This makes absolutely no sense and has no relation to any economic variables. Goodreads isn’t some struggling self-funded startup — it’s owned by Amazon.com. The acquisition was a deal that should have never been approved, if the Obama administration had been anything beyond completely impotent at protecting us from monopoly games:
I would like to understand the true strategic interest behind this. Is Amazon simply penny-pinching now that they’ve successfully obliterated the market for both new and used books online? There’s way more to this story than appears on the surface.
It's not mentioned in the article but Amazon had disabled their affiliate link program for Goodreads ahead of this announcement, which cut off a major source of their revenue for them, and forced them to sell. They had no choice.
The strategic reason for Amazon is obvious. As someone else mentioned, Amazon doesn't want Goodreads data to be used to add value to their competitors' offerings.
Speaking as a developer who tried to build on top of Goodreads API, I also want to add that this was a long time coming. The API had been neglected for some time. And some of the most interesting datasets weren't even made available through the API.
> WorldCat is a union catalog that itemizes the collections of 17,900 libraries in 123 countries and territories[4] that participate in the OCLC global cooperative. It is operated by OCLC, Inc.[5] The subscribing member libraries collectively maintain WorldCat's database, the world's largest bibliographic database.[6]
Hopefully the Justice department can use this as fodder for a potential breakup. It clearly demonstrates how monopolies kill competition, not by competing but by buying and extinguishing.
The end of an era. Sad to see. First IMDB and now GoodReads. So much for open data. Thanks for the bait and switch. Good thing we trusted them with our data.
Welp, time to start a better book catalog site with threaded discussions that eBook page turns can be synced with.
I think there's been a long-term trend away from open APIs toward ever-more-proprietary treatment of data. Data that wasn't created by the companies; they just happen to have control of it. Another example is the recent FB lawsuit threat against researchers. [1] Facebook will squawk about user privacy to justify this, but I have a hard time thinking Mark "privacy is dead" Zuckerberg is particularly worried about that.
What I think all off these large companies are doing is pulling up the open-web ladder after they've climbed it to dominant positions. The problem with anti-trust action is that it's reactive; we wait until a company has gotten too big, and then hope we can cut it down to size. I'd love to see moves toward proactive open-data and open-algorithm requirements, so that we guarantee a level playing field. That won't be easy, but neither is trying to rein in companies with annual profits in the tens of billions.
> Another example is the recent FB lawsuit threat against researchers. [1] Facebook will squawk about user privacy to justify this, but I have a hard time thinking Mark "privacy is dead" Zuckerberg is particularly worried about that.
I think you're flattening a lot of complexity here. Yes, I agree that Mark Zuckerberg is probably not terribly interested in our privacy. But one of the biggest outrages in FB privacy history, the Cambridge Analytica Scandal, was driven entirely by a researcher inappropriately accessing and sharing user data. While you might not trust Zuckerberg, and maybe you shouldn't, there is definitely some "there there" when it comes to how researchers handle our data too.
If you're saying Facebook shouldn't blindly trust anybody who claims to be a researcher, I agree, but that seems pretty far afield from what they're doing with the NYU researchers. Indeed, I think the fact that Facebook creates all sorts of real privacy concerns makes it especially bad that they're using that as a smokescreen to avoid accountability.
They did the same thing with IMDb a few years ago. Their data dumps now are absolutely useless and they don’t generate any of the information themselves.
I am sympathetic to what you are saying, but I think it does actually make sense: destroying Goodreads and turning it into just another sales funnel was presumably why Amazon acquired it.
A bunch of book reviews and book recommendations that can be used separately from Amazon doesn't help Amazon.
Amazon acquired Goodreads because it was forced to: when still independent, Goodreads made its money through affiliate links to various online bookshops. Soon Amazon's dominance in this sector was so entrenched that most purchases from GR were being made through Amazon.com and not the other sites like Barnes & Noble that GR linked to. It got to the point where Amazon was paying GR so much money in referral fees every month, that it struck Amazon as cheaper just to buy the site outright.
I would want to rephrase that. Amazon acquired Goodreads because it was cheaper to do so than to allow a good service to continue, and prevents those referrals from going to any site other than Amazon. To me, this sounds like textbook anti-competitive behavior, and grounds for Goodreads to be split off from Amazon.
