Amazon's growing power in books

The success of the company's Kindle e-reader gives Amazon a lot of sway over the future of the industry.

By Kim Peterson Jan 6, 2010 1:35PM
Amazon Kindle. Credit: (© Spencer Platt/Getty Images)Amazon (AMZN) sold more digital books than traditional books on Christmas Day. That was a first for the company, and it says a lot about where the book publishing industry is headed.

Is it any wonder, then, that publishers are having a collective freakout about Amazon and its Kindle e-reader? They know full well what Apple (AAPL) did to the music business with its iPod, and they don't want to see books go down that road.

Unfortunately for them, it's already happening.
Amazon has cut the price of some new digital books to $7.99 in some cases, compared with $35 for hardcovers, BusinessWeek reports. And Amazon is aggressively pushing to pay publishers less than the traditional rates. Why? Because it can.

Apple engaged in an all-out war on the music industry for some time, leveling demands on pricing and copyright protection even as it rocketed to become the No. 1 music seller in the country. The company bullied and flexed its muscles like nothing the music industry had ever seen before, and got much of what it wanted (though it did give in some, too).

And while it isn't completely fair to compare Apple and music to Amazon and books, enough similarities exist that publishers are mighty uneasy about the power Amazon is amassing.

And so publishers are trying to undercut Amazon while they still can, according to BusinessWeek. They're selling e-books through rivals like Sony (SNE), Apple and Nintendo (NTDOY). They're holding off on releasing digital books until long after the hardcovers have been on store shelves.

"We are thinking very hard about what opportunities there are to prevent our business from being destroyed," one book publisher told the magazine.

Harlequin books estimates electronic sales at about 6% of total sales, and predicts that will double in a few years, according to BusinessWeek.

Amazon hasn't waged a nasty public battle against the publishing industry like Apple did with music, but it's clear the company is quickly gaining power when it comes to digital books. It's getting to the point where Amazon can very directly influence the future of the industry, and publishers have every right to worry.
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