Originally Posted by Graham
Does Amazon have an obligation to sell at a discount? They've got the same incentive as the author to maximise profit. They've presumably calculated that the increase in sales at a higher discount doesn't offset the loss of revenue.
I think it depends on the system they’re using to sell the books.
On conventional paper based books, which is what I think that article is referring to, it’s on a ‘sale or return’ basis. Amazon buys x number of books from the publisher at 50% of the publishers RRP and sets the resale value discount level at somewhere between 50 and 100% of the RRP.
Ebooks are generally sold on the ‘Agency’ system whereby the publisher sets the price and the reseller simply gets a commission percentage on each book sold.
On either system, I think the author gets a fixed royalty commission on each book sold, so the more books sold, the more commission the author gets. I’m not sure if the royalty commission is fixed to the price of the book.
What the author in that article is complaining about, is that the higher the price of the book that Amazon charges (or the lower the discount being applied) represents fewer and fewer books being sold which translates into fewer readers and of course less royalties.
Amazon, having priced so many conventional retailers out of business is now hiking the price on less mainstream, less commonly available books because it has less competition from retailers selling them and can effectively set whatever price it wants to sell them at.
It is of course predatory and under-hand monopolistic business practice. The primary reason I avoid Amazon like the plague, including their Kindles.