Amazon changes book publishing business

SEATTLE - For more than a decade, Hugh Howey wrestled with writing about the horrors of Sept. 11, 2001.

Before Howey became the best-selling author of "Wool," he worked as a boat captain aboard a ship docked in the shadows of the World Trade Center towers as two planes flew into them. Even as he began to make a living as an author, the idea of writing about the tragedy vexed him.

And then Amazon.com opened a creative door for him. The book-publishing unit at the online retail giant created an imprint devoted to fan fiction, Kindle Worlds, last May. Fan fiction is often dismissed as mediocre writing by wannabe authors.

But Howey, who lets "Wool" fans write their own stories in the universe he created, saw an opportunity to write his own work in a world conceived by Kurt Vonnegut, which Amazon licensed from the author's estate.

Howey created a short work, "Peace in Amber," that wove his 9/11 story with the life of Montana Wildhack, an adult-film star from Vonnegut's "Slaughterhouse-Five."

"It was terrifying," Howey said about writing in a world created by a literary icon. "What helped was that I was writing about something that was even more terrifying."

With Kindle Worlds and its 14 other imprints, Amazon is trying to create something of an alternative universe in publishing. For decades, the biggest book publishers largely followed the same narrative: Pay hefty advances to well-known authors to write best-sellers. Lesser-known authors working in niche genres were largely left to niche publishing houses.

While Amazon has tried its hand at publishing blockbusters, with middling success, its real business is trying to change the business of book publishing. Amazon has created 15 imprints - publishing everything from science fiction to romance to Christian literature - all with the notion of finding success where other publishers struggle.

Amazon is betting its alternative universe will succeed because its business model is different. The company doesn't need blockbusters to offset the duds in its library. That's because the lion's share of the books it publishes are read digitally. Amazon doesn't have to worry about printing costs, distributing books to stores and buying back unsold books from those stores.

Instead, Amazon sees its foray into publishing as an experiment, much like many of its other emerging businesses. Amazon's publishing executives like to talk of the business as a laboratory where they can tinker with new ways to connect authors and readers.

"We felt there were a lot of things that were possible in the digital world that weren't being taken advantage of," said Russ Grandinetti, vice president of Kindle content.

It's not just reducing the cost of printing and distribution. Technology also lets Amazon study customer tastes.

It follows shopping patterns, so it can suggest books to readers based on the shopping patterns of other customers who purchase the same books. It studies customer reviews, working to sign self-published authors who have garnered high marks from readers.

And Amazon has the Kindle as well.

Sure, the e-reader and tablet give consumers a way to quickly purchase and read books. But the tens of millions of Kindles sold since the 2007 debut provide Amazon a window into how quickly those books are purchased, and how fast they are read. Data from each Kindle - "anonymized and aggregated," Amazon executives say - give the company insight into the types of books readers like.

Amazon's strategy didn't quite seem so digital when it tapped Larry Kirshbaum, a powerful literary agent and the former chief executive of the Time Warner Book Group, to run Amazon Publishing in 2011. Kirshbaum landed some big-name authors, including self-help guru Timothy Ferriss, Hollywood director Penny Marshall and former basketball coach Bobby Knight.

But the blockbusters from those efforts have been few, in no small measure because Amazon's archrival Barnes & Noble refuses to carry Amazon Publishing titles on its shelves. Many independent booksellers, wary of Amazon undermining their business, follow suit.

A little more than two years into his tenure at Amazon, Kirshbaum left the company in October. Daphne Durham, a company veteran who runs Amazon Publishing's adult trade and children's businesses and took over Kirshbaum's duties, said anyone who believed Amazon wanted to operate like big book publishers was wrong.

"We look at all opportunities and try to focus on what we do well," Durham said.

When it comes to publishing, there's one thing Amazon does better than any other publisher: make the best-selling electronic reader in the world. And the Kindle gives Amazon insight that no other publisher has. Amazon executives are cautious in describing the way they collect and use Kindle data. The company doesn't want customers to feel like the company is looking over their shoulder each time they open a digital book.