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Originally Posted by da_jane
My question is how will Borders make money selling Sony ebooks? They can't. They must be working on making their own branded device.
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Of course they can: If they sell the e-books at the same cost as Sony's Connect store, Sony gets a cut (along with the publisher, just like any publisher's royalty process). Borders doesn't have to store, shelve or deliver anything, so they make a profit with zero loss from physical expenses.
Sony could try to take a large cut, but since there are other free e-book formats that Borders can sell instead (and thereby only give the publisher a cut), it will behoove Sony to keep their royalty costs low... even non-existent... to encourage people to buy and use their reader.
Even if you discounted the e-books to significantly below printed books, you still make all profit on it.