He writes:
Major publishers have worked themselves into much the same position that Microsoft has. There are separate publishing companies, of course, but in important ways, they act in concert like a single monopolistic company.Read the entire article here: Will publishers be able to maintain primacy as ebook publishers?
For example, each offers virtually identical royalty terms to writers. Each offers very similar contract terms to writers. The only way publishers compete for a particular manuscript is by the amount of the advance. They have tacitly agreed not to compete in other ways.
As others have observed, big publishers have a remarkably haphazard manner of finding what they need to survive – new books.
Generally speaking, big publishers don’t develop their own products. Each sits around and waits for someone outside the company to give them a good new product idea. PG suggests that only in a shared monopoly could such a bizarre business practice be sustained.
The big publishers work with highly monopolistic big book wholesalers. The big book wholesalers work with a network of bookstores that has become highly consolidated over the last 20 years.
PG suggests the entire distribution chain from publisher the wholesaler to bookstore manifests classic features and behaviors of a monopolistic system – lack of innovation, lack of flexibility, narrow-gauge management and inbred thinking.
As one evidence of monopoly among Big Publishing, PG would point to what he believes to be a credible suit against all the large publishers for price fixing, one of the harms of monopoly.
While it is possible that Amazon may someday become a monopoly with all of the drawbacks that accompany such status, today, Amazon is primarily an Internet company. It is very close to its early history fighting its way up through a very competitive environment and is most definitely committed to innovation and very fast and flexible.
In your wildest imagination, can you conceive of Simon & Schuster or HarperCollins developing the Kindle? Elephants would flit back and forth among the clouds before that would happen.
A monopoly believes it is a permanent fixture in its industry. An Internet e-commerce company worries obsessively that it can be destroyed at any time if it doesn’t stay fast and smart. The contrast between Amazon and big publishing could not be more stark.
Big publishing is essentially unable to compete because its monopoly position has caused it to become inflexible and it has lost the ability to innovate. In the same way that Microsoft bumbles and stumbles when it tries to take on Apple or Google, big publishing is slow and oafish when compared to Amazon.
