Amazon: Friend or Foe?

Along with discussions of hot books and high prices at this month's London Book Fair, another major topic of conversation in the aisles was Amazon. The immediate flashpoint was the e-tailer's new policy of making publishers who use print-on-demand go through its BookSurge subsidiary if they don't want to risk having Amazon deactivate the buy button on their titles. While Amazon has so far been concentrating on implementing the policy primarily with online publishers such as AuthorHouse (which just agreed to use BookSurge), Amazon has said it wants all publishers, including traditional publishers, to use BookSurge for POD. The head of one of the major houses called the demand “outrageous,” but declined to say if this publisher had plans to use BookSurge.

It was clear from talk at the fair that publishers' anxiety runs much deeper than concern over print on demand. Amazon's dominance in the online retailing space—sales in its North America media group rose nearly 22% in the first quarter—has publishers worried that the e-tailer is becoming too willing to throw its weight around. “They need a competitor,” two separate publishers said at the fair. But just where that competitor would come from is unclear. B&N.com had sales of $477 million in 2007, a 10% increase over 2006, but that figure still represents only 10% of Amazon's 2007 North America media sales. In one publisher's scenario, Ingram, burned by Amazon's attack on its Lightning Source division, could team with one of Amazon's digital rivals such as Google or Microsoft to develop an online sales platform. How plausible such a combination is, is highly debatable, but it indicates publishers' deep desire for alternatives to Amazon.

Publishers are also keeping an eye on Amazon's growing presence in the creation of original content. “It's only a matter of time before they approach a major author to sign directly with them,” one publisher ruefully predicted. Amazon has tested the waters in that area with its Amazon Shorts program, in which original short works by authors can be downloaded from its site for 49 cents. Amazon Shorts continues to attract authors, but has not gained traction. Still, as one publisher noted, the program “was probably just a little ahead of its time.”

The development of the Kindle has also been a source of contention, specifically its pricing. With most bestsellers priced at $9.99, the e-books are considerably cheaper than hardcover editions, something Amazon was not bashful about touting in a press release earlier this month when the bestseller The Last Lecture fell out-of-stock at many traditional retailers. The Last Lecture, the release noted, was not out-of-stock for Kindle owners who can download it in 60 seconds. “Furthermore,” the release stated, “The Last Lecture is only $9.99 on Kindle compared to its print list price of $21.95.”

“One of the advantages for readers is that Kindle titles never go out of stock,” said Steve Kessel, senior v-p, World Wide Digital Media, in the same release. “That's good for readers, and it's good for publishers, too.” Publishers, however, are not always necessarily in agreement that what is best for Amazon is best for them as well.