Ref: IMD-7-2297

Case study

Reference: IMD-7-2297

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Amazon is disrupting the book market, but differently than you might think

Stefan Michel

By Professor Stefan MichelStefan Michel, Marat Korovaev, Alexey Kozak, Elzbieta Rzepnicka and Peter Seres

Michael Omer, an Israeli writer, was unsuccessful in getting his fantasy books published by traditional publishers in his home market. In the meantime, Amazon entered the market and then, in 2007, launched its e-book strategy with Kindle e-reader, Kindle Store and the Kindle Direct Publishing (KDP) platform. With these features it aimed to provide as many books to as many readers as possible, with the e-book price capped at $9.99. This move triggered confrontations with traditional publishers and opened the way to competitors like Apple. Ultimately, Amazon had to give up by accepting the new agency model, designed by Apple, and returning control over prices to publishers. At the same time, Amazon tried to hold leadership in the book and e-book market by decreasing the price of e-readers, issuing free reader applications, improving terms for self-publishers in KDP, introducing a new subscription model for readers, and establishing publishing units. Amazon was blamed for decreasing a book’s value; but it was also praised for destroying the hegemony of publishers. Mike had to learn how to promote his own books in the self-publishing ecosystem and how to approach other genres. In the end, he became one of the best-selling writers at Amazon KDP, with a mystery book that sold more than 100,000 copies. Success in KDP helped Mike establish a good relationship with Thomas & Mercer, one of Amazon’s proprietary publishers, and to achieve even greater success in both written and audiobooks.

Learning Objective

  • Understand the value of traditional and electronic books; the traditional and self-publishing book publishing process; and how KDP creates value via concepts such as customer journey, value constellation, value-based marketing and attributes-benefits-values
  • Insights into pricing, price elasticity and price discrimination can be gained by analyzing the price war between Amazon and traditional publishers
  • Gain and understanding of a digital platform
Keywords Agency Theory, Apple, Audiobook, eBook, Ecosystem, Kindle, Kindle Direct Publishing, Marketing, Most Favoured Nation, Pricing, Publishing, Self-publishing, Strategy, Subscription Model
Settings Israel, United States of America
Amazon, Thomas and Mercer, Printing and Publishing
1994 – 2020
Type Published Sources
Copyright ©IMD 2022
Language English
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Reference: IMD-7-2297

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Reference: IMD-7-2297

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