An Offer From Amazon to Its Most Bitter Rivals

The New York Times

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November 6, 2013

By DAVID STREITFELD and JULIE BOSMAN

SAN FRANCISCO — Amazon is going to the people who dislike and fear it the most — independent bookstore owners — and offering to work together to fulfill the needs and desires of their customers.

The retailer on Wednesday announced a program where stores can sell its popular reading devices. The booksellers would get a small payment on each sale and a commission on all e-books that the reader buys in the next two years.

It was a great deal, booksellers said — for Amazon.

“I seriously doubt that many independent stores will take them up on it,” said Bill Petrocelli, co-owner of two stores in the Bay Area.

Many booksellers are distrustful of Amazon, a company of boundless ambition and some aggressive ways. Stores dismissed the new program as a Trojan horse aimed at further undermining their business. Independents make up about 10 percent of book sales, down from as much as 25 percent before Amazon.

“We help Amazon grow its business and, in return, get a thin slice of the sale?” asked J. B. Dickey at Seattle Mystery Bookshop. “That’s not cooperation. That’s being complicit in your execution.”

Jason Bailey, co-owner of another Washington store, JJ Books in Bothell, had a more nuanced view. He has already signed up with the program and was featured on Wednesday on the Amazon site.

“I have people coming in with their e-book readers to look at my books and then buy them online,” Mr. Bailey said in an interview. “I may have helped sell the book, but I generated income for someone else. Now I have a chip in the game.”

An Amazon spokeswoman, Kinley Pearsall, said she did not have the total number of retailers in the program. (One other bookstore, a college store in Washington, was featured on the site.)

“I can tell you anecdotally that the interest we’ve seen since announcing this morning has been very strong,” Ms. Pearsall said.

Amazon has lost valuable real estate for its Kindle line of e-readers in recent years, as its brick-and-mortar competitors have dropped the devices from their stores. Last year, both Target and Walmart said they would no longer sell the Kindle.

The new program, Amazon Source, lets stores either buy Kindles for a 6 percent discount and receive 10 percent of the revenue from e-books that customers purchase, or gives them a 9 percent discount without any other payment. The cheapest Kindle is $69. Most e-books are about $12, although many self-published ones are much less or even free.

Amazon’s aggressive discounting of physical books as well as its creation of an e-book empire have helped thin the ranks of independent bookstores over the last decade. But the stores scored at least a temporary victory with the lackluster performance of Amazon’s publishing program, which offered up a handful of big names to weak sales.

One reason: The independents refused to sell the books.

Amazon portrayed Amazon Source as a win for both parties. “Customers don’t have to choose between e-books and their favorite neighborhood bookstore — they can have both,” an executive, Russ Grandinetti, said in a news release.

But even Mr. Bailey, who got early word of the program through a soccer buddy who works at Amazon, sees risks.

“I had to debate whether this is the next nail in my coffin, the next step down into the grave,” he said. Switching metaphors, he added, “But I decided to step into the whirlwind.”

His hope is that a customer will buy a Kindle from him, and yet remain a customer for physical books in forms that are not yet popular in electronic formats: children’s books, for example. His three-year-old store will get a modest but presumably steady commission on e-book purchases.

Other bookstore owners said any potential income was negligible, but the potential problems were enormous. When stores sell a Kobo reader, for example, customers can buy their e-books directly from the store itself, creating a tighter relationship. But when a customer buys a Kindle, the e-books come from Amazon.

Another problem is letting Amazon scoop up even more data about who is buying what.

“Our customers are buying e-books from us that are way more eclectic than people are buying from Amazon,” said Michael Tucker, owner of Books Inc., a San Francisco chain of 12 stores. “Giving away that information would be like giving away the farm for a nickel.”

Amazon has had some public relations setbacks recently. An in-depth look at the company by Brad Stone, a former New York Times reporter, written with official cooperation, presented a view of Amazon as a Darwinian snake pit. This week Amazon fired back, denouncing “The Everything Store” as one-sided.

With that as a backdrop, booksellers were not inclined to see any proposal from Amazon in a benign light.

“I was kind of wondering if it was April Fools’ Day,” said Karen Hayes, a co-owner of Parnassus Books in Nashville.

David Streitfeld reported from San Francisco and Julie Bosman from New York.