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Amazon still in the news

22 April 2013

Amazon was one of the major talking-points at last week's London Book Fair. Earlier in the month the internet retailer had bought the book recommendation site Goodreads. Apple had been discussing with Goodreads the possibility of integrating its content into the iBookstore, when suddenly things went quiet, then Amazon's purchase of Goodreads was announced. Amazon is also rumoured to be preparing its own phone, which would bring a direct challenge to Apple's iPhone.

But Amazon has been doing plenty of other things to irritate and alarm people in the book trade. Its practice of sourcing books not from the publisher in that territory but via a wholesaler in another country means a lower export royalty for authors but also potentially clouds the issue of territorial rights.

It is widely thought that Amazon want to have in their possession all the publisher files for ebook and POD so that they can become the supplier and cut out the publisher. Certainly they are gaining ground rapidly and in the UK 95% of new ebook users in 2012 bought from Amazon's Kindle. There has been a rapid fall in the number of print books sold but even there Amazon did well, with 9.2% more print books being bought by ebook purchasers who had gone to Amazon first for that.

Tim Godfray, Chief Executive of the UK Booksellers Association, said at an event at the Fair: 'My contention is that Amazon has got so big that they are not competing, but destroying the competition.' There has been a lot of adverse publicity about Amazon's use of Luxembourg as their European headquarters, a status which allows them to charge just 3% tax on purchases vs. much higher rates had they been based elsewhere in the EC, including the UK. There's also a feeling that they are encouraging customers to 'showroom' - to browse in bricks-and-mortar bookstores but shop online.

Jeff Bezos's 's recent letter to shareholders said: 'Our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors... We don't take a view on which of these approaches is more likely to maximize business success. There are pros and cons to both and many examples of highly successful competitor-focused companies. We do work to pay attention to competitors and be inspired by them, but it is a fact that the customer-centric way is at this point a defining element of our culture.'

Most competition to Amazon has been bought up by the online retailer, not just Goodreads but also The Book Depository and many others in non-book areas. Amazon is fast approaching a monopoly position where it will dominate the international book trade, cutting out not just the retail competition but also possibly the publishers. But there may just be a ray of light. The Japanese online retailer Kobo has 20% of the global book market, with a strategy relying on developing long-term relationships and exclusive deals. But are they too late to compete with Amazon? Only time will tell.