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I am not sure if that's really the case. Amazon is its own wholesaler and gets a 70% discount over the hardback price. The actual cost of bandwidth to distribute the book is minuscule - we are not talking about gigabyte video files here. They would only make an actual loss for a book that costs more than $9.99/30% or $33.30. Methinks the lady protesteth too much.
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Breakdown of percentages.
Assuming that's correct, Amazon is losing money as they claim to be. Typical new release hardback runs in the high 20's to low 30's, and $9.99 is significantly less than half that.
The adoption of the $9.99 price point for eBooks would be a major issue for publishers' current business model if eBooks get significant market share. Preproduction, royalties, and marketing would eat all of that. Add in the eRetailers share, and someone's taking a haircut. Given the dismal shape that the publishing industry is in right now, they really can't afford this.
Which is why Apple's $14.99, 70/30 split is so appetizing for them. The publisher share covers their current business model's costs just as physical books do now, with enough left over so the eRetailer gets their cut. Course, eBooks would forever remain a small niche at this price point because the vast majority of book buyers would be unwillling to pay the same price for an eBook as they would for a physical book. Which, I suspect, would be fine and dandy for publishers.
The only conclusion I can come up with is that Apple is intentionally burning down the eBook market in order to cripple Amazon's efforts in the area.
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Amazon acquires touchscreen startup Touchco, will merge it with Kindle division - SlashGear
Looks like Amazon's finally decided to make their own "iPad", or at least put a much better screen on the Kindle.. |
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It's $5 more, still far less than the insane $30 they want for a hardcover (seriously, a work of fiction can't be worth that much, nor can the binding). In the end, if people really start balking at this price, Apple will just do the same thing Amazon has been doing and set the price where the sales are at the level they want.
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