I thought this was interesting because it shows how prime directives ("it's all about the customer experience") can help defuse partner complaints. External print-on-demand providers might grumble, but they can't say Amazon's doing it just to squeeze them, even if that might be a natural result.
What's stopping other POD services from integrating tightly with Amazon just like the variety of other 2nd party businesses that sell stuff through Amazon? Or am I missing something here...
A significant part of the value-add of POD publishers is the printing on demand. It lets them operate on the Long Tail of demand. Now Amazon wants to take over the printing & distribution side.