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The Amazon Empire: How the Online Colossus Snuffed Out Competitors and Their Next Battle for Publishing

The bookstore wars are over. Independents are battered, Borders is dead, Barnes & Noble weakened and Amazon triumphant. But a new war rages for the future of publishing.

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The inexorable shift in the United States from physical to digital books poses a palpable threat to the ways publishers have gone about their business. Jason Epstein got it right two years ago when he wrote, “The resistance today by publishers to the onrushing digital future does not arise from fear of disruptive literacy, but from the understandable fear of their own obsolescence and the complexity of the digital transformation that awaits them, one in which much of their traditional infrastructure and perhaps they too will be redundant.” Traditional publishers, he argued, have only themselves to blame, many (perhaps even most) of their wounds having been self-inflicted. They have been too often complacent, allergic to new ideas, even incompetent. Their dogged and likely doomed defense of traditional pricing strategies has left them vulnerable to Amazon’s predatory pricing practices. Peter Mayer, former CEO of Viking/Penguin and now owner and publisher of the independent Overlook Press, agrees: “Publishers clearly need to newly prove to readers and authors the value that publishers add.” That value, he concedes, is no longer a given.

The inability of most traditional publishers to successfully adapt to technological change may be rooted in the retrograde editorial and marketing culture that has long characterized the publishing industry. As one prominent literary agent told me, “This is a business run by English majors, not business majors.” A surpassing irony: for years many of us worried that the increasing conglomeration of publishers would reduce diversity. (We were wrong.) We also feared bloated overheads would hold editors hostage to an unsustainable commercial imperative. (We were right.) But little did we imagine that the blunderbuss for change would arrive in the form of an avaricious imperium called Amazon. It is something of a surprise to see so many now defending the practices of corporate publishers who, just yesterday, were excoriated as philistines out to coarsen the general culture.

Epstein, for one, doesn’t fear Amazon, writing recently that the company’s “strategy, if successful, might force publishers to shrink or even abandon their old infrastructure.” Thus will publishing collapse into the cottage industry it was “in the glory days before conglomeration.” Epstein insists that the dialectic Amazon exemplifies is irreversible, “a vivid expression of how the logic of a radical new and more efficient technology impels institutional change.”

Not very long ago it was thought no one would read a book on a computer screen. That assumption is now demonstrably wrong. Today, whether writers will continue to publish the old-fashioned way or go over to direct online publishing is an open question. How it will be answered is at the heart of the struggle taking place between Amazon and traditional publishers.

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Jeff Bezos got what he wanted: Amazon got big fast and is getting bigger, dwarfing all rivals. To fully appreciate the fear that is sucking the oxygen out of publishers’ suites, it is important to understand what a steamroller Amazon has become. Last year it had $48 billion in revenue, more than all six of the major American publishing conglomerates combined, with a cash reserve of $5 billion. The company is valued at nearly $100 billion and employs more than 65,000 workers (all nonunion); Bezos, according to Forbes, is the thirtieth wealthiest man in America. Amazon may be identified in the public mind with books, but the reality is that book sales account for a diminishing share of its overall business; the company is no longer principally a bookseller. Amazon is now an online Walmart, and while 50 percent of its revenues are derived from music, TV shows, movies and, yes, books, another 50 percent comes from a diverse array of products and services. In the late 1990s Bezos bought IMDb.com, the authoritative movie website. In 2009 he went gunning for bigger game, spending nearly $900 million to acquire Zappos.com, a shoe retailer. He also owns Diapers.com, a baby products website. Now he seeks to colonize high-end fashion as well. “Bezos may well be the premier technologist in America,” said Wired, “a figure who casts as big a shadow as legends like Bill Gates and the late Steve Jobs.”

 
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