Amazon.com's - California State University Channel Islands

Amazon.com's - California State University Channel Islands

Amazon.coms Kindle: Publishing Industrys iPod? Case Study by Swapna Pragada and P. Girija Presentation: Emily Ip History of Publishing Before the 19th Century: Reliance

on traditional publishing houses. All functions of publishing (selecting, editing, designing, and production & distribution) was performed by the traditional publishing house. Financial

risk beared by traditional publishing house. History of Publishing After the 19th Century: The expansion of books such as novels, childrens books, and academics changed the publishing industry. Modern publishing houses replaced traditional printerbooksellers. With technological advancements, publishing became more sophisticated.

Publishing and book selling became two entities. Book Publishing: Traditional Operating Model Factors that Changed Publishing Technology such as: -lithography

-offset printing -desktop printing -electronic publishing -computer printer Technology improved readability and professionalism in manuscripts. Introduction of the CD-ROM: Manuscripts used as soft copies allowed the editorial staff to easily edit material.

Factors that Changed Publishing Consumer Demand: -Audio Books: been around since the 1950s, but gained popularity in the 1990s. -Demand for books on specialized topics had increased Mergers and Acquisitions: Many small firms were being acquired by large companies that had other media businesses such as television, music, and

motion pictures. The competitive structure of the business was changing due to small firms being acquired. Factors that Changed Publishing Internet: -Ease of access to information, readers preferred free content that was available on the internet. -Amazon started selling books and e-books through the internet

-Companies like Google offered free e-books online E-readers & Tablets: The way people are reading are shifting. People opt more to read from a screen than from a printed copy. The Rise of the Kindle Amazon.com launched in 1995. Started by Jeff Bezos. Jeff Bezos saw the revenue potential of the World Wide Web

and came up with a novel business idea of selling books online. Amazon maintained a large number of books in their warehouse so that it supplied customers with their orders without any time lag. With technology and the internet growing, Bezos decided to expand his business model, eventually developing the Amazon Kindle. Amazon originally sold hard copies of books at lower rates. With e-books, it was buying books from publishers for $13.00 and selling them for $9.99, taking a loss on each

book. They hoped to encourage sales of the Kindle and gain market share. Kindles Competitors in 2007 Kindles Current E-Book Competitors Tablet Competition 2013 According to the Association of American

Publishers (AAP), e-book sales accounted for about 23% of publishers net revenue for 2012. That is up from 17% in 2011. In 2002, the first year that the AAP measured the size of the Threats to Publishing Industry 1. Amazon is cutting into Publishers profits with low prices 2. Free material on the internet and piracy

3. Self-publishing Traditional Publishing Profit EXAMPLE: Book Hardcover Wholesale Price: $26.00 Publisher: 50% of the cover price, $13.00 Author royalties: 15% of the cover price, $3.90 Printing, cost of paper, and binding: $1.80 Marketing: $1.00 Distribution: $1.70 Profit (Before Overhead)*: $4.60

*Overhead: Rent, Editors, Sales Force, write-offs of unearned author advances Publishers: -Worry that e-books that go on sale the same day as regular books will cut into their profit. -Worry that Amazon will continue to cut prices of e- Internet & Piracy of Books With the rise of digital book files and

use of e-readers, book piracy has been on the rise. E-book piracy takes away profits from publishers & authors. Pirates either scan books and share them as PDF files or crack the digital rights management technology. In order to combat pirating, some publishers

try to delay releasing e-books for several The Rise of Self-Publishing There has been a rise of self-publishing platforms: Amazon Kindle, Direct Publishing, Smashwords, Lulu, Barnes & Noble Pubit, and iBooks. Self-publishing

gives the author the control to hire their publicist, marketing specialist, editor, and distribution service. Allows aspiring authors to publish work even when rejected by traditional publishing houses. Every

self-publishing website has their own royalty model, but Amazon has about a 70% royalty. (They have recently cut that in certain countries) Current Event: Publishers Price Fixing? In April 2012, the Justice Dept. filed a civil antitrust

lawsuit against Apple and 5 publishing firms accusing them of fixing e-book prices under an agency model. Agency Model: publishers, not vendors, have the ability to set prices on e-books. Agency model was used to compete with Amazons

e-books, which were mostly priced at $9.99. Most of the publishing firms settled with the Justice Dept. As of February 2013, the last publisher, Macmillan, settled as well. Apple is scheduled to stand trial in June 2013. Current Event: Amazon Acquires Goodreads Inc.

In March 2013, Amazon announces that it has agreed to purchase Goodreads Inc. Goodreads Inc. was started in 2007 and is a website that allows members to list, rate,

review books theyve read, and discover new books. Discussion Questions What are your thoughts as to what is destroying the publishing industry? What can the publishing industry do moving forward?

Three Review Questions 1. Name at least 3 factors that changed the publishing industry. 2. What is agency model pricing? 3. What are some of the threats to

publishing?

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