10-29-13 11:36 AM EDT | Email Article

By Therese Poletti, MarketWatch


SAN FRANCISCO (MarketWatch) -- Amazon.com Inc.'s two-year-old book publishing business is still experiencing major growing pains.


Late last week, industry blog Shelf Awareness reported that Amazon's key publishing executive in New York, Larry Kirshbaum, will leave early next year, and return to his most recent career as a literary agent. After Kirshbaum joined Amazon's (AMZN) book publishing business in May 2011, he signed up big-name authors to pen books for Amazon, such as director Penny Marshall and the self-help guru Timothy Ferriss, known for his "4-Hour" books. Their books are available in physical form via the company's adult trade imprint called New Harvest, distributed in a partnership with Houghton Mifflin, and as e-books, only through Amazon.


But Amazon's efforts to become a real book publisher have not fared very well, at least so far, especially in the area of adult trades. The business does not even merit much, if any, attention from Wall Street. On its earnings call last week with investors, not one analyst asked how the publishing business was doing and it was not mentioned in any analyst reports available to MarketWatch. A few analysts did not respond to questions about Amazon's publishing business.


An Amazon spokeswoman confirmed that Kirshbaum is leaving after 21/2 years at Amazon and that Daphne Durham, the editor-in-chief of adult trade, has stepped into the role of publisher for its adult trade and children's books business. "Our New York office will continue to expand, as our overall publishing business grows," an Amazon spokeswoman said in a statement. "In fact, we will be announcing new imprints to launch in New York soon."


The biggest problem may be that many booksellers all around the U.S., especially rival Barnes & Noble, are for the most part, not selling the physical books published under Amazon's imprints. The animosity between booksellers, who feel Amazon has completely up-ended the book publishing industry and driven some books stores out of business with its lower prices, has come back to haunt the e-commerce giant.


Barnes & Noble (BKS) said its decision to not sell Amazon published books was based on Amazon's continued push for exclusivity with publishers, agents and authors.


"Their actions have undermined the industry as a whole and have prevented millions of customers from having access to content," said Jaime Carey, chief merchandising officer of Barnes & Noble, in an email statement. "We don't get many requests for Amazon titles, but if customers wish to buy Amazon titles from us, we will make them available only online at bn.com."


"They have not had any big hits," said Christin Evans, owner of The Booksmith, an independent book store in San Francisco's Haight-Ashbury district. Evans said that her bookstore will stock Amazon published books, based on a book's merits or its relationship with the author, or it will order them for customers upon request. She said the store sold less than 10 copies of Ferriss's most recent "The 4-Hour Chef," compared with well over 100 copies of his previous two books. And in book publishing, which has a similar model to the venture capital business, where investors fund a slew of money-losing tech companies in the hopes that at least one pays off in a big way. The sales of the book that sells a million copies helps subsidize the ones that only sell a few thousand copies.


One adult trade title, "The Hangman's Daughter," was described by Publisher's Weekly as having strong "bricks and mortar sales" and believed to have sold over one million copies.


For authors, though, Amazon's better royalties, quick turnaround and marketing on its website can be appealing. During a recent panel during San Francisco's literary festival, LitQuake, literary agents talked about how self-publishing in many cases is no longer frowned upon, and the changing publishing industry represents many new opportunities for new authors to get published. Non-fiction literary agent Ted Weinstein of Ted Weinstein Literary Management talked about how book publishers are the venture capitalists and agents are the early angel investors in the age of the "author-preneur."


"The eight magic words are 'I'm delighted to be here to give this Ted talk,'" Weinstein said. "That is the reality now."


Silicon Valley-based author Keith Raffel, who has appeared in this column before with his book, "Smasher," has signed a deal to have his fourth novel, "A Fine and Dangerous Season," published by Amazon's Thomas & Mercer. Raffel said he checked with colleagues who had also gone with Amazon, "including some who had received hefty advances with traditional publishers."


"They were all extremely positive about their experience with Amazon Publishing," Raffel said "All had done better with Amazon in terms of sales and royalties than they had done with their previous publishers or by publishing themselves. So yes, Amazon Publishing definitely has strong credibility among the mystery, thriller, and suspense writers I know and trust." Raffel had self-published "A Fine and Dangerous Season" and had sold it as an e-book over bn.com, kobo.com and Amazon.com. "It was one of the top selling books on Amazon in mystery and thrillers," he said. "I guess it came to their attention." Raffel realizes some booksellers will not carry Amazon's books, but he will see how it goes. "I love mingling with readers and am really looking forward to doing that again. Raffel is launching his newest thriller on Dec. 3 at Kepler's Books in Menlo Park, Calif.


Amazon is good with data and figuring out which books will do well based on its own internal data from self-published e-books sold in its system. Amazon is believed to be doing better with its special genre imprints, such as its Thomas & Mercer for mysteries and thrillers, 47 North for science fiction and fantasy, and a few others.


But that same modus operandi doesn't necessarily translate to the tougher arena of adult trade hardback books, which is a hits-driven business.


Amazon, as investors know, has many businesses which are not making a profit but are slowly making inroads. How much of a leash CEO Jeff Bezos has given the book publishing arm is impossible to say. Amazon may ultimately just focus on specific genre publishing, but for now, it's apparently still looking for its next big hit.

-Therese Poletti; 415-439-6400; AskNewswires@dowjones.com


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10-29-13 1136ET

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