Amazon writes new chapter in its strategy

Last November, Amazon, the online retailer, flew a dozen of the top US literary agents to a day-long meeting at the company's Seattle headquarters to try to tone down its image as the 800-pound gorilla of bookselling. The meeting, called "Agents Summit", focused on discussing the timing of e-book releases and on compensation structure. Executives from Amazon, which makes the popular Kindle e-reader, did not discuss striking deals directly with authors, which they are doing on a limited basis, or about becoming a publisher itself, said one agent familiar with the proceedings: "They had no interest in being a publisher."

But, a month later, "that all changed," the person said. John Sargent, chief executive of Macmillan, smallest of the big six US publishers, in January delivered an ultimatum to Amazon that led to Macmillan's books being removed from Amazon's virtual shelves. Sargent had been pushing to shift Macmillan's contract with Amazon to the so-called "agency model", by which publishers set the retail price and take 70 per cent of the revenues. That is similar to deals offered by Apple that would return less to publishers - but would give them more control over retail pricing of e-books. Since then, in spite of playing the role of friendly facilitator, Amazon has tried to cement its position as an unconventional player in the publishing world that intends to exploit opportunities at the edge of the industry. It has brought the retailer closer to the center of the publishing business, agents said.