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When Amazon emerged, publishers in New York suddenly had a new buyer that paid quickly, sold their backlist as well as new titles, and, unlike traditional bookstores, made very few returns. John Sargent, who is the chief executive of Macmillan, first met Bezos in the mid-nineties, at a hotel in Washington, D.

He was a skinny kid, he was young, he was excitable, and he was completely serious about what he was doing. I drank the Kool-Aid. In the late nineties, an Amazon vice-president named Mary Morouse e-mailed her colleagues after a trip to visit publishers in New York. There were several examples cited where Amazon. And they love our sales numbers. Soon after music came DVDs and consumer electronics.

Books were going to be the way to get the names and the data. Books were his customer-acquisition strategy. In the mid- to late nineties, Bezos hired two dozen writers and editors to produce copy for the Web site. One of them—Amazon employee No. For these refugees from New York, where jobs in publishing and journalism were already beginning to thin out, Amazon offered the thrill of working at a rising power, with stock options and an enormous audience.

Marcus edited the home page, which was visited by at least thirty million people a day. Readers, especially isolated ones, adored Amazon. One day in , Fried went into the company kitchen and found him absorbed in assembling an ant farm. He was really pleasant and fun. Lots of managers had to take the Myers-Briggs personality tests. Eighty per cent of them came in two or three similar categories, and Bezos is the same: introverted, detail-oriented, engineer-type personality.

Not musicians, designers, salesmen. The vast majority fall within the same personality type—people who graduate at the top of their class at M. I think we were flat last year. They were full of inefficiences, starting with overpriced Manhattan offices. During the holiday season, Amazon tried publishing books, leasing the rights to a defunct imprint called Weathervane and putting out a few titles. Employees with publishing experience, like Fried, were not consulted.

Representatives at the company today claim never to have heard of it. Nobody at Amazon seemed to absorb any lessons from the failure. A decade later, the company would try again. Amazon was a megastore, not an indie bookshop, let alone a literary review, and its writers were under pressure to prove that their work produced sales. If a customer clicked on a review or an interview, then left the page without making a purchase, it was logged as a Repel.

Marcus was informed that his repulsion rate was too high. They never knew exactly how much these payments helped sales, and negotiations over them became tense. Judgments about which books should be featured on the site were increasingly driven by promotional fees. Author interviews became less frequent, and in-house essays were subsumed by customer reviews, which cost the company nothing. One day, Fried discovered a memo, written by a programmer and accidentally left on a printer, which suggested eliminating the editorial department.

Anne Hurley, the editor-in-chief of the DVD and Video section, was viewed dismissively by her boss, Jason Kilar, who went on to run the video-streaming company Hulu. Today, eight editors select titles to be featured on the Books page, and if you scour the site you can find a books blog, Omnivoracious, but its offerings seem marginal to the retail enterprise. According to one insider, around —when the company was selling far more than books, and was making twenty billion dollars a year in revenue, more than the combined sales of all other American bookstores—Amazon began thinking of content as central to its business.

By then, Amazon had lost much of the market in selling music and videos to Apple and Netflix, and its relations with publishers were deteriorating. Many publishers had come to regard Amazon as a heavy in khakis and oxford shirts. In its drive for profitability, Amazon did not raise retail prices; it simply squeezed its suppliers harder, much as Walmart had done with manufacturers.

Eventually, they all did.

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Amazon rarely makes its sales figures public, using bar graphs without numbers in presentations. The men were wearing Amazon nametags.


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So he capitulated. The process of paying co-op fees to promote individual titles grew increasingly complex, especially after Amazon began selling different levels of promotion. Random House currently gives Amazon an effective discount of around fifty-three per cent.

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Recently, publishers say, Amazon began demanding an additional payment, amounting to approximately one per cent of net sales. In , Amazon introduced Search Inside the Book, which allowed customers to hunt for a phrase in a book without having to buy it. Publishers warily allowed Amazon to scan some of their titles and convert the images into searchable text. In the mid-aughts, Bezos, having watched Apple take over the music-selling business with iTunes and the iPod, became determined not to let the same thing happen with books. Amazon had carefully concealed the number from publishers.

The price was below wholesale in some cases, and so low that it represented a serious threat to the market in twenty-six-dollar hardcovers. If reading went entirely digital, what purpose would they serve? The next year, , which brought the financial crisis, was disastrous for bookstores and publishers alike, with widespread layoffs. By , Amazon controlled ninety per cent of the market in digital books—a dominance that almost no company, in any industry, could claim.

Its prohibitively low prices warded off competition. Publishers looked around for a competitor to Amazon, and they found one in Apple, which was getting ready to introduce the iPad, and the iBooks Store. Five of the Big Six went along with Apple. Random House was the holdout. Most of the executives let Amazon know of the change by phone or e-mail, but John Sargent flew out to Seattle to meet with four Amazon executives, including Russ Grandinetti, the vice-president of Kindle content.

Seated at a table in a small conference room, Sargent said that Macmillan wanted to switch to the agency model for e-books, and that if Amazon refused Macmillan would withhold digital editions until seven months after print publication. The discussion was angry and brief.

After twenty minutes, Grandinetti escorted Sargent out of the building. Amazon unwillingly accepted the agency model, and within a couple of months e-books were selling for as much as fourteen dollars and ninety-nine cents. Amazon filed a complaint with the Federal Trade Commission. In April, , the Justice Department sued Apple and the five publishers for conspiring to raise prices and restrain competition. Eventually, all the publishers settled with the government. Macmillan was the last, after Sargent learned that potential damages could far exceed the equity value of the company.

