Empires, by definition, begin their decline at their peak. Today Amazon bestrides the publishing world like Caesar, and it may seem far-fetched to think of this company slipping from its dominant position. There is some doubt, however, that Amazon can continue to augment its control over so many facets of the industry. Although there may be more growth ahead, the environment Amazon operates in is evolving and rivals may force their way through cracks in the fortress.
When Amazon started out, we knew little of all the things Amazon subsequently taught us, things like the ease of ecommerce, the technology of user authentication and online processing of credit cards, the value of superb customer service, and that unique characteristic of the Web, the ability to create a storefront that could claim to hold truly comprehensive inventory in a particular domain. While not all organizations do these things as well as Amazon today, and none do them better, the fact is that Amazon has taught us well: more and more of what Amazon does is now available to rivals. It is no longer necessary to build your own shopping cart, and if you are stumped by the risks involved in taking an order by credit card, there are vendors lined up to take this problem off your hands. The gap is closing, and for Amazon to stay ahead of the pack, it must continue to innovate at a breathtaking clip.
Unfortunately for Amazon, other Web services are coming up with comparable innovations. Amazon built a community around its offerings, but the Amazon community is nothing compared to those found at MySpace, Digg, or Facebook. And Amazon created what may be the first credible ebook device, the Kindle, but already the possibility of reading etexts on the iPod and iPhone is making the Kindle seem like an unlikely winner. We can imagine a Dr. Frankenstein of ecommerce rummaging in the graveyard for body parts to cobble into the monster that will resemble nothing so much as Amazon: A second-best shipping system, a second-best shopping cart, a second-best print-on-demand service–but in the end, a credible alternative to Amazon’s systems: not good, but good enough.
Where Amazon continues to trump all pretenders is in the breadth of its inventory–The World’s Largest Bookstore was its original claim. It would be very, very hard to replicate this inventory (or, rather, the online catalogue that represents that inventory, which may be warehoused at Amazon or at Amazon’s many vendors). It may no longer be necessary to catalogue and support all titles, however, if a new online merchant could dominate a particular subject area. Mike Shatzkin has argued persuasively that the infrastructure of online bookselling marks the end of general trade publishers, which will be replaced with “verticals” in particular fields, abetted by tapping into online communities built around particular topics. In time the science fiction vertical or the ancient history vertical or any number of other subject-specific sites could incorporate ecommerce activity and pressure Amazon at the edge of empire, relying on the intensity of community involvement to strengthen their marketing proposition vis-a-vis the industry leader. Amazon tries to be all things to all people, but a niche site must simply be everything to a self-defined group of people. The intensity of focus becomes the merchandising weapon of choice.
It is astonishing to think of how little a new, topically-based ecommerce site would have to do for itself. Inventory can be drawn from Ingram or Baker & Taylor; ecommerce software can now be purchased off the shelf; fulfillment (once a big headache for warehouses that were not set up to handle orders to individuals) now has several suppliers; metadata for catalogue entries supporting the ONIX standard can be sent from publishers to the new site; and so on. Part of Amazon’s position at the head of the pack derived from its willingness to invent new infrastructure and build it. Now the world of ecommerce is being disaggregated, and the vertically integrated Amazon is beginning to look like it was built for an earlier era.
These thoughts, and the controlling metaphor, were prompted by a recent experience in my local, beloved used-book store. I wandered among the idiosyncratically organized stock, the stacks of books of all description, the book spines whose lettering had worn away: paradise. There on a shelf I spotted the two-volume Modern Library edition of Gibbon’s Decline and Fall of the Roman Empire. I hesitated before picking up the books and carrying them to the cash register, but I had promised myself to read Gibbon before I died. I joked with the cashier that she wouldn’t see me for a long time because I had a very long book to read first. She said that I would have to read quickly, as the store would close in a month.
Among other causes, Amazon had helped to put that store out of business. But the proprietor has already begun his next venture, in online bookselling. He is not himself a threat to Amazon (some of what he will do will be with Amazon’s many services), but he is one of many people and companies gradually coming to terms with the behemoth and finding new ways to find a customer, turn a profit. It is an army of thousands and they are starting new ventures, testing new value propositions. It could be said that if any of them achieve anything of importance, Amazon will simply buy them. But Amazon can’t buy everything: unlike the imaginative space opened up by a book, the balance sheet of even an imperial corporation is not infinitely extensible.
Is Amazon’s weakness its growing arrogance? Perhaps. Speak to the vendors who are now struggling with Amazon’s new Vendor Central system and you will find countless volunteers ready to bring down the tyrant. Or perhaps Amazon, seeing the success of the iPhone and Stanza ebook reader, is getting desperate, as was suggested by one individual (not cited by name here as the comment was made in a private mailgroup); and this desperation has resulted in Amazon’s new insistence that it will only sell ebooks in the Kindle format. Amazon would have us believe that resistance is futile, but the growing number of publishers studying alternatives to the Kindle suggest otherwise.
Amazon’s decline will come about because it will not be able to monopolize ebook distribution with the Kindle; because new business models (mostly based on subscription sales of aggregated content to consumers, not unlike Safari Books and similar in form to NetFlix) will challenge Amazon’s operating philosophy; because social networks organized around special interests will help to solve the problem of bringing traffic to a new or series of new online stores; because so many of the pieces necessary for an ecommerce site are available at modest cost from multiple vendors; and because many people are motivated to storm the barricades, whether for profit or just for the hell of it.
Amazon will not go quietly or quickly. It is a great company and no stranger to risk or innovation. But we are not likely to see Amazon continue to grow and increase its dominance of publishing and bookselling. Sometimes it’s just time to go.