I was thinking about potential rivals to Amazon and what they might look like.

If you are a reader, Amazon does two things very well: It enables book discovery, and it sells books.

But Amazon isn't the only Web site that does a good job enabling book discovery: Goodreads and Library Thing are also good at that. They don't sell books, though--instead, they link to where you can buy books.

Another way to enable book discovery is to specialize in a particular niche. And whaddya know, there's a site out there called All Romance that specializes in romance e-books (yes, of course, romance). It allows authors to upload books and set prices themselves, giving you 60% of the revenues.

Unlike Smashwords, All Romance doesn't do your file conversion for you--you upload what you have, and that's what's for sale. From a technical standpoint, it's simpler, because the authors are doing the file conversion--all All Romance needs to worry about is having a reliable Web host. Like Smashwords, All Romance doesn't appear to have a big corporate backer.

I think that as server space gets cheaper, more sites like this will crop up, specializing in particular genres. They'll offer fewer titles than Amazon, and probably won't have as powerful recommendation software--but they won't need that because they'll be offering fewer, more-specialized products.

In addition, if server space gets really cheap, I could see a site like Goodreads or LibraryThing offering titles themselves--instead users clicking over to Amazon to buy a recommendation, they click a button to buy from the site itself.

The thing about e-books is, they don't really play to Amazon's strengths other than their ability to make stuff easy to find. Amazon is very, very good about getting what you ordered into a package and to your door. But what does that matter with electronic goods? Look at other e-things--movies, music--and Amazon isn't the dominant player. That's why they're offering freebies to Prime members and soliciting exclusive offers--they know they have to sweeten the pot to keep people buying from them.