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Interesting comments, and thanks so much for sharing them with us!

Originally Posted by oj829

* Depending on publisher, Kobo does actually do some aggressive discounting (vs. Google) right now. While it's right that the retail store only gets a piece of the pie, as they did with the Google deal, that pie is getting smaller.

This is correct of course, but if the alternative is losing customers to e-reading with a 0% revenue stream it's possibly still worth doing.

* That piece of that smaller pie is getting smaller, too. The indie's cut from the sale of a Kobo ebook is 8.4%, smaller than the (unknown to me) cut Google was offering. 84 cents on a $10 book.

Hmmm... is that 8.4% less of a stake in the whole, or an 8.4% reduction to their commission? The difference is huge! (eg., is it 20% dropping to 11.6% commission, which would be a huge drop; or has the commission dropped by 8.4% from, say, 20% to 18.32%?)

* Under the ABA/Google deal, indie retailers were paying $200 a month for the privilege of access to the program. It is unknown what their future monthly cost is going to be, but they had to affiliate-sell a lot of books under the Google program to even hit that $200, which was one of the reasons retailers are not all that excited about yet another dive into these waters.

I can understand, that would be tough. Is Kobo even requiring a monthly cost to be involved? Perhaps the lower percentage Kobo's offering is in lieu of not charging a monthly fee?

* Store owners only get a 5% cut on hardware sales (Calculate 5% of $129 or $79). Furthermore, it is only during the introductory/launch period that they'll be able to return these things. What are small retailer credit card fees these days? 4%?

I'm a small retailer (bicycles) and we typically pay 2-3% on credit card merchant fees. Occasionally as low as 1.5%.

Margins like that on hardware is pretty normal for any industry that uses the razor/razorblade model in the electronics industry. For example, those are the kinds of margins that stores typically get on video game systems. Video game stores also get truly terrible margins on boxed video games (15-25%), despite having to hold inventory! (That's the worst of every world). Video game stores do make money on accessories, though, and I would expect the e-reader accessories to have much higher margins. The real cash cow for video game stores is in used games, and bookstores do have the option of dealing in used books.

Like I say, I don't expect this to be a huge money-maker for the independent bookstores. I do see it as a better alternative than watching their business wither on the vine as the trend towards digital continues. At least with e-books, the stores don't have to carry "inventory" of e-books like the video game stores do with boxed retail video games. If I owned a bookstore in the U.S., I would model my store after video game stores: a strong focus on used product at high margins, and accessory add-ons to e-reader sales. I would merchandise my store with these two categories front and centre, and train my staff to make every customer aware of them, and I would take trade-ins of used books towards new e-readers and accessories.