[Andrew H.]

Originally Posted by murraypaul

Leaving aside all the name-calling going on in the thread, the iOS app store is different because it reaches far more customers than other mobile platforms, it is the only way of selling to the iOS platform, and being in it is very profitable.
From Amazon's point of view, they have made money selling eBooks to iOS owners. A while ago they said that 20% of their sales were to people who did not own Kindles. I think it is reasonable to assume that a significant portion of those were to iOS owners.

All of this is true, although of course profitability varies by app.

So Amazon would lose sales by leaving the app store.

This is undoubtedly true, although the real question is how many sales they would lose. Among the target market (the people reading a book a month or more), the question is whether they would just switch to iBooks (a format completely incompatible with their existing Kindle books), or whether they would instead use a Kindle. Obviously any number is a guess, but I'd guess that at least half of the heavy readers are going to stay with Amazon for books - and maybe many more.

And of course Apple will lose iPad sales as well.

Therefore they would be willing to pay a certain level of Apple tax to stay in it. That level would be calculated by balancing how many more sales they get versus how much less they make on each sale. It certainly isn't 30%, it probably is at least 5-10%.

Yes to part one. As to part two, it's probably closer (or below) 5%. Amazon has very low margins.

My guess is that Apple don't actually want Amazon to leave. The 'there is an app for that' meme is more valuable than directing a few more sales to the iBookstore. eBooks are, frankly, just not that big of a market to risk the overall platform for. They are more interested in the magazine market, where the iPad doesn't really have any competitors at the same size and capability. They have the chance to define how the digital magazine model will work right from the start. If they think they can take a slice of Amazon's revenue they might well try to do so, but they aren't going to set a level that they know will force Amazon out.
So both sides want to work it out, and I think this is supported by the lack of any real official statements by either side. I imagine deals are being done quietly and this will have turned out to be a storm in a teacup.

I'm sure that there is some negotiating going on. But right now, Apple has said it wants 30%, and that's just impossible for Amazon.

Note that the points I made above in reference to the Kindle/Amazon are likely just as true in reference to the Nook/B&N.