The Dream Factory: Amazon touts the high bidders

I submitted myself to a little computer experiment recently. Amazon.com, the online bookseller, had offered to anticipate my reading tastes and provide a list of recommended titles it felt sure I would enjoy. All I had to do was rate any four titles it threw up on the screen that I had read, and the magic computer would do the rest. Almost immediately I was deluged with names familiar from the best-seller lists: lots of Grisham, generous sprinklings of Patricia Cornwell, more than one mention of David Baldacci, and the ubiquitous Stephen King. After a fair amount of clicking, I had seen enough titles to offer my various verdicts: thumbs down to Patricia Cornwell, yes to Martin Amis's Money but no to The Information, yes to Roald Dahl's short stories, a big yes to Captain Corelli's Mandolin.

The exercise was enough fun for me to carry on beyond the strict minimum of four titles: I rated crime writers like James Lee Burke, gave my seal of approval to a couple of favourite children's books and passed judgement on Michel Foucault, an author I hadn't had the courage to grapple with since graduating from university. Then came the moment of truth: my very own list of recommendations. I'd like to say I was disappointed but it would be fairer to say I laughed my head off. The Body Farm by Patricia Cornwell, a book I had specifically said I disliked. The Witches, by Roald Dahl. Fair enough, though not what I was looking for. And On Grammatology, by Jacques Derrida, arguably one of the great unreadable books of the 20th century. Wow, what a mixture.

There the exercise might have ended, were it not for a story in the next day's New York Times that revealed how amazon.com's recommendation process was not entirely pure. The company received payments of up to $12,500 (pounds 7,800) from publishers to promote titles on its website. The Recommendation Center was not specifically mentioned, but among the authors being backed on the site for hard cash were John Grisham, David Baldacci and Stephen King - the very first names I had been offered. True, it seemed unlikely that French deconstructionists were paying amazon to plug their dense outpourings, but I couldn't help feeling there was more to my disappointing little exercise than computer eccentricity. In short, I felt I had been taken for a ride.

Plenty of other people clearly felt the same way, because two days later amazon admitted it had fudged the line between recommending and advertising, and promised to correct the problem by March. It was a big concession for amazon, the best known and largest online retailer. In its effort to distinguish itself from "physical" bookshops amazon has not just offered cut-price books. It has also tried to provide a thorough reviewing service, featuring its own opinions, those of the mainstream press and contributions from web surfers. The reviews formed a bond of trust between amazon and its customers, and helped it ward off competition from newer arrivals in the online business - particularly the internet branches of retail giants Borders and Barnes & Noble.

The tainted recommendation process is one symptom of numerous ills in the burgeoning e-commerce market. It points to a lack of clearly demarcated rules for buying and selling on the net. It illustrates how easily a powerful medium like cyberspace can promote commercial causes under the guise of something quite different. And it demonstrates the precarious economics of the whole exercise. Amazon, like most of its fellow online retailers, has yet to show a profit and only manages to finance its rapid expansion through the buoyancy of its share price. Although it explains its losses as the result of massive investment in new operations - music and video are two recent departures for the Seattle-based company - its critics suspect it can never make a profit and only achieves the volume of sales it does by undercutting its competitors.

In other words, amazon's strategy is to use its market capitalisation to finance a price war, carving itself a large niche for the day when the big bookchains have been humbled the independents driven out of business. The crossover exposed this week between its editorial and commercial priorities points to a wider, by now rampant malaise: the corporatisation of the book publishing and retailing world. Playing computer games with book titles might seem like innocent fun, but if the choices are predetermined by commercial considerations we'll all end up on a solid diet of Grisham and Cornwell.