Essay --

Q1: Analysis of the book industry prior to the Internet Consolidation was the major theme in the book publishing industry in the early to mid 1990s; as the result, the industry appeared to be an oligopoly, dominated by only a few names such as Random House, Simon & Schuster, Harper Collins, Pearson and McGraw Hill. †¢ Rivalry: high o With the domination of only a few players in the book publishing industry mentioned above, the competition among these publishers was quite fierce. Each of them always attempted to grab more market shares from other competitors to enhance profits and market power. o Major book publishers in most cases offered similar editing and marketing expertise, while the resources for them to generate revenues--the right to publish excellent works and the relationships with promising authors--were scarce. Due to the lack of major differentiators for publishers, the results of resources allocation often depended on the prices they bided on the copyrights. The bidding process could become intense and therefore drove up the price for new books to millions of dollars. †¢ Threat of new entrants: low o To start a new book publishing business, the capital requirement for the upfront payment to offices, equipment and staff would be high, especially during the pre-Internet time in 1990s, in which editing and publishing machineries such as computers and printers were pricy. o Distribution channels were key to the survival of a book publisher. Existing major players had long established stable relationships with book chains and super stores across the country, namely with huge retailers like Barnes & Noble and Borders. New comers in the book publishing industry could hardly obtain similar relationships with these dominatin... ...nline retailing platform that sells both physical books and eBooks, in order to withhold the impact of powerful online retailers like Amazon. Some publishers have already done so. In 2001, Random House, Penguin Putnam, Harper Collins, and Simon and Schuster agreed to skip online retailers and sell contents directly through Yahoo.com †¢ Work closely with Universities and other educational institutions, providing exclusive contents to faculties and students. The proprietary relationships with schools can lock-in a large group of loyal customers. †¢ Develop security technologies against pirating and illegal downloading so that publishers' lawful benefits will not be lost. †¢ Build good relationships with popular authors, solicit more exclusive contracts to produce, promote and distribute their works through publishers' own channels in order to garner the strong demands.