September 12, 2011

While physical libraries are under siege, Amazon.com is planning to start a virtual book-borrowing service. The Wall Street Journal reports that the yet-to-be-named Amazon library would operate on a Netflix-type model, where subscribers would pay an annual fee to access a library of electronic books.

An unnamed publisher quoted in the WSJ article worried that participating in such a program would devalue physical books, and other unnamed publishing execs are concerned about how such a scheme would affect their relationships with non-Amazon retailers that carry their product.

What wasn't mentioned in the story is how major publishers were already wary of Amazon's ever-growing power in the book-iverse. Two years ago, Amazon briefly halted all sales of e-books from big six publisher Macmillan over disagreements about e-book pricing, and this past May Amazon hired Larry Kirshbaum, the former head of Time Warner Books (now Hachette), to run an in-house publishing arm designed to compete directly with Hachette, HarperCollins, Penguin, Random House, Simon & Schuster, and, of course, Macmillan.

With Amazon.com already the leading bookseller in the world - North American book sales alone were US$6.9 billon; closest competitor Barnes & Noble sold US$4.4 billon - an integrated lending service would further solidify Amazon's status as the biggest player in the game. And while that game isn't zero-sum, the more power a single retailer has, the more difficult it will be for publishing houses (and authors who make their money from book sales) to have a voice in the industry as it moves forward.