A marriage of convenience

21.05.12 | Neill Denny

The Waterstones deal with Amazon has come as a real, and not necessarily welcome, surprise, judging from the senior publishers I have spoken to this morning. The news is a complete shock to them, and certainly Waterstones and Amazon have pulled off quite a coup at a technical level, just to keep a deal of this size under wraps. The strategic problem facing publishers this morning is that potentially up to half the market is now in the hands of a retailer alliance.

But the deal has obvious advantages for both Amazon and Waterstones, a marriage of two of the most powerful brands, the established market leaders in print and digital specialist bookselling combining forces.

From Amazon's point of view they acquire hundreds of showrooms to demonstrate Kindles in, to make the case to the most conservative book buyers who have been resistant to embracing e-readers. For Waterstones, finally, they have a strong e-book partner, after the failure of the Sony e-reader to gain any traction. It's also worth remembering that Waterstone's went through a long period of subcontracting its website operation to Amazon.

Waterstones and Amazon are now free to concentrate on physical and digital plays respectively. But the danger for Waterstones must be that they are handing over too much of the future to Amazon, that they will pay the price for years of failing to get a proper e-reader of the ground by handing over details of their biggest customers to their biggest "frenemy". Amazon, which has never had any intentions of opening physical bookshops, has made a massive breakthough in terms of credibility and reach.  Daunt has famously described Amazon as the devil; and when you sup with the devil, take a long spoon.

More later on when we have looked at this in more detail...

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