Inside Amazon.com, Inc. (AMZN)’s Brave New World of Fan Fiction

With its self-publishing division, Amazon.com, Inc. (NASDAQ:AMZN) is doing the same thing, since it doesn’t have to quarrel with publishers who believe that e-books are unfairly priced. There is no physical inventory of books and no real investment risk, only content creation by users who might earn a few dollars from something that they would otherwise have done for free. Moreover, Amazon doesn’t need each book to sell thousands of copies for this business model to be profitable; it simply needs a lot of contributors who sell a handful of books each.

Kindle Worlds would also become a very competitive universe, in which fan fiction writers will compete with each other to tell the best stories using shared characters and settings. If Kindle Worlds can continue growing, then I believe that it could become as self-sustaining as Facebook, since it is completely fueled by voluntary content creators.

The Foolish bottom line

In retrospect, Amazon’s move to monetize fan fiction was incredibly observant and clever. Bezos realized that there were millions of people on the Internet willing to write fan fiction pieces for free, and then offered them an incentive to sell them on Amazon by partnering up with the franchise owners.

Partnering with Amazon.com, Inc. (NASDAQ:AMZN) in its fan fiction program would not only help media companies, which are looking for ways to promote their television shows and movies, but it would also help laggard book publishers such as Scholastic Corp (NASDAQ:SCHL), which need new ways to profit from concluded franchises. In other words, Amazon is casting a win-win halo effect on all parties involved, which could grow exponentially with the right support.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com.

The article Inside Amazon’s Brave New World of Fan Fiction originally appeared on Fool.com.

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