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Originally Posted by HarryT
Are you sure? I thought that Amazon paid a simple percentage royalty for eBooks. What would "sale or return" even mean for an ebook? How would you "return" it?
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Sale or return is just an old expression for only paying for what you sell. With regards to conventional paper based books, they’d buy in x number of them at a set 50% discount on RRP and return the ones that hadn’t been sold to the publisher. It’s the old system for the way in which conventional physical books were bought from the publisher.
Most other resellers of e-books use the agency system pioneered by Apple in their iTunes store whereby they simply take x% commission on whatever items were sold.
When Amazon started out selling e-books they most definitely negotiated with publishers to use the old ‘sale or return system’ as opposed to the newer ‘agency system’ for the specific purpose that it allowed Amazon to undercut their competitors and sell e-books at a loss, rather than simply take a % off the top of the sale.
This is how Amazon were initially able to sell so many e-books at a loss and grow their Kindle market (a smaller loss than the agency system would have produced)—because Amazon themselves were able to set the price and not be dictated to by what price the publisher set.
Whether Amazon have now switched to the newer agency system I couldn’t say because I don’t know. I believe they may still be fighting this with the publishers who want them to switch to the agency system.