As celebrities choose Amazon, is this the end for publishers?

Deal for James Franco book fuels fears that online giant has become too dominant

Who needs publishers? Not James Franco, the artsy Hollywood star, who has just signed a deal to write his first novel; and not Amazon, the vast online retailer which beat the traditional giants of the industry to secure the high-profile author.

Franco, 33, has become the latest in a string of big names to join the increasingly glamorous stable of authors now on the payroll of Amazon. According to reports, his book, which has the working title Actors Anonymous, will be loosely based on his career in the film industry.

The deal, which was reported yesterday but has yet to be formally confirmed by either side, represents an ominous development for the industry, which in recent months has seen similar deals signed by the likes of New Age "guru" Deepak Chopra, self-help writer Timothy Ferriss, and the actor and director Penny Marshall.

For years, the rise of Amazon, which heavily discounts books, has been eating into the once luxurious profit margins enjoyed by mainstream publishers. There are therefore growing fears that the online giant could soon send their industry the way of the high street bookstore.

Since it was unveiled last year, Amazon's publishing arm has launched an array of imprints majoring on genres from science fiction to romance, and has already released more than 100 new titles, in hardback, paper back and electronic formats. It has also shown itself willing to pay huge sums to secure the services of what it considers to be the stars of the writing profession, using aggressive charm to woo them from the clutches of their former houses.

Chopra's deal, for the rights to a memoir co-authored by his sibling Sanjiv – and called Brotherhood: A Tale of Faith, Big Dreams and the Power of Persistence – was reportedly for more than $500,000 when it was unveiled in November.

At the time, Robert Gottlieb, the literary agent who negotiated the contract, described it as a "game-changer for the publishing industry". It came at the expense of Crown, the mainstream publisher which has for years looked after Chopra's hugely-lucrative literary interests.

Marshall's deal, for a reported $800,000, prompted Dennis Loy Johnson, a high-profile figure at the upscale firm Melville House, to tell the New York Times: "Publishers are terrified and don't know what to do."

Richard Curtis, a prominent agent, added that Amazon's growing dominance of its field was upending the status quo in almost every corner of the traditional book industry. "Everyone's afraid of Amazon," he said. "If you're a bookstore, Amazon has been in competition with you for some time. If you're a publisher, one day you wake up and Amazon is competing with you too. And if you're an agent, Amazon may be stealing your lunch because it is offering authors the opportunity to publish directly and cut you out. It's an old strategy: divide and conquer."

Franco's deal first reported by the New York Observer on Tuesday, separates the actor from Scribner, which published a book of his short stories called Palo Alto only last year.