Amazon (NASDAQ:AMZN) frightens book publishers. Not because electronic books are going to replace print by September. Far from it. Print is thriving, and while e-book sales have grown 1,300% in the past three years, they still represent only a fraction of overall revenue in the publishing industry. Amazon’s business makes publishers nervous because it’s finally allowing the online retailer to cut publishers out of the loop entirely. Amazon is making more of its own books, and it’s got the authors to sell them.
A Tuesday report in The New York Times said Amazon has made its latest promising acquisition in an ever-growing stable of authors producing original books for the company. Timothy Ferriss, the self-help author behind the bestseller The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich, will release his new book The 4-Hour Chef exclusively through Amazon Publishing imprint.
4-Hour Workweek has spent 84 weeks on the Times‘ Advice bestseller list. That book was published by Crown, an imprint under the Bertelsmann-owned Random House. Ferris never entertained a counteroffer from his previous publisher after talking with Amazon because they would not have been able to match what Amazon was offering as “a technology company embracing new technology.”
This is just the latest major publishing effort from Amazon since editor Laurence Kirshbaum came on as head of Amazon Publishing in May. Imprint Montlake Romance, an all-romance branch of Amazon Publishing, opened for business in May. Connie Brockway’s The Other Guy’s Bride will be the imprint’s first book out this fall. Brockway’s previous books were distributed under the Dell Publishing mass-market imprint, another house under the Random House banner.
Then there’s Amazon Crossing, an imprint translating popular novels from abroad into English, the first two of which will be Oliver Potzsch’s German-language The Hangman’s Daughter and Tierno Monenembo’s French-language The King of Kahel. The Amazon Encore imprint will publish books that previously were released independently or in small quantities, the potential bestsellers that older publishing houses never had a shot at.
That’s an impressive arsenal, well suited for capturing the average reader and even more dangerous because Amazon’s Kindle is such a high-profile presence in the e-book business. Amazon controls the format, the distribution and now the publishing rights for a rapidly growing business. As chief executive of News Corp.‘s (NASDAQ:NWS) Harper Collins UK publisher Victoria Barnsley said, Amazon Publishing is “obviously a concern” since it means the retailer is “getting close to being in a monopolistic situation.”
Even as Amazon’s power grows, its competitors are coming under fire. A class action lawsuit against Harper Collins, Random House, CBS‘ (NYSE:CBS) Simon & Schuster, Pearson‘s (NYSE:PSO) Penguin Group, Macmillan Publishing, Hachette and Apple (NASDAQ:AAPL) was filed in California claiming that the those companies used the “agency model” for pricing e-books in Apple’s iBookstore to conspire to “force e-book rival Amazon to abandon its pro-consumer discount pricing.”
It would appear that everything’s coming up Amazon. Investors already pleased with how Amazon has performed for them will only have more to celebrate as Amazon’s publishing, Kindle and traditional retail business continue to work in concert. As to whether Amazon will attract attention for monopolizing an industry, time will tell.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.
