Wednesday, April 3, 2013

Amazon’s Goodreads Acquisition Triggers Backlash

By Greg Bensinger and Jeffrey A. Trachtenberg
A screenshot of the Goodreads app, one of the most prominent book review and recommendation sites Inc. AMZN -1.63%’s announcement of a deal to acquire Goodreads has set off a backlash among some fans of the popular site who treasured its independence.
Users of Goodreads–one of the most prominent book review and recommendation sites–can record what books they have read and see what their friends are reading. They can ultimately buy books through the service from various Internet retailers, including Amazon and Barnes & Noble Inc. BKS -1.05%
Hundreds of Goodreads fans flocked to Twitter and other online outlets to complain about the purchase by Amazon announced last Thursday. Some of them expressed concerns that the Seattle-based online retail giant could mine data about their reading habits from Goodreads to seek to influence their book purchases.
In some cases, users vowed to cancel their accounts on the free service. “I wasn’t happy doing it,” said Michele Filgate, an events coordinator at Community Bookstore in Brooklyn, N.Y. But she said called the prospect of Amazon knowing what books she buys and also what she reads as “just too much.”
Amazon hasn’t spelled out any details of how it may exploit Goodreads or any information generated by its users, which Goodreads said number more than 16 million. But an Amazon spokesman pointed to other cases where the company has let other acquired subsidiaries–such as–operate with few changes.
“Goodreads is enjoyed by readers of books in any format and on any platform, and we expect to keep it that way,” the Amazon spokesman said.
Goodreads Chief Executive Otis Chandler said in an emailed statement the company saw more people sign up for new accounts in the three days after the Amazon announcement than in any other three-day period in its 6-year history.
“Change always brings uncertainty and makes people nervous – we totally get that,” said Mr. Chandler. “Our job is to prove to our members over the coming weeks and months that we are still the Goodreads they know and love.”
The deal, expected to close in the coming weeks, will cost Amazon as much as $200 million, depending on whether Goodreads meets certain performance targets, according to two people with knowledge of the structure. The terms include $160 million to $170 million in cash upfront, these people said.
One of the people said Amazon will also create a more connected experience on its Kindle e-readers by integrating Goodreads’ social network into those devices.
While impossible to track precisely, opposition to the Goodreads deal seems to have taken root largely among those worried about Amazon’s broader impact on publishing and small bookstores. Many outlets have gone out of business since the Seattle-based company and other online and chain-store rivals emerged in the 1990s.
Katie Locke of Asheville, N.C., for example, said she takes pains to avoid buying books through Amazon because she preferred independent booksellers and is opening a bookstore of her own. She said she hoped to make “a statement” by closing the Goodreads account she has used to keep track of her reading list for the past five years.
Melissa Chadburn, a Los Angeles-based fiction writer, said she closed her account to ensure that Amazon didn’t have access to her book reading data. “It is really heartbreaking to have Amazon take over Goodreads,” she said. “It was great to have other readers recommending me books, but I don’t need Amazon using my information to sell me books.”
Not all Goodreads users were upset by the news. Rohit Bhargava, the author of self-help book “Likeonomics,” said he was hopeful Amazon would improve its social networking services with the acquisition and, ultimately, help him sell more books through the site. “The community aspect of Amazon is pretty dormant,” Mr. Bhargava said.
At least one fledgling book site expects to gain some Goodreads users in coming weeks. “It’s phenomenal for us,” said Joe Regal, chief executive of Zola Books, an independent e-books retailer that expects to officially launch this summer with a significant social media component. “There is a lot of concern about Amazon’s growing power and influence.”
Some, though, say a broad consumer backlash is unlikely over a new corporate parent.
“If the average consumer continues to enjoy Goodreads, they’ll continue to use it,” said Jamie Raab, publisher of Grand Central Publishing, an imprint of Lagardere SCA’s Hachette Book Group. “Authors and publishers may care, but this is a consumer driven site. If they get what they are looking for when they go on, the vast majority will continue to use Goodreads as a source to find out more about books.”
The Wall Street Journal.

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