Amazon's amazing e-book reader is bad news for the publishing industry.

"Everyone is worried that Amazon will end up becoming to books what Apple is to music," Paul Aiken, executive director of the Authors Guild, told me. (Aiken's group has criticized the Kindle's text-to-speech feature, which automatically creates a kind of audio book from an e-book; the guild says that Amazon should compensate authors for reading their books aloud. But that's another argument for another time.)

Aiken points out that even if Amazon does create a Kindle app for the iPhone and other devices, the service will still have the same fundamental problems. Your books will still be locked to Amazon—you'll just have two or three places to read them rather than one. At the moment, Aiken notes, Amazon is selling e-books at a loss in order to spur Kindle sales—it sells books for $10, but pays publishers more than $10 per copy. But once Amazon gets control of the market, it will be free to impose price reductions—to force publishers to reduce their e-book rates to less than $9.99. "That would be potentially devastating to the industry," he says.

And even if the publishing industry isn't devastated when a single bookstore takes over the e-book world, the marketplace for books will be diminished. Amazon stands as proof of how innovative retail practices can transform an industry; over the last decade and a half, the company revolutionized the book market with innovations like customer reviews, collaborative filtering, one-click shopping, and unbeatable customer service. It launched all these services to stay ahead of its rivals. But what will happen when it has no rivals?

Correction, Feb. 27, 2009: This article originally stated that Apple's iTunes Store was for many years the only place to legally download music for the iPod. It was the leading online purveyor of music produced by major record labels. (Return to the corrected sentence.)