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Were'nt there some rumors a while back about Kindle taking Epub submissions from publishers?
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Not really a rumor. Submitting epubs (that are then converted to mobi's) is not really new. And Kindlegen currently embeds the epub (or html source) in the mobi--has for some time. Supporting epub is something that they
may do at some point, but I don't believe that's what we're going to see with Amazon books being available through Overdrive.