Tech Innovators and Amazon’s Publishing Domination

Tech innovators might find this ClickAway Blog very interesting. There Will be Blood was Paul Thomas Anderson’s incredibly great movie about Daniel Plainview, an oilman iconically played by Daniel Day-Lewis. It’s unfortunately best remembered now by the lunatic ending, and the famous “I drink your milkshake!” scene, which in the context of the movie made perfect madman sense. In the film, Plainview is the snarling avatar of unbridled capitalism, run amok, descending into inhumanity, trampling anything that gets in his way. He’s a bulldozer. He always wins out.

People remember the movie, but less well-known is that it was based off Upton Sinclair’s novel Oil!. It was very loosely based off the book, that is. In the novel, the Plainview character (named Ross) is far from a good guy, and he does what he wants when he wants it, but he isn’t a monster. He just doesn’t understand the effects he has on people. As he grows richer and more powerful, he becomes more and more disconnected with the problems of his workers and those who rely on his goods. They are just figures to him, where at one point, he genuinely cared. He never stopped convincing himself that he was doing good, not just doing well.

I was thinking about the movie, and the book, as I was reading the invaluable Steve Coll’s review of The Everything Store: Jeff Bezos and the Age of Amazon over at the New York Review of Books. In it (and I haven’t read the book, so I am relying on the Coll article), Bezos comes across as someone who sincerely wants to save publishing, but is in many ways destroying it in order to do so. In this, there is a valuable lesson for Silicon Valley startups, as they try to be successful without compromising their initial ideals.

Amazon vs Hachette – Tech Innovators Beware

Hachette is a publishing group that isn’t terribly happy with Amazon’s domination over the field and has tried to circumvent it. In response, Amazon has punished titles by Hachette authors, using its algorithm to knock them further down its lists. It has, of course, said that it is trying to lower prices for consumers. Hachette, who is in the process of buying more publishing imprints, and thus strengthening its hand, says that it is fighting a battle against Amazonian monopolies. (Leaving aside for the moment how much a group that can purchase other major publishing firms is an independent, versus the collected strength of Amazon, it is basically operating out of a garage.)

Here’s the thing: Amazon does lower prices. That’s pretty much indisputable. The question is whether that is always a good thing. I know, I know – how can that be a bad thing? In his NYRB article, Coll goes through the history of major chains coming in, with enough clout to affect wholesale prices, forcing so-called “Mom and Pop” stores out of business. Starting with A&P – which to modern ears sounds off since A&P stores seem the quintessence of small-town, old-timey, everyone-knows-your-name Americana, but such are myths of history – through to Wal-Mart, Coll sets up Amazon in the tradition of greedy corporate behemoths, artificially lowering prices, but in doing so wrecking tradition, competition, and the lives of many independent owners.

And yet, the flip side of that – prices are lower. More people can afford more books. It’s what Bezos wants – the spread of literacy. The problem comes when, as we see, Amazon uses its clout and power to crush any competitors, thus lowering diversity and perhaps ultimately hurting publishing. Already, people want to game its algorithms in order to make sure their book sells. When one company has that much power over publishing, even unwittingly, it makes authors and publishers bend toward its whims. Bezos might have wanted to serve literature. But in the end, it caters to his company.

The Lessons for Silicon Valley

There might be a subset of tech innovators and investment entrepreneurs who read that lesson and think, “Awesome! Where do I sign up?” But probably not most, or even many. Most get into this because they want to make the world a better place – cleaner, more efficient, easier-to-use, and therefore, probably more peaceful. No one says, “I want to fundamentally alter in a probably negative way the area I am trying to serve.” So how do tech innovators avoid getting so big that all your footprints are littered with the bones of the small?

  • Don’t be a hammer.

    It’s the nature of capitalism to want to eliminate competition. But tech innovators shouldn’t see everything as competition. The corner bookstore wasn’t the competition for Barnes and Noble; it missed its real competition. In the same way, you aren’t competing with everything similar to you. If you do so, you might not see the bigger challenges, and even if you succeed, you dilute your market. This makes your innovation less able to withstand fluctuating and fickle market trends.

  • Expand the pie, not just your share.

    A great example of this is Starbucks. Starbucks certainly grew and put a lot of coffee places out of business, but once they grew enough they stopped trying to close down everything around them. Because there was enough variety in the market, the coffee industry boomed and hasn’t stopped. Even if its percentage of the market went down, the market kept growing.

  • Focus on what you do best, not what others do well.

    Some companies, like Facebook, can afford to buy the latest trend. Others go crazy and bankrupt trying to emulate or take over anything that might one day be a nagging issue. You can ruin your company this way. Dance with what brung ya.

  • Don’t take other people’s success as a personal insult.

At one point in There Will Be Blood, Daniel Plainview explains to his supposed half-brother his view on life and work (the dialogue doesn’t do it justice; watch the clip), “I have a competition in me. I want no one else to succeed. I hate most people… There are times when I look at people and I see nothing worth liking. I want to earn enough money so I can get away from everyone… I don’t need to look past seeing them to get all I need. I’ve built up my hatreds over the years, little by little.”

It’s a given Jeff Bezos doesn’t think like that. And there is little chance that a shifting perception of him will alter Amazon’s market dominance. But for young tech innovators, and their financial backers, it is worth asking; when you are taking down established giants, do you want to be that giant, resented by those underneath you, and the constant target of coups by people just like your past self? How do you want to be remembered?

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