Book discounts

[jgray]

I asked this question over at TeleRead, but it seems to have gotten lost in the pile. Perhaps someone in the know can enlighten me.

I understand that it is typical for the book-seller (like Amazon) to get a 55% discount off of the list price of a book. So, assuming that the book sells for list price, the book-seller makes a nice 55% profit. Why is it that the entity that only sells the book makes more profit than the author, the publisher, or anyone else? Afterall, the author worked on that book for many weeks, months or years. The publisher may have spent considerable time and money in the editing and production of the book. The seller spent a few minutes making the sale. Does this sound upside down to anyone else?

I’m sure there is some crazy historical reason for this practice, but even if that reason was valid long ago, it is still valid?

[Nate the great]

Originally Posted by jgray

I asked this question over at TeleRead, but it seems to have gotten lost in the pile. Perhaps someone in the know can enlighten me.

I understand that it is typical for the book-seller (like Amazon) to get a 55% discount off of the list price of a book. So, assuming that the book sells for list price, the book-seller makes a nice 55% profit. Why is it that the entity that only sells the book makes more profit than the author, the publisher, or anyone else? Afterall, the author worked on that book for many weeks, months or years. The publisher may have spent considerable time and money in the editing and production of the book. The seller spent a few minutes making the sale. Does this sound upside down to anyone else?

I’m sure there is some crazy historical reason for this practice, but even if that reason was valid long ago, it is still valid?

First of all, you have a number of terms mixed up. Yes, Amazon takes 55% of the retail price, but it's not profit. It's income. Profit is what's leftover after expenses are paid.

There is a precedent for this. In the US, it is common for a manufacturer to sell his product to a distributor at 40% of retail. The distributor then turns around and sells the product to retailers at 60% of retail. This is not an absolute rule, but from what I can tell it does apply in publishing, though the percentages may be different.

Lately the discount has changed because the big box retailers like Walmart do their own distributing, and get the 40% price. Apparently Amazon thinks it's a distributor, and is taking the biggest cut it can get away with.

I'm glad you brought it up. I agree that it's not a fair split for the publisher.