THE BLOG
08/22/2014 09:29 am ET Updated Oct 22, 2014

Amazon, What's Next?

The battle of US authors and publishers against the online retailer Amazon may seem minor, in terms of the current world economic and geopolitical issues at stake, and far removed from the thoughts of all of us because it seems to concern only the distribution of revenue sales from digital book sales in the USA. This is not the case.

Amazon, after simply marketing books printed by mail order, started selling everything under the sun, from washing machines to groceries and especially digital books. They are in a situation of quasi-monopoly on online commerce, without being profitable, unlike Google, Facebook or Apple. In accordance with the prognosis issued 20 years previously, and neglected by all the publishers, readers are buying, all over the world, more and more books readable on screen. In the United States, the country most committed to this path, over a third of books purchased are already in digital files; soon it will be 75 percent and paper books will be marginalized.

Amazon, which owns 60 percent of the digital book market and 35 percent of the paper book market, is offering publishers to sell their digital files much cheaper -- arguing that books are too expensive, that buyers are very price sensitive, that books compete for buyers with other products: movies, music, television...

Some publishers accept, hoping to grab it back through quantity; many refuse, in order to maintain their power pricing selling books and not to undercut rights for which they paid a high price. A thousand authors from the United States carry this fight, in support of their publishers and booksellers -- in retaliation, Amazon is delaying the sale of their books. The American subsidiary of Hachette is, rightly, at the forefront of this battle. If Amazon wins, if the authors give in, if the publishers capitulate, American consumers will benefit in the short term; the authors of best-sellers much more. Others no doubt will also sell more books, but will reap much lower incomes; publishers will lose everything, same for booksellers.

Later, Amazon will focus on the European market, temporarily less sensitive to digital books, and having in several European States laws on the unique price of books. In the short term, once again, consumers will win: Sales platforms online will sell to readers increasingly inexpensive items that they will buy for less and less money from authors, keeping for themselves the distribution margin as rent. These platforms will replace one after another all services rendered by intermediaries and will participate in the technological deflation in full swing, ruining many professions.

Amazon does not lead a battle against books -- this is just a product like any other in the eyes of its leaders. It also has interest in the film market, posing as a competitor to Netflix and the major companies. The stand-off has begun with Disney. Amazon is offering authors and filmmakers to forgo a publisher or producer, by publishing and distributing via self-publishing on its website, which has become hypermarket of a culture in which the role of publishers and producers -- selection, enrichment, promotion -- will be entrusted to algorithms.

Publishers, booksellers and authors must blame themselves, especially in France. If they had anticipated the digital revolution, if they had not done everything to turn the project of the French State Library, which was, 10 years before the emergence of Amazon, to be digital, into one more physical library, antediluvian and inconvenient, if they had helped to build a strong competitor to Amazon -- which exists for certain products and countries: Cdiscount -, we would not be at this point today.

Publishers and booksellers can feed for a while the illusion that the decrease of Amazon share price will make it change its strategy, it will not suffice. Eventually, Amazon will install a monopoly, will choose books published and the languages in which it will find profitable to publish them. Same for film and the press. To save the European cultural model and its players, it will be necessary to imagine new products and services. For example, as musicians are increasingly making a living from their concerts and less from their albums, same for newspapers which are increasingly making a living from live colloquiums they organize and less from their newsstand sales, in the same way publishers, booksellers and authors, will increasingly make a living from conferences they will give. New companies will offer book loan services online between readers: So many libraries are asleep when so many people dream of reading!

To publishers and booksellers, for once, anticipate the next battle. This is the price to pay for diversity of culture.

j@attali.com