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So why do they include encryption in their products that will allow their products to be read only by their readers? I would think that this would be contrary to their best interests.
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I think it's because they want to sell their ereaders. It may be changing, but as I understand it the primary source of revenue for those sellers is the hardware, not the ebooks. I read in Bloomberg that the Kindle 3 is sold at 48% profit. That's a fairly respectable margin, and not the sort associated with content-driven devices which are often sold at single digit profit margins or even a loss.
Before I dwell on this further, I read that at some point Amazon was taking a loss on ebooks, at least many of them. They would sell under wholesale to keep prices at a level that made their device more attractive. The article I read was almost a year old. Is this still the case? If not, to what extent has it changed? If anyone knows.