Quote:
Originally Posted by charleski
Hahaha, that blog post is ridiculous. Yeah, I'm sure Kindle books are making money for Amazon on some small-press, long-tail works, but the guy himself admits that when it comes to the majors, "The really big guys–Random, Hachette, S&S. Here, Amazon is supposedly losing money. And they probably are in some cases." Guess what? The majors are what count and represent the vast majority of Amazon's throughput. Doh!
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Nope. Amazon may well lose money on some major publisher titles. "Loss leaders" are standard practice in retailing. You set an artificially low price on a popular item, where you
do in fact lose money, because the object is to get the customer into the store. Once there, you are betting you can sell them other things at a margin that more than covers your losses. You may rest assured Amazon is not losing money on
all major publisher titles.
Major publishers
are peeved at Amazon's pricing, and several have announced plans to delay ebook releases because of it. They'd like ebooks to be priced higher and give them a bigger margin, because their costs to produce ebooks are lower. Amazon has countered by offering even
lower prices on some ebook titles.
At some point, I hope the major publishers will figure out that most buyers will balk at a price on an ebook higher than the cost of a mass market paperback, because the customers certainly understand the publisher's costs are lower with ebook editions. Meanwhile, this reminds me of the tempest in a teapot a while back where various major music labels were threatening to stop selling through Apple's iTunes store - they wanted Apple to charge a higher price and give them a bigger cut. The old fable about the goose and the golden eggs comes to mind...
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Dennis