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Originally Posted by Kali Yuga
Bezos has already publicly stated that the Kindle Reader and Kindle Books are treated as two separate business units, that one does not subsidize the other, and both turn a profit.
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Increasing the kindle market does not mean that they are subsidizing the reader. Taking a loss on kindle books can be done to increase the market share of the book selling business unit.
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From what I have gathered, Amazon is paying the standard wholesale price for the books. If it's a best-seller, then just like paper books, it's a loss-leader.
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Isn't that what I said? "loss-leader" = "taking a cut on their profit margin in order to increase the kindle market".
It's more than just best-sellers though.
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Remember, with an e-book they are getting half the savings -- no shipping to or from the warehouse and no losses on "free shipping," no inventory costs, no physical returns.
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It's the same with the other eBook retailers. We're not comparing prices of kindle eBooks to printed books. We're comparing kindle eBooks to other eBooks. They both have the same distribution cost reductions, yet the kindle eBooks are often much cheaper.
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It is also possible that, given their clout, they do in fact get better pricing than some other retailers and/or can resist pricing pressure better
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Amazon has more clout with publishers than somebody like Barnes and Nobles?