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Amazon Buys Goodreads to Bolster Its Advice Portfolio
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Posted On April 11, 2013
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On March 28, 2013, Goodreads’ founders Otis and Elizabeth Chandler and Amazon vice president for Kindle Content, Russ Grandinetti, announced that Amazon had acquired Goodreads. The companies expect the deal to close in 2Q 2013. For the present, Goodreads will remain a separate company with headquarters in San Francisco.

Goodreads’ 16 million members—a number that has doubled in just the past year—now have 525 million books lining their online bookshelves and have written more than 23 million reviews. With links to more than 68,000 authors and more than 30,000 book clubs, Goodreads has become the clear leader for peer recommendations and social cataloging in its 6 years of existence. In the past 90 days, members have added more than four books per second to the “want to read” section of the site. Numbers like that are bound to be attractive to any buyer with deep enough pockets. And Amazon has deep pockets with estimated assets of more than $32 billion.

What Amazon Bought

Goodreads, which was aptly called “the most important book networking site on the Internet” in a recent Forbes article, launched in 2007 from a rather humble beginnings. According to Otis Chandler, “One afternoon while I was scanning a friend’s bookshelf for ideas, it struck me: When I want to know what books to read, I’d rather turn to a friend than any random person or bestseller list. So I decided to build a website—a place where I could see my friends’ bookshelves and learn about what they thought of all their books. Elizabeth, my co-founder (and now my wife) wrote the site copy and I wrote the code. We started in my living room, motivated by the belief that there was a better way to discover and discuss good books, and that we could build it.”

Goodreads’ founders explained the acquisition to their members on the Goodreads blog in this way: “We truly could not think of a more perfect partner for Goodreads as we both share a love of books and an appreciation for the authors who write them.” Otis Chandler noted in the announcement that, “I’m incredibly excited about the opportunity to partner with Amazon and Kindle. We’re now going to be able to move faster in bringing the Goodreads experience to millions of readers around the world. We’re looking forward to inspiring greater literary discussion and helping more readers find great books, whether they read in print or digitally.”

In his blog post to members, Otis Chandler continued by noting three major advantages to Goodreads in the move:

1. With the reach and resources of Amazon, Goodreads can introduce more readers to our vibrant community of book lovers and create an even better experience for our members.

2. Our members have been asking us to bring the Goodreads experience to an e-reader for a long time. Now we’re looking forward to bringing Goodreads to the most popular e-reader in the world, Kindle, and further reinventing what reading can be.

3. Amazon supports us continuing to grow our vision as an independent entity, under the Goodreads brand and with our unique culture.

From Amazon’s Grandinetti, the accolades were similar: “Goodreads has helped change how we discover and discuss books and, with Kindle, Amazon has helped expand reading around the world. In addition, both Amazon and Goodreads have helped thousands of authors reach a wider audience and make a better living at their craft. Together we intend to build many new ways to delight readers and authors alike.”

Market Impact

Amazon’s move comes just weeks after Hachette Book Group, Penguin Group, and Simon & Schuster finally launched their Bookish recommender site, intended to create stronger links between authors, publishers, and readers. Bookish is designed to be vendor neutral, allowing users to purchase content from a variety of sources while forging stronger connections among publishers, authors, and readers. Some believe this move by Amazon only works to strengthen ties between readers and new publishing venues at the expense of publishers, who have been far too slow to respond to the changing environment.

“Online book purchasing behavior is morphing quickly, pushed on one end by tablets (which in just the past 15 months have surpassed eReaders nearly 2-to-1 as the dominant e-reading platform) and on the other by Amazon,” notes David Vinjamuri in a recent Forbes blog. “Both the challenges of online discovery as well as the solutions depend largely on the interaction between these two groups. In the short-term, consumers gain through increased price competition but lose as they have to work harder to find good books.”

Amazon is well-known for its aggressive market moves and the use of acquisition as a means to growth. The company’s reviews have always faced attacks for their quality and sometimes questionable authorship. On the other hand, Goodreads has assembled a good team that constantly adds or refines its features including good use of graphic user interfaces and decent browsing capabilities. However, with the enormous growth in members over the past year, the growing number of complaints about system performance underlie questions about the ability of the small company to keep up with system demand and user growth. Having Amazon’s deep pockets will ensure that Goodreads is able to have the support it needs to continue to grow and innovate.

Writing on the Harvard Business Review blog, Paul Nunes and Josh Bellin note that Amazon “is already the biggest provider of book advice, with its top-secret personalized recommendation algorithms, trusted user reviews, and inside-the-cover previews.” So why bother with Goodreads? We are entering a new “influence landscape” that requires “advice consolidation …. reading the reviews page still isn’t comparable to engaging in an active conversation and building relationships with like-minded individuals. Goodreads therefore bridges an important gap in Amazon’s advice portfolio, and will keep customers engaged on a new front in the Amazon universe.” (The emphasis is theirs).