The thing is, Goodreads always felt like a feature. They failed to build a business, let alone one that should take VC (and hence be required to generate venture-scale returns). And my guess is the only way they could have generated the right returns is to move down the sales funnel, which is a direct threat to Amazon's business. Making the subsequent behavior inevitable.
It feels like there are a couple very nice small (not necessarily lifestyle, but not vc) businesses in that space.
Taking VC put them on a collision course with Amazon because of growth requirements, and the limited ways to build the type of business that requires. Advertising and affiliate fees almost certainly don't create a large enough opportunity (interested if you have counterexamples!), and put them on that crash course with Amazon. As the obvious route to the size of business that merits VC is to attempt to cannibalize AAmazon's business. Probably by being the recommendation engine that starts sales, then starting to sell books themselves instead of being leadgen.
Had they instead chosen not to take VC: they had 35 headcount at the time of acquisition. That load probably requires $7m to $10m/year of revenue, particularly when they have to start doing data deals for all that book data / cover photos. I suspect they couldn't make the business work w/o VC given they ran two years on that $750k angel round. And even if they could, having a near-monopsony relationship with their affiliate fees partner makes them not a real business because they are highly vulnerable to Amazon predation. The same as Mozilla -- when there's just one buyer, that buyer names the price.
edit: put more succinctly: a business that either ran and grew on earned dollars (ie no vc), or a VC-backed business that didn't rely on the company you were attempting to cannibalize to play nice with you.
I agree that VC wasn't a great choice. But I don't see much evidence that they were reliant on investor money; per Crunchbase they only took $2.8m over 6 years of operation. And I don't think Amazon was their only potential source of revenue. Book publishers clearly still spend money on marketing, and Goodreads would be able to do very precise targeting. I also suspect they could have sold well-targeted ads to others, as some book categories strongly indicate monetizable non-book interest.
People are weirdly imprecise with their language in this domain. It’s like when people say a corporation is forced to do something to appease its shareholders, a complete falsehood.
I’m afraid you are dead wrong there. Goodreads book listings still contain links to a wide variety of online bookshops other than Amazon: Barnes & Noble, Walmart, Better World Books, etc.
Its Amazon MO. They similarly killed IMDB by disabling message boards, my main source of interesting details about movies/actors. Why bother with IMDB now when I can read same info on wikipedia?
Amazon was forced to shut down IMDB boards, because the discussions on the most popular blockbusters had devolved into flamewars, people posting obscenities and threats, etc. Amazon ended up having to pay a lot of money for workers to police the forums. It does suck that cinephiles having reasonable discussions about less-popular movies got caught in the crossfire, but I totally understand why Amazon did it, and in fact many large companies have taken down fora on their websites for the same reason.
> The acquisition was a deal that should have never been approved
Regulators should step in when businesses/startups are being harmed by a monopoly via unfair practices such as bundling. But intervening otherwise will simply deny founders and employees a decent exit. And if the economics are not sound enough it'll be harmful for customers as well - the app will get loaded with too many ads or simply shutdown.
I think the 2010s model of “just build it to be acquired by the industry giant” was a mistake, and is officially dead. You can’t expect to sell to the giants anymore, because they can’t expect to be allowed to buy everything that could grow to be a threat. It’s time to come up with a new model (maybe even a return to the 1990s model of small IPOs and mini-consolidation into a crop of strong mid-tier players, rather than giants).
Founders and employees are not a priori entitled to "a decent exit", especially not at the expense of healthy market conditions. Or at least this should be the case, but American regulators have been asleep at the wheel for decades now.
Depending on how charitable you want to be, a lot of the specific claims in that thread range from "a bit misleading" to "complete bullshit". If I know he's making false claims about topics that I'm semi-knowledgeable about, I have a hard time trusting what he says in areas where I'm less informed.
> Goodreads isn’t some struggling self-funded startup — it’s owned by Amazon.com
Not that I like Amazon, but it is not philanthropy. I assume goodreads take non trivial cost to run operations, moderations and the site and just because Amazon is doing well financially it doesn't mean they have free money. This move makes it easier for Amazon to monetize on goodreads, it is as simple as that.
The only reason it was supporting itself previously is because investors are pouring money in it with the hope that some big company will buy it with the hope that they can have value to them.
https://www.theguardian.com/books/2013/apr/02/amazon-purchas...
I would like to understand the true strategic interest behind this. Is Amazon simply penny-pinching now that they’ve successfully obliterated the market for both new and used books online? There’s way more to this story than appears on the surface.