MobileRead Forums - View Single Post - Amazon: New $189 Price Results in Tipping Point for Growth

Nathanael · 07-20-2010, 09:30 PM

I was pretty sceptical of the report -- sounded like one of those typical press releases that the media likes to snap up and run with with its critical thinking switched to off. But this CNET review did a much better job of deconstructing it:

http://reviews.cnet.com/8301-18438_7-20011038-82.html

Some flags it raises:

Kindle sales also tripled when prices dropped from $359 to $299.

How much of Amazon's ebook business consists in self-published books (Amazon stocks a LOT of them)?

What are the profit margins -- at $9.99 Amazon was losing money before the switch to the new agency model. It still considers ebooks loss-leaders.

Amazon's ebook business is growing, but this may only because the entire ebook business is booming (the American Publishing Association claims overall ebook sales quadrupled last year). What about market share? If Apple and B&N claims of 20% marketshare each are true, Amazon is likely losing marketshare.

The CNET article raises other questions as well.

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And a question of my own: Anyone have a clue what the industry's profit margin on ebooks is? Standard industry wholesale prices of hardcovers are generally half the list price; that's $13 on average. Yet pre-agency-model wholesale prices for ebooks were nearly the same -- $12 -- despite the fact that ebooks are cheaper to produce, incurring none of the printing, shipping or storage costs that comprise 12-15% of the cost of a traditional book. And, I've heard (don't know if it's true) that publishers pay authors a lower cut of ebook sales.

Sounds to me like someone's rollin' in ebook dough.

--Nathanael

07-20-2010, 09:30 PM	#44
Nathanael Groupie Posts: 185 Karma: 1110435 Join Date: Jul 2010 Location: Shanghai, China Device: Sibrary G5	I was pretty sceptical of the report -- sounded like one of those typical press releases that the media likes to snap up and run with with its critical thinking switched to off. But this CNET review did a much better job of deconstructing it: http://reviews.cnet.com/8301-18438_7-20011038-82.html Some flags it raises: Kindle sales also tripled when prices dropped from $359 to $299. How much of Amazon's ebook business consists in self-published books (Amazon stocks a LOT of them)? What are the profit margins -- at $9.99 Amazon was losing money before the switch to the new agency model. It still considers ebooks loss-leaders. Amazon's ebook business is growing, but this may only because the entire ebook business is booming (the American Publishing Association claims overall ebook sales quadrupled last year). What about market share? If Apple and B&N claims of 20% marketshare each are true, Amazon is likely losing marketshare. The CNET article raises other questions as well. --------------------------------- And a question of my own: Anyone have a clue what the industry's profit margin on ebooks is? Standard industry wholesale prices of hardcovers are generally half the list price; that's $13 on average. Yet pre-agency-model wholesale prices for ebooks were nearly the same -- $12 -- despite the fact that ebooks are cheaper to produce, incurring none of the printing, shipping or storage costs that comprise 12-15% of the cost of a traditional book. And, I've heard (don't know if it's true) that publishers pay authors a lower cut of ebook sales. Sounds to me like someone's rollin' in ebook dough. --Nathanael Last edited by Nathanael; 07-20-2010 at 09:32 PM.