Tuesday, May 22, 2012

Retweet: CNET looks at Amazon's move into content; will losing publisher lawsuit force Apple into content, as well?

CNET's Jay Green this morning has a post up that talks about Amazon and its move into publishing. How Amazon is changing the rules for books and movies touches on how the online retailer is beginning to effect the way books are published, and movies produced.

The transition from content delivery to content creation is an old one – think, for instance, of HBO's move from distributor of films to the creator of both films and television programming.

But it may seem strange for a retailer to go in this direction, but it shouldn't, since the best example of this is right in your refrigerator: all those store brands are now competing with the more familiar national brands, and often are produced by them as well. It's called private labeling.

Amazon, with its smaller margins, would be a natural for this approach. Creating and selling your own content can, in theory, improve margins. It is precisely the reason most people think a company like Apple would avoid getting into publishing and entertainment production themselves: they are making tons of money being the middle man.

But the current lawsuit involving Apple and book publishers, combined with Amazon's push, may force their hand.

In some ways, the launch of iBooks Author was a baby step in this direction. The eBook publishing software allows publishers to create their own eBooks, but it also allows authors to bypass the entire publishing industry. But it is a very minor move in this direction – no popular author would want to be a self-publisher unless they are doing so for very personal reasons. Stephen King or J. K. Rowling could do it, but the vast majority of authors would discover the pains of self-publishing.

No, what we really are talking about is popular media: television, film, and the like. In a world where their empire is at risk because content is being withheld, a company with huge cash reserves like Apple could easily move into content creation on a massive scale.

When you read Jay Green's post think about this: if you were competing against a company that was, in essence, competing against media producers, and your own efforts to work with those media producers was dealt a blow by the the Justice Department, might you conclude that the best way to compete is to become a media content creator yourself?

Apple, it is rumored, is working hard to negotiate content deals for its Apple TV products – both current and imagined. No doubt the networks and producers are playing hard ball because their whole business model centers on their relationships with the cable TV providers. Success at breaking the distribution paradigm would, many believe, blow up the whole TV distribution model. But failure at this could also force change. Apple would be forced to either give up its plans, or go to Plan B – fund your own content.

It's interesting and fun to think about – unless you are in the publishing, television or film industries.