More Than the Kindle — How Amazon Is Taking Over the Book Business

Victoria Barnsley, chief executive of the News Corp. -owned (NASDAQ: NWS )
Harper Collins publishing house, told The New York Times in August that Amazon s
(NASDAQ: AMZN ) Amazon Publishing business is obviously a concern. Amazon
Publishing, Barnsley said, is bringing the online retailer close to a
monopolistic situation. Fast-forward a couple months later, and shes right to be
concerned. Amazon has signed a fleet of popular writers to its new Amazon
Publishing imprints with plans to publish 122 books, both in print and
electronically via its Kindle e-book store, this fall. AMZN is projected to
control 50% of the entire U.S. book retail business by the end of 2012 . If it
doesnt need publishers anymore, whats to stop Amazons domination of the book
business? Amazons far-reaching online retail business has been making publishers
sweat for years, but its Amazons Kindle e-book store that causes the most
concern. The ubiquity of the store Kindle books can be purchased and read on
any web browser coupled with the popularity of Amazons own Kindle e-reader
device has given the company a stranglehold on the growing e-book market. The
e-book market is growing and fast. E-book sales across the industry totaled $878
million in 2010 . Thats just a fraction of the overall publishing industry,
which brought in $28 billion in sales last year. And its just a fraction of even
AMZNs average quarterly earnings the company brought in $9.9 billion in the
second quarter of 2011 alone, so e-book sales have a long way to go before they
influence Amazons overall value. That might happen sooner rather than later,
though, considering how quickly the e-book business is growing. That $878
million figure represents 1,300% growth since 2008 . AMZN might not be making as
much money on them, but e-books are outselling print editions at Amazon already.
The company announced in May that for every 100 print books, including those
without digital editions, it sells 105 books on the Kindle . Its Kindle e-reader
business is growing apace with the e-book business, as well. Though AMZN still
refuses to divulge sales numbers for the four-year-old e-reader line, there are
hints to how well the device has performed during the past year. After Christmas
2010, Amazon announced that the Kindle had become its best-selling item in
company history , surpassing J.K. Rowlings 2007 book Harry Potter and the
Deathly Hallows , a title that sold 15 million copies worldwide on its first day
of sales alone. In July, the company said Kindle sales grew between the first
and second quarters of 2011 thanks to the popularity of its new, cheaper,
advertising-supported Kindle .