By George Packer
In the era of the Kindle, a book costs the same price as a sandwich. Dennis Johnson, an independent publisher, says that “Amazon has successfully fostered the idea that a book is a thing of minimal value—it’s a widget.” Credit Construction by Ian Wright / Photograph by Ed Park
Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review. and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business. Sam Walton wanted merely to be the world’s biggest retailer. After Apple launched the iPod, Steve Jobs didn’t sign up pop stars for recording contracts. A.T. & T. doesn’t build transmission towers and rent them to smaller phone companies, the way Amazon Web Services provides server infrastructure for startups (not to mention the C.I.A.). Amazon’s identity and goals are never clear and always fluid, which makes the company destabilizing and intimidating.
It seems preposterous now, but Amazon began as a bookstore. In 1994, at the age of thirty, Bezos, a Princeton graduate, quit his job at a Manhattan hedge fund and moved to Seattle to found a company that could ride the exponential growth of the early commercial Internet. (Bezos calculated that, in 1993, usage climbed by two hundred and thirty thousand per cent.) His wife, MacKenzie, is a novelist who studied under Toni Morrison at Princeton; according to Stone, Bezos’s favorite novel is Kazuo Ishiguro’s “The Remains of the Day,” which is on the suggested reading list for Amazon executives. All the other titles, including “Sam Walton, Made in America: My Story,” are business books, and even Ishiguro’s novel—about a self-erasing English butler who realizes that he has missed his chance at happiness in love—offers what Bezos calls a “regret-minimization framework”: how not to end up
like the butler. Bezos is, above all things, pragmatic. (He declined to be interviewed for this article.)
It wasn’t a love of books that led him to start an online bookstore. “It was totally based on the property of books as a product,” Shel Kaphan, Bezos’s former deputy, says. Books are easy to ship and hard to break, and there was a major distribution warehouse in Oregon. Crucially, there are far too many books, in and out of print, to sell even a fraction of them at a physical store. The vast selection made possible by the Internet gave Amazon its initial advantage, and a wedge into selling everything else. For Bezos to have seen a bookstore as a means to world domination at the beginning of the Internet age, when there was already a crisis of confidence in the publishing world, in a country not known for its book-crazy public, was a stroke of business genius.
In 1995, in Chicago, Bezos manned an Amazon booth at the annual conclave of the publishing industry, which is now called BookExpo America. Roger Doeren, from a Kansas City store called Rainy Day Books, was stopped short by Amazon’s sign: “Earth’s Biggest Bookstore.” Approaching Bezos, he asked, “Where is Earth’s biggest bookstore?”
“Cyberspace,” Bezos replied.
“We started a Web site last year. Who are your suppliers?”
“Ingram, and Baker & Taylor.”
“Ours, too. What’s your database?”
“ ‘Books in Print.’ ”
“Ours, too. So what makes you Earth’s biggest?”
“We have the most affiliate links”—a form of online advertising.
Doeren considered this, then asked, “What’s your business model?”
Bezos said that Amazon intended to sell books as a way of gathering data on affluent, educated shoppers. The books would be priced close to cost, in order to increase sales volume. After collecting data on millions of customers, Amazon could figure out how to sell everything else dirt cheap on the Internet. (Amazon says that its original business plan “contemplated only books.”)
Afterward, Doeren told his partner at Rainy Day Books, Vivien Jennings, “I just met the world’s biggest snake-oil salesman. It’s going to be really bad for books.”