Sep 3, 2014 by Marty Coyne
5 Questions To Answer-Courtesy of Amazon
Recently, I received an email (Important Kindle Request) from Amazon asking for my help in supporting their e-book pricing position vs the one taken by the major hard copy book publisher Hachette. Given my daily onslaught of email, my first inclination was to hit the delete button. Then something made me read the email and I discovered an incredible learning opportunity.
I received the email because I’ve written a book and periodically get a royalty check. It’s not a best seller but the checks do arrive quarterly. I was aware of the new Amazon offer to get unlimited e-books for about $10 a month and I was wondering how that would affect author royalties. I also knew that Amazon was struggling to gain support of the major publishers for their approach.
I found this Amazon email to be instructive because it touches on two major business issues many of us face: disintermediation of our business and how we define our competition. Let’s take a quick look at both of these topics and apply the learnings.
Disintermediation of the Book Business
I was fascinated by the historical reference about paperback books replacing hardcover books and the publishers’ reactions at the time. That same reaction is occurring right now with e-books which eliminate much of the value-add that publishers provided in the past. In fact, my next book will be an e-book with printed hard copies only as needed for a small subset of readers.
Major publisher reaction is protectionist instead of approaching the problem via how they can make money off of the new model.
Market and Competitive Definition
What is even more important are the points that Amazon Kindle makes around the competition. They are viewing the market as much more than just hardcover books, paperbacks and e-books. They view the market more expansively including media that is competing for our time: mobile games, television, movies, Facebook blogs, free new sites and more. This broader view of the marketplace is something we all need to keep in mind for our own business.
Sometimes we get so entrenched in defining a market and customers that we fail to realize that we can not only be replaced by new technologies but there may be a different way of viewing the market opportunity. This can provide a competitive advantage for others.
5 Questions for Reflection
There are important questions that can be derived from this email that we should all be asking about our business and its future.
- What are the new product and technology threats to our business?
- How can new competitors or technologies replace our business and products?
- What changes in our business model might occur based on these new competitors?
- How are we defining the market where compete?
- Who are our competitors and how do they view the market and opportunity?
Take some time periodically to answer these questions and really challenge your management team’s assumptions and conclusions. Any successful business, especially those with high profitability, will eventually come under attack. If such a threat emerges in your market space, work on how to make it work to your advantage rather than just going into defensive mode.