[GA Russell]

Originally Posted by Kali Yuga

FYI Amazon intends to generate revenue from both the reader and the ebook sales, so the "razor blade" analogy doesn't apply.

I have it on good authority that Gillette always made money on its razors too!

I don't think that model would go over very well anyway. It might drop the reader costs, but would require higher costs for the ebooks. I doubt anyone would be psyched over $15 ebooks, even if the reader is less expensive.

My model doesn't call for Amazon to lower the retail price of eBooks. It calls for Amazon to negotiate a lower wholesale price with the publishers.

Wrong. You have all kinds of ongoing costs -- website maintenance, server storage, bandwidth, payment processing, customer service, database issues, and of course staff to keep everything going.

Those are Amazon's costs. I was referring to the publisher's costs.

Not to mention that you have to pay the royalties to the publisher.

The wholesale prices Amazon pays the publisher are not royalties.

My whole point is that Amazon has the power to negotiate lower wholesale prices for the eBooks, just as the record clubs negotiated lower prices for albums from the record companies, and pass the savings on to new purchasers of Kindles.

Amazon has already stated that some of the $9.99 ebooks are loss leaders, by the way. The prevailing theory is that sooner or later, Amazon (and perhaps other ebook retailers, who are also pushing the $9.99 price point) are going to turn the screws on the publishers and demand lower wholesale prices on eBooks.

That's what I'm talking about.

With all due respect, now we know why you aren't the CEO of a major retailer.

You don't know me from Adam.

Given the fact that Amazon has a fairly expensive reader and has still managed to overtake Sony in the US market, I hardly see why they (or anyone else) would want to utterly eviscerate their revenues in order to acquire new customers.

Consider the Apple iPod/iTunes model. Apple reinvigorated the company, not eviscerated it.