On Thursday Amazon announced its acquisition of Goodreads, the world's largest site for readers and book recommendations.
At its core, Goodreads functioned as a social network for ardent readers. With this acquisition, Amazon has snatched up an independent network that has the ability to shape reader perceptions on hundreds of millions of books - and was, in essence, their largest competitor when it comes to book reviews. Reports indicate that Amazon paid about $150 million for Goodreads.
The Authors Guild isn't too happy about the move, calling it a "devastating act of vertical integration."
One example should make it clear how formidable this combination is. For “Animals Make Us Human” by Temple Grandin and Catherine Johnson, Amazon has 123 customer reviews, and B&N has about 40 (they report 150, but that figure includes ratings as well as reviews). Goodreads swamps these figures, with 469 reviews and 2,266 ratings for the book.
As an independent platform, Goodreads, with its 16 million members, posed a serious competitive threat to Amazon. No more.
“Amazon’s acquisition of Goodreads is a textbook example of how modern Internet monopolies can be built,” said Scott Turow, Authors Guild president. “The key is to eliminate or absorb competitors before they pose a serious threat. With its 16 million subscribers, Goodreads could easily have become a competing on-line bookseller, or played a role in directing buyers to a site other than Amazon. Instead, Amazon has scuttled that potential and also squelched what was fast becoming the go-to venue for on-line reviews, attracting far more attention than Amazon for those seeking independent assessment and discussion of books. As those in advertising have long known, the key to driving sales is controlling information.”
Goodreads launched in 2007 and since then has built up a user base of 16 million members, who have added 525 million books and 23 million reviews. The Authors Guild warns that with this acquisition, Amazon's garden walls are about to grow much higher.[via PaidContent]