Posted by James McQuivey on March 29, 2013
After traveling 5,000 miles in three days to speak about digital disruption (I know, it's odd that my physical body has to go somewhere to talk about being more digitally disruptive), I fell asleep on a train yesterday and missed one of the most noteworthy events of the week: Amazon acquired Goodreads.
Full disclosure on this one up front: Amazon published my recent book, Digital Disruption. At the same time, I am a Goodreads member for more than five years; in fact, if you have read any of the most-liked reviews of the Twilight books on Amazon, chances are good you've read mine. That is to say that I am not exactly neutral on this one. But I'll do my best to be objective in answering all the anger being expressed on Twitter and in the trades when I point out that Goodreads was not saving itself for Amazon like some virginal tribute. It has been sitting there, all along, waiting for the right offer to come along. That's how venture capital works, people.
That's not to dismiss altogether the reactions I'm seeing, which range from Amazon wants to own the whole world (and to be fair, maybe it does) to How could Goodreads do this to us. But among all the hurt feelings and handwringing about the fall of publishing and the eventual reign of cohabitating cats and dogs (oh, I do hope you get that reference), I have an important question to ask, one that I am stealing from author Nick Harkaway (@Harkaway) who wrote this on Twitter the morning after:
The point isn’t that Amazon bought GoodReads. The point is why GoodReads wasn’t snapped up by a publisher years ago.
The obvious reason is that based on the rumors of a purchase price in the "low eight-figures" as some are confidently whispering, most publishers weren't really in a position to buy Goodreads. Unless they had seen this coming and had bought it many years ago. Let's say back in 2010, when I first urged one of the Big Five (are there five now?) publishers to buy it. It was a riskier proposal back then, I'll admit, and one that I couldn't put a price tag on, so I won't claim that I pushed hard or that the publisher was foolish not to take my advice.
But the urge to buy Goodreads then was driven by the reality that has propelled Amazon to do so this week. Digital disruption is built on -- and therefore requires -- direct digital customer relationships. Publishers haven't had direct relationships of any kind historically -- in fact, they are the first to admit that their customer was the book buyer at Barnes & Noble. This used to be a good thing until digital disruption came in and made it not so much a bad thing as an old thing. In the race to grab a customer relationship publishers have worked hard to build pages on Facebook, they've tried to reinject energy into their genre portal sites (Suvudu.com, anyone?). But none of them have managed to create anything as powerful and as useful to both themselves and to readers as Goodreads.
Only with a direct digital customer relationship can you learn from the customer in real-time, rapidly expand your total product experience, and easily offer new benefits to your customer. This is true for publishers, it's true for toothbrush manufacturers, banks, and for every other industry as digital makes its way into even heavily regulated or very physical businesses. In each case, the solution to keeping up with digital disruption is to have a customer relationship, one that digital tools and platforms make incredibly cheap and increasingly powerful. Goodreads is one such tool. It still is, by the way, even now that publishers will be wary of it. And so I'll offer this one piece of advice to publishers who may now feel like they should back away from Goodreads for fear that they are sleeping with the enemy: Don't do it. Don't succumb to the kind of thinking that made the last century what it was. Instead, open up to the idea that under digital disruption promiscuous partnership is not only possible, it's preferable. Look around other media industries and you'll see the same: The music industry's partnership with YouTube that led to the wildly successful Vevo, the TV business putting its apps on the Xbox, and even Details magazine releasing a version of itself on the previously feared Flipboard. All of those could be construed as sleeping with the enemy but they're really about sleeping with the customer. Okay, maybe I just took the metaphor too far, but you get what I mean.
James McQuivey, Ph.D., is a vice president and principal analyst at Forrester Research and the author of Digital Disruption. He is solely responsible for the tired sound of today's post. To learn more about digital disruption, visit Forrester.com/disruption.