Netly: The Third Screen

On coalitions

Posted on: November 12, 2009

345154331_0d79ac2c12Peter Kafka reported yesterday that an industry-wide coalition of publishers was getting closer to reality, with News Corp. rumored to be among those banding together…

Supposedly, one main reason the idea of a coalition is attractive to publishers is it gives them pricing power. “We don’t want Amazon dictating our prices!” “Don’t let Apple do to the publishing business what iTunes did to the music business!” Etc.

If indeed that’s the impetus, it strikes me as wrongheaded. Here’s why:

There will be ENORMOUS competition on the hardware side, which is driving OEMs into the arms of the publishers. Already today—even without the rumored, pending iThing—we’ve got the iPhone and the Kindle fighting each other for market share, as Sony, iRex, Plastic Logic/Que, HP, Dell, Microsoft(?), Google/Android, Cooler, and a dozen others that I can’t think of at the moment begin to flood the channel. Every one of these players is courting the publishers because content deals are key to the success of any piece of hardware whose fortunes are linked to selling information.

While content may not be king (yet), it sure as hell isn’t a schlub anymore either.

This idea must be dawning on the publishers, who suddenly find themselves having more than a little power at the negotiating table. So tell me again: why do they need to band together?

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