Publishers, What Are You Doing While Amazon Eats Your Lunch?

Book publishers face a wave of disruption and must respond more shrewdly, as Amazon's challenge has moved beyond the Kindle e-reader to direct competition

By Mathew Ingram

Amazon.com started out as a book retailer, a company that was arguably a friend to publishers, since it expanded the market for many of their books. But increasingly, the Web giant is becoming a competitor to those traditional publishers, as the New York Times details in a recent article and as we have noted a number of times. Just as it did with book retailing, Amazon has its sights set on lowering the barriers between authors and readers, both via the Kindle and through its own publishing deals—and in many cases, the biggest barrier between authors and readers is a traditional publisher. Until that changes, Amazon will continue to win.

Although some are just beginning to see the company as a publishing competitor, Amazon has been marshalling its forces for some time now. As GigaOM Pro analyst Mike Wolf has described in a number of posts, the company has been putting together the pieces of a "book industry in a box" for the better part of a year—launching new imprints of its own for various different genres, including one devoted to popular thrillers. Then in May, it hired publishing-industry veteran Larry Kirshbaum, former chief executive officer of the Time Warner Book Group, and opened a New York office.

In the months since then, Amazon has signed deals with a number of prominent authors, including popular writer Tim Ferriss, whose books—such as The 4-Hour Workweek and The 4-Hour Body—have sold millions of copies. The terms of the deal with Ferriss weren’t released, but the author said, “The opportunity to partner with a technology company that is embracing publishing is very different than partnering with a publisher embracing technology.” Amazon also signed thriller writer Barry Eisler, who gained attention earlier this year when he turned down a $500,000 two-book deal with a traditional publishing house and said he planned to self-publish instead.

It’s Not Just About the Money

Why are authors signing these kinds of deals? In some cases it could be about the money (a deal with former TV star Penny Marshall was reportedly for $800,000 according to the New York Times), but in many cases it seems to be mostly about getting past some of the legacy processes that are typical with traditional publishers and expanding the potential market for a book. The core of the problem confronting the industry is summed up in a comment by Amazon executive Russell Grandinetii in the NYT piece, in which he says: “The only really necessary people in the publishing process now are the writer and reader. Everyone who stands between those two has both risk and opportunity.”

If you look at the comments made by Eisler about why he decided to take a deal with Amazon instead of self-publishing, he says virtually nothing about the money, or about other factors that traditional publishers are used to focusing on. It’s the other terms of the deal that he was swayed by: for example, the fact that Amazon was going to come out with an e-book version within a matter of days after the book was finished and then follow that quickly with a paperback—and that both were going to be sold at a cheaper price, instead of the traditional industry’s approach of trying to charge print prices for electronic books: “What I care about is readers, because without readers I can’t make a living and I want people to read a lot. To that end, if I can find a way to get readers books that cost less and are delivered better and faster, I want that.”