Time magazine book critic and tech columnist Lev Grossman follows up his report earlier this year about the future of literature with a new article, written with reporter Andrea Sachs, examining the impact Amazon is having on the publishing industry. “If Amazon is a bookstore,” the authors write, “it’s supposed to be buying from publishers, not competing with them. Right?” The answer, of course, is that Amazon isn’t just a bookstore anymore:

… Amazon has diversified itself so comprehensively over the past five years that it’s hard to say exactly what it is anymore. Amazon has a presence in almost every niche of the book industry. It runs a print-on-demand service (BookSurge) and a self-publishing service (CreateSpace). It sells e-books and an e-device to read them on (the Kindle, a new version of which, the DX, went on sale June 10). In 2008 alone, Amazon acquired Audible.com, a leading audiobooks company; AbeBooks, a major online used-book retailer; and Shelfari, a Facebook-like social network for readers. In April of this year, it snapped up Lexcycle, which makes an e-reading app for the iPhone called Stanza. And now there’s Amazon Encore, which makes Amazon a print publisher too.

As Grossman and Sachs put it, Amazon is “the most forward-thinking company in the book business.” Whether or not that’s a good thing depends on if you’re a book buyer or a publisher, they argue.

U2 and Madonna don’t have deals with record labels anymore; they did their deals with a concert promoter, LiveNation. That stuff that the labels used to do “ production, promotion, distribution “ it’s just not that hard to DIY now or buy off the shelf. It’s the same with publishing. Amazon could become the LiveNation of the book world, a literary ecosystem unto itself: agent, editor, publisher, printer and bookstore.

Still, as the authors rightly point out, while Amazon has the power to hurt publishers, it’s likely not in a position to mortally wound them. On the contentious issue of e-book pricing, for example, the industry is beginning to fight back against Amazon’s lowball $9.99 price tag on many of its best-selling e-books, an unsustainble price point aimed at fueling Kindle sales. Yesterday, Simon & Schuster announced it was bypassing the Kindle store altogether, making 5,000 titles available through Scribd, a social media platform that allows users to share and sell their own work. The S&S-set price “ 20% off the hardcover price “ is one that many publishers, not to mention authors, will find more sustainable.