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Tuesday, December 22, 2009

Amazon's Supposed e-Book "Monopoly" Isn't "In-Scribd" in Stone
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Business Insider reports that, sometime next year, Scribd will launch a "seamless" interface that allows users to access Scribd docs on their Kindles. That's a major step forward for the startup, which aims to be the "YouTube for print"--and which Adam and I use to make all our PFF papers available online in an embeddable Flash viewer that's much quicker to load than the full PDFs. But it also represents a serious potential long-term challenge to Amazon, since Scribd is "quietly developing a strong e-book storefront to match its hoard of user generated content," as Business Insider notes, and because:

If Scribd can put its books on the Kindle, this number should only grow, especially since it offers publishers a better business deal than Amazon. Amazon reportedly offers a 50/50 sales split. Scribd only keeps 20% and allows publishers to set their own price.

So much for "The coming Kindle monopoly" the cranks over at Oligopoly Watch warn us about!

kindle-vs-nookIt would be more accurate to say that Scribd will be "Kindling" e-book competition within the base of Kindle users, and of course, competing devices like Barnes & Noble's Nook offer cross-platform competition, just as satellite television competes with cable. In both cases, the platform operator has a strong incentive to compete for users by offering as much content (books/video programming) as possible at attractive prices.

On the one hand, one might say that inter-platform competition is stronger in the case of video delivery platforms, because users generally lease equipment on a month-to-month basis, while e-book users must buy their $250+ device up-front (making it therefore harder to switch from Amazon to Barnes & Noble, if one decides one doesn't like the offerings or prices for e-books on the Kindle). But on the other hand, if Scribd can compete head-to-head with Amazon in offering e-books on Amazon's Kindle (and perhaps on the Note, too, someday soon), users don't need to switch devices at all: They can just switch e-book providers. Furthermore since e-books are bought on an à la carte basis, users don't have to switch completely, they can just switch for any particular book--meaning that Amazon needs to compete for every additional purchase they can get, which means lower prices and more choices for consumers.

In short, there's no reason to think that competition won't work in this market. But, then again, it works pretty darn well in the video programming delivery market, too, and yet we still see the Federal Communications Commission trying to uphold outdated regulations based on supposedly " gatekeeper power" that cable providers lost roughly 15 years ago, when satellite television became an alternative to cable for essentially all Americans. If the general activist direction of antitrust enforcement under this administration is any indication, I fear we may soon see this kind of stasist thinking applied to the very competitive new market of e-books. And if recent tech history is any guide, innovative, scrappy startups like Scribd will simply be dismissed out of hand by regulators incapable of imagining what's just around the corner.

posted by Berin Szoka @ 4:18 PM | Antitrust & Competition Policy , E-commerce

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It is a device which promotes education and reading, one might need a monopoly to generate enough funds to get people away from their tv's and cell phone to try it.

Posted by: Drew at August 1, 2010 5:47 PM

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