Amazon Publishing to Launch Book Line, Cutting Off Publishers, Agents
Amazon is adopting a new business model, and it might hurt longtime relationships with publishers in the process. But will this be the future of publishing?

Earlier this year, Amazon announced the establishment of a new publishing house under a new division, Amazon Publishing. Through this new imprint, the retail giant plans to acquire and publish "the highest quality books in literary and commercial fiction, business and general nonfiction." In May, the company hired publishing veteran Laurence J. Kirshbaum to lead the group, and it seems the first fruits of Amazon Publishing's labor will be out to market soon.

Self-Published Books Launching Soon

This fall, Amazon is set to publish 122 titles in various genres, including fiction and non-fiction. The launch will be for both electronic and print formats. What's interesting with Amazon's new efforts is that it will potentially alienate its longtime partners in the book retail business -- publishing houses.

According to an article by the New York Times, Amazon is aggressively pursuing top authors, and has already made deals with self-help author Tim Ferriss (of the "four-hour workweek" fame) as well as actress and director Penny Marshall. Being a book retailer, Amazon is already eating into bookstores' revenues. And by letting authors publish their books directly with Amazon, the company is cutting out the middlemen, including publishers, literary agents and even the professional critics who help promote books.

It's a changing landscape, but authors have mixed feelings over Amazon's new publishing house. Some authors who both self-publish and have existing relationships with traditional book publishers have reportedly been warned against distributing their e-books via Amazon. Meanwhile, other authors who have oft been passed over by traditional publishers are seeing new opportunities in e-book publishing.

Sure, anyone could publish and distribute e-books via Amazon before, but this time, Amazon itself will handle the editing, publication, marketing and distribution of the titles.

E-Book Readers, Anyone?

Amazon is clearly timing the launch of its self-published books with the release of the upcoming Kindle Fire tablet. Marketed mainly as a device for consuming Amazon content and buying Amazon merchandise, the $199 Kindle Fire acts more like an e-reader than a traditional Android tablet. Judging from pre-orders, Amazon is set to sell about five million Kindle Fire tablets by year-end, and is predicted to sell 15 million Kindle Fire units in 2012, as per Barclays forecast. This is a big market for e-books, which are already outselling physical books.

However, the question here is whether the business is sustainable. Amazon reportedly loses $10 per unit sold, as per IHS iSuppli's estimates of component and production costs of the Kindle Fire. The company plans to make up for losses through e-book sales and commissions from merchandise, and iSuppli likewise estimates each unit to net Amazon an average of $10 in revenue.

Authors who have signed deals with Amazon are legally bound not to disclose details of their deals, although some indicate that Amazon is not giving royalty advances, like traditional publishers would. This means that books directly published through Amazon will need to succeed in the market get authors their well-deserved paycheck. It is a gamble. But the benefit here is that with "Amazon's publishing program ... there can be these grassroots phenomena," says Bruce Nichols of Houghton Mifflin Harcourt, speaking of how an obscure German novel made it big as an Amazon e-book.

Amazon has once changed the business of selling books. Will it do the same once again with the launch of its own publishing house?