Reader Reaction

Reactions by readers, reviewers, and bloggers to this merger run the gamut. Many Goodreads members and fans support the change, noting the easy access this will bring for Kindle users. Author Hugh Howey, who used Amazon’s Kindle Direct Publishing platform for his Wool science fiction debut, was quoted in the joint news release calling this the marriage of “my two favorite people” creating “the best place to discuss books is joining up with the best place to buy books—To Be Read piles everywhere must be groaning in anticipation.”

Others have blasted Goodreads with outrage and criticism. A Wall Street Journal blog post noting that “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.”

Comments on Twitter, Facebook, Goodreads, and even Amazon's site have reflected concerns by users that their online book chats and reviews will be affected by Amazon’s customer tracking system and Amazon will soon monopolize internet book selling and sharing. Still others believe the merger won’t change anything.

The Future

After making the announcement, Grandinetti and Otis Chandler were interviewed by PaidContent during which Grandinetti noted that “our mentality here is to first do no harm, and make sure that if we’re going to do integrations, users genuinely find it to be a big benefit.” However, it was often difficult to read between the lines. When asked about whether Goodreads would remain vendor-neutral he responded with: “We always want Goodreads to be a place for people to share and talk about books … As for specific design of [the links], we’ll see, but we really think about it from the user perspective. If users really want those links [to other retailers], then those links will probably still be there.” The use of the word ‘probably’ is a bit disturbing for those seeking a clear separation between their shared comments and ideas and the marketing/sales emphasis of Amazon.

No details were released on Amazon's long-range intentions for one of Goodread’s chief assets: The information generated by their users on recommendations, reviews, and their online preferences and behavior. In an environment where consumer behavior can be gauged at high degrees of detail, many Goodreads members immediately expressed their concern. Certainly, this expands and strengthens Kindle’s ecosystem while further marginalizing publishers in the evolving book/reading landscape.

Andrew Rhomberg, founder of Jellybooks, notes on the Digital Book World blog that, “book recommendations are social and Amazon has been weak in social. Goodreads dramatically strengthens the Kindle ecosystem and raises the barriers to entry yet further. The Amazon Kindle fortress has just become even more impenetrable. Amazon is even less likely to suffer the fate of MySpace and be displaced by the next plucky start-up.”

Amazon already owns Shelfari, which many claim has been left to wither away without any serious attention or investment. Asked whether Shelfari was a ‘failed acquisition,’ Grandinetti answered: “We’ve used [Shelfari] to generate quite a bit of incremental data about books. It’s powered features we’ve launched over time, such as book extras and X-Ray. But, of course, Goodreads has been much more of a social connection site and a larger social network. So when it comes to the graph we’ll use to connect people on Kindle, Goodreads will power that.” Having learned what it could from Shelfari, Amazon is now turning to Goodreads to “power” their ongoing strategies in this arena.

Amazon also owns a minority share in LibraryThing, a potential alternative to Goodreads for disaffected members. This came with Amazon’s purchase of ABE Books, which had held a minority stake in the company. LibraryThing founder Tim Spaulding noted in his blog that “publishers are desperate to find a way out of the Amazon trap—needing Amazon, but also competing more and more with Amazon’s own publishing operations, and finding their individual and collective power declining as Amazon’s grows.” Whether or not readers turn to Goodreads is impossible to predict at this time. If Amazon keeps their activity behind the scenes —and limited to mining data for use in their algorithms and market development—Goodreads users may stay put. However, the loss of a sense of “small community” is something that many of those 16 million users will need to factor into their future decisions.

The same is true for libraries, many of which have used Goodreads as a base for their own reader advisory or promotional activities. Pennsylvania’s James V. Brown Library, for example, uses Goodreads as a way for users to “see what new fiction and nonfiction titles (both in print and ebooks) the Library has, see what will be filling our shelves in the coming months, read reviews, check out staff picks, and find recommendations for your next great read.” If direct connections to Amazon develop, it will be interesting to see if libraries decide to stick with Goodreads, switch to another, more independent source, or collaborate to create their own alternatives.

Google Play and other systems use Goodreads, and it will be interesting to see if the acquisition leads to other changes with the site, for users, retailers, and publishers. Spaulding noted to Library Journal that, “I have a lot of respect for Amazon. They’re a very smart company. But I’m personally worried about them controlling the entire book world, and it’s really kind of heading that way.”


Nancy K. Herther is American studies, anthropology, Asian American studies, and sociology librarian at the University of Minnesota Libraries, Twin Cities campus.

Email Nancy K. Herther

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Comments Add A Comment
Posted By Ari B.4/17/2013 12:37:41 PM

I have a Goodreads account and after what happened to Shelfari, I'm looking for options. I'll definitely check these out. Thanks for the great coverage of this. I do my reviews and comments for public, not profit!

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