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Amazon goes for broke (again)

26 May 2008

Amazon has dominated the headlines in the book trade press over the last few months, as it has taken a more aggressive approach to its plans for growth. Back in 1997 Jeff Bezos said he wanted the internet retailer to be one of only 'two or three leading players' Actually it's done much better than that. Like it or not, Amazon is now the only global online book retailer and it dominates the market. But Bezos's plan is far more ambitious than that. Books were just a good place to start and his eyes are now set firmly on becoming the international online retailer for a huge range of goods.

Amazon's initiatives have been coming thick and fast. Each one has moved the goalposts around in an innovative way which is often uncomfortable for both publishers and booksellers, but which provides benefit for the consumer. Last year Chris North, Amazon UK VP books, said that: 'Jeff Bezos's strategy for Amazon from day one was price, selection, availability and obsessive customer focus. We have the same strategy today... in five years we are still going to be obsessed with the same things.'

So, how has Amazon's pursuit of these aims contributed to the growing sense of unease amongst publishers? First there was the introduction of second-hand book sales for third parties on the site. Many thought these would cannibalise new book sales but in fact they have contributed to Amazon's revenues and prevented many book-buyers going elsewhere to sites such as Abebooks.

The 'Search Inside' programme caused consternation when it was first launched, but now publishers are recognising that the browsability of real books can be successfully replicated on the web, and are developing their own similar programmes.

In February Amazon bought the US audiobooks giant Audible, cementing its position on this front and opening up the possibility of extensive cross-marketing which may bring this rather under-recognised format to the attention of many more book-buyers. The Bookseller said: 'At a stroke Amazon has gone from languishing far behind rivals in digital audiobooks to becoming the clear market leader.'

CreateSpace, launched in the US only last year, is a print on demand service run by Amazon for authors, but margins are so tight it look as if they would find it hard to make any profit from getting involved in this enterprise.

The Amazon Kindle, so far launched only in the US, looks set to play a major part in kick-starting the e-book market, with its access currently to 200,000 e-book titles for purchase from Amazon's site.

Two recent spats have been quite serious, and may show a change of approach by the Internet giant. Last month Amazon told American publishers that all print on demand titles would have to be printed at Amazon's own fulfilment centres by its new programme BookSurge. The alternative is to provide it with five copies of each title via its Advantage service, but this costs publishers $29.95 a year and Amazon demand 55% of the list price, making it at best marginal.

Finally, there's the recent arguments in the UK this spring. In the midst of a terms negotiation Amazon has used its muscle to threaten publishers by removing the buy button from their books on the site. Publishers who have been developing their own online sales have been experimenting with discounting books on their own websites. Amazon tried to stop this by threatening to use the publishers' online discounted price as the retail price and apply its discounts accordingly.

Amazon seems set on being Amazonian, now that it is big and secure enough to flex its muscles. It doesn't look as if publishers - and possibly therefore also authors - have an easy ride ahead. For book-buyers interested in a great range of books and good prices, it is clearly another story.