy and when they think it
through, readers may not be ecstatic either. Publishing companies and
booksellers, the gatekeepers of the world of books, who compete
financially, are trying to form monopolies in order to lean on each other
harder. And two important stakeholders in book publishing, writers and
readers, primary producers and consumers, feature only as interested
bystanders in this arm-wrestling match. It???s almost enough to make them
want to join hands and cut out the middlemen. 

On Thursday, Amazon announced the acquisition of Goodreads.com, a
readers??? community which crowdsources reviews and ratings from 16 million
members. The volume of the deal remains unspecified, but educated guesses
range between $140 million and $1 billion. The US Authors Guild struck back
immediately, calling the buyout a ???truly devastating act of vertical
integration???. Its president, Scott Turow, made a bleak public statement:
???Amazon???s acquisition of Goodreads is a textbook example of how modern
internet monopolies can be built. The key is to eliminate or absorb
competitors before they pose a serious threat.??? 

Meanwhile, another monopoly-like deal has been slowly inching towards its
conclusion. In February, the Department of Justice cleared the proposed
merger of publishing giants Random House and Penguin. Now, the deal awaits
clearance from antitrust regulators in Europe and Canada, which is unlikely
to be denied. The merged entity will control perhaps one-third of English
trade publishing and will leverage its volumes to secure better terms from
Amazon, which dominates retailing. 

M&As sometimes trigger cascades as industries reorganise their assets. When
Random and Penguin announced their feelings for each other in October last
year, Rupert Murdoch was expected to start cruising for a partner for
HarperCollins. There was talk of a merger with Simon & Schuster in November
but News Corp, which owns HarperCollins, was probably too preoccupied with
the fallout of the phone hacking scandal in the UK to do a notable merger.
But if a deal of any magnitude had been struck, the English language market
would have been divvied up into two lions??? shares, leaving a wedge
populated by smaller players and indie presses ??? the Third Front of the
books trade. It was assumed that the battle would remain a straight contest
between publishers and retailers, each seeking to gouge better margins out
of the other. As the sharpness of Turow???s criticism suggests, a flanking
manoeuvre like the Goodreads buyout was totally unexpected. 

Amazon has made sizeable acquisitions in the past ??? IMDb, audiobook
specialist Audible, the daily deal site Woot, the social buying site
LivingSocial, the e-commerce site Zappos and Kiva Systems, which develops
robotics for large scale warehousing. All these were straightforward
decisions to improve market access and logistical efficiencies. But the
Goodreads acquisition is an attempt to control consumer behaviour. Amazon
has acquired the biggest source of credible crowdsourced reviews and
ratings on the Net, and it will kill it to remove competition with its own
user reviews. It will do this without even trying. 

Product reviews are powerful marketing aids but they are distrusted
precisely because they have commercial value. The credibility of media and
industry reviews is lower than that of word of mouth publicity. The
Goodreads business model was based on this distinction. The credibility of
the site owed to its independence and its ability to build ever-expanding
circles of trust among users who already knew each other. The site was
acquired by Amazon because it can influence sales and had the potential to
divert traffic to competing stores. But absorption into the very industry
it critiques would probably lower the perceived credibility of Goodreads.
In which case, rather than gaining a strategic asset, Amazon would have
only eliminated competition. 

Goodreads is an interesting example of the erosion of the traditional
gatekeepers of the Anglo-American industry ??? publishers, booksellers,
critics and agents ??? who are surrendering ground to the crowd. First,
Anglo-American publishers transferred marketing roles to writers.
Traditionally reclusive, they have turned performers in order to promote
their work. Agents and editors used to be deeply involved in shaping the
books of their writers, but that is now the exception rather than the rule.
And then Goodreads crowdsourced opinion and crowded out the critic. 

Eventually, perhaps mainstream trade publishers would like to get out of
the way altogether? The industry has concentrated on financials rather than
creativity and worked quite hard to convince writers that they would be
better off publishing themselves, and thus triggered a self-publishing
wave. Now, any agency which can join the dots between the writer and the
reader, cutting out traditional publishing services, can establish a new
market dynamic. It would do for the book trade what iTunes did for music
??? rattle cages very hard and chuck the goalposts way out of sight.


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