Mr. Kirshbaum is a veteran of New York publishing with 40 years of industry experience, including 10 years as CEO of Time Warner Books (now the Hachette Book Group). Under his watch, Time Warner and its imprints published everything from David Baldacci to David Foster Wallace. In 2005, he started an agency, LJK Literary Management. His return to head Amazon Publishing is a clear sign that New York publishing houses will now be competing against one of their biggest retailers to sign up writers.

"Larry Kirshbaum is a highly admired ... figure in the publishing world," said Peter Osnos, the founder and editor-at-large of Public Affairs. "The fact that he is back in the mix as a publisher is the kind of thing that would catch everybody's attention"

Catch everyone's attention it has, but it has also, for the first time, aroused fear that New York publishing might be facing a full-scale invasion from Seattle.

"What essentially happened is you had six players sitting at the table playing poker, then a seventh player who has more money than the others combined, sat down at the table, and the price of playing poker just went up," said Mike Shatzkin, CEO of the Idea Logical Company, which advises publishers on digital books. "I think it means that the agents are all celebrating and the big publishers are all crying in their beer."

When Amazon began its foray into publishing, it was initially in areas in which it would not compete with the big six, such as self-publishing. Then, in 2009, the company launched AmazonEncore, described as "a new program whereby Amazon uses information such as customer reviews on Amazon websites to identify exceptional, overlooked books and authors that show potential for greater sales." That the imprint launched by republishing a self-published fantasy novel by a 16-year-old was reassuring to publishers. As long as Amazon was offering an encore only to writers whom publishers had turned down in the first place, there were no apparent conflicts.

But with the hiring of Mr. Kirshbaum, it's clear that Amazon will now be competing directly with the traditional houses. Amazon has already outbid its competitors in a number of high-profile auctions, although at least one writer was put off by an exclusivity clause written into Amazon's writers' contracts that stipulates their books will be available only in electronic form for the Kindle, which already has 67 percent of the e-reader market share. "This is a time when these customers are up for grabs," said Mr. Shatzkin. "Amazon has been very conscious of that. They try very hard, if they sell you your device, to keep the business." For instance, any Amazon-published books would be locked out of the Nook, Barnes & Noble's e-reader, which has more than 20 percent of the market share and is Kindle's only real competitor. In other words, if your favorite authors sign with Amazon, the only way you can read their books is on a Kindle.

But whether they are merely trying to eliminate the competition in the reader market, or in the publishing market as well, is not yet clear. To many, it seems the e-commerce giant has both goals in mind.

One agent was pointed about what he thinks is a bait and switch on Amazon's part. "It occurs to me," he said, "that what they have traditionally done is lower the costs of what they're selling so that when it comes to pricing nobody can compete, and then when the competition is weakened or eradicated they can then raise their retail prices, or use the site to sell other nonbook products. Doesn't it seem highly likely that what they may now be doing--and preparing to do--is raise the costs of what is being paid, for advances, and then when the competition, i.e., publishers, are weakened or eradicated Amazon can then behave how ever they want?"

Another person, who was approached by Amazon for hiring advice, had an objection that, though small, perhaps laid bare most plainly the cultural differences between old publishing and Amazon. "They never picked up the tab," he grumbled.

ewitt@observer.com

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Daversa has a unique insight into this world, since his job consists of convincing talented tech types to take new jobs. As recently as 18 months ago, Valley execs would more often than not say "NFW" (no effing way) when called about New York opportunities, Daversa says.

Along with these anecdotes, Daversa dropped this nugget: VC godfather Ron Conway, attending a private Daversa event, said that, "25 percent of his current portfolio is based  in NY - up from 5 percent just two years ago."

There is still a lingering question in Silicon Alley. When will NY get a big exit that helps to establish a foundation for the ecosystem? "Can NY create 2nd and 3rd generation legacy much like executives at Google, eBay and Paypal that have been a part of the Web 3.0 emergence?" asks Daversa.

The more talent headed this way, the better the chances.