Amazon Adds a Piece to Its Growing E-book Empire

Photograph by Chris Ratcliffe/Bloomberg

Over the past few years, authors and publishers have had a new way to connect with their most voracious readers: Goodreads, a San Francisco-based social network for book lovers. Goodreads, which has more than 16 million members, is a digital manifestation of—and perhaps a gradual replacement for—the chatty independent bookstore clerk. Members in its 20,000 online book clubs can popularize new books, make the careers of authors, and generally share their exuberance for the pastime of reading.

For publishers, one virtue of the site has been its neutrality in the battle among Amazon, Apple, and the major book publishers over e-book prices and the future of the printed world. Some commentators even believed that Goodreads was well-positioned to one day start selling books directly.

Well, no more. On Thursday, Amazon announced it is buying Goodreads for an undisclosed amount.

For the last decade, Amazon has been unusually acquisitive in putting together all the pieces of a digital publishing ecosystem. It purchased French e-book software provider MobiPocket and the print-on-demand company BookSurge in 2005; another social network for readers, Shelfari, in 2008; and the British bookseller, Book Depository, in 2011, among other acquisitions. The company has also been minting imprints and directly publishing its own books to the Kindle, both from Seattle and from its own New York-based Amazon Publishing division.

For Jeff Bezos and his colleagues, the idea is to rebuild the publishing world from the ground up, with the Kindle e-reader and its associated apps for mobile devices the only things sitting between authors and readers. It’s a bold vision, a way to keep customers accustomed to buying not just books from Amazon, but music, movies, and everything else. There’s not necessarily much room for traditional book publishers and their accessories from another age, such as book warehouses and local bookstores.

The purchase of Goodreads fits this vision. Amazon can use the community to market its own books, allow Goodreads customers to buy directly from Amazon, and mine the social network for data on reading trends. Amazon says it will leave its latest acquisition in San Francisco, but you can expect to see new social tools popping up on Kindle devices and apps.

Mike Shatzkin, a book industry consultant at Idea Logical, sees all this as a huge missed opportunity for Amazon’s competitors. “If a year ago, someone had come to me, and said, ‘We want to compete with Amazon on books, what should we acquire?’ the two companies I would have suggested are the Book Depository and Goodreads. And Amazon got ‘em both, as far as I can tell, without anyone else firing a shot,” Shatzkin said. “Shame on Barnes & Noble, shame on the big publishers, and shame on everyone else for letting this happen.”

Shatzkin says the deal was an obvious one for Amazon. “If you sell books, having a community of people that love to talk about them is exactly what you want.”

Before it's here, it's on the Bloomberg Terminal.