Is Amazon Growing Too Powerful?

Without providing further terms or details, Amazon (NASDAQ:AMZN) announced that it plans to purchase Goodreads, an e-reader program that adds a social layer to the experience. Boasting 16 million members, Goodreads is a good purchase for Amazon, but not everyone is happy with the proposed acquisition.

A group of authors are saying that Amazon is gaining too much control in the publishing industry, and that Goodreads was one of the few entities with the means to potentially compete with the titan online retailer. Amazon is at the forefront of the e-book market, which has been gaining huge momentum as readers make the shift from paper to e-reader devices, like the company’s Kindle line. As e-books continue to expand, publishers have said Amazon devalues content with low prices that make it hard for them to compete.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

“Recommendations from like-minded readers appear to be the Holy Grail of online book marketing,” said Scott Turow, president of the Authors Guild, whose legal thrillers include “The Burden of Proof” and “Presumed Innocent.”

“By combining Goodreads’ recommendation database with Amazon’s own vast databases of readers’ purchase histories, Amazon’s control of online bookselling approaches the insurmountable,” he added.

Although Amazon’s tendency of driving prices down may hurt publishers on one front, analyst Brian Blair of Wedge Partners says the added popularity and social networking ability that Goodreads bring to the table may benefit publishers by reviewing and selling more books overall.

“It strengthens Amazon’s book-selling capabilities because it makes discovery of new books easier,” Blair said. “Making good books easier to find and staying up with what your friends are reading and enjoying is a good thing for all parties involved, especially the consumer.”

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Other analysts agree with Blair’s sentiment, that the purchase decision won’t affect publishers in the negative way that Turow and the Authors Guild fear.

Don’t Miss: Will Amazon’s Outage Hurt Like Netflix’s?

More Articles About:   , , ,  

More from The Cheat Sheet