Introduction
The world is changing due to changes caused by the emerging technologies. Technology has brought new approaches to various human activities. Various industries have been affected by the emerging technologies.
The forces are so strong that a firm is always forced to either conform to these forces or be faced out of the market. Many firms have been faced out of the market due to their inability to read and adjust to the market trends.
Book publishing industry is one of the industries that have experienced the impact of the emerging technologies. For a long time, traditional firms such as Oxford, John Wiley and Sons, Cengage, among other major publishing firms dominated this industry.
They had huge market in schools and colleges, and other institutions not only in the United States, but also in the entire world. This is drastically changing. With the emergent of amazon.com among other online bookstores, the world is slowly drifting to e-books instead of printed books.
This study is focused on analyzing the revolution of the publishing industry and how various forces in this industry have changed.
Analyzing the Book Publishing Industry Revolution
Analyze the Book Publishing Industry Prior To the E-Book Revolution Using Porter’s Five-Force Model
Prior to the e-book revolution, the world of publishing was a preserve for the large firms which had the capacity to pay authors large sums of royalties or advance payments once their manuscript was confirmed.
In order to bring more understand to the external environment of this industry in this period, Michael Porters Five Forces theory will be applicable.
Supplier power is always important in determining how profitable an industry is. Operating in an industry where suppliers are very powerful can be very dangerous. During this era, suppliers of papers were the most important suppliers to these firms.
Other suppliers for products such as ink, binding pins and machines among other items were very important to this industry. However, these suppliers never managed to monopolize this industry. Publishing firms were able to maintain their position as large organizational buyers. They had powers over their suppliers.
There were a number of firms that were offering products that they were using as their raw materials. They were therefore, at liberty to choose which firm to buy their raw materials from.
Although there were times when the supply of papers would rise, it was not enough to cause a scare in this industry. The publishers would always find a way of manipulating their way in this industry.
Buyer power was another factor that affected this industry during this era. When the buyer has power of the products they buy in the market, then they always tend to dictate the price of the product in the market.
The power of the buyer was largely low during this era. This was because of the large market that existed in the form of students who had no option but to buy the products.
Degree of rivalry of the firms in the industry also determined success of a firm. During this era, the degree of rivalry was very stiff, especially to those firms that were smaller in size.
The larger firms would frustrate smaller firms by paying authors attractive royalties. This made them attract major authors, while smaller firms had to struggle in order to get good authors.
Threats of new entrants were felt by firms in this industry. The world has been reduced into a small global village. When the planes and telephone was invented, the geographical barrier that existed before was eliminated.
The world was reduced into a small geographical area where an individual could easily move from one end of the earth to another. Firms were heavily affected by this. Most countries, including the United States of America, have liberalized their markets.
A foreign firm can easily enter the US market and operate without any interference from the government. This fact created a threat to traditional firms that existed in this country. New firms were coming into this industry at a rate that many of the existing firms had not predicted before.
The firms were forced to come up with new strategies that would help them be competitive. The market became very competitive, and success was determined by how effective a firm could market its products among the target group.
The new entrants were eating up the market share of the existing firms, and the existing firms had to formulate competitive ways that they could outsmart them.
Threat of substitutes was another problem that these firms had to deal with. During this era, there were no serious threats of substitutes that these firms faced. It was difficult to find a substitute product in the market. As such, the main threat that this industry faced came from the media.
The print media was eating into the market for novels and other books that were meant for leisure. Most of the leisure readers preferred to read magazines, newspapers and other journals instead of books that required a longer time to read.
Using Porter’s Five-Force Model to Analyze How the Advent of E-Books Changed Industry Structure and Competitive Dynamics
This industry has changed a lot. The advent of e-books was a revolution in this industry. The large firms that dominated the industry found that they were in very awkward position as what they had considered as competitive advantage turned into main weaknesses they had.
Firms in this industry had to redefine their strategy, and overhaul their system to meet the emerging market trends. Porter’s five forces may be useful in demonstrating the dynamics that have happened in this industry.
The power of suppliers in this industry has changed. The suppliers have changed from what they were before the advent of e-books. E-books do not require papers as raw materials, and neither do they need ink, or large machines that were needed before in printing books.
Although there are a good percentage of those books that are produced in print form, this percentage is on a constant decline. This means that the power of traditional suppliers has been reduced a great deal.
The power of the buyers has been on the rise since the advent of e-books. Buyers are able to access various online suppliers of books.
This also means that these buyers have opportunity to dictate price in the market because they have a variety to choose from. This increased buyer power has seen firms in this industry lower the price of books in the market.
Threat of substitutes has massively increased in this new era. The internet has massive information in various fields available freely. Scholars have considered it best to access these free sources of information instead of buying books.
Threats of substitutes have also increased. For every book that is authored, there are various other sources of information that can be used instead of them.
Degree of rivalry has also increased. There are many firms that can easily get into this industry because it is much easier to operate in as opposed to how it was before the advent of e-books.
The Long-Term Threats and Opportunities Facing the Book Publishing Industry
There are some long term threats that may have serious effects on this industry. Mass and social media is posing serious threat to this industry. Children spend more time watching movie instead of reading books, while youth take most of their time on Facebook, Tweeter, and YouTube among other social media.
This means that the sale of books, including the e-books, will continue declining. This is aggravated by the fact that college students prefer getting their information from the internet for free. Such sites as Wikipedia have become so popular among the college students, jeopardizing sale of books
Despite these challenges, there are some opportunities that are available in this industry. The advent of e-books has had a massive reduction on cost of producing books. The production cost of books has been reduced by almost eighty percent. This makes it easy for the firms to charge lower prices for their products.
Distributions of the products have also been made easier, faster and cheaper. It is easier to ensure that an online book reaches the customer from various regions around the world. It has helped this industry eliminated a number of middlemen who inflated the cost of making the product available to customers.