Caught between madmen and mercenaries

This is not a comment on the recent court ruling on Apple, agency contracts, and price fixing.

But a cursory glance at the history of ebook retail makes one conclusion crystal clear:

Ebook retail is a horrible horrible business to be in.

On one side you have self-destructive madmen like the big publishers who have done the following lovely things to their ebook retail partners:

This is without even considering the things publishers could be doing to specifically help ebook sales such as creating ebook-optimised covers.

On the other side you have the cutthroat mercenaries. Amazon seems willing to run its entire Kindle business at break-even, which would be fine if it didn’t also make massive development investments in hardware and software. Investments that it seems content with never recouping. Apple seems willing to butcher lucrative product categories because of its inability to let any buck pass by an iOS device without demanding a thirty cent cut.

Anybody planning to start a new ebook retail store would be stabbed in the back by publishers or cut to ribbons by ruthless competitors before the first year is out.

Your suppliers have no concern for the viability of your business and are quite willing to ruin it for little to no personal gain. Your competitors have corporate parents who are willing to run the ebook retail unit either at a loss or break-even (and that’s without taking their substantial R&D investments into account, most of which are focused on developing or protecting vertically integrated silos, not innovations that actually benefit the customer).

In short, it’s a sector that desperately needs new, competent, and innovative entrants but is too irrational to sustain any sane business development or investment.