The cover story in this month’s issue of Fast Company profiles Amazon.com and discussing the long-term strategy behind the Kindle and their push into the e-book market.  The article is a great read, especially as it provides insight into Amazon’s larger strategic goal. Not only is Amazon looking to pull an Apple by disrupting and dominating the e-book industry, but CEO Jeff Bezos has his sights on a larger prize: to rewrite and dominate the entire publishing model.

Jeff Bezos is trying to do to book publishers what Steve Jobs of Apple did to the music industry. With its iPod and iTunes Store, Apple carved out a largely virgin market so fast that it was able to wrest control of the digital-music distribution system and thus dictate what the record labels could do. With Amazon jamming (its latest earnings are sky-high even as other online retailers are in a state of malaise), Bezos may sense similar opportunity, a moment when he, in true Jobs-like fashion, could colonize this growing niche for the Amazon ecosystem. Should that happen, book publishers would have more to fear than just being squeezed. Amazon could phase them out completely, treating them as the ultimate middlemen orphaned by a new technology.

Essentially, Amazon is looking to bypass traditional publishers through its massive electronic distribution channels (Amazon.com and the Kindle device) as well as its on-demand publishing technology.  Rather than dealing with the publishers, Amazon could strike deals with the largest authors (those that provide the bulk of the revenues from ‘hits’ that traditional publishers require to keep operating) by offering wider distribution and increased royalties.  This could fundamentally alter the publishing industry, if not destroy its current incarnation.

While this is interesting, there is another part of the article that deserves attention: the risk Amazon could face down the road from Apple. Continue reading