After the feverish 1990s, Amazon has, for most of this young century, not made much noise in the book world. The online bookseller sat quietly as its main competitor acquired a publisher; barely rustled when a chain staged a controversial plan to manage categories; and kept mum as stores like Wal-Mart cut deeper into sales of bestsellers. Even its biggest innovation, Search Inside the Book, has lately been overshadowed by a nonbook player, Google. Instead, the company has concentrated on expansion in other areas, like apparel and housewares.
But in two stunning developments last week, Amazon basically rang the bell and announced that the silent years are over. On Monday, the company bought BookSurge, a print-on-demand and online vanity publisher whose modest reputation doesn't begin to hint at the acquisition's meaning. Two days later, a PW Dailystory revealed that Amazon has been in negotiations with agents to publish and sell exclusive material from some of the country's biggest authors.
The latter would allow Amazon to do something that few editorial or retail entities can: use large amounts of desirable, exclusive writing where books can be bought. "It's the kind of branding I'd do for an author if I sold a story to Harper's," said one agent of the new program. "Only now, people can buy books with one click."
Observers say they're not convinced the move to exclusive publishing would create a rash of demand along the lines of, say, iTunes. For one thing, unlike book chapters, nearly all songs can be bought à la carte. And most songs have already created a market by being previously released.
But almost everyone agrees that a switch has been flipped. They say that Amazon's business logic is sound. While the money is not expected to be high—Amazon would charge only $.49 per download for the digital versions of the essays, updates and alternative endings to novels—it is expected to be high volume.
"When you think about Amazon getting 60% of each transaction, and you can have 10,000 transactions for an author, this could start to add up," said one agent familiar with the plan. (If the scheme attracts that level of sales for each of the 250 authors it hopes to get, Amazon's take would be about $750,000.) Amazon is not shy about its ability to attract that kind of volume or target readers without the help of publishers—the company touts its millions of customers repeatedly in its pitch to agents, parts of which were obtained by PW. (The company declined to comment on the program.)
More portentously, the program—along with Amazon's new ability to print books via BookSurge—positions the site perfectly for a big, Riding the Bullet—like blowout, where an author is published and sold exclusively. "I think that's what makes this [negotiating with agents] such a big deal," said one editor. "The idea of one store being the exclusive publisher is the nightmare scenario. It would be war."
The BookSurge acquisition ushers Amazon further into that new, potentially conflict-ridden era. Amazon underplayed the purchase last week by saying the deal is being driven merely by its desire to expand selection. It is an explanation few are buying. The acquisition of BookSurge, which has more than 10,000 titles already in its system, suddenly casts Amazon as a print on-demand player along the lines of industry powerhouse Lightning Source.
What Amazon lacks in Lightning's reputation it makes up for with marketing. On-demand can be a slow, small enterprise. Large publishers have had difficulty making money on it—as a business of mostly one-offs, it requires targeted marketing that's inefficient for most large houses—but Amazon can pinpoint demand without spending a cent. Which means the site could take orders almost immediately and start printing, ensuring a considerably wider margin than on an order put through Lightning. (Lightning said in a statement that it has a strong relationship with Amazon that it "fully expects it to continue.")
With both these moves, Amazon is clearly responding to rising business pressure: those not in the book business are now getting into the book business, and those in the book business are getting more into the book business. Google is basically doing book marketing; Barnes & Noble is in publishing; Random is in distribution; and Penguin is in retailing. New revenue streams and wider margins are necessary, say observers.
Still, the idea of a retailer becoming a publisher is rife with overtones; publishers worry that, like B&N, this is one more bookseller venture to give them fits. For Amazon, the prospect is no less fraught: "They're getting a little and losing a lot," said one editor. "Why would you risk offending everyone?" For now, it's still unclear who's getting and who's losing. One thing is clear, though: risky days are here again.
