Thursday, December 10, 2009

Ganging up on the enemy of my enemy

Two of my MBA students presented a project last night on the Kindle and e-readers. One quick takeaway was that everyone else in e-books — Barnes & Noble, Google, Sony (and probably Apple) etc. — wants to ally against Amazon to keep it from taking over the world.

Meanwhile, for music, everyone wants to gang up on Apple to keep them from continuing to dominate the world — particularly content providers. And for video, it’s YouTube which inspires this enemy-of-my-enemy-is-my-friend mentality to create Hulu and Vevo.

I’m not saying it’s wrong, but these ad hoc decisions do make for incoherent strategies and strange bedfellows. And if an ally that formerly weak becomes strong, will the other rivals (or suppliers) then ally with someone even weaker? Go it alone? Ally with their original enemy?

I was reminded of this when trying out Vevo this morning. I decided to watch a video from the Elvis Presley Christmas Duets album — continuing the raised-from-the-dead trend that started with the 1991 “Unforgettable” duet between Natalie Cole and her late father Nat “King” Cole.

Is this because Vevo’s owners prefer Amazon to Apple? Or is it because Amazon pays a referral fee? An advantage Amazon has in seeking alliances is that it pays a commission on click-through sales so that people and firms (like me) will send traffic to their site.

However, some states are seeking to use these payments as a justification for taxing Amazon sales into their state — and in a response, Amazon is dropping the program in those states. So if this kills the associates program, will Amazon have less allies in its music efforts?

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