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By Paul Biba

images.jpgAs most of our regular readers know I generally refrain from making too many editorial comments. I feel that presenting the news speaks for itself in most cases. But not in this case. While I bemoan the general “Amazon bashing” that goes on by some of our other contributors, I think that it is quite justified in this case.

While the Lexcycle people, whom I know and respect, say that business will continue as usual, I’m afraid this is either naive or wishful thinking. As a corporate lawyer for the last 40 years, I can assure you that what most acquiring companies want is the acquiror’s market share, intellectual property or other assets, and generally the target’s management is something that is more of a pain than anything else. We would put up with them for a while, but when their vision conflicted with our vision, which was generally the case, we were happy to see them go – if not get them gone ourselves. I’ve seen this over and over at every company I’ve worked for.

So, we can postulate that Lexcycle’s management will be changed in the next couple of years. It’s just the way it works. This leaves Amazon with a platform, the intellectual property behind the platform and a business model. We can assume that Amazon will keep the platform and the intellectual property, but it’s the business model that Amazon will probably want to change.

And how will the do this? Well, if you look at Stanza’s current catalog you will find a lot of entries that don’t have any relevance to Amazon’s business model. As a matter of fact, they are directly opposite to Amazon’s business model. What are they? They are Books on Board, Fictionwise, Random House Free Library, Feedbooks, Smashwords, Project Gutenberg, Munseys, Book Glutton. In other words, all those book sites that do not generate any revenue for Amazon in the current model.

Of course, O’Reilly, Pan Macmillan, Harlequin, are sources that can be funneled through Amazon and can create a revenue stream.

I’m not so concerned about the format wars, or the DRM wars (I take the unpopular position that these will sort themselves out as the marketplace matures – as they are doing in the music industry, and so they are not a major concern of mine) but I am concerned about the little guy who wants to provide readers with ebooks almost as a matter of public service. How else can you describe Smashwords and the others I’ve mentioned. I am very afraid that Amazon will cut these people out completely, or try to force them into a revenue producing model, and thus a whole category of ebooks will disappear from the iPhone/Touch platform at a very minimum, or become “pay for your Goethe if you want to read it on your phone”. This may take a few years for Amazon to accomplish, but companies are not in business to be philanthropic, and I am firmly convinced that it will happen sooner or later after the original Lexcycle management leaves or is removed.

Pity.

 
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