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Macmillan was obliged to pay twenty million dollars, and Penguin seventy-five million—enormous sums in a business that has always struggled to maintain respectable profit margins. Apple fought the charges, and the case went to trial last June. Grandinetti, Sargent, and others testified in the federal courthouse in lower Manhattan.

As proof of collusion, the government presented evidence of e-mails, phone calls, and dinners among the Big Six publishers during their negotiations with Apple. Sargent and other executives acknowledged that they wanted higher prices for e-books, but they argued that the evidence showed them only to be competitors in an incestuous business, not conspirators. Apple, facing up to eight hundred and forty million dollars in damages, has appealed.

As Apple and the publishers see it, the ruling ignored the context of the case: when the key events occurred, Amazon effectively had a monopoly in digital books and was selling them so cheaply that it resembled predatory pricing—a barrier to entry for potential competitors. In other words, before the feds stepped in, the agency model introduced competition to the market. If you pay seventy-nine dollars annually to become an Amazon Prime member, a box with the Amazon smile appears at your door two days after you click, with free shipping.

Until recently, even taxes were airbrushed away. For years, Amazon fought furiously against paying sales taxes in states where it had no warehouses and even where it did. Amazon, with fulfillment centers across the country, favors a national online-sales-tax policy, perhaps because smaller online rivals would find it overwhelming to navigate all the tax jurisdictions across the country.

At Amazon. Online commerce allows even conscientious consumers to forget that other people are involved. Amazon employs or subcontracts tens of thousands of warehouse workers, with seasonal variation, often building its fulfillment centers in areas with high unemployment and low wages. Last September, lawyers brought a class-action lawsuit against Amazon, on behalf of a warehouse worker in Pennsylvania named Neal Heimbach, for unpaid wages: employees at the fulfillment center outside Allentown must wait in line to pass through metal detectors, and submit their belongings to be searched, when they leave for lunch and at the end of their shift.

The process takes ten to twenty minutes each time. Theft is a common concern in Amazon warehouses—no doubt, a knock-on effect of the absence of bonds between the company and the ever-shifting roster of low-paid employees. A company executive told the Times that Amazon considers unions to be obstacles that would impede its ability to improve customer service. In , the Allentown Morning Call published an investigative series with accounts of multiple ambulances being parked outside a warehouse during a heat wave, in order to ferry overcome workers to emergency rooms.

Afterward, Amazon installed air-conditioners, although their arrival coincided with the expansion of grocery services. Bezos recently predicted to a gobsmacked Charlie Rose that, in five years, packages will be delivered by small drones.

Then Amazon will have eliminated the human factor from shopping, and we will finally be all alone with our purchases. The combination of ceaseless innovation and low-wage drudgery makes Amazon the epitome of a successful New Economy company. But its brand of creative destruction might be killing more jobs than it makes. According to a recent study of U. Census data by the Institute for Local Self-Reliance, in Washington, brick-and-mortar retailers employ forty-seven people for every ten million dollars in revenue earned; Amazon employs fourteen. In the book industry, many of those formerly employed people staffed independent stores.

Two decades ago, there were some four thousand in America, and many of them functioned as cultural centers where people browsed and exchanged ideas. Vivien Jennings, of Rainy Day Books, has been in business for thirty-eight years. Postal Service announced a special partnership to deliver Amazon—and only Amazon—packages on Sundays, with the terms kept under official seal. Since the arrival of the Kindle, the tension between Amazon and the publishers has become an open battle.

The senior editor, like most people in publishing, rarely deals directly with Amazon, but in the fall of he attended a meeting with Russ Grandinetti, the Kindle vice-president, who was visiting the big New York houses.

He joined Amazon in , as treasurer, then moved on to apparel, before taking the Kindle job. An Amazon colleague described Grandinetti as the smartest guy in the room at a company where everyone believes himself to be just that. Many publishing types consider him a bully. Grandinetti took questions, and an editor raised his hand. It showed contempt for his audience. When I spoke with Grandinetti, he expressed sympathy for publishers faced with upheaval. The future is happening to bookselling. The old print world of scarcity—with a limited number of publishers and editors selecting which manuscripts to publish, and a limited number of bookstores selecting which titles to carry—is yielding to a world of digital abundance.

After the Kindle came out, the company established Amazon Publishing, which is now a profitable empire of digital works: in addition to Kindle Singles, it has mystery, thriller, romance, and Christian lines; it publishes translations and reprints; it has a self-service fan-fiction platform; and it offers an extremely popular self-publishing platform. Authors become Amazon partners, earning up to seventy per cent in royalties, as opposed to the fifteen per cent that authors typically make on hardcovers.

Bezos touts the biggest successes, such as Theresa Ragan, whose self-published thrillers and romances have been downloaded hundreds of thousands of times. But one survey found that half of all self-published authors make less than five hundred dollars a year. Wimbledon - women's seeds: The full list of Jeremy Hunt: I'm prepared to sacrifice people's jobs to deliver Brexit. Moving video shows dads surprise children in a rainbow Pride bus. When does Wimbledon start? Dates, schedule, how to get tickets. When is the Love Island final? Why did Sherif Lanre leave Love Island ? Who is on Celebrity Gogglebox ?

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