Amazon's Digital Media Land Grab: The Kindle TV

| About:, Inc. (AMZN)

It's official: Amazon (NASDAQ:AMZN) is attempting to take over all commerce on Earth, including digital media. Amazon's mission statement states:

We seek to be Earth's most customer-centric company in four primary sets: consumers, sellers, enterprises and content creators.

By focusing on these four, expansive customer groups, Amazon is creating a moat-heavy and platform-based operating model. Stated differently, Amazon is setting up various businesses to encourage entrepreneurship to be run through its platforms. Third-party sellers can set up digital store fronts at; start ups and large enterprises can run their entire IT organization through Amazon Web Services; and authors can easily distribute ideas through Amazon Direct Publishing.

The world sure is getting flatter, like Thomas Friedman postulated. Writers, filmmakers and musicians no longer need a deal from a traditional publisher. Now they can go directly through the Amazon Direct Publishing platform to self-publish. The competitive disruption that many of Amazon's innovations are is unlikely to be known, until its too late for the victim of the gales of creative destruction, to take a term from Joseph Schumpeter.

Now, with the reported introduction of Kindle TV, Amazon is not only competing with Apple TV (NASDAQ:AAPL), Roku and other set-top box businesses, but traditional pay-TV businesses such as Comcast (NASDAQ:CMCSA) and Time Warner Cable (TWC). The Amazon Kindle TV platform will be another way for content owners to distribute digital media content. Land grab type competition over the dominant distribution platform is good for consumers and content creators, and bad for traditional retailers/distributors.

And since Amazon's goal is to be the most customer-centric company in the world, it's likely that both the content creators and content consumers will benefit with a large customer base and favorable pricing. Case in point: Amazon pays its Kindle Direct Authors a 70% royalty on net sales; traditional publishers aren't that generous. Meanwhile, Amazon collects its toll for distributing that content.

Like I observed in a recent column on SolarCity, collecting a toll is a superior business model, throwing off moat-like recurring and predictable cash flow. If you own Amazon, you own a bridge.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AMZN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.