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Amazon Plans Publishing Arm to ‘Cut Out Middle Man’

By Katherine Rushton

Amazon is planning to buy the rights of archive titles and new books in a bid to boost its margins by cutting out the “middle men” publishing houses whose books it sells online.

Last week the company made its first foray into publishing in America by buying the US rights to Ian Fleming’s James Bond novels.

Amazon is determined to cement its position as the lead seller of e-books. Through its Kindle device, Amazon has an estimated 70pc of the ebook market but competitors are catching up.

“All we care about is the Kindle. Strategically, it is the number one priority, and the number two and three,” an Amazon source said.

By publishing its own books, Amazon could offer exclusive material on the Kindle, helping to fend off Apple’s iPad or Kobo, which has formed an alliance with WH Smith.

Last week WH Smith revealed plans for in-store Kobo “training” zones to help customers use the devices, making the most of the asset Amazon lacks – a physical presence on the high street.

Amazon has hired Larry Kirshbaum, former chief executive of Time Warner Publishing Group, to establish its publishing business in America. The business plans to launch its first batch of US books in the autumn. In an interview last week Mr Kishbaum said: “Despite the fact that Amazon is a very large company on the retail side … we’re really a very small publisher. We’re a start-up. We only have about 20, 25 people.”

Even so the move has alarmed the industry. The chief executive of one a UK publisher said the atmosphere between Amazon and book publishers was “febrile”.

Five of the industry’s biggest names – Macmillan, Hachette, Penguin Group, HarperCollins and Simon & Schuster – are fending off allegations in the US and Brussels of price fixing, collusion and anti-competitive behaviour with Apple, to help it compete with Amazon. Apple, Macmillan and Penguin all deny the charges, but the rows have exposed hostility towards the retailer over its strategy of cutting prices.

The Society of Authors said it has “been concerned for some time at the damaging impact its increasingly dominant position is having on all aspects of the industry”.

However, Jonny Geller, managing director of the literary agency Curtis Brown, which brokered the Bond deal, said: “From the author’s point of view, you want to reach the biggest audience. For certain authors, Amazon will offer something different.”

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