People are tweeting and blogging about the latest spat between Amazon.com and Macmillan Books. What exactly is going on? Apparently Amazon has pulled all of Macmillan books from their store over a price dispute. But this is just the result of a much deeper problem. What it really comes down to is the fact that one of these companies doesn't know what business they're in.
A hundred and fifty years ago people didn't buy candles so they could be candle owners. And they didn't buy ice from the ice truck because they wanted frozen water. Consumers wanted light, and consumers wanted cold food, and candle making companies and ice delivery services that didn't understand this fact disappeared when the light bulb and the refrigerator came along.
So what business is Macmillan in? That's an easy question to answer. Macmillan is in the business of printing, distributing, and selling hard copies of books. Macmillan doesn't want Amazon to release their ebooks until the hard copy version has been out for seven months. Printed books are their business. It's the one they have become comfortable with, and it's the one to which they are currently clinging, hoping that the life they now understand will still be here tomorrow.
The problem lies in the fact that readers don't buy books to own wood pulp and ink.
They buy books because they want stories.
Amazon is in the business of connections. They connect people who have stories with people who want stories. They allow almost anybody with a book to put it in their store. But they don't stop there. They also make it so that you can download books from Project Gutenberg. They know that good stories aren't just the new releases, but the classics as well. It's not about selling enough hardback copies to cover the bottom line, it's about providing a rip-roaring good story to somebody who needs the escape.
Amazon isn't perfect, but they do know their business. Publishers who figure it out have a good chance of staying in business.