Amazon May Have to Share Its E-Books to Kick-Start Its Publishing Venture

Last Updated Aug 8, 2011 5:28 PM EDT

Amazon (AMZN) loves to keep details about its business to itself and dotes on proprietary systems that keep its e-book customers tied to the company's Kindle devices and software. But that attitude may have to go out the window to make its new publishing division succeed.

According to Publishers Weekly, Barnes & Noble (BKS) said that it would stock books by the new Amazon Publishing division, but only if also given access to e-book versions.

Number one has to try harder
Amazon is used to ruling the retailing roost and has played a seminal role popularizing e-books. But even though Amazon conducts a significant part of U.S. book sales, that's not enough to make its new publishing venture work.

Barnes & Noble can rely on the foot traffic it already generates to expose people to the inexpensive titles it publishes and puts in stands toward the front of its stores. They are impulse buys. Although not impossible, it's a lot harder to pull that off online.

Amazon also isn't selling books that cost relatively little to produce. The company has contracted significant authors with their own followings. That will help, but the company needs others to carry the books as well.

Some independent retailers have already dismissed the possibility. They don't want to contribute to the profits of a company they see as driving them out of business.

A Macy's and Gimbels moment
The two retailers may be the media equivalent of the legendary rivalry department store rivalry between Macy's and Gimbels. At one point in the U.S., the phrase "Does Macy's tell Gimbels?" was an answer any time someone got too nosy.

Only, in this case, Macy's may have to tell Gimbels if it wants a new venture to succeed. Barnes & Noble holds a door to the market that Amazon must reach, and it has nothing to lose by turning its competitor down:
Barnes & Noble CEO William Lynch told PW the nation's largest bookstore chain would stock Amazon Publishing titles, with one major proviso: that it can sell both the print and the e-book. "We will not stock physical books in our stores if we are not offered the available digital format," Lynch said. "Given Amazon's recent push for exclusivity with agents and the authors they represent, we feel it's important to be very clear about our position on content going forward."
Not getting into B&N would be the kiss of death for the new division, especially with Borders closing. E-books may be growing in popularity, but they don't bring in profit the way paper books do because of consumer expectations of lower prices on electronic versions. Ironically, that's a perception that Amazon was key in helping to create. E-books also don't build awareness the way that titles in a store can.

That puts Amazon in an interesting situation. It can write off its greater expectations for the new division or get squeezed the way it has squeezed its own publishing vendors for years by embracing business practices it would rather not undertake. Amazon would have preferred selling paper books in B&N to help drive awareness and demand and then pulling in the sales via e-book itself.

Then it could have lured big names from traditional publishers and taken over even more of the industry. Now, it's going to have to share money with its rival, or else risk putting off the agents and their bigger name authors that it would like to court.

Related: Image: Flickr user seemann, CC 2.0.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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