Amazon's Disappointing Earnings and Hard-Nosed eBook Strategy

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Despite seeing its second-quarter earnings jump 46 percent, Amazon took a beating in after-hours trading.

The company's earnings of $207 million for the April-June quarter fell short of analysts projections, as did the company's outlook for the next three months. Chief Executive Jeff Bezos praised the "rapid growth" of his Kindle e-book reader, which now has its first serious competition in the Apple iPad. Sales of books for the Kindle recently outpaced hardcover sales and the retailer also just signed a controversial deal expanding its Kindle offerings.

The news comes just one week after The Nation published a profile of the company, showing how it wields its power to force publishers to make tough concessions:

Blocked at every turn in their attempts to escape this relentless race to the bottom, publishers have seen their revenues fall, forcing many to make cutbacks and concentrate more on lead titles, the blockbusters that, accountants tell them, are the most profitable component of their business. Fewer staff and falling promotion budgets mean that books by less established authors--the "mid-list"--receive ever shorter shrift.

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Niraj Chokshi is a former staff editor at TheAtlantic.com, where he wrote about technology. He is currently freelancing and can be reached through his personal website, NirajC.com. More

Niraj previously reported on the business of the nation's largest law firms for The Recorder, a San Francisco legal newspaper. He has also been published in The Hartford Courant, The Seattle Times and The Age, in Melbourne, Australia. He's also a longtime programmer and sometimes website designer.
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