By now everyone is well aware of the ongoing battle between Amazon and publisher Hachette. The thing is, we all know how this story ends; we just don’t know when it will be over. This one does not have a David vs. Goliath ending. Goliath is going to win — and that is a good thing for the world.
An investor in oDesk once said, “Two middlemen seems like one too many.” It was a pivotal statement that solidified the early focus on providing direct connections between employers and freelancers anywhere in the world. Everything we did in the early days of oDesk to support and benefit these direct connections paid off. Everything we did to accommodate other middlemen in the process was a waste of time.
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Hachette is a middleman. So is Amazon. There should be only one.
The arguments for Hachette go something like this: without great publishers, there will be fewer great writers, and emerging talents will have a harder time establishing themselves. For at least 900 authors, this is a scary proposition. Publishers do provide valuable services of talent discovery, quality control and distribution. But let’s look at each one of these points and see how things could be better with fewer middlemen.
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Take a look at Apple’s App Store. They’ve effectively destroyed the old guard of video game publishers. It’s only in the last few years that an independent game developer from Vietnam could end up with the No. 1 game in the world. That developer probably never would have been discovered by EA. Platforms like the App Store or Amazon can do a better job of talent discovery than the status quo, because they lower the barriers to entry for aspiring app developers or authors. They give everyone a chance. I don’t hear consumers complaining about the lack of good games available. On the contrary, mobile gaming is hotter than ever.
A platform like Amazon will get data about user conversion rates and user ratings much faster than anyone else and can let the cream rise to the top. Granted, they will not discover authors before they ever write a book, but as soon as a title is available for sale, Amazon can take care of the rest. An aspiring author that self-publishes a title that resonates with readers will rise to the top of the charts in a meritocratic platform like Amazon. We should be embracing meritocratic platforms.
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The bonus for the world is that eliminating middlemen makes the world more economically efficient and maybe even more educated. Prices come down and the amount of reading goes up.
The lessons for other marketplaces here are straightforward. Align the incentives of the buyer and supplier and, if possible, ignore the incentives of other middlemen.
Link to the rest at TechCrunch and thanks to Joshua for the tip.