Quote:
Originally Posted by murraypaul
Amazon does have a very good reason to run loss-leaders (in the short to medium term), to build market share.
Once someone has bought a Kindle, the only type of DRM they can use directly (without stripping) is Amazon DRM. The device has an automatic way to buy from the Amazon store. Whispernet is designed to deliver books from Amazon. They are selling a platform, not just either a device or ebooks.
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Yes, they are.
The Kindle from my viewpoint is priming the ebook pump. Amazon sees an opportunity in ebooks. They are already the world's largest catalog retailer, and I believer they are the largest book retailer. They already had the infrastructure in place to display the titles and accept the order and payment. Adding fulfillment in terms of immediate digital download was relatively trivial. eBooks have no warehousing or shipping costs. For Amazon, what's not to like?
Once the market was established by the Kindle, we started seeing the Kindle app for various platforms, so you didn't need a Kindle itself to purchase and read Kindle editions. Fine by Amazon - you can assume they make money on each Kindle they sell, but what they really want is to sell you the
books. And their DRM is less a matter of reducing piracy and more one of vendor lock-in. If you have a kindle or Kindle app, the only place you can buy DRM protected commercial titles is from Amazon. Amazon's pricing and selection are such that Kindle owners don't see this as an onerous restriction, but it's still vendor lock-in.
The question is whether Amazon is playing the loss-leader game and accepting no margin or a loss to build market share. It's possible, but I doubt it. I
definitely doubt it in the US market affected by Agency Pricing. The publishers were reacting to lowered revenues because Kindle editions were competing with hardcovers. If Amazon was actually paying publishers the same price for the Kindle edition as the hardcover, Amazon would be putting the loss in "loss leader", and I really don't see them doing that. Retailers will accept lower margins (or even losses) on
selected hardcover titles to generate traffic and other sales. (The Harry Potter books were popular for this.) They won't do it across the board on all new titles. They want to stay in business.
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Dennis