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Originally Posted by crossi
I forgot the exact percentages but say Author 10%, Publisher 60% and Amazon 30%. The way Amazon used to work the publisher set the price at $10. The author got 10% so earned $1 million, the publisher got it's $6 million but Amazon instead of getting it's $3 million chose to give up some of it's profits and instead discount it and only take $1 million by cutting the price and recoup the price cut by selling a lot more of the books.
Lets say the discount doubled the sales, now the author gets $2 million, the publisher gets $12 million and Amazon almost makes up for the discount by getting $2 million.
You keep assuming the discount comes from what the publisher/author got. It didn't. The only one taking a cut in the profit/book sold was Amazon. This is not a difficult concept. Try to take it in. The Publishers/authors did NOT take a pay cut even if the number of books sold didn't increase.
Lets say you sold me something. I give you your money, whatever price you ask. I turn aound and sell it to someone else at half the price you asked me. Do you lose anything? No. You already have your money at your asking price. What do you care if I give away what I already paid you for? Especially if I keep buying things from you and then giving them away. The more gifts I give to people the more you make. Even at a 200% discount where I PAY people to take the item you would still be making money hand over fist.
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Of course, what you ignore is that after doing this for a while, Amazon then said to the publisher, publisher, now that we have set the expectation of a discounted price with the customers, we want _you_ to cover the cost of that discount from here on out. That was a big part of the contract fights that Amazon had with the publishers. They thought the publishers would cave.
Amazon is in the business of making money. Like Walmart, the way they keep the prices low is to push to cost on to the provider. You don't make money long term by selling a product for less than you pay for it.