30 March 2008

Forward to the past with Amazon

Beside the Charles River in Cambridge, MA, between MIT and Harvard, there's a little patch of green called Riverside Press Park. It takes its name from a book printing plant that stood on that site until the early 1970s. Riverside Press was the manufacturing division of Houghton Mifflin (now called Houghton Mifflin Harcourt ).
This type of vertical integration was common for book publishers a century ago. By the time
HMCo dismantled the Riverside Press in 1973, they were among the last big publishers to spin off or shut down their printing operations.
There's a strange
deja vu in Amazon.com's announcement that they won't sell print-on-demand titles unless they are printed at its subsidiary BookSurge. Book publishers got out of the printing business decades ago, because book publishing is a seasonal business. Publishers couldn't afford to tie up their capital in factories that for half the year were idle (or contracted out to do competitors' work).
So why is Amazon muscling its way into the printing business? Amazon's value proposition isn't the merchandise. They sell convenience, the ease of shopping for books, music, movies, cameras, and golf clubs all in one place, and getting them delivered to your door quickly. They're successful because they put their resources into the buyer experience. They let other people invest in factories, warehouses, and inventory.
Amazon might have saved itself a lot of trouble by reading
Charlie Rheault's fine little book, In Retrospect: The Riverside Press 1852-1971* (you can even buy it on Amazon). They might have learned that assets aren't worth keeping if you have to bully your customers and business partners into paying for them.
* The source of
the illustration above.

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