walkitout (walkitout) wrote,
walkitout
walkitout

disintermediation != walmart

I realize that what Wal-Mart does (and takes the hit for a lot of other people doing the exact same thing, viz. getting The China Price) is distasteful. However, there is more than one way to seriously cut the cost of producing a substitutable good and pass the savings along to the customer. It is disingenuous to claim that all forms of cutting costs are morally equivalent to paying child slave labor to make toxic crap for our children to play with.

Here are a few examples:

The transition from minicomputers (think DEC) to personal computers (think IBM PC, Intel, Microsoft, etc.). I don't think at the time that anyone was running a fab in China, but even if they were (or you want to say that where they were running a fab was equivalent then to China now, which is a dodgy proposition, but hey), the savings between minis and PCs did not arise from that kind of savings. It arose from a bunch of disruptive innovations that could be summarized as worse is cheaper -- and it turned out there was a serious market for worse if it was cheap enough.

A series of transitions in computer storage technology. Again, in all cases, technology that amounted to worse is cheaper. And to worse, we owe a bunch of really nifty gadgets from Apple like the Nano, which is now so well known that people think of that device when they hear the word nanos, rather than nanotechnology. Which is disturbing, weird and was probably inevitable.

Using typewriters instead of writing everything out longhand.

Steamshovels instead of, er, shovels.

Publishers have delayed the transition to e-books for long enough that they appear to be experiencing several cost-cuts simultaneously.

(1) E-publishers do not suffer from costs associated with distribution uncertainty (you don't have to ship copies to everywhere you think a book might sell, and then ship it back or destroy it at your cost or whatever). Publishers had an opportunity to experience this transition earlier, had they been willing to make some modifications to their relationship with booksellers -- the same modifications that virtually every single other kind of retailer in the country had already made sometime since the end of WW2.

(2) E-publishers have equal access to customers as big 6 publishers. If the publishers had collectively introduced a DRM-ed platform (their own kindle), rather than forcibly stopping gadget companies who made them (RocketBook) and leaving the field open to book retailers (kindle, Nook), they could have made it very difficult for anyone outside the big 6 to create books readable on that platform. They could even have given the readers away for free, as long as the customer bought full price on that platform, they still would have made money.

(3) Worse is cheaper formatting: complain about the kindle all you like, but as near as I can tell, what you have to do to set up an electronic file for typesetting and printing is at least as technically difficult as setting up an electronic file for the kindle or any other reader. The big guys may have it all down pat and automated, but this leveled the playing field. A lot.

(4) Disintermediation. Amazon really did a number on the industry with this one, partly because they used all that free cash flow from the way the book supply chain worked to bootstrap themselves -- and that was long before they added the kindle to the mix. Once the kindle is in place, you have to start asking yourself: just what is the publishing house supplying? And once you start to understand how slush piles, query letters, agents, and all the rest of the grinder that takes manuscripts and turns it into print books works, and how eager fastselling authors are to get enough power to _stop_ publishers from doing that grinding to their manuscripts, well, at that point you start thinking, I'd kinda like access to that slush pile. I'm not convinced what you're sending me is that much better than what you sent back to the author.

BTW, kudos to HarperCollins for doing this:

http://en.wikipedia.org/wiki/Authonomy

And then, of course, there's the Penguin/Amazon discover new authors deal.

Regardless, as that article in the NYT Magazine about James Patterson made clear, the big 6 aren't really interested in new talent anyway. They're much more interested in finding reliable bestsellers. If you've already decided you're not that interested in the bestsellers they are pushing, you need to go somewhere else. Closer-access-to-authors is a plausible strategy.

I'm sure there's more. But the big 6 have been unbelievably successful at preventing significant change in the industry (okay, _that's_ arguable). Time to pay the piper. And badmouthing your customer? Lame.
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