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The new Amazon tablet called the Kindle Fire is displayed on September 28, 2011 in New York City. Such digital ventures embarked by Amazon have made the company an inadvertent threat to the book publishing industry.
Someone once said to Gertrude Stein, "There are readers for you, but no publisher." Soon, this may be truer than ever for more authors. Since 1994, Amazon has been shaking up the book business, but now the e-commerce behemoth is striking at the heart of the publishing industry itself.
Last May, Amazon hired one of New York's best known publishing insiders, Larry Kirshbaum, to run its new print publishing arm. Publishers big and small viewed the move as predatory and highly threatening to their already struggling business model. Amazon executives portray the move as an experiment in the thriving world of e-books, not as an attempt to destroy the Big Six - Random House, HarperCollins, Simon & Schuster Penguin, Hachette and Macmillan. But with traditional book sales plummeting and brick and mortar stores going bankrupt, publishers are highly anxious.
Businessweek writer Brad Stone said Amazon's foray into publishing is creating a lot of friction. "You know the publishers — Amazon's their biggest customer, their biggest retailer, and here they are, fairly aggressively courting authors."
According to Stone, they started with niche genres like mystery, romance and science fiction, but after hiring Kirshbaum, they've taken a serious turn towards minting best sellers.
"Amazon has, comparatively, very deep pockets. They can spend a lot and it’s a long term bet; they think the market is moving in their direction,” he said. “They see disruption coming and they want to lead it,” Stone said.
Amazon has attracted some front-list authors – the bread and butter of publishing – with whopping advances. Kirshbaum’s division has already signed authors like self-help guru Timothy Ferriss, actor/budding author James Franco and actress/director Penny Marshall, who got an $800,000 advance for her memoir – cutting out the middleman.
Elaine Katzenberger, executive director of City Lights bookstore and publishing company, said the book business isn’t the only industry feeling pressure; Amazon is trying to dip into every market.
“If you go to Amazon’s website, they don’t advertise themselves as a bookseller. They are a place to buy apparel, appliances, something else and then books,” she added.
Books may have come later in Katzenberger’s list because it’s not Amazon’s most successful product branch. Businessweek writer Stone said he was surprised that Amazon has been so active in recruiting new editors and spending money on book resources. “Amazon sees books as a loss leader and I think that’s true, and it’s a sign of how valuable they see this business is,” he said. “They’re willing to lose a lot of money on it, and get into a business that’s traditionally seen as somewhat inefficient.”
In the current issue of Businessweek, Stone writes, “On the West Coast people cheerfully call this kind of arrangement "coopetition." On the East Coast it’s usually referred to as getting stabbed in the back. Adding insult to injury, Amazon also hopes to sell the books they publish in the very stores they’ve long treated as obsolete and unnecessary.
Critics say Amazon clearly wants exclusive control over the book selling business and will stop at nothing to get it. But not everyone has sympathy, arguing that the book publishing industry is overdue for a makeover. Moreover, people like Oren Teicher, CEO of the American Booksellers Association, don’t believe physical books will ever be ousted.
“The notion that physical books are going to go away is absurd. Back in the 1950’s, folks thought television might put movie business out of business,” he said. “We’re going to have to find what the equilibrium is between electronic content and physical content, but they’re going to complement.”
According to Teicher, bookstores have had the best holiday season in a long time this past year. “For all the quantum leaps going forward in technology, there’s nothing like a bricks and mortar, physical location store to browse and discover and find new books,” he said.
Teicher isn’t the only one who sees e-books in a positive light. Writer Peter Lefcourt recently made a deal with Amazon for his new book, “An American Family.”
Lefcourt said that the medium doesn’t matter. “I think the really important thing is for writer to get their books read, and Amazon enables that. It’s not about the envelope; it’s about the content of the envelope,” he said.
Might this be the end of the printed page? Can Amazon do to books what Apple did to music? Are their business practices predatory and unfair – or smart and forward-looking? What’s more important to Amazon – print books or e-books?
Brad Stone, Senior Tech Writer, Bloomberg Businessweek; Author of Businessweek’s current cover story “Amazon’s Hit Man”
Elaine Katzenberger, Executive Director of City Lights, an independent book store in San Francisco and publisher
Oren Teicher, CEO of American Booksellers Association